Don't Fool Yourself: A Market Pullback Is Extremely Likely Now | Lance Roberts

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There's only been about nine times that we've gone eight weeks in a row of advances. And when you start talking about nine or 10 weeks or 11 weeks, those become much more rare historically. So, we're starting to get into to more, you know, kind of more of a category where a correction becomes a lot more a lot more probable. And so, we're certainly going to have a pullback in the market. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. Welcoming you here at the end of the week for another weekly market recap featuring my good friend, the portfolio manager and Speedo swimsuit model, Lance Roberts. Lance, how you doing? >> Pound and a half to go. >> Pound and a half to go. >> This last week and a half is is I got one more week and and I tell you what, it's been a slow grind on this last two pounds. It always is. They They It's the 8020 rule, right? >> Yep. >> That last 20% is is the 80% of the work. All right. Well, look, I'm sure you're very excited uh to be heading out of here soon to go uh frolic on the beaches of of Italy. Um are you going to take your beach pictures like the minute you get there and then say to your wife, "I'm going to eat some pasta." >> The pictures will come very quickly. Yes. cuz uh we're going to we're actually taking a cooking class while we're there where you go pick all the vegetables and stuff out of the garden. You then make your own meal. You then eat your own meal. So, we're making pasta and pizza and a lot of other stuff. So, yeah, pictures have to come very soon because I'm going to gain weight very quickly over the course of the week. >> That sounds pretty wonderful though. >> Yeah, it'll be it'll be great. >> Yeah. Um do do you ever hear the comedian Bill Burr talk about how hard it is to get abs after 40? Yeah, and trust me, I'm right there with him. >> Yeah, it's it's such a great routine. But yeah, my guess is are your your abs going to basically live for like a nancond until you start just hoovering down all that food. >> I hope so. I hope long long enough for pictures for the kids. That's awesome. That's all I need. >> Okay. All right. Well, look, we're going to miss you while you're gone, but have yourself a great time there, Lance. Um All right. Um I gotta say, usually when you go on trips, Lance, right? What happens? Well, you know, I have had a bunch of people email me lately and say, "Lance, don't go on your vacation because the market's going to crash." It used to be that case. Like literally about four or five years ago, I go on vacation and something would happen. And over the last couple of years though, in particular, the markets have done really well when I'm gone. So maybe, fingers crossed, you know, there still two weeks out, you know, but maybe, you know, markets keep doing okay for the next couple of weeks. Uh, I hope so. But I I'm starting to get the feeling that we're going to have a big sell-off while you're away. One, because the universe, I'm sure, just wants to ruin your vacation, period. But also, I mean, Lance, anything related to semiconductors or AI in any way is just going bonkers right now. You know, we've got stocks like Micron. I think Dell was up like 36% or something like that from yesterday. I think the Korean stock market has doubled this year. I mean, this does seem like it's getting out of control in terms of uh an unsustainable meltup here. Um, >> pardon me. >> I said, be careful with that. You know, a lot of people are going, "Oh, this is the meltup." And you know, I get that and it certainly seems that way >> and you remember in 1996 you were around for it. Allan Greenspan goes irrational exuberance and then the market ran for three more years. Now look, what's going on now if it continues is eventually going to end in a fairly significant correction, but just understand that momentum can last a whole lot longer than you think it can. >> I I totally get it. And as I think I was just saying, you know, look, no guarantees what's going to happen from here, but it has that bubble up feel, that bubble meltup feel. and the fact that you're going on vacation a week from now. I I overlap those two things and I just in the center of the ven diagram I see Lance might not fun vacation. >> Well, that yeah, hopefully that won't happen. So, >> well, I mean, let's let's talk about this and maybe let's get straight to the um let's let's get straight to the uh uh technical analysis because I realized at the end of last week we actually never did pull up the chart. So, um, I want to make sure folks get that right out of the gate this time. But how concerned are you, if at all, um, about the the animal spirits right now in the markets? >> I thought we did the chart last week, but >> we didn't. I I I I mentioned that we were going to and then I never actually asked you to bring it up. >> We never got back to it. Okay. Um, well, so I did a couple things for this week. So, this is a Fibonacci retracement of the S&P 500. Um, so the important thing here is that markets have done exceptionally well. We're nine weeks in a row of of an advance. And I wrote an article on Tuesday or Wednesday of this week for our daily market commentary talking about historically what happens after eight weeks of advances, which was last week. And there's only been about nine times that we've gone longer than than uh sorry that we've done eight weeks in a row of advances. And when you start talking about nine or 10 weeks or 11 weeks, those become much more rare historically. So we're starting to get into to more, you know, kind of more of a category where a correction becomes a lot more a lot more probable. And so we're certainly going to have a pullback in the market. So what this is is this is a Fibonacci retracement. And and if you're not fi familiar with Fibonacci retracement levels, it's based on the mathematical equation called the golden ratio. And there's certain kind of they they appear all throughout nature all throughout the world. Um these ratios just show up in everything from the number of sunflower seeds in a sunflower to the length of your arm from your fingertip to your elbow. They're all golden ratios. >> The spiral arms of galaxies. I mean this is a real universal >> phenomen. And so these these retracement levels are just a function of that. And so there's a you know the the first level retracement is 23.6% then 38.2 2 then 50% so forth. Um so from this recent advance a a retracement of you know back to kind of the 50% retracement level which you would kind of expect after such a big advance. Not saying that's got to happen but and that's where the previous breakout high was. So it' be a retracement of the previous breakout. That's about a 7 and a half% decline from here. So it's not nothing, you know, it's not the end of the world. It's just a it's a seven and a half% decline. We just had a 10%, you know, back here in March and April. So, a 7 and a half% decline certainly, you know, isn't the end of the world, but it's certainly not going to feel good because after this advance, you know, a correction of any type is going to feel like a crash. You're like, "Oh my gosh, I'm losing all my money." And and you're not. You're just giving up some of the gains since really since March. But it's going to feel bad emotionally because it's been such a low volatility move higher. And of course, the stocks that we hit the hardest are the ones that have also had the biggest advances. So, you know, the where you're going to see your biggest retracements are going to be in semiconductors, technology stocks, those type of areas because those are the ones that are leading the gains. You take a look at staples. I I was showing that I was showing a series of charts earlier this week on our on our YouTube show. Let me see if I can just bring this up real fast while we're talking. >> And while while you're bringing them up, is it still a very low breadth rally? >> Yeah. Yeah. Because you basically have one sector driving the whole market. All right. So, here's technology. So this so if you take a look at technology stocks, right? It looks just like the market. So here's year to date. So this is the technology stocks. Remember what's what's so ironic about what I'm about to show you is is remember at the first of this year everybody's like, oh, you know, technolog is dead. AI is dead. Nobody wants technology. It's all about energy and small caps and international. And we were like, hey, be careful with that because when this thing rotates, it's going to be pretty vicious. And this is the rotation, right? And so now every what everybody wants is they want tech. So, all right. So, what about energy? That was the that's the big story of this year, right? I mean, energy, we got Iran crisis going on. We got oil spiking to $100 a barrel. We're now back down to 80 bucks a bar, 88 today or something. Um, but here's energy, right? So, here's the early year run when energy was a hot thing before the Iran crisis and since then it's done nothing. So when you start to take a look at and these and by the way these two sectors >> are the two sectors that account for the massive part of the gain in the in the S&P 500 this year. Um they also account for the most for almost all of the earnings of the S&P 500 so far this year just from these two sectors. But >> but I'm guessing it's still heavily weighted towards >> tech energy is 3% of the index. >> Right. >> Technology's 30. >> Right. >> Right. So it's No, it's tech that's driving the markets right now. Here's communications. So, communications, that's Google, Meta, right? You know, big companies. Google's done fine. You know, Verizon, AT&T, etc. It's done nothing this year. Um, drop down into financials. Same story here. It's done nothing this year. If you've been invested in any of these other in any other sectors of the market, there's industrials. Hadn't done anything since really kind of February. Um, here's Staples, which is your more defensive area. did well at the beginning of this year and hasn't done anything really since the the decline uh back in April. So when you start going through these other other sectors of the markets outside of technology, the only thing holding the index up right now and the only reason we're making new highs in the index is because of tech. That's it. So when and so the reality is is that when you eventually get a correction in the market, that rotation is going to probably be out of tech into staples and utilities and and more defensive areas of the markets just from that kind of riskoff bias that occurs in the markets. You know, here's here's momentum. This is the momentum ETF. Uh so this this ETF changes holdings based on what's moving in the markets. So, right now it's mostly tech and and semiconductors, but you know, this is a very very sharp advance that you have got a massive deviation from long-term means. Here's semiconductors. Don't really need to tell you much about this. Um, if you take a look at semiconductors, this is a 20-year chart on semiconductors. This is what's called a parabolic move. This is not sustainable. You and I were talking about this very same chart in gold, you know, at the end of last year, and I said, >> absolutely. And it wasn't sustainable. >> Exactly. Same thing was in silver. These parabolic moves it everybody when this is occurring everybody goes well this time is different because of a b or cd reasons these are never ever ever sustainable. They will always correct back to some some form of a median or moving average. So if we drop this onto a monthly moving average as an example your first correction point is at $320 a share. You're at 600. You're talking about a 50% correction just to get to your first level of support. and and the 50-month moving average is the long-term running support of this rally. You see the bottom here, the bottom here. So, this this run of semiconductors really that started back in 2020 has found consistent trend support at the 50-month moving average that's at 223. So, you've got a and in fact, this is the subject of this weekend's bull bear report as well. So, I'm going into a lot more detail on semiconductors and this weekend's bull bear report. So, it'll be on, you know, you get that on our X page at lance Roberts or at realadvice.com. But this is a this is about a 75% decline in the markets just to get back to that moving average, which it will most likely do. Can't nothing's guaranteed, but historically it says that you're going to come down and retrace this moving average at some point. Now, what causes that or when it occurs, who knows? But, you know, those things actually that they they occur repeatedly throughout history, and those long-term support levels become very critical to the long-term game of of what you're playing into, >> right? All right. And of course, the question is is how high how much higher can this go? The honest answer is is nobody knows. >> But Lance, given the verticality of it, that's why I'm suspicious that you may have some interruptions on your trip. >> Well, no. I'm just hoping it lasts until I get back. That's >> I know you are. I I know part of your push back on me here is just denial that you're trying to say don't let it happen while I'm trying to relax. >> Exactly. Right. >> Um so, okay, let me ask you this. Actually, Adam, the good news is I'm going to be like eight uh let's say you're in you're in Reno, so you're an hour behind me right now. So, I'm going to be roughly about eight hours ahead of you. So, I'll be able to call you ahead of time and tell you what's happening about eight hours in advance. So, >> Oh, awesome. Awesome. All right, folks. So, we're gonna we're gonna have we're going to set up this time travel trading service. So, folks, for the low low price of $10,000. >> Exactly. >> You can join it. >> People know everything eight hours in advance. So, >> by the way, Lance, I'm two hours behind you. I'm still on Pacific time here in >> That's right. That's right. Two hours. >> Um Okay. So, uh you you have said like we saw at the beginning of the year, you expect another capital rotation at some point of capital just coming out of this red-hot tech sector and flowing back into more of the the value and defensive um stocks. Um totally see that happening. The question is is does that will that be a wash in terms as far as the indices are concerned or will the indices get pulled down