Government in Markets & Buffett in Healthcare: What Should You Own? | Rise UP!
Summary
Intel and Government Involvement: The podcast discusses Intel's recent stock volatility and the potential U.S. government investment, likening it to past government interventions during financial crises. The focus is on Intel's need for both capital and technological advancement.
Warren Buffett and Healthcare: Berkshire Hathaway's investment in United Healthcare is highlighted as a strategic move in a sector that has underperformed the S&P 500 by over 30%. The discussion emphasizes potential opportunities in healthcare, especially with AI advancements.
529 Plans and Tax Benefits: Changes in federal tax law have expanded the use of 529 plans beyond college expenses, offering tax advantages for educational costs and estate planning, making them a flexible tool for parents and grandparents.
Market Bubbles and Diversification: Concerns about potential bubbles in various markets, including stocks and real estate, are addressed. The importance of diversification and risk management in portfolios is emphasized to mitigate potential losses.
Mag 7 and Investment Timing: The dominance of the Mag 7 tech companies is discussed, with advice to be cautious about current valuations but to consider them for long-term portfolio inclusion due to their growth potential.
Long-term Investment Opportunities: Bitcoin and small to midcap biotech stocks are suggested as high-risk, high-reward investments for those with a high risk tolerance, with an emphasis on the need for careful sizing and timing.
Federal Reserve and Economic Indicators: Upcoming speeches and economic data releases, including the PCE price index, are anticipated to provide insights into inflation and interest rate expectations, influencing market movements and investment strategies.
Transcript
Bubbles are occur when there's debt like a debt problem like it's backed by by by u by debts that go bad and the and bad debt fuels selling and fuels a contagion and a spread to selling other areas of the market instead of you know beyond where where the the bubble starts. [Applause] Welcome to Rise Up, where we take a look at this week's biggest stories out there, and we break them down so you can understand what's happening to be able to make better decisions on growing and protecting your portfolio. With everything going on in the marketplace today and the volatility, it can get very confusing. Our mission at RiseUp is to really bring you the very best experts, the best conversations, and people who are actually directly helping clients each and every day to help make these important financial decisions for their lives. If you would like some extra help during this session or anytime after, please go to wealthon.com for a free portfolio review from one of our experts here at Grimes and Company Wealth Management. My name is Terry Coulson. I'm a managing partner at Rise Growth. I'm a certified financial planner and I'm very excited to be with you here today with two of our experts. We have Kevin Grimes who's the CEO and CIO of Grimes and Company. Welcome Kevin. >> Hi Terry. Great to be here as always. >> Wonderful. And we also have Chris Dey who's a CFA, a portfolio expert and he's also with us from Grimes and Company. Welcome Chris. >> Hi Terry. Thanks for having me again. >> All right, we're gonna have some fun today. There's been a lot going on. Let's get into our big three. Starting with what's going on with Intel. A 7% surge in Tuesday to close at a fivemonth high. It dropped the same on Wednesday. So, you know, what is happening? The ups and the downs. Soft Bank, you know, announced a $2 billion investment and then the US government said it was considering buying 10% of the stake in the company. You know, some of this is unprecedented. Kevin, can you help us understand what is going on and what should shareholders think? >> Uh, sure. Well, I don't know if it's completely unprecedented. I mean, to me, it hearkens back to the good old days of the global financial crisis back in 2008. If you remember the TARP program. Yeah. Um you remember the US government uh treasury took a stake in GM and and also uh some preferred issued some preferred stock or Boston preferred stock uh from in some of the major banks. And if you think back to back at that point, these were companies that probably could have faced extinction. Um Intel is not quite there yet. Um but back then the taxpayer made money. An American institution lived to fight another day. Uh saved a lot of jobs. So I I look at this uh situation here and I think it's not the same but it it rhymes a little bit. I think semiconductors are absolutely key to the economy. They're also key to national security. Intel is important. Uh the the government is trying to onshore production of semiconductors. Intel plays a part in that or could play a part in that. So from that regard I I mean it makes sense to me um from a shareholder perspective and firstly we're not shareholders but uh from a shareholder perspective I guess like I said it's a little bit different in the sense that uh GM was probably facing bankruptcy the uh the the common shareholders were wiped out in that case and and or nearly wiped out um and uh and the government kind of came in and saved the company. So, at this point, the government's investing alongside uh Intel shareholders, so it could be a good thing. Um, some people are arguing Intel doesn't need money. They need to fix their business. I would argue they probably need both. I mean, if you're going to build, if the plans to build fabs here in the US and to redefine the business, I mean, those things take a lot of money and this is a company that's been burning cash for years. So, you know, I' I'd like to see I'd like to see this get fasttracked. I'd like to see Intel be able to kind of maybe move through regulation quickly, be able to onshore. I mean, let's remember the stock was three times higher than it was today. I think roughly three times higher uh five years ago. Um it's been a long road down u but being aligned with the government and getting tracked through regulation, there could be some advantage there. So, look with they still need a business plan. We'll see what the dilution is uh for shareholders, but I mean it's probably a good thing in the long run and if it's not then the company probably would have been in big trouble anyway without this proposed investment. >> Yeah, Kevin, I think you know you reminded me actually I was at the University of Chicago in one of their finance classes about two years after this all happened many many years ago and I actually got to talk to members of the Fed who actually were making those decisions to invest in banks at that time, invest in GM. So, you're exactly right. Um, maybe a little different, but certainly something we've seen before. Um, Chris, what are your thoughts on this? You know, competitors such as Nvidia, yet some analysts believe there's an infusion of capital from the UF government isn't the solution. If one of your clients asked you about investing in Intel, what would you say? Well, Terry, I think I would I would dovetail what what Kevin just said is that honestly Intel doesn't have a funding problem right now. It really has a technology problem. So, I think Kevin's correct in the sense that that funding is is good. They have additional capital because they are building, you know, big plant in Ohio which costs $28 billion. So, they they need the funding. But the unfortunate part is they're so behind on technology both on the um on the chipm side against Taiwan Semi and then on the chip design side with Nvidia. So they're they're way behind. Now could the capital that's being infused in the company help them kind of get closer to the competitors? Maybe. But I would tell clients right now that it's really an execution problem and that it probably makes sense to wait a little bit before you invest in Intel. They have a new management team which has been successful at other turnarounds, but I would give it a couple quarters before I would I would think about investing in Intel right now and see what that capital can do and see what the return on invested capital will be for shareholders. So, I would take a wait and see approach with Intel right now. >> Yeah, exactly. With the new CEO, I think it does make sense. Um, but let's move on to our next story, which has to do with the infamous Warren Buffett effect. So, we've been taking talking about the opportunities in health care since January. We've had a couple healthc care experts come on to our show rise up. Clearly, Warren was listening because Berkshire Hathway took a $5 million share position in United Healthcare. Last week, shares of the largest healthcare insurance company in the US had plummeted more than 50% from all-time highs, but after the announcement, they were up 12%. Kevin, over the past 52 weeks, the health care sector has