because tech is just such a bigger percentage of the indices >> I don't know how well look anything is possible right so if you had all if all the money came out of technology and then went equally into every other sector >> then the market would anywhere right >> it would be a wash yeah >> it would be a wash but that's not the way it really happens >> right Um, and >> people go to the sidelines, they get worried, you know. >> Yeah, exactly. So, you know, with with with tech being such a big weight in the index, it's it's almost, again, this is where we're talking about that 5 to 10% decline in the markets. I think that's why you get that that potential pullback in the overall S&P is because you get movement out of tech and then it goes into fixed income or it goes into other asset classes, etc. outside of the sectors of the S&P. >> Okay. Uh, I'm going to take a risk here and just do ask you a question as I'm thinking about this live. Um, this might be a dumb question in retrospect, but actually I wonder would it be a wash if if all the capital was on one side went from one sector to another, would it be a wash or would it matter at the price at which it transitioned, right? because stocks are priced at the margin. You know, if I if if if you know, if I'm willing to bid I'm trying to think of this um out loud, but all that really matters is what the last share was bought for. >> Right. >> Right. So, if if if people are getting out of tech and they're getting into something safe and they're buying it at the current market price, that doesn't really change very much. But if the next whoever buys that next tech share buys it at 20% less, >> you have some market value that that kind of just went to market value heaven, right? >> No, it did because remember the index is market cap weighted, right? So how do we weight the index? We weight it by market capitalization. So if you reduce tech if you reduce the market cap waiting of the technology sector by five I'm just >> no no nobody quote me on this, right? Let's say reduce >> the tech sector by 5% of its market cap. So you take it from 30% to 25% of the index and that and you have a a sub a relative increase in the other sectors of the market. So you bring energy up from say 3 to 4% whatever >> you know that's still a very small waiting in the overall index. So from a market cap weighted basis it's not going to be a one for one exchange. That's why that's why I'm, you know, because of the of the weight of technology and the size of its market cap, the downside risk is certainly there. Even if it even if it was a straight exchange from technology to every other sector, you're going to have probably a declination in the overall index because of just the market cap differentials, >> right? And and my point about things being priced at the margin, it depends what that next marginal buyer comes in at. And and if there's a big delta, >> it's hard for people to wrap their brains around sometimes, but it literally just goes to money heaven. Like what happened to all that market cap? It's like it didn't go into anybody's pocket. It just literally disappeared. >> Yeah. Well, well, out of the index, it went somewhere, right? Money's never created or destroyed. It just changes form. >> No, but just on this point, let's let's let's take Micron stock or whatever. That's, you know, so it's that's money to heaven. Yeah, but that's my point, right? It's it I don't know what it's trading at right now, but it's like,00 times what or 1100% what it was not that long ago, right? It's been on some crazy tear. If if and let's just say it's at trading at a,000 just to make the math easy. I'm the last crazy person to buy a share at a,000. The next guy who's willing to buy says, "I'll buy it at $700." that drop of $400 per share, it's not going into anybody's pocket. It's literally going to market cap heaven, right? >> Yeah. No, exactly. And so, I think it's certainly worth paying attention to. And again, look, you know, the bottom line is that I don't disagree with, you know, kind of your concerns. They're certainly valid concerns. And again, kind of going back to just here, let me just come back to this chart here real quick. Um, so this is this is a a chart of the technology ETF. This is a two-month chart of this is a monthly chart of the of the technology index ETF, but this two-month spike in tech stocks has never occurred previously, right? And I mean, I can run this chart all the way back. You don't see this normally. So, this acceleration in the market is beyond normal extremes and that deviation from long-term means is is astronomical. And and despite listen, yes, earnings growth is is booming, etc. But you know this is this is that kind of meltup you're talking about is occurring in technology. It's not necessarily occurring in the broad market but it's certainly occurring in technology. >> Well it is occurring in the broad market meaning the index is getting yanked up along with it. It's not amongst all the other the other >> sector but but but yeah but the the acceleration of the market still there right you can still see this acceleration of the market being dragged up by the the the the technology sector but it's not nearly as egregious as it is in the tech sector >> well absolutely and let me ask you this so what is so I know you say be careful of the narratives and everything for all the reasons we talked about but what is the narrative driving this why are companies like Micron and Dell especially why Are they all of a sudden catching fire? >> Um, well, it's it's not really there. Well, the narrative behind it is is strong earnings growth, a shortage of of chips to meet AI demand. Um, AI demand is is booming right now. We just there's just simply just too much demand for AI and there's not enough supply to supply them. And so, Intel and Micron and these stocks are all running up. But the reality is it's all a gamma squeeze. And so as and we talked about gamma a couple of weeks ago here on the show, but that's just that option that that option book sitting behind these stocks that every time these stocks go up, it's forcing all the short covering. It's just this mechanical process in the market. It drives prices higher which creates more short covering. But at the same time that these prices are going higher, hedge funds are shorting the shorting the snot out of these technology stocks. And every time they short them, they have to turn around and cover them, which drives the price higher again. It's just this rotating gamma squeeze within within the overall market. Again, this is something I'm going into a little bit in depth uh in this weekend's newsletter. So, really, if you want to know what's going on in semiconductors, read this weekend's bull bear report because I'm going to talk about the gamma squeeze. I'm going explain what that is, how it works. I've got a whole little chart that shows the dynamic, you know. So, so all that'll be in the newsletter this weekend. >> Okay. And let's the the speculative um fervor with call options is a big part of gamma squeeze too. Correct. Right. So everybody says, "This thing's shooting the moon. I'm going to buy a call option to really ride it with leverage." And the guy that writes you the call option needs to buy the actual physical stock as an offset to that, right? So >> the more the more call options are are are bought, the more stocks got to get bought and it just keeps chasing itself up, right? >> Well, not only that, though. So So if if you're going to buy a call option, the dealer's got to take the other side of that transaction. Really? >> I'm saying he's writing the call option to you. Yeah. >> Yeah. He's writing the call. So, which means he's actually short the stock, >> right? >> So, so he needs to buy it so that if it gets called away, he's he can give it to you. >> Exactly. So, but then at the same time, they're also shorting the stocks that to arbitrage their bets to make sure that they don't get hung out. And so, that that whole that whole backdrop behind this surge in call options. You take a look at put call ratios. There ain't nobody buying puts right now. We started buying puts for November on the S&P just for our portfolios. We have a a portfolio that uses options called the platinum model. And we started buying puts today on the S&P 500 for November. Uh just to hedge just to hedge the portfolio. And we're just going to keep buying them here over the next couple of months until this market eventually breaks because it will because right now insurance options, you know, put options on your portfolio are about as cheap as they've ever been. I mean, nobody wants put options. So they're incredibly cheap. Everybody's buying call options and and that that cost is getting very very expensive. >> So I just want to remind folks I'm trying to remember when this was. It was maybe like a year or so ago, but we were here a while ago where the cost of downside protection folks I was interviewing, like Lance just said, were saying it was the cheapest they'd seen. And I remember advising that folks look into it. And I bought some um put options then uh at that time and it turned out to be a great trade because it was real cheap. I bought these longdated puts. Uh so I had plenty of time and then the froth in the market invariably reversed and it was just uh I was like gosh I wish we had more opportunities like this. So I just want to note that that opportunity appears to be presenting itself again. >> That's right. >> Okay. >> These don't happen lot these don't happen often. You're Look, we've been, you know, here's the problem, Adam. You've had Lance on every week for the past eight weeks. He keeps saying a correction is going to come and to take profits and reduce risk and he's been wrong this whole time. Absolutely right. You know, the problem is is that we never know when these corrections are going to come, but what we do know is they are going to occur. And the problem is is about the time that you give up on your risk management, that's when the corrections. >> Exactly. Yeah. And this is the whole um uh John Husman bubble markets force you to make a choice. Look like a genius now or look like a genius later. Right. >> Right. >> And uh and it and it's just hard if you take the latter perspective where people just think, well, you clearly look wrong, Lance, because you're missing the party. Right. Yeah. But if indeed the correction happens, then all of a sudden everybody's like, oh my god, Lance was a genius. How do you ever see this coming? And it's like it's like I was telling you guys every week for weeks. Okay. But again folks, we don't know how long this can this broth may last. And actually, Lance, I just interviewed Darius Dale and you know, you know, Dar Darius, you you and Darius are like brothers from another mother in the sense that you guys just live in the data, right? Um, >> yeah, >> Darius has this amazing >> uh deck that he creates and maintains and Lance, it's amazing. I think it's got like a hundred close to 170 slides. And what's amazing about it is not just all the work that goes into keeping it updated, but that Daryus will be talking about something. He's like, "Oh yeah, let me get the slide for that." And he'll enter the slide number in the deck to pull it up. And nine times out of 10, he's right. So, oh, that's slide 132 or that's slide 71 or that's slide three. It's amazing how he keeps all that in his head. But anyways, to your point there about um you said earlier about Greenspan uh about what happened in the late 90s where things just bubbled higher for longer than anybody had could have imagined at that point in time. Darius is saying there are some you know real inflationary pressures right now um largely coming from uh well coming from uh the oil price shock but there also some other ones he said that are separate from there the war and he says if if Kevin Worsh taking the wheels of the Fed or the wheel of the Fed um if he decides to look past those like if he says you know what they're there but to use a bad word for the Fed, they're transitory and decides not to hike. Darius is very confident that the market will then bubble. The whole market will bubble from there. >> Um, and I think that is the risk right now. If you're looking at this stuff and you're saying, "Oh gosh, it's tech's gone vertical. This pig's going to roll over soon." There's a lot of reasons why it probably should, but that that factor that Darius mentioned is another new development here that could get the party kicked into overdrive here. So, you get you do got to be very careful. You know, I think just piling into shorts right now, you know, would be aggressive and it would might be might be imprudent at least until you get clarity on what what worse is going to do. >> So, while while we've been talking, I've been having Claude do some work for me real quick. I've been running this I've been building spreadsheets for the last, you know, few months uh on these on this series of gains. So, while you and I were talking, I just had Claude update my data for me real quick. So, since 1965, there's only been four times that the S&P went nine week straights of gains, which will be today will be the when we finish positive day, this will be the ninth straight week of gains. Um, so only four times since 1965. There's never been a 10. There's never been 11. And in 1985, there was a 12-week advance. So, not saying we can't go 10 weeks or 11 weeks, but the only time we've been longer than nine weeks, it was 12 weeks. That was once in 1985. >> Okay. So, we're in very rare fairy territory. I wonder, Lance, if you can ask Claude, on average, what happened after those four periods? >> Well, I here I'll let me share some sausage with you. So, >> okay. >> I I apologize. This is a a little bit dirty um in terms of spreadsheets, but um so I had it build some statistics for me real quick. So here's the four times that we went longer than sorry went nine weeks later. >> Just so you know, Lance, that's tiny. We can't really see it. Maybe you can't expand it, but yeah. >> Is that better? >> Yeah. >> The problem is this is at the very top of the chart. There we go. So is that better? Can you see this? >> Yep. >> Okay. So in 1985 um this was the one time we went 12 weeks and then it went four weeks later 9 10 11 12 you were up 3% from that 9week advance. Every other time you had a negative draw down over the next week. And the same thing occurs when we take a look at 8 weeks as an example. So here's eight weeks of advances. Normally you have a down week following that except the periods where you went nine weeks. Here's the four the four green ones or the four nineweek periods. So the the bottom line of this is is that nothing is impossible that you can't keep going higher from here. But there's two there's two big takeaways from this analysis. The first is that you typically have a short-term correction after a very long stretch of of advances. But outside of 1989 for instance for this nineweek advance um you know 52 weeks later you were positive in the market. So, you know, and if you take a look at 8week gains as an example, you know, almost every time except 1989, again, you were positive 52 weeks later. So, just because we're very overbought near-term and you have a correction doesn't mean that the bull market's over. It's just a breather within a continuing bull market. The bull market underpinnings are very, very strong. And I wouldn't be betting against that until something begins to happen. either you start to see, you know, economic deterioration of some sort. You start to see um earnings deterioration of any type, which you don't have right now by any stretch of the imagination. Those are getting stronger and being revised higher. Um or you some have some type of credit event. You start to see credit spreads rising. You don't have any of that right now either. So there's the the fundamental underpinnings of the market suggest markets will be higher by the end of this year, but you're going to have a correction most likely between now and and then. And I would suspect sometime, as I've been saying, you know, really for the last four or five weeks, I expect a correction, but I expect it sometime later this summer, probably, you know, July, August, Septemberish. >> Okay. Um, yeah, like I said, uh, I think it's going to happen in a week and a half, right in the middle of your, uh, your your pasta eating adventure, but we'll see. Um, and and only because you're on vacation is why I'm I'm saying that. Um, I got to say, Lance, looking at these at those tables, um, yes, it it it supports the point you're making, which is, you know, right now it seems like the skies ahead still look pretty blue. >> And so, yes, there'll be a pullback at some point in time, but it'll be within the current bull market rally, and then, like you said, things seem um more likely than not, uh, the bull market will continue. Um, >> oh, and by the way, just to back up, I completely agree with Darius. A, I don't think the Fed's going to hype rates, and, you know, I don't think they're going to cut rates either, but you know, they are continuing to buy a lot of short-term bills. Why would you buy long-term? Why would you buy long duration bills at a higher rate at when when you expect rates to come down, right? So, it makes complete sense buying short-term bills, but that funds directly into the banks, which are loaning that money out. If you take a look at at uh bank lending, bank lending is taking off right now because the economy is strengthening. You got a lot of product productivity going on in the economy. And this is the one mistake. You know, there's a lot of people that quote Milton Friedman all the time. They're like, well, I saw you comment on this this morning on on X. You know, Milton Freeman says that inflation is always and everywhere a government phenomenon. The problem is is that's very misqued because you have to read the rest of what Milton Friedman said, which is at the end of that statement. He says as long as it's productive and what you have right now is very productive investment. So that creates economic growth without a substantial rise in inflation. So that's what's happening and you're seeing that happen right now. The short-term bills are funding bank lending which is going out into the real economy which is why we're printing pretty good economic growth, >> right? Um, and we've talked about this and, you know, at the beginning of the year I was taking the over on economic growth and I think that's still going to play out. Um, unless the war totally metastasizes from here, but I think it'll my probabilities will go even higher if the war actually happens manages to end relatively soon too. Yeah, we just a lot of strength in a number of factors in the economy here. Is it completely widespread, folks? No. But um we're definitely seeing um a lot of good positive momentum in a number of different parts of the economy and you got to be careful of discounting that. >> Well, that's what because that's what's fueling earnings and earnings is what drives markets, >> right? And you know I I asked Darius this um because he was talking about you know the strength in the market and particularly the strength that we're seeing in the um in the AI sector and we talked about you know how much is being spent which you and I have gone through the charts here you know almost a trillion this year or trillion two or something next year and and even more than that the following year with that wave of spending. it is really hard to make a case that the economy is going to fall into recession because you just have so much money entering the real economy. And then to your point, there's also the bank lending that's coming on from the short-term uh treasury purchasing. Um so, you know, again, >> you have just a ton of liquidity in the markets. >> Yeah. lot lots of reasons to to maintain our long-term macro concerns that we have, but in the immediate term, there is so much adrenaline being shot into the patient, it's hard to expect him to fall into a coma. Let's exactly put it that way. >> And again, you should be cautious. You're absolutely right. And and again, you know, what we're what we're trying to do is, and again, because I always get a lot of comments after I do a show with you, it's like, you know, you're just always bullish. You're like a permable bull. It's like, no, I'm not. I'm actually very bearish on the overall market. is just I have to invest with the markets. I've got to make my clients money. So, I have to segregate out kind of the nonsense from reality and say, okay, this this is a valid concern, but it's not a valid concern right now and focus on what is driving markets. And at the end of the day, the only thing that matters is earnings, and that's what the markets price off of. So, until it affects earnings, it really if whatever whatever worry you have, all you have to do is boil it down. Does this worry I have affect corporate earnings? And if that is not a direct line between those two, don't worry about it. It's not important. Focus on what drives earnings. >> Okay. And I want to I want to get your opinion on that in just a second on something related to that. Real quick, just to finish my earlier point. >> Sure. >> Um you you see whatever pullback we have is is very likely to still keep us within the uptrend channel. Um and then things will recover. >> Those tables that you were just showing, I was kind of shocked. Um there didn't seem to to be any real material corrections after these eight or nine week runs in the markets. I mean I it looked like on average maybe the first four weeks they're down like 0.5%. And then most of them were green thereafter. I didn't I was expecting to see like a down 7% or 12% or something. I I didn't see that in the data set. >> No, you don't. And and again that's the that's the problem with momentum. And also too, you have to remember how that occurs. So for instance, let's just say this hypothetical example. You wake up on a Monday morning and the markets are down 3%. And then the markets are down 4% on day two. So now you're down seven and then the market rallies back by Friday and you're only down 2% for the week. That's that's how that registers, right? So that week only counted as a 2% decline even though volatility was a lot higher. and and and so again when you start looking back at at these data sets one thing that we learned from these what so so these movements in the markets where you have week after week after week of of an advance is called a bullish stampede um same thing occurs when you get into a a kind of a trending correction the markets where week after week markets are down that's a bearish stampede bearish stampedes are fairly short in nature three to four weeks at most bullish stampedes tend to run between four and eight weeks uh on average and that's so when you get to eight nine weeks as I was showing you get pretty long that that bullish stampede is getting pretty pretty long in the tooth but that also shows you there's a lot of momentum behind the markets and there's a lot of of greed in the markets right now speculation's very high retail investors are you know buying every little dip you know every time every time semiconductors dip you know you wake up one morning and and you know AMD or Micron will be down six 7% in the morning by the afternoon it's back up near even. That's because retail buyers are just stepping in to buy every little dip. That that psychological narrative of the markets is very very hard to break and it really takes a lot to to break that bearish stampede and turn it negative. And that's why when you take a look at those longerterm outcomes, you have a short-term correction in the markets, but generally over the next 24 to 52 weeks, markets are generally higher almost 100% of the time. >> Yeah, I get that. I was more shocked on the four weeks and >> 10 weeks and 12 weeks. Let me let me ask you this though. Is it different this time? >> Um because tech is such a big part of the indices and um this is really just a tech rally as you were saying earlier on. Right. So, you know, when you were showing us the chart of the semiconductor index and you basically said, look, that thing's going to eventually go down to the I can't remember which moving average it was, but >> yeah. So, that that's that's not a >> sideways that that is a correction. And the whole Bob Ferrell thing too, right? You know, vertical moves don't correct by going sideways. So, could it be more different this time? >> Sure. And look, anything >> Well, it could. Anything could be, but yeah. You know and again when we take a look at markets the only thing that and then this goes back to narratives and headlines and those type of things you know this is why when we start doing work you know we do a lot of this analytical work is like okay when this has happened before what's been the normal outcome because it's very easy to go oh well because this went straight up it's going to go straight down and that's not necessarily the case. um you know, you're going to have a correction that we know um historically, statistically, you always have a correction. The size and the magnitude of the correction is always is always kind of the the you know, the variable. You never know how how big that's going to be. Sometimes it's bigger, sometimes it's not. Um you know, and and like for instance, a good example is the correction we had back in uh March, April. You know, we were down 10%. And think about what was going on right there is that you had, you know, we're bombing Iran. You've got the the straight over moo shut down. You got oil prices going to 100 and all you got out of it was a 10% correction. I mean, that was that was textbook for all the bears out there. That was the textbook setup for a 30 40% correction in the markets. But it didn't happen because of liquidity, because of support, because of of speculation in markets, etc. And what was priced in very quickly is the impact of forward earnings. You know, oil prices don't have a lot to do with Google's AI revenue >> with with sector. Yeah. >> Yeah. But there's some there's some impact for sure, but the markets quickly looked through that and said, "Okay, you know, that's not going to really impact them much." And same thing for semiconductors, etc. It's like despite what all else is going on out here, the sectors that are most impacted by oil, Walmart, Costco, Tesla, um you know, those companies are getting hit by high oil prices because of production cost, input costs, those type of things. And and you know, you've seen Walmart under a lot of pressure lately. Consumers are having stepped down. Costco just reported some whopper numbers this morning on earnings. Their stocks down 4% today over concerns about the consumer, right? The consumer slowing down. Personal income, real personal income is on the decline for three months in a row. Uh consumers are taking out more credit cards than ever right now. We're just seeing that, you know, the number of credit cards from consumers ramping up. So, there's certainly some concerns. If if you saw a GDP report this week, that was came in at 1.6%. that was revised down from the 2% first print and that almost entirely came from an uh from a decline in personal consumption and a little bit from inventory adjustment but most of that reduction in GDP growth was all personal consumption getting a lot weaker. >> Okay. Um All right. I want to talk with you about the consumer just a minute. I'm checking GDP now as we're talking and it actually that has come down for Q2 a little bit. It was at 4.3 the other day. It's now at 3.8. Um, and obviously that's a moving target as more data comes in, but but um it's it's actually still pretty high GDP number relative basis, but to your point, Lance, maybe some of these things might start dragging it down. Who knows? Um, all right. I I uh I wanted to bring this up real quick um about your your point about earnings. Um so I agree. um it doesn't matter until the earnings estimates start getting written down. Right. >> Right. >> Um and so you know what I'm about to show you isn't going to matter until it matters. Um but I just saw this chart today on uh this chart by the Financial Times. I saw this today on X and I just wanted to get your thoughts on it. Um so implied return on hyperscaler AI investment uh for the next uh five years assuming zero costs and you'll see here it's negative for all these big companies. I think Amazon's the only one that has a positive imputed uh ROI here and um so I guess the point here is just you know right now everybody has their own opinions on what the future AI is going to be. Um but but this is basically saying, you know, under the best case assumptions here. Um it's still unclear what ROI these firms are going to get from all this massive spending that they're currently doing. >> Be real careful with that. I