been underperforming the S&P by over 30%. Obviously, Buffett's team saw an opportunity. Are there others out there? >> Yeah. Well, I I think it's great that that Warren Buffett's taking his cues from Rise Up and and he he's tuning in. Uh hopefully that's helping him out a little bit. But I mean, this is what Buffett always does, right? He he takes an activist position in very beaten down names. um this is an industry that he knows as well as anybody. I mean, who better to fix an insurance company uh granted of a different different slant, but an insurance company um more than Berkshire Hathaway. I it's just uh I think it's this is something that makes a lot of sense. They have a lot of insurance and reinsurance holdings. So, look, with regard to healthcare, we talked about this a lot in past weeks and yes, I I think that there is an an opportunity here. Uh the question is when uh I mean the whole healthcare industry as well as some of the consumer staple industries with with food processing and and food products in particular um are very much under the microscope with the maja movement you know make America healthy again uh under RFK you know drug sales practices regulations there's just been a lot of scrutiny for the sector um but you got to remember there there are probably some catalysts and maybe even some in the short term I mean I'm thinking You know, when I when I look at the drug industry, it's like the one area that just hasn't had any sort of tariff re resolution. I feel like there's been a lot of resolution with with different other uh different other um sectors and um and and I feel like when you get some when we know what's happening and there and there's there's uh some finality or at least some guidance on what's going to be the the tariff situation with with with with drugs that could be a short-term catalyst because they're the last ones to kind of get the get the turnaround effect from that you know and other than that you just got to remember I mean drugs devices treatments These things have to recover at some point. I mean there could be an opportunity. The bottom line is look if if humanity is going to advance and healthier health healthcare is going to advance and to be able to buy a sector that's lagged by 30 or 40%. I mean at some point I think there's going to be some opportunity there. >> Yeah. Kevin I also think about he may have been thinking the transformation that's going to take place in healthcare for AI and some of the digital work that's going to get done. I mean, they're still on the precipice, but that is really going to start to drive greater, you know, healthcare experiences, but cost and efficiency, I would think, would go down once they can truly implement AI. But Chris, I I want to hear from you. How are you view viewing the health care sector as a part of a portfolio? Yeah, just dovetailing what Kevin said earlier. I do think that um they did come out today and say with the the European deal, the tariff deal that pharmaceuticals will be taxed at 15%. So that was a positive there. Um getting back to uh the tariff issues on pharmaceuticals. So I think that's good news. I think the the sector has stabilized a little bit in the past couple weeks. Uh but when you're looking at portfolios, you know, we always talk about diversifying amongst asset classes and we obviously want to diversify a large cap portfolio into different sectors and healthcare is an an important sector, but it's been beaten down for a number of years. And when you look at, you know, 30% underperformance to the S&P 500, that last happened, guess when 2000 when the dot bubble. So there's a lot of corlaries between now and 99 and 2000. You look at the percentage of healthcare of the S&P 500, right now it's 9%. Just a couple years ago was 15%. When was it last 9%? 2000. So there will be a turnaround in health care. You know there there is a need. The aging population is still happening. There's a lot of unmet medical needs, a lot of rare diseases that still need drugs. So importantly, I think you always want to have some part of your portfolio in health care stocks, but to Kevin's point, you know, it's been a very difficult time to invest in health care. And so, it's hard to put a big part of your portfolio in there, even if there is some valuation discrepancies when you look at healthare versus technology. So, you probably want to see a little bit more momentum in the health care space to add a lot more there. But certainly as Kevin said between medical devices and biotech companies and pharma companies longer term they will be winners. That's right. So we may you this might be more of a longer term investment not a shortterm investment which we've seen the Buffett effect really take place for long-term investment. Keeping that in mind. Our last story is for all of you parents out there who are thinking about paying for your child's educational costs. There's been some changes in new federal tax law. Qualified expenses for the use of 529 plans have expanded beyond college costs, which would cover licensing, tutoring, continuing education, and dual enrollment courses for high school students. And for those of you uh who are parents, but you also have grandparents, I also want to point out that grandparents can actually contribute completed gifts from their estate, which will lower their estate tax and then give them that back to their children to go to college. So remember, in these 529 plans, growth is tax deferred and the qualifications for withdrawal are tax-free when you withdraw withdraw them. And some states even offer income tax deductions or credits for contributions. So all you grandparents out there or parents who have grandparents, this might be a conversation you want to have about gifting through 529 plans to reduce your estate, which ultimately provides you tax benefits in the long run. But Chris, I know you talk to a lot of clients about 529 plans and leveraging them for their children's education. Most choose savings accounts, but what are the pros and cons? >> Yeah, I think you talked about a lot of the pros here, which is the biggest pro is that you can grow these funds taxree and when withdraw them, you don't have to pay any tax. There's not many investment opportunities where you have that where you can put it in, put the money in, have it grow taxree, and then take it out and not have to pay taxes. Also, uh you know, you talked about the state income deductions that are possible in certain states. You talked about the the grandparents uh the flexibility now with uh with changes in in the in the most recent bill. Not only can it be offered for college education, but it can be offered through K through 12, and that was$10,000 a year. Now it's $20,000 a year. It can also be offered for vocational training for certificates and for school for for vocational um trade. So that's a big change. And a lot of clients used to always say, well, what if my child doesn't go to college? Well, now it's so flexible because you can use it for K through 12, you can use it for college, you can use it for uh for the trade schools. So I think the flexibility is is is almost one of the biggest pros now. And the cons obviously are if you take out some money from 529 plans for not for qualified education expenses then you have a 10% penalty and it will be taxed as as income and that some of the plans the investment offerings are a little bit sparse. So you can't invest in individual stocks and things like that. But overall, a 529 plan makes great a great amount of sense for all people right now. >> Yeah, for both parents and grandparents, the 529 certainly gives more flexibility than it has in the past and really helps. I think people still value education, but do it in a taxefficient manner. So, let's go on now to our questions. And I want to remind you again, if you would like to go to wealthon.com to be able to do a portfolio review, please do that. But our big topic we're opening up about is um the questions that you have sent in to us. So let's begin with Marco Fontana 2115. It feels like there are massive bubbles at all levels. Stocks, real estate, crypto, even debt. How do I manage my portfolio? And this this particular um question is coming from a 50-year-old when I'm worried about everything is going to collapse. So, how do you manage the bubble with the fear of loss here? Chris, do you want to take that one? >> Yeah, there's a lot in that, Terry. I think, you know, first of all, a 50-year-old has a number of years till retirement. So, um, they can take some risk even if there are some concerns about, you know, bubbles in certain areas. There's always there's always worries out there. We're always climbing a wall of worry whether it's uh in the equity markets or in the fixed income markets or in real estate. There's always some concerns. Now, now certainly when he's putting a portfolio together for him, he wants to make sure that portfolio