I I saw that chart. Um >> and I'll be careful with that. I just wanted to put it up here. >> Yeah. No, no, no. I think it's fine. Um but I don't really understand how they're calculating the implied return. Are they simply looking at, hey, I if I spend a dollar on building out a data center, what's the return on that dollar? And then, you know, are they accounting for depreciation, amateurization, you know, all those type of things. Um, I'm not sure how they actually came up with those numbers because again, if you take a look at, you know, the actual revenue growth of these companies, it's telling you something different. I mean, the revenue growth in Microsoft is not declining. It's still growing and pretty strongly, right? So, how I'm not sure how you separate out one line item and say, "Okay, that's your negative return on that assumption." >> Yeah. I I don't I don't know how they're doing it either. But, um the argument that at least the guy who's posting this chart here is saying is this is kind of what we would expect um if this techn technological buildout follows previous cycles that we've seen, right? You and I have talked about this, you know, internet spectrum, radio spectrum, railroads, etc., right? So, um I I guess the question is is not knowing exactly how this was imputed, let's just assume this is correct. Yeah. >> You know, at some point here, earnings estimates are going to have to start getting written down as people say, you know what, there's not as much immediate gold here as we all thought and the gobs of money these guys are spending. it's going to take longer to get some sort of return off of that. Then that would that that's where you then get to the 30 40% type of correction that you were talking about, right? >> Yeah. Yeah. No, then I think that's a look are are probably assumptions ahead of reality. Absolutely. I mean, we saw that in the internet bubble. We saw that, you know, in in other places as well. Um, but this is and again until but until you start to see those revisions, this is what you know, >> it doesn't matter until you start to see them. >> So, this is global GDP growth. This is global earnings growth versus real GDP growth. And you know, you can see the high correlation between these. So, as long as you're getting economic growth and and again, I think probably the second quarter estimate by Atlanta Fed's going to turn out to be too high. It'll, you know, the actual number will be probably two and a halfish for for the second quarter. We'll see. But nonetheless, if we if we start growing ear, you know, real GDP growth, inflation adjusted GDP growth at three, three and a half or 4%. Then all of a sudden, these earnings make a lot more sense. If we don't, these earnings are going to have to correct. >> Yeah, but those are very correlated, right? I mean, don't the don't the earnings factor into GDP? >> Well, they the earnings are a function of GDP. >> They don't. >> Or is it the other way around? >> Yeah. Yeah. >> Companies make the money and then GDP grows. >> Yeah. GDP is what creates the earnings, right? So 70% of GDP is what? Consumption. Where do earnings come from? Consumers buying stuff from the companies, >> right? But hey, sorry, sorry to rattle hole on this, but the companies make the money and then they they calculate the GDP off of that, right? >> No. Because because that's where that's where the value is initially created is a consumer goes and buys something. The company then has earnings as a result and then GDP is kind of a conglomeration of of the all the earnings activity in the economy. >> Okay. Okay. Wait. Okay. I see where you're going. So So yes, production comes first. I have to go work. I get paid a paycheck and then I go consume in the economy. But the GDP calculation is a trailing look at personal consumption, business investment, government spending, and exports. >> We're we're there. I agree. Thousand%. Yeah. The actual stuff has to happen first though before GDP gets calculated. >> You got to go to work and make a paycheck. >> Okay. >> But but yes, earnings though ultimately I make a paycheck. I go produce a product. That product has to get sold. that that product getting sold to another consumer is what creates the revenue for the company in order to pay me a paycheck. >> Yep. >> Right. So that's where the earnings come from. >> Yeah. No, totally agree. And the reason why I was asking is because a as earnings are starting to really increase here, we would kind of expect that real GDP growth would will have to follow because if earnings go up, GDP needs to go up. Correct. >> Yeah. And normally these are very like you can see here back in 1516. >> You saw a very the economic growth was declining. You saw a really big jump. This was in uh kind of early 1516. We the Euro crisis was resolved and everybody kind of got back to work and you saw this really big jump in earnings growth and GDP followed to your point. >> Yep. Okay. Um I want to get to uh something you wrote this week. So, we've been talking about pullbacks, but you know, likely still in the same bull trend channel, all that type of stuff. >> Um, now folks are concerned that um either because valuations are so high or because oil is still stubbornly, you know, 90 100 bucks a barrel and we don't know when that's going to come down. I do actually want to talk with you a little bit more about oil in a minute. Um but there there are there are reasons why you know you and I we're we're still concerned on a high level macro level for the longer term, right? Um people are concerned that at some point we're going to have another bare market, >> right? Um and you know, you're still somewhat concerned about the direction of the market because you have a bull and bear behind you today. It's not all bull, right? But you recently wrote a piece sort of as a sort of a thought piece of like are 20 plus% corrections obsolete these days. So I just want to give you a chance to to talk to folks about >> that thought exercise. >> Yeah. So the what the article goes over is like you know every time we have a correction. So you remember last April we had a a 19% correction like 19 and a half% last April liberation day. And the media was I was like, "Oh, we're in a bare market." And then back in 2022, we were down 25%. It's like, "Oh, we're in a bare market." Because the markets were down 20%. >> Right. And sorry to interject, but isn't kind of conventional wisdom a 20 plus percent drop in the market is what they will refer to as a bare market. >> No, actually conventional wisdom is is that this was something that was done back in the 1960s. Alan Shaw, he worked at Smith Barney at the time in the 1960s and he came up with this definition for a bare market that we haven't updated since the 1960s and he he said basically a 20% decline is considered a bare market and back then because markets were more normal a 20% decline would actually break the bullish trend of the market. So a bull market is when prices are trending higher a bare market is when prices are trending lower. So until you break that trend, you're not technically in a bare market. And so again, we just never really updated it. And the only reason that we've used that since then is because it was easy for people to remember, right? So it's just like, okay, 20% decline, that's a bare market. We're just going to go with it. The problem is today is that 20% declines no longer break the bullish trend of the markets. And so here, let me share you that I'll share with this this chart. >> All right. And while you're pulling it up, I just got to say I love talking to you, Lance, because I'll say something like, "Hey, isn't conventional wisdom that 20% decline in the market is a bare market?" And you'll say, "No, because it's about this old thing where 20% decline in the market's called a bare market." So, you basically tell me I'm wrong and agree with >> I'm telling you, you're right. That that's But no, you said 20% or more. And the reason I said no was is because the the it's actually just 20%. >> Okay. Okay. >> Right. That's what I'm sorry. Apologize. That's what I mean. But no, this is why back in in 2022, you know, we were in a bare market and according to the media in April of last year, we only down 19%. But they were all calling it a bare market because it was close to 20. >> So the the demarcation line is is 20%. But so so what this >> you're just saying it's not relevant anymore. We need to update it for our modern era. Yeah. >> Right. Right. And and so again, what defines a bare market is when you break the preceding trend of the markets. So if you look at 2007 as a good example from 2002 to 2007 you had a very bullish trend in the markets and then you completely devastated that you gave you gave up all your gains plus more and you had basically you know over almost a year's worth of declines. So the market was trending lower month after month after month uh during that entire bare market. Same thing in 2001 and two you broke the bullish trend of the markets and had a bare market decline. Markets were down 47 and 57%. So at that point, those definitions of bare markets made sense because the 20% decline did break the previous bullish trend of prices and you were actually in an actual bare market. However, since 2009, because of all the financial interventions and zero interest rates, etc., we've had repeated corrections, but if you look at the trend of the market, we've never actually broken that bullish trend. We've had nice corrections along the way. uh you know 20% 34% during the pandemic etc. But we never broke the bullish trend of the market. So we've never had a period of time where prices were trending negatively. And this is why so many people today they don't understand they they you know they talk about a bare market. It's like oh we need a good bare market. It's like dude you have no idea what a bare market actually is. You've never seen one. And then, you know, unless you live through 2008 or through 2001 and two, you have no idea what a bare market is or what it does to your portfolio. >> I'm going to flag this just real quick. So, this we're going to talk about this in the rant. So, folks, just pay pay close attention here because this is going to be really relevant to the rant. >> Yeah. And and so, you know, having not ever been through a bare market, you have no idea what it is. The point right now though is is that a 20% correction from here would not it would barely register. We're 83% above the long-term trend line. In order to get back to that trend line, we're talking and you'll still be in a bull market, but a 40 to 50% correction in the markets, you're still in a bull market because you still won't break that trend line. To break that trend line, it gets much more serious. Now, again, this is all in just in in just mathematics. And when you're in a 50% decline, everybody will classify it for sure as a bare market. I'm just saying technically from a trend line perspective, we are so deviated, a 20% correction is not anything near a bare market. It's going to be 30, 40, 50% at some point that we're going to actually classify something as an actual bare market. >> And and and that 20% is going to feel awful, >> terrible. It's feel like a bare market, >> right? is going to feel terrible, especially to a market that's just so used to these shallow flesh wounds and and but that 20% uh that's going to feel just catastrophic. >> I don't know what how you want to describe it when it gets to down 40% 40 plus%. >> I know >> it's unimaginable to today's investor, I think. >> Exactly. But this is so this is just the S&P versus the 36-month moving average. You can go build this on your own to to to see it for yourself. But here's you broke that 36-month moving average in 2001 and two. So here's your bare market. This is an actual bare market. Broke it here in and really kind of June July of 2008. There's your real bare market. Since then, you've never broken it. And now again, going back to what we're saying is this deviation is so big. You know, you're going to have to have a correction back below. you're be at like 5,500 on the S&P before you even start getting close to the 36-month moving average, much less, you know, longer term bull trends. So, >> it's crazy to me because that wasn't all that long ago. >> No, it wasn't. It wasn't. But that's how that's how deviated these markets have gotten. And and by the way, we've never had deviations in the market like this ever before. This is we are in historical territory in terms of long-term long-term market deviations, etc. from, you know, means and those type of things. And eventually those are going to those will reverse to to some degree. And but but again, you're going to need, you know, something, you know, financially related to the markets of some sort to cause that be credit related event of some type, but you'll eventually cause these type of corrections. There's a table I put together just showing, you know, peak to trough declines and the recovery times. So when you get into a real bare, this is what I was saying earlier and to to the rant you want to have. If you've never been through a real bare market, you don't understand the damage it does to your portfolios. It took seven years after the dotcom crisis to get back to even it took five and a half years after 2007209 to get back to even and then to get you know your recovery time you know ultimately from 2007 it to sorry from 2000 if you were in if you invested your first dollar January 1st of 2000 it took you till 2013 to get back to even that was 13 years of no returns but you know you start looking at the recent corrections yes they were big numbers 34 24, 25 and a half, you were back to even in five months, 18 months. These aren't bare markets. These are corrections within a bullish trend because bull markets correct corrections very quickly. Bare markets take a long time to reverse the psychological damage that occurs. >> Okay. Um man, I want to get to this rant um quickly, but um and maybe we will folks, maybe this one will be a little bit shorter than normal. Um, so, okay, three quick questions before we get there. One of which is going to be your trades. Um, last week we talked about, um, the the growing concern, at least in the headlines, of um, oil inventories um that were starting to, you know, basically run out of the slack that was in the system. Um, that is continuing. Um I I would say I'm beginning to read more and more pieces that are just plain old alarm. Um that even if a deal is struck right now, uh piece still struck and the straight of Hormuz opens right now that there is enough sort of damage to oil inventories that oil is going to remain a lot higher for a lot longer than people expect. It's going to be a big drag. Do you still feel as as unworied as you were last week because hey, look, the the market knows and it's future oil future prices aren't that bad. Um or or as some of these alarm pieces I'm reading are saying is the market is mispricing this. >> It could the market could be mispricing it. Um markets generally aren't too wrong for too long. >> So, you know, but oil prices are down today. We're at $87 a barrel on West Texas Intermediate crude. And so for right now, the markets are certainly saying that, you know, these concerns are probably not going to be that big of a concern. Something will happen and, you know, oil supply will come back on. I don't know. Right. >> Okay. You know, >> one of the reason I ask you is because you just live in Houston and so you get swing a cat, you're going to hit 10 oilmen. So curious to hear what you're hearing. >> It's pretty much true. No. And there's certainly a lot of concerns. I've talked to the people I've talked to are certainly concerned about it. Um, you know, CEOs of Exon Mobile and Chevron have both come out and kind of warned about the the oil supply issues and and what that potentially means, but again, the market knows about this already and the markets don't seem overly concerned and futures contracts aren't spiking up sharply yet either. So, you know, maybe I'm missing something um that, you know, because I'm certainly concerned about the inventory levels as well. I'm certainly, you know, certainly concerned about the impact of that, but I keep looking at the oil market and the oil market doesn't seem to to be too worried about it. And again, you take a look at oil prices and what's happening with energy stocks as well. These stocks should be printing money right now. Why why aren't energy stocks surging through the roof right now and they're not. They're they've been under a lot of pressure over the last several weeks. I mean, we we're long some energy stocks just for this reason of high oil prices are going to benefit their revenues, but the market's not seeing that right now. So, what's the market looking at that I'm missing? That's the big question. >> Okay. Um All right. Well, folks, we'll we'll we'll keep watching this, obviously. Um All right. So, I'm going to slip in one other one. Um credit spreads, bond yields, etc. Is there just anything going on in the bond market we need to talk about right now, or is it pretty much the same where bond yields are slowly coming down, credit spreads still aren't doing much? >> Uh credit spreads aren't doing anything. Um, bond yields after just a brief concern over the spike in oil have completely reversed all that. So, we're back to pretty much where we should be in terms of yields. Um, I talked about a couple of weeks ago on the radio show that we were likely this is right when oil there was a lot of article headlines about yields, you know, at 5% those >> and I was like this is probably a great buying opportunity and it turned out to be a really good buying opportunity for bonds. >> And you didn't buy as much as you had hoped, right? >> I didn't didn't. I didn't. I missed the trade. So, we'll have to catch the next one. Um, but but again, back to oil prices, if oil prices were, you know, if the market was predicting in much higher oil prices, that should be reflating back through inflation expectations and those aren't rising either right now. So, you know, again, when you start looking at kind of the macro data from different perspectives, there certainly doesn't seem the market doesn't seem overly concerned about what's going on with oil as much as a lot of the guys writing the headlines in in the media. >> Media. Okay. All right. I'm going to ask you two different scenarios. >> Sure. >> This is all narrative, so I know you're going to say, Adam, it doesn't really matter. Um, but um >> and always narratives matter. Just be careful how you weigh them. Okay. So, two scenarios with the war. Um, one is Trump gets everything he wants. So, we sign this memorandum of understanding. Um, we don't know exactly what's in it yet, I don't think. But, um, but let's say what's in it is Iran gives up its nuclear material. Um, and it seems credible. There's credible provisions in there that's going to that it's not going to enrich going forward. Uh, the straight her permanently open to free passage. um uh Iran can't fund its proxies going forward, right? So, let's say Trump gets all that and this is signed today and you know peace reigns tomorrow. Oh. Oh, and all the Gulf countries, even including Iran, join the Abraham Accords, right? So, I'm I'm going for everything, right? >> It's a big but the market's going to scream if that happens. >> That was my question. Okay. All right. You think the market will indeed scream because I know you generally have said geopolitical events don't really matter all that much to markets but you think the market would definitely have a party on that. >> Oh yeah. At least for a day or two, right? For for sure because this has been such a headline driven event that you know if if and again you're talking about a major sea change in terms of geopolitical policy. >> Absolutely. I'm going for the best case scenario here. >> Yeah. I mean that this would be you know this is the best of all world. This is peace in the Middle East. This is this is a whole new world kind of a game plan that starts at that point. So yeah, no, the dollar is going to rally strongly. The markets are going to rally strongly. Oil prices are going to club like a baby seal and and you know, we're going to be off to the races in terms of of the markets itself. And it should translate back over decently into better economic sentiment as well. And so we should see consumer sentiment actually start to pick up a bit on on that kind of news as well. >> Okay. Um what are the probability that folks? I have no idea. Um probably not super high that it's it's the best best case scenario. All right, so let's let's flip the script. Um Trump uh posts on Truth Social in an hour. Um I have torn up the memorandum of understanding. These guys just don't get it. The only way they're going to learn is through force and we are going back to full scale kinetics, US and in Israel. What happens >> oil prices to 110 120 markets going to decline. Rates are going to pick up on bond yields. So, um, pretty much you don't want to be long much of any asset if that happens. >> Okay. Okay. So, good, good point. And to the extent that it looks like it's going to continue, you know, it it's not a weak event that okay, the summer is going to be war. Um, you imagine that this would have prolonged impact, you know, through the next >> If we get back into a kinetic war with with or I shouldn't say a war because nobody's actually ever declared war. This has been a military. >> Oh my god, you're g you're gonna ignite the comment section here. Let's just colloquially call it a war because it's nations that are shooting ballistics at each other. >> It is, but nobody no Congress has never officially declared war. I mean, so it's not technically a war. It's military operation. And so from that standpoint, but yeah, I mean, you know, if you start getting back into that type of military operation, you know, look, gold hasn't been a hedge for it. Stocks haven't been a hedge for it. Bonds aren't going to be a hedge for it. So you better be in cash. >> Okay. Um and >> and obviously be long defense stocks, be long uh probably finance stocks, probably be long healthcare at that point more defensive in general. But you know, defense stocks are going to do great because you got to start resupplying the military. So you know, companies like Palanteer, Rathon, General Dynamics, those will probably do very well and and energy stocks will do well obviously because of oil prices. >> Because oil prices will be elevated. Okay. Um, now those aren't the two only options, but but generally peace deal versus return to kinetics do feel like the the the two main options that are here. And it feels like we've gone far enough on the timeline >> that we're we're going to hit that fork sooner than later, right? >> Probably. >> I mean, look, I think honestly what's going to come down to is we're probably going to get a peace deal done >> and it's not going to be anything like everybody was expecting. It'll probably be, you know, regain some control over the straight moose. I don't know what they're going to do with the nuclear side of it. >> I think I I think right now it's looking like they're saying it I think they're looking for a commitment, but then it'll be 60 days to figure out how it's actually going to happen. >> Exactly. And so I think eventually we're going to get to an agreement that is an agreement of some sort, but it's it's going to be a potentially a halfway measure between what everybody wants and, >> you know, what Iran wants. It'll be something that's negotiations though, right? You never get everything you want, >> right? Each party leaves feeling a little disappointed. Yeah. >> And and and it'll be that way. It'll it'll be a deal that's done and nobody's gonna be happy about it. And you know, if you're depending on what side politically you lean on, you're either going to hate the deal or love the deal. So, um, whatever deals occurs though, if it does reopen the straight or remoose, then stocks should do well, bonds should do well, oil prices will drop, and gold should actually probably do well in that in that environment as well. Okay. All right. Um, and we'll see. And folks, again, we'll be tracking it every week on this channel, although not with Lance next week. We'll be doing it with uh >> No, I'll be here next Friday. >> Okay. Sorry. Two weeks. Uh, two weeks from now, it'll be with Michael Liowitz. Uh, because you will be on the beach. Um, >> he's much more bearish than I am, so you'll love him. >> Okay. Uh, okay. Uh, just staying with the Trump theme for a second or the administration theme. So I I guess this week is the launch of the Trump accounts um you know which are basically accounts where every American born uh the government will put a little bit of money uh away for you to then compound over your life. Um and uh your parents, your family can continue to uh contribute into these trump accounts and there's incentives to do so. And and the hope basically is that we are making people a little bit more financially literate and we are increasing the number of people that get to participate in the wonder of our financial markets and to let uh compounding work in their favor from time zero, right? Which is when it can make the biggest difference over a long period of time. Um so I I will say Lance, I'm I find myself kind of mixed on this topic. Um but let's assume for a moment that it's a good thing and it's going to happen. Um you know Mike Green's passive bid, right? The giant mindless robot. >> Does this just increase the size of the giant mindless robot? >> Yeah. I mean you're just adding you're just buying in, you know, adding more passive index buyers. Look, there are more ETFs right now than there are stocks in the market. >> Right. Right. All I'm saying is there's all that and then on top of that we're layering, you know, the sort of I don't want to call it forced buying, but this mindless buying by every new baby that gets born. Right. >> Exactly. Well, and again, you know, we've look, we've tried this before. You'll remember that Obama tried to have the IRA accounts set up >> and the Obama accounts and they failed miserably. And I'm not saying these are going to fail miserably, but you have to go apply for this. And the and the problem that we have is is that yeah, people listening to your show right now, that's great. You know, hey, I'm I'm already talking to my wife, you know, we need to have four more kids so we can get four four of these accounts in, right? You know, the people listening to your show, they'll go apply for these. But for most people, they are totally unaware of this type of stuff. And >> so there's not, you know, I I think the uptake on these will be okay. I mean, I don't think you're going to see this massive surge in accounts. Maybe I'm wrong, but I think that most people when they're having babies, those type of things, they're not real aware of, you know, all these other benefits that are out there. And after this administration is over, this will probably kind of fade into the background and to a large degree. It won't be, you know, and after kind of this initial, you know, talk and we're all like talking about it, those type of things. You know, once it kind of falls out of the headlines, most people aren't even going to be aware of it. And so they're not going to know they need to go apply for it unless somebody tells them like their financial adviser says, "Oh, by the way, you're having a baby. Go get a Trump account." >> Right. That'll be great. >> Right. >> How many people >> Not a lot of people in the inner city who've got a financial adviser that's looking out for Yeah. >> Yeah. I mean, you're always talking about the wealth gap. I mean, you know, when you got 50% of the population that makes that owns two two and a half% of the wealth, how many of those you think are going to apply for a Trump account? Look, I think these are great things and and I wish everybody that has kids would, you know, get out there and open one up for them and get money contributed to it and and add to it every month. Just the reality is, this was the problem with the Obama accounts is like here, you can have this IRA and you can contribute money to it. People aren't saving any money to start with. That's the whole problem we've got going on in the economy is nobody saves any money and then we complain about the problem of not having any money. So is is this is this something where like maybe the intention is good but the outcome is the opposite, right? the unintended consequence where to your point the people who are taking advantage of it are the people who need it the least and so therefore they're gaining even more advantage. And then to my point um to the extent that it's taken up at any scale, it contributes to the the passive bid which drives up the price of assets which further separates