is right for his risk tolerance to make sure he has the right asset allocation there and then he's diversified in those major asset classes. We talked about healthcare, but when you look at equities, you want to be not only in the US, you want to be have some exposure in international stocks, some exposure in small cap stocks, some exposure in emerging market stocks. So, you stay diversified. And also I would I would point out when you look at some of the more speculative asset classes like Bitcoin just to make sure you have the right position size for your risk tolerance. It certainly is a good diversifier in portfolios, but you want to make sure you're not taking a huge amount of risk because it is the most volatile asset class that is out there. Even though it has been the best performer, it certainly has the volatility. So I would say Marco is to make sure you have the right risk tolerance. Make sure your ass allocation is correct. And also, if you need money in the short term, not for retirement, but for something else, make sure you have a a cash bucket so that you can use that cash and you're not taking money out if if in fact these bubbles do burst in these markets. He's not having to sell at lows. And I would say that even in this scenario, if the markets kind of blew up, if he had a good amount in bonds, those would be the safety part of his portfolio. And those would provide that balance and and that protection of principle when things start to fall apart. >> I agree, Chris. And the other thing I would add is making sure you're rebalancing your portfolio regularly, if it's quarterly or annually, having a recheck of your portfolio because you may want to trim a few positions that have grown oversized due to the current frothy market. And then you shift those gains to safer underweight asset classes so that your risk tolerance is now balanced. And then you lock in those profits and keep your risks aligned with your ultimate goal. So, those are a couple thoughts on how you might manage through the bubbles. But Kevin, let's go to our next one. And this is Everett who's in Reading, Massachusetts. I think that's what that means. Everyone is talking about the Mag 7 and how dominant they are in the market. Is it too late? Should I be looking to add or sell? What other investments are better at this point? >> Sure. So, so Kevin, I I live in Needam, so not far from Reading. us Massachusetts people. We know how to pronounce all our towns. So, um yeah, I well I I maybe I could relate this even in in roll in Chris's the question that Chris just fielded um from Marco Fontana about uh about bubbles. I guess I guess if you were gonna if there's a there could be bubbles in narrow areas of markets and I mean if you look at if you look at the broad market right now there I don't think that you could say that there's bubbles but there there are certain pockets I think that you could be concerned about and obviously mag seven would be one that everyone would point to and say is there a bubble there and they probably relate it back to the tech bubble in uh in the late 90s and in 2000. Uh and there's a lot of similarities. I mean back then there was a huge amount of spending on internet infrastructure and fiber and and and you know internet components and and changes in technology made a lot of that investment obsolete and and there was but you got to remember bubbles are financed or bubbles are occur when there's debt like a debt problem like it's backed by by by u by debts that go bad and the and bad debt fuels selling and fuels a contagion and a spread to selling other areas. is with the market instead of you know beyond where where the the bubble starts and right now I guess if you said there was a bubble it would be a AI maybe Sam Alman had a comment I think earlier this week where where I think I don't know if you use the term bubble but I think he said over excited he say which is kind of interesting considering they're they're raising capital right now. Um, but if you think about the companies that are making the investment right now, I mean, there's there's still they're still experiencing earnings growth. There there's not a debt problem. There's no there's no real debt fuel. So, I don't know if it's a bubble, but I do think that they're in the short run that some of these companies in the mag seven look I mean the valuations are enormous. you know that you see some maybe not mag seven companies but some AI companies like Palunteer with with you know 120 times sales uh you see you see some you know a lot of the mag seven companies they're at 50 times earnings 60 times earnings I mean these are enormous numbers so in the short short term valuation you know can be a problem when there's you know when they're it can be an excuse for a pullback or can magnify a pullback um so at the end of the day maybe right now is not the time to running out and adding these to your portfolio in mass. But look, if if there's a pullback, these these are the stocks that should be bought, right? I mean, the play and that's been the playbook. You know, during COVID a couple years ago, these these stocks were the first to to kind of come roaring back. Um that was the fastest decline in in rally ever. Um and then even just this past uh you know, March, April after liberation day, it was the fastest 20% down and up. And again, it was the mag seven that that led. Um, in the long run, you have to own these names. Uh, I I think just like Bitcoin or some other areas of the market that you you want to get exposure to. You have to just try to be patient, be selective on when. So, I'm not I don't know about timing this that. My guess would be try to find a better entry point. But at some point, you got to have exposure here. I mean, these companies um they experience the network effect. They can grow faster and scale faster than any other company. and you know if they're if it's left unchecked they'll you know they'll they basically become monopolies and unstoppable and that's kind of what's happening. So you know I guess in the in the long run one of the biggest risks would be that they get broken up like the monopolies did in the past. Like think of like energy companies and baby bells, you know, the the phone companies. So yeah, I I I think that in the short run I'd say you might want to be careful. in the long run, you got to own these things because there there's just, you know, long-term uh uh waves that are going in that direction. But I think Chris hit the nail on the head where if you're, you know, I think part of that question was, you know, what else could you be adding and and what looks good? I mean, small caps are are are small cap stocks are trading where they were in 2021 and, you know, emerging markets are, you know, they've been up and down and all around, but is it you know, the MCI emerging markets index is back where it was in 2017. So there there's an opportunity I think for these other areas of the of of the markets, these other markets to to to lead uh in the next phase here. And look, if if we are going to have a Fed cutting cycle like I think we're going to have, if if if we can skirt inflation, um if things do settle out, then then those are the areas of the markets that would benefit from from uh you know, from a calming and um and and that's where you might see some opportunity. So, I know we've been saying it for a long time and you've probably been reading it in all the, you know, the magazines or or or columns for a long time, but there will come a time when when it you're you're you're really rewarded for having exposure to other things than large cap tech. You still need large cap tech, but if you're looking for opportunity, um, it's probably somewhere else right now, like maybe small caps and emerging markets. Well, that leads us to our third question, Kevin. It's really around the same theme, and this is uh Riley from Lincoln, Nebraska, and he asks, "What is your favorite long-term investment for someone who has a very high risk tolerance?" Kevin, why don't you take that and then Chris, please add in. >> Yeah, Chris is gonna get mad at me, but again, Joe's not here, so I I can I can talk about Bitcoin again. So, uh I would say Bitcoin. I mean, look, the bottom line is you got to be really careful about this. I'm going to start a a newsletter for clients um just that talks about the cycle and the trending of of Bitcoin because it's it's it's not something you can really value because there's no cash flow to value. But in the big picture, you're talking about the best returning asset that exists right now or has existed um you know, really since it's come out. Um it's also probably the highest volatility asset. Um, but then again, if you look at risk adjusted returns, you look at like what we call a sharp ratio in in the industry where where you adjust returns to volatility, it's still a better it's still better than stocks. It hasn't better