those with assets from those who don't have them. >> That's right. Well, yeah. And and again, you know, who are the people that are going to have Trump accounts? People that understand the financial markets. People that already are in the top 10% of wealth earners that that own a big chunk of the of the stock market wealth, right? They're smart enough to know about these. And so when their kids have kids, they're going to say, "Oh, make sure you go get your Trump account and I'm going to fund it and you know, we're going to help you." But you know, again, the this is going to really just inflate the wealth gap more probably than it would help it. >> That's what I'm saying. And the funny thing is is at least its stated intent is to help with the wealth gap. Like let's get everybody who isn't a gazillion there, at least let's get them into the market and we'll give them some money to do so. Right. >> Look, and don't get me wrong, right? I'm not bashing it. I think it's a great idea. I think it's awesome. The Obama account was a good idea. >> Well, maybe maybe a good idea in theory, but not in practice, which is what we're sort of putting our finger on here. Yeah. >> Well, exactly. It's just like 401k plans. You know, I you hear a lot of of stories about it like, oh, you know, everybody contributes to a 41k plan. No, they don't. It's only about 25% of the working population because 50% of the working population don't have access to 401k plans. Of the 50% that do only only 50% of those actually contribute to them and most of those only contribute the minimum amount. So, you know, they're not take the average American isn't taking advantage of all the financial opportunities that are out there. And again, this is back to our conversation about the the wealth gap, right? I've got a whole article I'm writing on this for the next couple weeks. Um, but you actually dig down into it and a big function of the the wealth gap is simply a function of people not managing their finances well and they're not taking advantage of these opportunities that are given to them and they're overspending. They're in credit card debts. They're making all the bad financial decisions that's keeping them from building the wealth and moving up the ladder and and moving from lower class to middle class to upper class. >> Yeah, but this is a good segway segue into the rant. Um, but I just want to note too, you're putting your finger on, Lance, the core problem you're putting your finger on is why I created thoughtful money in the first place. >> Um, which is we just don't teach financial literacy and our education system, which is so mindboggling to me because again, you ask people, why do we value education? Well, because I think if I go to school, I'll be better off. Well, what do you mean by being better off? Well, I'll probably be wealthier, right? Okay. So, why doesn't our school teach you about money and investing? Right? It's just bananas, right? Well, look, it it's it's a really great comment. So, last weekend, my son brought home his girlfriend from college. Super sweet girl. She's very smart. Um, she's got her head on straight. She's getting a good education. She wants to start her own business. Those type of things. And so, we were just talking about some separate things, some different things. And we got onto the subject of taxes and and talking about taxation and how taxation works. and she's like, I don't understand why, you know, why we pay taxes. So, I was just explaining the function of how government needs revenue and those type of things, >> right? >> But once we started digging down more into, you know, kind of the the the issue is like, okay, well, look, as you grow up, >> you need to open the first thing you need to do right now is you're making money now. You need to go open up a Roth IRA and start putting some money into your Roth IRA to grow taxree. And she goes, "Well, what's a Roth IRA?" And I'm like, "Okay, well, let's step back and let's talk about what a Roth IRA is." Well, why would I do that? and and so because this will save you taxes in the future. Well, what do you mean it'll save me? So, I mean, this was >> and she's she's this a smart girl in college, right? >> But nobody has ever So, she's 22 years old. >> Yeah. >> So, no one in her educational past had planted any of these seeds >> and I mean and just knew nothing of And look and this is this is my point about this is she's not abnormal. >> No, no, no. She is by far the norm. >> She's the norm, right? We don't teach this stuff. And again, you know, if you're watching Thoughtful Money right now, you've got your own opinions, right? You read your own stuff. You've got your own opinions about inflation and markets and those type of things. And my job is not to convince you any differently. That's you do you, right? But you've got a vested interest in your money and what you're doing. That's why you're spending an hour on Saturdays watching a show like this. You >> two hours, but yeah. >> Yeah. You are a very small minority of the US population, right? people that actually have money are watching finance shows because they're bored, let's be honest. Um, but that's a very small percent. The vast majority of the population doesn't know the basics. They just, you know, and we got in, we talked about credit cards. Well, I was told I had to have the credit card to have a credit score. And I was like, nope, not at all. And this is why you're in trouble with your credit score and we got to get that we'll get that fixed, but this is how we're going to fix that. and uh you know so just going through all these mistakes that you know young people make because nobody's ever given them the the right information to start with. >> Yeah. It it it is well it's so criminal and that's why I do what I do and it's what you do what you do. you do. And and um we'll probably talk about this a little bit in the rant in a second, but um you know, kind of my main message for folks is there's a lot of things out there that are really frustrating, right? The wealth gap or if you're, you know, especially a younger person and you know, you're frustrated by some of the headwinds your generation has, which Lance and I disagree somewhat on, but but assume I'm right. um uh you can't control what is happening at the macro level, but what you can control is your individual personal destiny, right? And and that's where the opportunity lies in this, which is, you know, even if some of these macro headwinds do play out the way that we we we're concerned about, you can make yourself much less vulnerable to them and be much better off on a relative basis by employing constructive behaviors earlier in your life around your money and your finances. And that's what we're trying to help you do here. >> That's right. >> So, okay. Um, let's get to the rant. Um but quickly before we do, Lance, what trades, if any, has RA made over the past week? >> Um the only thing we did this week is like I said earlier in our platinum. So understand that when generally when I'm on the show with you, Adam, we talked about one model, which is our kind of our 6040. >> It's kind of a whole bunch. >> It's it's it's a one-sizefits-all model. And so it's a good proxy for kind of what's going on in the markets. And it has bonds in it, so we talk about interest rates, and we has stocks in it, so we talk about the stock market. that we run 85 different models >> clients and one of them is called our platinum model which is for our high net worth clients and it uses options as well. So in that portfolio um we were buying put and the reason I say that is I have a lot of clients that watch the show on Saturdays but we didn't do that in my account it's like because you're not in that model. So but in that model um we started buying a lot of uh not a lot longated S&P 500 puts to hedge in our second rotation model which we launched at the beginning of this year and that portfolio is doing exceptionally well. We we went in and rebalanced that model this p past week. It's still on a value tilt. We We haven't gotten the value back to growth tilt, which is interesting because the reason that hasn't occurred is Micron is actually considered a value stock in the index. >> Was >> No, no, still is. >> No, I know it is, but it's it's just it's Yeah, >> it is, but it's up 500%. So, you know, it's it's just, you know, but it's that micron is distorting the value index um because of of how it's classified. But anyway, so we haven't we haven't rotated that back to to growth yet. That'll eventually occur and that'll occur most likely when value when Micron begins to correct because I'll hit the value stocks and and growth will rotate back. So um but it's very interesting. I mean that like I said the portfolio is up um what's it doing this year so far? Hold on, I'll tell you. Um because again we launched that one on January the 1st of this year and that portfolio is up 14.3% year to date. >> Okay. versus the S&P is like 10 11 >> 10ish. Yeah. >> Yeah. >> So, >> okay. Um All right, great. And so that that's pretty much it for the week. >> That's that's all we did this week was a rebalance on the on the rotation model and then the uh the puts on the platinum model. >> Okay. All right. Well, look, let's get to the rant and then let's we'll wrap this up. So, Lance, I kicked over such a hornet's nest uh unintentionally on on X Twitter um this past week and um so I saw this um this post from Unusual Wales talking about a poll that was done saying Americans are feeling worse about the economy now than they were during the CO 19 pandemic, the financial crisis, and following the 911 attacks. Okay. They're talking about University of Michigan sentiment. >> Uh I don't know actually which which survey they were reacting to. But >> it has it has to be that one because that's the only one that's worse than the financial crisis. >> Okay. Well, I I think it was some survey that specifically asked people how they're feeling about the economy. But um but here was my response. said, "Man, I'll be the first to say that things aren't perfect, but worse than the GFC, worse than 911, um, folks, GDP is growing at 4% this quarter, and that was referencing uh GDP now, which was 4.3% of the time. It's now 3.8 as we saw, but rounded up to four. And the stock market is at all-time highs. I realize that this prosperity isn't equally distributed, but trust me, take today's conditions and then plunge the country into a recession plus a prolonged bare market and things can get much worse. Right? So, I was just trying to tell people, hey, look, if you think this is as bad as it can get, it can get a lot worse than this. And man, the blowback on this Lance was huge. And it was mostly from people saying, "You'd understand. It's really bad out there right now uh for the bottom leg of the K-shaped economy. Um, you know, I'm suffering. I'm having trouble finding a job. You know, my company's laying off or whatever." >> I am discounting none of that. I hope those that are watching this right now, you know, are long-term watchers and see me talk all the time about my concerns about the wealth gap and the K-shaped economy and all this type of stuff. All I'm trying to say, if you are sitting there saying, "Man, things could just not be worse. It is the the worst they've ever been, and it could can't get worse from here, it's like our conversation earlier, Lance, about people that just haven't lived through a real bare market, >> right? >> It's like I'm so sorry to say people, but these are the good times." like on a relative basis like if we go into a real recession, if we have a true bare market, >> you would give your right arm to get back to where we are today. >> Exactly. Well, look, and a lot of this, you know, I'm actually I'm I'm writing an article on on this K-shaped economy um and sentiment coming up here soon and and really digging down into a lot of this because there's a lot of misunderstanding about the K-shaped economy and what it means. Um, but here's here was a chart that was just out this past week. And and this is the one thing that you've really got to kind of wrap your head around. And the the reality is is that for a lot of this sentiment that you're that you're getting and a lot of the stuff that you talk about, you're looking at the wrong benchmark. And we're comparing ourselves to the, you know, if you've got a million. I was reading an article this week. He's like, I've got I've got $2 million and I feel like I'm broke. And but the problem is is they're comparing themselves to people a lot more wealthy than them. So if you've got $2 million in wealth, who are you comparing yourself to? Well, you're comparing yourself to people with $20 million in wealth, right? So yeah, you feel broke at that point flying around a private jet >> or or you're comparing yourself to the to the adult in your town who had $2 million when you grew up back in 1970 where $2 million was a lot of money back then. It's just a lot less now. >> Well, no, no, it's still it's still $2 million. It's just the inflation adjusted pursing power of that $2 million is different. That's what I'm saying. Yeah. >> Well, yeah. But what this is super important though >> because so here here's the percentage of US households by total money. Now, what you'll note back in 1970, only 13.1% of the Americans in 1970 had $100,000 or more in income. 54% were in the middle class and 32% were in low income, 35,000 or less. Look at today. This is as of 2022, last last time this data was updated. 37 a.5% of the population is now on $100,000 more in income. The middle class has shrunk to 39.1% and so has low income class. In other words, everybody's been moving up the scale over the last 50 years. In other words, wealth and prosperity is getting better in America, not worse. And so when people talk about, oh well, think you don't understand things today are so much tougher than they were back then. Well, talk about buying houses. Back in the 1980s, if you wanted to buy a house, your mortgage rate was 10, 12, 13% and you had to have 20% down. No ifs, ands, or buts. Today, your mortgage rate six, and you need a 3% down payment to get an FH FH mortgage. So, things are, yes, prices have gone up. Things have certainly changed in those dynamics, but the wealth prosperity has gotten a lot better in America. And when you start looking at, you know, the United States, Mississippi is the poorest state in the United States compared to every other country in the world. It's in the top 1% of income earners. >> So, you know, when you're So, when you're talking about this K-shaped economy, you've got to be really, really careful about how you're framing this. And we also have to look at personal responsibility in a lot of this as well. As we were talking about earlier, a lot of the reasons that people are in the low income class or the middle income class isn't necessarily a function of the economy itself or or you know some you know oppressive pressure on top of them or whatever it is. A lot of it comes down to personal choices and okay where where you're spending how much debt you have those type of things. you can change all those factors and again we see this in the data over the last 50 years people have been moving up the wealth and prosperity ladder not down it >> okay and this is somewhat of a separate discussion I don't want to get into to that too much right now um although I will just make note one thing um because I'm not here to convince people that um they're way better off than they think they are though I think that's true in certain cases and and and one thing I I so growing up as a kid. Um I we had this little river that went behind our house and um there was down the river a little bit. There was there was this one nice house and uh this guy built it. Sorry, this guy bought it and then renovated and became really nice and he used to sit out there uh where I used to take my little fishing pole and go fish and uh eventually I got talking to him. Turns out he was Charles Caralt. um probably anybody younger than me probably has no clue what that name is, but but he was a big um what do you want to say? Like a newsman. Um uh and and would would travel the country and basically do a lot of kind of reporting from real America. And he did a um uh he did a report one Christmas from I can't remember the town, but it was some tiny little hollow in Appalachia. And um it was amazing the poverty that these people lived in. And yet they still had a school and a slightly functioning town and whatnot, but I mean you go into a house there, that house is probably like if it's 200 square ft, you know, it's probably less. It's really more of a shack. Um you know, one tiny little metal pot they're using as a stove. Uh the child there besides the clothes that she wears might have like a a little handmade doll, you know, out of like corn husks and that was it, right? I mean, >> but did they have running water? >> No, they did not have running water. They did not have indoor plumbing. They didn't have electricity. the the point the point is is is there was a report that was done not that long ago um about the same area and it's still depressed but you know there's a dollar general store and there are um you know the there there's um government uh food rations that are sent there and people you know basically nobody's starving in that town anymore like the town has electricity it has running water it's it's not a thriving location in America America, but the standard of living is tremendously different than it was say 50 years ago when Charles Caralt went there and did his his um overview of it. So I I'm I'm I'm sort of with you there, Lance. But that's not the point I want to make here. The point I want to make here is um I can understand the frustration of what I would call the majority here, which is saying look like I don't think I'm doing all that well and I'm looking at my prospects and I'm not feeling very good about them and uh you know people are telling me the stock market's up. Uh the GDP is growing. That means nothing to me, right? I I I just feel like look, you know, I don't own any stocks. My friends don't own any stocks. And Lance, you might say that's because of personal choice or whatever, but my my point is just if you're if you're there and you're saying, "God, this is worse than the GFC." It's like, are you kidding me? Like, we lost 9 million jobs uh over the course of a year and a half. Like, yes, you might think that your job is paying you wages that aren't good, that aren't keeping up with inflation, and I'm not saying that's good or you should be happy about it. But I'm saying try having no job for over a year and no companies are hiring. You know, we're just losing hundreds of thousands of job jobs month after month after month. My point here is just it can get a lot worse. Not trying to bum people out, but I'm just say like our our whole discussion today, Lance, has been, hey, at some point a real bare market's going to come along again. At some point, yeah, a recession will come along again. And so I don't blindly say this is the worst it can get because folks it has been a lot worse. And yeah, maybe maybe there's a lot of folks watching now who were kids during the great financial crisis and so they don't really have an actual um realistic memory of what it was like in the economy then. But it was pretty darn bad for a good amount of time. And folks like there have been longer prolonged downturns in American history and we'll probably have them again in the future. And certainly a real bare market, you were talking about that chart, Lance, that had the two real bare markets and then basically all these kind of fake ones, right? A real bare market by the time that thing is ending, you don't ever want to touch a stock again, right? I mean, people you have basically given up on the sun ever coming out again economically uh or in the financial markets. Um, but usually that's kind of when things start getting better. But but but when you're in it, God, it just feels horrible. And we're nowhere near that right now. So I guess I guess what I'm trying to tell folks is is don't like um don't be so pessimistic that you put yourself into inactivity of like, well, there's nothing I can do because this is the worst it's ever been. It's like, "No, you better be trying to figure out ways to to either increase your prosperity or at least decrease your your risk of a downturn because when's going to come?" >> Yeah. No, no, that's the most important thing when and again, this is the thing that frustrates me when people complain about their plight in life and those type of things. There there was a really great video out the other day. I was watching this this story about this guy and um they live in this really beautiful house and and they she was the the wife was doing a tour of the house and showing the house that they had just built together and stuff, you know, and and they got a lot of comments about well, you know, what does your husband do for a living? He must make a lot of money. And it's like, well, let me tell you the story of my husband. So, he dropped out of high school, couldn't get a job, right? Making minimum wage, couldn't do anything. He then went and got a GED, put himself through college, got a master's degree in accounting, and then tried to get a job with one of the big four accounting firms. Nobody would hire him. Story sound familiar so far? >> Sure. >> Okay. So then he he finally finds a company that he finally finds an accounting firm that'll hire him. And so here so this is the complaint everybody hears like, well, you know, nobody's going to hire me. I've got this master's degree. Nobody will hire me. >> So woe is me. goes out and he finds this small accounting company that hires him and he figures out while he's working with this accounting company that he can do work faster than everybody else because he's he's starting to you he learned he taught himself how to code and once he taught himself how to code on top of his accounting degree he then began implementing that coding into his process so that he could produce work faster than everybody else in his firm and so then he goes well if I can do this faster and cheaper than what my firm does I'm gonna go out start my own company, which he did. And then he went out and started getting contracts from the big four companies because he could do it faster and cheaper than the big four companies could do. And he built a very, very nice business for himself and grew that. But now, it didn't happen overnight. Nobody gave him anything. But he went out there and he figured out what a problem was and he worked his way towards it. Now, here's the important part. She she concludes the statement by saying this. She goes, "When he was growing his business and making more money, he didn't buy bigger houses. He didn't live he lived in a townhouse, >> right? He didn't >> change his lifestyle >> and he invested everything he made into the financial markets." And that's why today, 20 years later, didn't happen overnight, but 20 years later, we can now afford this house and we can afford to do the things we want to do because he put in the time and the effort and the application. Didn't get himself into, you know, a lot of debt. stayed out of debt, didn't upgrade his lifestyle, didn't go buy fast cars and big houses and do all those type of things, didn't try to keep up with the Joneses. He went out and and worked and invested smartly, kept himself out of debt and grew his wealth over time. That's the only way it works. And this is why when I showed you that, that's why I showed you that chart. People are moving up the pay scale. They're moving up the wealth ladder. And yes, we're seeing this K-shaped economy. And we have to come back and say, "Okay, to your point you just made a few minutes ago." It's like, "Well, I'm not invested in stocks. My friends aren't invested in stocks." Okay, why aren't you? What's keeping you from investing into the markets? Well, I don't have any money to invest in the markets. Okay. Well, let's start there. I do this all the time for people. This is part of my job, right? >> Why don't you have money to invest in stocks? Okay. Well, let's go look at your budget. Where are you spending your money? And so if you go to our website, if you're interested in in fixing your situation, go to our website, go to our resources tab, go to our eguide library, and there's a book called the 10 laws of money. It's an ebook, and it goes through the basic laws of how to start getting yourself into a financial position. So regardless of your income, regardless of your financial situation in life, you can start taking the steps necessary to start building your wealth. Is it going to happen overnight? No. Nobody's going to give you anything. That's not going to happen. You're not going to be wealthy tomorrow. Don't compare yourselves to wealthy people. Don't worry about what other people are doing. Focus on your situation because your wealth is very different than Adam's wealth or my wealth or anybody else's wealth in the world. Who cares what they have or they don't have? Don't worry about keeping up with the Joneses. Focus on getting yourself into the position that you want to be in. That you can do. You have total control over that. And nobody can keep you from taking yourself where you are today to where you want to be. You just got to be willing to commit to do that. >> All right. Totally agree. We are on the agency trail there. Um and I happily do another rant with you deep diving on that. Um I want to get back to one other part of this though. um which is so you know first off it's just hey look don't um don't don't deceive yourself that um this is as bad as it it it it can be because it can get way worse as I've already made the case for. The other thing I want to say is just make a case for civility in this world. So Lance, like I said, I got a ton of push back and a lot of the push back was like this. So um I'm going to pull this up here. I apologize in advance to folks. Um I I I don't have the opportunity to to block these words out on the screen. I won't read them themselves, but but here here's what I said. Um yeah, I sort of mentioned that a lot of people were pushing back in very what I thought were non-constructive ways. So I said, "Here's a nice example of the pleasant people I've been dealing with all day. Um so this user says, "You're an effing idiot. The stock market means nothing to normal people." to which I respond,"Well, it sure does when it drops by twothirds, which it did during the great financial crisis, and then their company is forced to lay them off." And the guy responded, "They did it anyways, you effing idiot." And I said, "That really doesn't sound like you've lived through a real recession before." But but the point being here folks is um look uh you don't have to agree with everything I say but I spend a lot of time on X now and I get a lot of slings and arrows and part of that that just comes with the the territory of social media but like there's such a great opportunity on social media to have a real dialogue and to say hey you know what I think I disagree with you or hey here's here's here's what I think is a hole in your argument. What do you think about this? Right? instead coming out with the whole fire ready aim, guns blazing, you're the worst person in the world for saying something that triggered me that I don't like. >> Yeah, >> it's just so not constructive. And look, I've got a thick skin. I'm going to deal with it. But that person, they're going to learn nothing from this exchange. >> The problem the problem is is a social media is a cesspool. Yeah. >> To start with and and b when people respond. Look, I get the same stuff all the time, right? instead of having a conversation. So, you know, like uh like like I posted an article today, dollar dominance remains alive and well, right? So, this pushes a bit against all the this is just a fact-based article about how the dollar works in the world. That's it. That's that's all the article goes through. And of course, immediately everybody that hates the world is, you know, got the worst things to say about >> they light their flamethrower and aim it at you. >> Exactly. And all that tells you immediately is that these people are very unhappy. they realize that their situation is dire and they they are just looking for somebody to blame for their situation, right? Because people that are truly and again I have these dialogues as well with people which are people that are in that situation that really want to better themselves. Their responses are, hey, I get it. Can you help me with this? I help me understand this or can you help me understand that? And it's a very different type of person. So people that are self-loathing and just angry at the world and they blame everybody else for their situation other than taking