than stocks. It's that the the the returns have justified the risk. And and when I look at like I like to I'm a simple guy. I like to look at things like supply and demand. And there's a fixed supply here. You know, you Bitcoin might might just simply be a spot on a digital register, which sounds boring, but you know what? There's only 21 million of them and that's it. And there it's not like dollars or any other currency or really anything else. It's a fixed number. And demand, you're not talking about people looking to go buy pizzas and soda with with Bitcoin anymore. You're talking about um institutions getting involved. You're you're going to see them see Bitcoin in 401ks. Bitcoin. It's been only probably a year or so now that they you can buy it through an exchangeraded fund like a true Bitcoin exchange traded fund and an investment portfolio. The institutional money is going into it. Uh, you know, companies are putting on their balance sheet. You're seeing hedge funds just making big allocation. I I feel like the supply is fixed and the demand is going up. And in the grand scheme of things, that would be something that I would I would want to add um in portfolios. Like Chris said earlier, you'd really want to keep the sizing under control so that your risk your risk is kind of you put money in. Did you you know can you lose that? Sure. It can go down. Um you want to keep your sizing to the point where you can emotionally feel comfortable if you know if the if the asset goes down 50%. And to the point where you might even buy more if that happens. That's the attitude you have to have when buying these type these types of uh of securities. I can call it a security now. Um, but I I would say I would say Bitcoin if you wanted if you you want a a long-term high-risk tolerance uh appropriate investment. That's my choice. >> Thanks, Kevin. So, now I want to hear what Chris has to say. >> Yeah, I would I would have a little bit of a different take than Kevin and it kind of um has to do with two things we talked about on the call today. One is small cap stocks and one is healthcare stocks. So, uh, when you look at small to midcap biotech stocks over the last couple years, they have been just unloved and and just had the most terrible time over the last three years. And that has a lot to do with the interest rate uh environment we've been in. Higher interest rates certainly hurt companies that are trying to raise capital. Um, th those hurt those smaller companies and that's why larger cap companies have done better. But when you look at the landscape uh going out, as Kevin said, if we're in a rate cutting cycle, that could help uh small cap stocks and it could help the speculative small cap stocks like biotech stocks. So I would if you have a high risk tolerance because many of these companies obviously don't have revenues, they don't have earnings. They're they're dependent on the FDA to approve their products. But as we said earlier, the health care sector, the aging population isn't going away and the end medical needs are not going away and these drug companies are doing tremendous work to try to put drugs out to cure or help these diseases. So for a long-term investor that has a high risk tolerance, small to midcap biotech stocks is a great place to be for the next couple years. I was going to say full disclosure for Chris. He's the portfolio manager of an emerging biotech portfolio. So he he actually knows what he's talking about, but uh but I just wanted to make sure that I I I I threw that in there. >> Well, I think I think in the end you're both right and the most important thing is that we know our clients. We know what their risk tolerance is. And everyone has a little different definition of what long-term means, right? But we're there's going to be a lot of volatility in the next 12 to 24 months. This has to be something you're thinking about holding on to for three, five, seven years so that the long term actually can come through and it can be a positive in your portfolio. But if you're looking for something short term, you know, these may not be right for you because of the volatility. So I think you've gotten some good advice from both Kevin and Chris. I would also add thinking about artificial intelligence there. There's plenty of ETFs that have that. Semiconductors like chips, data infrastructure, and software platforms can certainly be a good long-term idea, but not necessarily just one stock. You might want to think about an ETF and spread out that risk. >> Great point. >> Um, we're going to also now go on to the three big stories to watch for next week. And so, we're recording this Thursday. Today, Fed Chair Powell is speaking tomorrow at the Fed's annual gathering of central bankers in Jackson Hole, Wyoming. And the next week, Dallas and New York Fed chair presidents have events. Kevin, what do you expect to hear? >> Uh well, I I think it'll be interesting to see tomorrow uh wi with Powell. I I I doubt that there's going to be anything earthshattering that comes out. Um well, last year there was. If you remember last year, Powell announced that that, you know, rate cuts were coming and and that was that was a big deal. Um, that that turned out to be one of the bigger Jackson pole uh releases, I guess, of information. I'm not expecting that this time around. I I don't think that you're going to get anything that's that's explicit. I might you might see Powell lean more dovish meaning that maybe indicating that the the rate cuts are more likely than before. Certainly he's getting an enormous amount of pressure from Washington uh to you know to to be lowering rates. So you probably see some of that but no matter what the markets will probably completely overanalyze and sensationalize whatever he says maybe even take it out of context. So um but so there could be some market move moving news with that. Um, next week with the with the numbers, would you say consumer confidence and GDP revisions? I mean, I I think both of those are kind of a throwaway just because we're still in that tariff churn. So, I think those numbers become more relevant in another quarter or so. Um, you know, the durable goods number, I think that I think that that that could be kind of interesting. We got a good PMI number. You know, the PMI is a survey for purchasing managers. We got a good number a week or so ago, two weeks ago. And um and so that's what people think is going to happen. And the durable goods is like what actually happened. So it'd be good to see the durable goods number back up what the slightly more positive PMI number was. Uh that would be I think a positive, but the big one's probably going to be PCE next Friday. >> That's right. There's a lot going on with the Fed this week and next week, durable goods next week. But let's talk a little bit about the PCE price index that's also out next week which will give us more insight into inflation. Chris, if the numbers aren't good, what would you be advising for your clients? >> Yeah, I think PC, as Kevin said, will be the important reading. Uh PCE is obviously the Fed's preferred inflation measure over CPI. It's more consumer-driven. It's less volatile than CPI. Uh so it will be a very important reading. Um I think if it comes in hotter than expected obviously uh interest rates will see a bump up and expectations for a Fed cut will go down. Uh so it could again backfire on looking at such thing as small cap stocks and those areas of the market where are more dependent on lower interest rates. But again these are shortterm movements. I don't think I would counsel any clients to make moves based on one inflation reading. Um, overall there's a lot of noise because of the tariffs that we've seen as Kevin just talked about. There's a lot of noise there. So just be cautious on on one reading and um I would say that to clients keep your allocation the way it is and understand that that as time goes on inflation should come down as tariffs aren't necessarily as we've talked about in the past inflationary. It's more of a tax. >> Yeah. So I think you both have given our viewers some really good information to come back again next week to see how these reports are turning out to help you make better decisions. I want to thank you all for watching today. I want to invite you to wealthyondon.com to get a free portfolio review from advisors, fiduciaries just like Kevin and Chris at Grimes Wealth Management and Company. They want to help you think through these important decisions during these times. So, I also want to thank our viewers for sending in questions. These were great questions this week. I'd encourage all of you to send us questions, comments, suggestions, whatever it is. And lastly, I really want to thank both Kevin and Chris for your insights and your expertise. >> Thanks, Terry. >> It's great to be here, Terry, as always. Thank you. >> You guys have a great week. >> You, too. >> You, too.
Government in Markets & Buffett in Healthcare: What Should You Own? | Rise UP!
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Bubbles are occur when there's debt like a debt problem like it's backed by by by u by debts that go bad and the and bad debt fuels selling and fuels a contagion and a spread to selling other areas of the market instead of you know beyond where where the the bubble starts. [Applause] Welcome to Rise Up, where we take a look at this week's biggest stories out there, and we break them down so you can understand what's happening to be able to make better decisions on growing and protecting your portfolio. With everything going on in the marketplace today and the volatility, it can get very confusing. Our mission at RiseUp is to really bring you the very best experts, the best conversations, and people who are actually directly helping clients each and every day to help make these important financial decisions for their lives. If you would like some extra help during this session or anytime after, please go to wealthon.com for a free portfolio review from one of our experts here at Grimes and Company Wealth Management. My name is Terry Coulson. I'm a managing partner at Rise Growth. I'm a certified financial planner and I'm very excited to be with you here today with two of our experts. We have Kevin Grimes who's the CEO and CIO of Grimes and Company. Welcome Kevin. >> Hi Terry. Great to be here as always. >> Wonderful. And we also have Chris Dey who's a CFA, a portfolio expert and he's also with us from Grimes and Company. Welcome Chris. >> Hi Terry. Thanks for having me again. >> All right, we're gonna have some fun today. There's been a lot going on. Let's get into our big three. Starting with what's going on with Intel. A 7% surge in Tuesday to close at a fivemonth high. It dropped the same on Wednesday. So, you know, what is happening? The ups and the downs. Soft Bank, you know, announced a $2 billion investment and then the US government said it was considering buying 10% of the stake in the company. You know, some of this is unprecedented. Kevin, can you help us understand what is going on and what should shareholders think? >> Uh, sure. Well, I don't know if it's completely unprecedented. I mean, to me, it hearkens back to the good old days of the global financial crisis back in 2008. If you remember the TARP program. Yeah. Um you remember the US government uh treasury took a stake in GM and and also uh some preferred issued some preferred stock or Boston preferred stock uh from in some of the major banks. And if you think back to back at that point, these were companies that probably could have faced extinction. Um Intel is not quite there yet. Um but back then the taxpayer made money. An American institution lived to fight another day. Uh saved a lot of jobs. So I I look at this uh situation here and I think it's not the same but it it rhymes a little bit. I think semiconductors are absolutely key to the economy. They're also key to national security. Intel is important. Uh the the government is trying to onshore production of semiconductors. Intel plays a part in that or could play a part in that. So from that regard I I mean it makes sense to me um from a shareholder perspective and firstly we're not shareholders but uh from a shareholder perspective I guess like I said it's a little bit different in the sense that uh GM was probably facing bankruptcy the uh the the common shareholders were wiped out in that case and and or nearly wiped out um and uh and the government kind of came in and saved the company. So, at this point, the government's investing alongside uh Intel shareholders, so it could be a good thing. Um, some people are arguing Intel doesn't need money. They need to fix their business. I would argue they probably need both. I mean, if you're going to build, if the plans to build fabs here in the US and to redefine the business, I mean, those things take a lot of money and this is a company that's been burning cash for years. So, you know, I' I'd like to see I'd like to see this get fasttracked. I'd like to see Intel be able to kind of maybe move through regulation quickly, be able to onshore. I mean, let's remember the stock was three times higher than it was today. I think roughly three times higher uh five years ago. Um it's been a long road down u but being aligned with the government and getting tracked through regulation, there could be some advantage there. So, look with they still need a business plan. We'll see what the dilution is uh for shareholders, but I mean it's probably a good thing in the long run and if it's not then the company probably would have been in big trouble anyway without this proposed investment. >> Yeah, Kevin, I think you know you reminded me actually I was at the University of Chicago in one of their finance classes about two years after this all happened many many years ago and I actually got to talk to members of the Fed who actually were making those decisions to invest in banks at that time, invest in GM. So, you're exactly right. Um, maybe a little different, but certainly something we've seen before. Um, Chris, what are your thoughts on this? You know, competitors such as Nvidia, yet some analysts believe there's an infusion of capital from the UF government isn't the solution. If one of your clients asked you about investing in Intel, what would you say? Well, Terry, I think I would I would dovetail what what Kevin just said is that honestly Intel doesn't have a funding problem right now. It really has a technology problem. So, I think Kevin's correct in the sense that that funding is is good. They have additional capital because they are building, you know, big plant in Ohio which costs $28 billion. So, they they need the funding. But the unfortunate part is they're so behind on technology both on the um on the chipm side against Taiwan Semi and then on the chip design side with Nvidia. So they're they're way behind. Now could the capital that's being infused in the company help them kind of get closer to the competitors? Maybe. But I would tell clients right now that it's really an execution problem and that it probably makes sense to wait a little bit before you invest in Intel. They have a new management team which has been successful at other turnarounds, but I would give it a couple quarters before I would I would think about investing in Intel right now and see what that capital can do and see what the return on invested capital will be for shareholders. So, I would take a wait and see approach with Intel right now. >> Yeah, exactly. With the new CEO, I think it does make sense. Um, but let's move on to our next story, which has to do with the infamous Warren Buffett effect. So, we've been taking talking about the opportunities in health care since January. We've had a couple healthc care experts come on to our show rise up. Clearly, Warren was listening because Berkshire Hathway took a $5 million share position in United Healthcare. Last week, shares of the largest healthcare insurance company in the US had plummeted more than 50% from all-time highs, but after the announcement, they were up 12%. Kevin, over the past 52 weeks, the health care sector has been underperforming the S&P by over 30%. Obviously, Buffett's team saw an opportunity. Are there others out there? >> Yeah. Well, I I think it's great that that Warren Buffett's taking his cues from Rise Up and and he he's tuning in. Uh hopefully that's helping him out a little bit. But I mean, this is what Buffett always does, right? He he takes an activist position in very beaten down names. um this is an industry that he knows as well as anybody. I mean, who better to fix an insurance company uh granted of a different different slant, but an insurance company um more than Berkshire Hathaway. I it's just uh I think it's this is something that makes a lot of sense. They have a lot of insurance and reinsurance holdings. So, look, with regard to healthcare, we talked about this a lot in past weeks and yes, I I think that there is an an opportunity here. Uh the question is when uh I mean the whole healthcare industry as well as some of the consumer staple industries with with food processing and and food products in particular um are very much under the microscope with the maja movement you know make America healthy again uh under RFK you know drug sales practices regulations there's just been a lot of scrutiny for the sector um but you got to remember there there are probably