responsibility, that's the people that are firing off, you know, tweets to you like that. >> Sure. And I guess all I want to say is look, I can understand somebody getting emotionally triggered by a hard truth, right? Nobody likes to hear hard truths, especially Lance, as you said, if you feel vulnerable to it, right? um the emotions are going to flood. But then you have an opportunity. You have a choice, right? You could just flame back, right, and say, "Lance, you're an idiot." Or, "Adam, you're an idiot." And uh and leave it at that and learn nothing. Or you could say, "Hey, tell me more, right?" Like like that person who's flaming you has a fantastic opportunity to actually get to engage with Lance Roberts, >> right? >> And say, "Hey, look, either I I don't fully agree with you, Lance. Here's my thought. What do you think about it? And and you might be kind enough, Lance, to say, "Hey, I understand why you think that, but I'm Lance Roberts. I got a zillion charts. Here's the chart that shows you why I think I'm right and you're wrong." And that person could actually learn something that they could use to then better their situation. Right? So, there's like a grand opportunity there for the person who just is able to take a beat and engage with some civility, right? And I I I if you're watching this video folks, I'm going to guess that you are fully already on team civility. Um but there's, you know, this is a real dynamic that happens daily to guys like Lance and I. And yeah, I don't like getting yelled at or getting insulted, but again, I I I I mourn the like, dude, if you just >> if you just ask me in a respectful way clearly what you know what what you want some clarity on here, I'll give you a little bit of my time and try to help you out here. But instead, it's just, you know, you're the antichrist and screw you. >> Yeah. Well, no, and that's and that's the whole point is that people that are that are nice and respectful and want to have a conversation, I respond to them, right? So, I I keep a monitor on my my ex account and I'll respond to you and say, "Hey, you know, here's a chart. Here's this. Here's that. Here's this information." And we can agree to disagree. It's completely fine. Every, you know, market takes everybody's opinion, but happy to engage with you. And people email me all the time and I answer every email that I get and I'll say, "Here's here's what it is." Blah, blah, blah. I don't respond to people who are dicks. So, >> you know, because again, it's like you're not going to listen. You know, you can like this guy, right? That was just to your point, right? He It doesn't matter what you say, you're not going to convince him of anything. >> Yeah. They call it feeding the troll. Like you try to be nice and they just Yeah. >> Yeah. They're But they're not going to change their mind. It's just like people that are convinced that, you know, the dollar's dying or whatever it is. You can give them all the facts, but they are so anchored to their belief that they just discard all the facts. Right? It doesn't matter what the facts say. don't tell me the facts, just, you know, let me live in this bubble. And the problem for that is is that it leads you to make bad investment decisions over time. And the whole purpose that we're trying to get to is make you a better investor. That's what we do here. Um, you know, but again, it's so funny because, you know, you're if you're unwilling to listen, you can't improve. And, you know, that's the that's the whole fact. And that's why a lot of these articles we write is like I hear people that they say this this is what I believe and I'm like okay I start doing the research. Are they right? I need to I need to know if this person is right. Start to do the research, dig up all the facts, get all the resources and then I can say hey they're right or they're wrong and here's all the facts that back it up. But most of the stuff that we write is for me is it's to help educate me so that I can make better decisions for my clients. It's really not. I share all of it with you. So you're welcome to read it. It's our research, but it's really for me and Mike so that we can we we do better. >> Right. So you can be better at your own craft. Yeah. >> Yeah. Exactly. But again, it's just so funny because people are just unwilling. It doesn't And again to to the point I was making was it doesn't matter what you tell these people. They are never going to agree with you. >> Yeah. And you know, I mean, not only is it a great lost opportunity for the person, right, that just decides to be a close-minded flamethrower, but like it's a lost opportunity for me. I don't pretend to have a corner on 100% of of what's accurate. So, if somebody disagrees with me and we can have a back and forth about it and start exchanging information and data, I I might refine my understanding of the of the world, too. So, anyways, all right. Uh, we'll we'll move on from this, but I guess last point, just getting back to my my previous point on this about things can get worse. >> I'm not saying that to depress people. In fact, I'm I'm I'm It's almost the exact opposite where I'm trying to if you're one of those people who is feeling frustrated by the current economic circumstances and feeling like, "Oh, dear God, it's never been worse and and this is the worst it could ever be." Um I if that's your mindset, it's easy to give up, right? It's easy to say, "Well, there's really nothing I can do because the universe is just, you know, squishing me." And my point is is um there are plenty of ways and Lance has listed a number of them here in this discussion that you can use to kind of look at your situation and say well is you know whatever it is how can I find some ways to improve this here? Um I I think that's smart and necessary to do in any time along the spectrum, but it is very important to do now knowing that there could be um or that things indeed could be a lot worse should a real recession eventually arrive or we go into a bare market um >> which will which will happen. We will get into a lost decade again. That's almost a guarant which will happen. So yeah, exactly. So, so start doing while the sun is still relatively shining, start preparing for that stormier day. And somebody said, Adam, it's like, Adam, this is so cruel of you to say this to people that are hurting. Um, and I I thought about it and I said, I mean, I I I I can get someone feeling like that, but I'm like, look, what what what is kinder? Um, uh, somebody falls and breaks their leg, right? Um, and and I agree with them and I say, "This is the worst thing that could ever happen to you. You're right. This this you're having the worst day of your life." Or is it kinder to say, "I'm really sorry for that, but we got to find a way to get you to move here because you have fallen and broken your leg on a railroad track, and at some point in time, a train's going to come by, right? So, as crappy as today might feel, you're going to be in a in a whole lot worse world of pain if you just stay where you are right now, right? And I do think that's a pretty good analogy actually here, which is like, yeah, you've got some adversity, things aren't going great, but there's the potential, there's the very real potential that they're going to get a lot worse at some point. So, what can we do now to make sure that you are less vulnerable to that? I guess that's the the message I want folks to take from all this. I >> I think that's I think it's absolutely the right message. You know, it it's you know, this is the this is the tough love part that, you know, we talk about on the show and and this is where you get a lot of push back. It's like, oh, people really disagree with you about this, whatever. And I get it. It's it's fine. But a lot of the, you know, when you're really thinking about your situation, you you have two choices, which is one, I can blame others for my situation or I can take responsibility for my situation. And just ask yourself, has anything ever gotten better in your life by blaming others for your situation? >> Right. Never has happened. Yeah. >> Yeah. It doesn't because there's nothing that anybody else is going to do to help you. The only thing you can do is take responsibility and start making the changes necessary. And that's tough, man. You know, look, I like I like I said before, you know, I've been in your situation. I'm older now, so I've I've had the years to work through the tough times to get to easier times. You know, now that I'm 60, I've got 60 years of experience behind. 61. I've got 61 years. I forget. I'm getting older. So, 61 years of experience behind me. But I started right where everybody else started. You know, nobody gave me anything. My parents made $30,000 a year. We lived in 1100 foot house, you know, when I was growing up, you know, it's just nothing fancy and you know, just struggling to make ends meet. But, you know, so nobody gave me anything. I had to go find out. I had to make all the same mistakes you made. I got myself into credit card debt. I got myself near bankruptcy at a couple points. You know, I've had businesses that I've started that have failed and I've had to pick up the scraps and start over again. Been there, done that. So, I can I can certainly commiserate with your situation. Your situation may be slightly different than mine, but we have a lot of similarities. I've just had the experience, the time to get through it. And so, you know, what what Adam and I share with you is just saying, look, this is from experience. A things are look, things can get dramatically worse than you think they can because I've we both Adam and I have both been through real bare markets and they can get terrible. Um, job losses, loss of wealth through collapsing markets, housing prices, all those type of things. You think financial you think financial times are tough right now. You get into a real bare market, and I'm not talking about a a correction in the market. I'm talking a real bare market >> that's economically devastating. You will understand what tough can be. >> But we're not there yet. So don't dwell on that. Let's f, as Adam said, let's focus on taking responsibility for our our position today and start improving ourselves so that when that does come, because it will come, you're in the best possible position to weather it. And that's the that's the differential. People that got devastated during the financial crisis weren't prepared for it to start with. people that survived it were financially prepared for it to start with and they they still got hurt, right? They got hurt badly financially, but they survived it, >> right? And relatively they were far better off in the end to to everybody else. Um so as a as an old guy like you, Lance, um you know, we've we've been in bad times enough to know um a a to be able to understand, you know, to to emote where people are right now, but also to know what it takes to get out of them, right? And I think we also know and and I' I've I've learned this through life experience but also by married being married to a therapist. Um you know life can deal you some real lemons. I mean, some real curve balls and injuries, right? And initially, you know, you have to experience them emotionally, right? It's just we're humans, right? We got you got to let the emotions be felt. But no situation is as hopeless as it it often times feels when those emotions first, you know, wash over you. And so, yeah, you got to feel them. Okay, this sucks. Woe is me. Whatever. But then you've got to say, "Okay, look, what can I do to start making this better?" Right? Like every situation can be made better. Um, and I mean, the fact that anybody who's watching this right now, I'm sure there were times in your life where you didn't think you were going to be able to carry on. You thought it was all over. Well, you're the fact that you're watching this shows that it wasn't a fatal event in your life. Things did eventually get better. And so, you know, use that to to say, "Okay, look, you know, all right, I I feel pretty crappy about where I am. Let me process that however I need to process it. But once I've processed it, let me get over let me get over it. Let me put my my big boy pants on. How am I going to actually make it better from here?" And you called it tough love, Lance. Maybe it is. Um, but uh you know, where we are, you can get to a better place. And again, if you're sitting there thinking, man, uh, life sucks and it can't get any worse, man, it it certainly is going to when when these next bare markets and recessions arrive. So, take the steps now to put yourself in a much better position relatively. All right, with that, um, if you think that the, um, the second best way you can think of to, uh, start improving your life process, uh, it situation is to continue watching Lance Roberts on this channel going forward. let them know that by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it. If you're watching this video the day that it uh releases, we are getting really close to hitting 180,000 subs here on YouTube. Please help us get over that today by hitting the subscribe button if you haven't subscribed yet. And if you would like to get some help for navigating the current kind of crazy melting up market that we have right now, or you'd like to get some help in figuring out how to take your personal situation to a better place and prepare yourself uh to defend against some of these things that Lance and I have just been ranting about. Uh if you don't already have a good professional financial adviser guiding you on all that, feel free to talk to one of the ones that Thoughtful Money endorses. These are the firms you see with me in this channel week in and week out. Perhaps you'd like to talk to the great Lance Roberts himself and the team there at RAA. To do that, just fill out the very short form at thoughtfulmoney.com and whichever firm you're matched with, we'll be in touch with you right away. All right, Lance, my friend, we get you for one more week, right, before you head off into the Italian sunset. >> Uh, yep. Next Friday. And then, um, yeah, that'll be it. >> All right. Okay. Well, look, we'll enjoy uh making sense of whatever happens between now and next week with you, and then we'll have your partner in crime, Michael Liowitz, fill in in the week that you're off here. But thanks so much again, buddy. >> Absolutely. See you then. >> All right, everybody else, thanks so much for watching.