some catalysts and maybe even some in the short term I mean I'm thinking You know, when I when I look at the drug industry, it's like the one area that just hasn't had any sort of tariff re resolution. I feel like there's been a lot of resolution with with different other uh different other um sectors and um and and I feel like when you get some when we know what's happening and there and there's there's uh some finality or at least some guidance on what's going to be the the tariff situation with with with with drugs that could be a short-term catalyst because they're the last ones to kind of get the get the turnaround effect from that you know and other than that you just got to remember I mean drugs devices treatments These things have to recover at some point. I mean there could be an opportunity. The bottom line is look if if humanity is going to advance and healthier health healthcare is going to advance and to be able to buy a sector that's lagged by 30 or 40%. I mean at some point I think there's going to be some opportunity there. >> Yeah. Kevin I also think about he may have been thinking the transformation that's going to take place in healthcare for AI and some of the digital work that's going to get done. I mean, they're still on the precipice, but that is really going to start to drive greater, you know, healthcare experiences, but cost and efficiency, I would think, would go down once they can truly implement AI. But Chris, I I want to hear from you. How are you view viewing the health care sector as a part of a portfolio? Yeah, just dovetailing what Kevin said earlier. I do think that um they did come out today and say with the the European deal, the tariff deal that pharmaceuticals will be taxed at 15%. So that was a positive there. Um getting back to uh the tariff issues on pharmaceuticals. So I think that's good news. I think the the sector has stabilized a little bit in the past couple weeks. Uh but when you're looking at portfolios, you know, we always talk about diversifying amongst asset classes and we obviously want to diversify a large cap portfolio into different sectors and healthcare is an an important sector, but it's been beaten down for a number of years. And when you look at, you know, 30% underperformance to the S&P 500, that last happened, guess when 2000 when the dot bubble. So there's a lot of corlaries between now and 99 and 2000. You look at the percentage of healthcare of the S&P 500, right now it's 9%. Just a couple years ago was 15%. When was it last 9%? 2000. So there will be a turnaround in health care. You know there there is a need. The aging population is still happening. There's a lot of unmet medical needs, a lot of rare diseases that still need drugs. So importantly, I think you always want to have some part of your portfolio in health care stocks, but to Kevin's point, you know, it's been a very difficult time to invest in health care. And so, it's hard to put a big part of your portfolio in there, even if there is some valuation discrepancies when you look at healthare versus technology. So, you probably want to see a little bit more momentum in the health care space to add a lot more there. But certainly as Kevin said between medical devices and biotech companies and pharma companies longer term they will be winners. That's right. So we may you this might be more of a longer term investment not a shortterm investment which we've seen the Buffett effect really take place for long-term investment. Keeping that in mind. Our last story is for all of you parents out there who are thinking about paying for your child's educational costs. There's been some changes in new federal tax law. Qualified expenses for the use of 529 plans have expanded beyond college costs, which would cover licensing, tutoring, continuing education, and dual enrollment courses for high school students. And for those of you uh who are parents, but you also have grandparents, I also want to point out that grandparents can actually contribute completed gifts from their estate, which will lower their estate tax and then give them that back to their children to go to college. So remember, in these 529 plans, growth is tax deferred and the qualifications for withdrawal are tax-free when you withdraw withdraw them. And some states even offer income tax deductions or credits for contributions. So all you grandparents out there or parents who have grandparents, this might be a conversation you want to have about gifting through 529 plans to reduce your estate, which ultimately provides you tax benefits in the long run. But Chris, I know you talk to a lot of clients about 529 plans and leveraging them for their children's education. Most choose savings accounts, but what are the pros and cons? >> Yeah, I think you talked about a lot of the pros here, which is the biggest pro is that you can grow these funds taxree and when withdraw them, you don't have to pay any tax. There's not many investment opportunities where you have that where you can put it in, put the money in, have it grow taxree, and then take it out and not have to pay taxes. Also, uh you know, you talked about the state income deductions that are possible in certain states. You talked about the the grandparents uh the flexibility now with uh with changes in in the in the most recent bill. Not only can it be offered for college education, but it can be offered through K through 12, and that was$10,000 a year. Now it's $20,000 a year. It can also be offered for vocational training for certificates and for school for for vocational um trade. So that's a big change. And a lot of clients used to always say, well, what if my child doesn't go to college? Well, now it's so flexible because you can use it for K through 12, you can use it for college, you can use it for uh for the trade schools. So I think the flexibility is is is almost one of the biggest pros now. And the cons obviously are if you take out some money from 529 plans for not for qualified education expenses then you have a 10% penalty and it will be taxed as as income and that some of the plans the investment offerings are a little bit sparse. So you can't invest in individual stocks and things like that. But overall, a 529 plan makes great a great amount of sense for all people right now. >> Yeah, for both parents and grandparents, the 529 certainly gives more flexibility than it has in the past and really helps. I think people still value education, but do it in a taxefficient manner. So, let's go on now to our questions. And I want to remind you again, if you would like to go to wealthon.com to be able to do a portfolio review, please do that. But our big topic we're opening up about is um the questions that you have sent in to us. So let's begin with Marco Fontana 2115. It feels like there are massive bubbles at all levels. Stocks, real estate, crypto, even debt. How do I manage my portfolio? And this this particular um question is coming from a 50-year-old when I'm worried about everything is going to collapse. So, how do you manage the bubble with the fear of loss here? Chris, do you want to take that one? >> Yeah, there's a lot in that, Terry. I think, you know, first of all, a 50-year-old has a number of years till retirement. So, um, they can take some risk even if there are some concerns about, you know, bubbles in certain areas. There's always there's always worries out there. We're always climbing a wall of worry whether it's uh in the equity markets or in the fixed income markets or in real estate. There's always some concerns. Now, now certainly when he's putting a portfolio together for him, he wants to make sure that portfolio is right for his risk tolerance to make sure he has the right asset allocation there and then he's diversified in those major asset classes. We talked about healthcare, but when you look at equities, you want to be not only in the US, you want to be have some exposure in international stocks, some exposure in small cap stocks, some exposure in emerging market stocks. So, you stay diversified. And also I would I would point out when you look at some of the more speculative asset classes like Bitcoin just to make sure you have the right position size for your risk tolerance. It certainly is a good diversifier in portfolios, but you want to make sure you're not taking a huge amount of risk because it is the most volatile asset class that is out there. Even though it has been the best performer, it certainly has the volatility. So I would say Marco is to make sure you have the right risk tolerance. Make sure your ass allocation is correct. And also, if you need money in the short term, not for retirement, but for something else, make sure you have a a cash bucket so that you can use that cash and you're not taking money out if if in fact these bubbles do burst in these markets. He's not having to sell at lows. And I would say that even in this scenario, if the markets kind of blew up, if he had a good amount in bonds, those would be the safety part of his portfolio. And those would provide that balance and and that protection of principle when things start to fall apart. >> I agree, Chris. And the other thing I would add is making sure you're rebalancing your portfolio regularly, if it's quarterly or annually, having a recheck of your portfolio because you may want to trim a few positions that have grown oversized due to the current frothy market. And then you shift those gains to safer underweight asset classes so that your risk tolerance is now balanced. And then you lock in those profits and keep your risks aligned with your ultimate goal. So, those are a couple thoughts on how you might manage through the bubbles. But Kevin, let's go to our next one. And this is Everett who's in Reading, Massachusetts. I think that's what that means. Everyone is talking about the Mag 7 and how dominant they are in the market. Is it too late? Should I be looking to add or sell? What other investments are better at this point? >> Sure. So, so Kevin, I I live in Needam, so not far from Reading. us Massachusetts people. We know how to pronounce all our towns. So, um yeah, I well I I maybe I could relate this even in in roll in Chris's the question that Chris just fielded um from Marco Fontana about uh about bubbles. I guess I guess if you were gonna if there's a there could be bubbles in narrow areas of markets and I mean if you look at if you look at the broad market right now there I don't think that you could say that there's bubbles but there there are certain pockets I think that you could be concerned about and obviously mag seven would be one that everyone would point to and say is there a bubble there and they probably relate it back to the tech bubble in uh in the late 90s and in 2000. Uh and there's a lot of similarities. I mean back then there was a huge amount of spending on internet infrastructure and fiber and and and you know internet components and and changes in technology made a lot of that investment obsolete and and there was but you got to remember bubbles are financed or bubbles are occur when there's debt like a debt problem like it's backed by by by u by debts that go bad and the and bad debt fuels selling and fuels a contagion and a spread to selling other areas. is with the market instead of you know beyond where where the the bubble starts and right now I guess if you said there was a bubble it would be a AI maybe Sam Alman had a comment I think earlier this week where where I think I don't know if you use the term bubble but I think he said over excited he say which is kind of interesting considering they're they're raising capital right now. Um, but if you think about the companies that are making the investment right now, I mean, there's there's still they're still experiencing earnings growth. There there's not a debt problem. There's no there's no real debt fuel. So, I don't know if it's a bubble, but I do think that they're in the short run that some of these companies in the mag seven look I mean the valuations are enormous. you know that you see some maybe not mag seven companies but some AI companies like Palunteer with with you know 120 times sales uh you see you see some you know a lot of the mag seven companies they're at 50 times earnings 60 times earnings I mean these are enormous numbers so in the short short term valuation you know can be a problem when there's you know when they're it can be an excuse for a pullback or can magnify a pullback um so at the end of the day maybe right now is not the time to running out and adding these to your portfolio in mass. But look, if if there's a pullback, these these are the stocks that should be bought, right? I mean, the play and that's been the playbook. You know, during COVID a couple years ago, these these stocks were the first to to kind of come roaring back. Um that was the fastest decline in in rally ever. Um and then even just this past uh you know, March, April after liberation day, it was the fastest 20% down and up. And again, it was the mag seven that that led. Um, in the long run, you have to own these names. Uh, I I think just like Bitcoin or some other areas of the market that you you want to get exposure to. You have to just try to be patient, be selective on when. So, I'm not I don't know about timing this that. My guess would be try to find a better entry point. But at some point, you got to have exposure here. I mean, these companies um they experience the network effect. They can grow faster and scale faster than any other company. and you know if they're if it's left unchecked they'll you know they'll they basically become monopolies and unstoppable and that's kind of what's happening. So you know I guess in the in the long run one of the biggest risks would be that they get broken up like the monopolies did in the past. Like think of like energy companies and baby bells, you know, the the phone companies. So yeah, I I I think that in the short run I'd say you might want to be careful. in the long run, you got to own these things because there there's just, you know, long-term uh uh waves that are going in that direction. But I think Chris hit the nail on the head where if you're, you know, I think part of that question was, you know, what else could you be adding and and what looks good? I mean, small caps are are are small cap stocks are trading where they were in 2021 and, you know, emerging markets are, you know, they've been up and down and all around, but is it you know, the MCI emerging markets index is back where it was in 2017. So there there's an opportunity I think for these other areas of the of of the markets, these other markets to to to lead uh in the next phase here. And look, if if we are going to have a Fed cutting cycle like I think we're going to have, if if if we can skirt inflation, um if things do settle out, then then those are the areas of the markets that would benefit from from uh you know, from a calming and um and and that's where you might see some opportunity. So, I know we've been saying it for a long time and you've probably been reading it in all the, you know, the magazines or or or columns for a long time, but there will come a time when when it you're you're you're really rewarded for having exposure to other things than large cap tech. You still need large cap tech, but if you're looking for opportunity, um, it's probably somewhere else right now, like maybe small caps and emerging markets. Well, that leads us to our third question, Kevin. It's really around the same theme, and this is uh Riley from Lincoln, Nebraska, and he asks, "What is your favorite long-term investment for someone who has a very high risk tolerance?" Kevin, why don't you take that and then Chris, please add in. >> Yeah, Chris is gonna get mad at me, but again, Joe's not here, so I I can I can talk about Bitcoin again. So, uh I would say Bitcoin. I mean, look, the bottom line is you got to be really careful about this. I'm going to start a a newsletter for clients um just that talks about the cycle and the trending of of Bitcoin because it's it's it's not something you can really value because there's no cash flow to value. But in the big picture, you're talking about the best returning asset that exists right now or has existed um you know, really since it's come out. Um it's also probably the highest volatility asset. Um, but then again, if you look at risk adjusted returns, you look at like what we call a sharp ratio in in the industry where where you adjust returns to volatility, it's still a better it's still better than stocks. It hasn't better than stocks. It's that the the the returns have justified the risk. And and when I look at like I like to I'm a simple guy. I like to look at things like supply and demand. And there's a fixed supply here. You know, you Bitcoin might might just simply be a spot on a digital register, which sounds boring, but you know what? There's only 21 million of them and that's it. And there it's not like dollars or any other currency or really anything else. It's a fixed number. And demand, you're not talking about people looking to go buy pizzas and soda with with Bitcoin anymore. You're talking about um institutions getting involved. You're you're going to see them see Bitcoin in 401ks. Bitcoin. It's been only probably a year or so now that they you can buy it through an exchangeraded fund like a true Bitcoin exchange traded fund and an investment portfolio. The institutional money is going into it. Uh, you know, companies are putting on their balance sheet. You're seeing hedge funds just making big allocation. I I feel like the supply is fixed and the demand is going up. And in the grand scheme of things, that would be something that I would I would want to add um in portfolios. Like Chris said earlier, you'd really want to keep the sizing under control so that your risk your risk is kind of you put money in. Did you you know can you lose that? Sure. It can go down. Um you want to keep your sizing to the point where you can emotionally feel comfortable if you know if the if the asset goes down 50%. And to the point where you might even buy more if that happens. That's the attitude you have to have when buying these type these types of uh of securities. I can call it a security now. Um, but I I would say I would say Bitcoin if you wanted if you you want a a long-term high-risk tolerance uh appropriate investment. That's my choice. >> Thanks, Kevin. So, now I want to hear what Chris has to say. >> Yeah, I would I would have a little bit of a different take than Kevin and it kind of um has to do with two things we talked about on the call today. One is small cap stocks and one is healthcare stocks. So, uh, when you look at small to midcap biotech stocks over the last couple years, they have been just unloved and and just had the most terrible time over the last three years. And that has a lot to do with the interest rate uh environment we've been in. Higher interest rates certainly hurt companies that are trying to raise capital. Um, th those hurt those smaller companies and that's why larger cap companies have done better. But when you look at the landscape uh going out, as Kevin said, if we're in a rate cutting cycle, that could help uh small cap stocks and it could help the speculative small cap stocks like biotech stocks. So I would if you have a high risk tolerance because many of these companies obviously don't have revenues, they don't have earnings. They're they're dependent on the FDA to approve their products. But as we said earlier, the health care sector, the aging population isn't going away and the end medical needs are not going away and these drug companies are doing tremendous work to try to put drugs out to cure or help these diseases. So for a long-term investor that has a high risk tolerance, small to midcap biotech stocks is a great place to be for the next couple years. I was going to say full disclosure for Chris. He's the portfolio manager of an emerging biotech portfolio. So he he actually knows what he's talking about, but uh but I just wanted to make sure that I I I I threw that in there. >> Well, I think I think in the end you're both right and the most important thing is that we know our clients. We know what their risk tolerance is. And everyone has a little different definition of what long-term means, right? But we're there's going to be a lot of volatility in the next 12 to 24 months. This has to be something you're thinking about holding on to for three, five, seven years so that the long term actually can come through and it can be a positive in your portfolio. But if you're looking for something short term, you know, these may not be right for you because of the volatility. So I think you've gotten some good advice from both Kevin and Chris. I would also add thinking about artificial intelligence there. There's plenty of ETFs that have that. Semiconductors like chips, data infrastructure, and software platforms can certainly be a good long-term idea, but not necessarily just one stock. You might want to think about an ETF and spread out that risk. >> Great point. >> Um, we're going to also now go on to the three big stories to watch for next week. And so, we're recording this Thursday. Today, Fed Chair Powell is speaking tomorrow at the Fed's annual gathering of central bankers in Jackson Hole, Wyoming. And the next week, Dallas and New York Fed chair presidents have events. Kevin, what do you expect to hear? >> Uh well, I I think it'll be interesting to see tomorrow uh wi with Powell. I I I doubt that there's going to be anything earthshattering that comes out. Um well, last year there was. If you remember last year, Powell announced that that, you know, rate cuts were coming and and that was that was a big deal. Um, that that turned out to be one of the bigger Jackson pole uh releases, I guess, of information. I'm not expecting that this time around. I I don't think that you're going to get anything that's that's explicit. I might you might see Powell lean more dovish meaning that maybe indicating that the the rate cuts are more likely than before. Certainly he's getting an enormous amount of pressure from Washington uh to you know to to be lowering rates. So you probably see some of that but no matter what the markets will probably completely overanalyze and sensationalize whatever he says maybe even take it out of context. So um but so there could be some market move moving news with that. Um, next week with the with the numbers, would you say consumer confidence and GDP revisions? I mean, I I think both of those are kind of a throwaway just because we're still in that tariff churn. So, I think those numbers become more relevant in another quarter or so. Um, you know, the durable goods number, I think that I think that that that could be kind of interesting. We got a good PMI number. You know, the PMI is a survey for purchasing managers. We got a good number a week or so ago, two weeks ago. And um and so that's what people think is going to happen. And the durable goods is like what actually happened. So it'd be good to see the durable goods number back up what the slightly more positive PMI number was. Uh that would be I think a positive, but the big one's probably going to be PCE next Friday. >> That's right. There's a lot going on with the Fed this week and next week, durable goods next week. But let's talk a little bit about the PCE price index that's also out next week which will give us more insight into inflation. Chris, if the numbers aren't good, what would you be advising for your clients? >> Yeah, I think PC, as Kevin said, will be the important reading. Uh PCE is obviously the Fed's preferred inflation measure over CPI. It's more consumer-driven. It's less volatile than CPI. Uh so it will be a very important reading. Um I think if it comes in hotter than expected obviously uh interest rates will see a bump up and expectations for a Fed cut will go down. Uh so it could again backfire on looking at such thing as small cap stocks and those areas of the market where are more dependent on lower interest rates. But again these are shortterm movements. I don't think I would counsel any clients to make moves based on one inflation reading. Um, overall there's a lot of noise because of the tariffs that we've seen as Kevin just talked about. There's a lot of noise there. So just be cautious on on one reading and um I would say that to clients keep your allocation the way it is and understand that that as time goes on inflation should come down as tariffs aren't necessarily as we've talked about in the past inflationary. It's more of a tax. >> Yeah. So I think you both have given our viewers some really good information to come back again next week to see how these reports are turning out to help you make better decisions. I want to thank you all for watching today. I want to invite you to wealthyondon.com to get a free portfolio review from advisors, fiduciaries just like Kevin and Chris at Grimes Wealth Management and Company. They want to help you think through these important decisions during these times. So, I also want to thank our viewers for sending in questions. These were great questions this week. I'd encourage all of you to send us questions, comments, suggestions, whatever it is. And lastly, I really want to thank both Kevin and Chris for your insights and your expertise. >> Thanks, Terry. >> It's great to be here, Terry, as always. Thank you. >> You guys have a great week. >> You, too. >> You, too.