Stocks Becoming More Volatile Due To Growing Liquidity Shortfall | Michael Lebowitz

Summary

Market Rotation: Detailed discussion of breadth improving and rotations from overbought mega-cap tech toward Health Care, Consumer Staples, and Energy as a risk-management approach.
AI Theme: Extensive debate on AI capex sustainability, chip obsolescence risk, depreciation assumptions inflating earnings, and the potential for a sentiment-driven unwind.
Key Companies: NVDA, ORCL, META, GOOGL, and MSFT analyzed in the context of AI spending, debt issuance, circular financing, and counterparty risks.
Semiconductors: The sub-industry is central to the thesis as AI chips and data center buildouts face rapid life-cycle risk and massive funding needs, raising volatility in valuations.
Liquidity & Fed: The Fed’s increasing role in market liquidity and likely return to QE were highlighted as key supports for asset prices despite structural stress in funding markets.
Passive Investing: The “giant mindless robot” bid into top-weighted names was cited as a dominant flow supporting indices, with risks if demographics or flows reverse.
Energy Focus: Launch of a new energy model underscores interest in Oil & Gas as a beaten-down area with potential upcycle, and a tactical rotation target versus overbought tech.
Speculative Barometers: IBIT (Bitcoin ETF), MGK (mega-cap growth), and Gold were monitored as leading indicators for broader risk appetite and trend durability.

Transcript

The point is that liquidity is no longer ample. We we don't know where it is on the scale. The Fed doesn't know. So, you know, to I think to your original question is yes, there's still stress in the market. There are a lot more Fed tools that kind of limit the stress, put a floor and ceiling on some of that stress. So, it's not maybe as concerning as it would have been in 2019. But nonetheless, there's liquidity issues and the Fed will be doing some variation of QE. How that plays out, you know, I don't think anyone knows, including the Fed at this point, but that is coming because there is a liquidity shortfall. Welcome to Thoughtful Money. I'm thoughtful money founder and your host, Adam Tagert. welcoming you back here at the end of the week for another weekly market recap. This time featuring my good friend, the Buffeted portfolio manager, Michael Lieowitz. Mike, how you doing? >> I'm doing well, Adam. How about you? >> I'm doing well. Um folks, we got Michael this week because this is um one of the weeks that Lance is taking his wife to her chemotherapy treatments and we're wishing them very well. Um I think they're past the midpoint on this, so hopefully they're starting to feel like they're in the home stretch. That would be great. Michael, I picked the word buffeted for a couple of reasons. Um, one, out here in my new home in Nevada, uh, we are having a pretty decent rain and windstorm. Uh, so my house is getting pretty buffeted by the winds. Uh, the market similarly is getting pretty buffeted uh, today. So, we'll talk about that, I'm sure. Uh, and then lastly, uh, Warren Buffett, a great investor, uh, just announced that, uh, we won't be hearing from him much anymore. he's going to be quote unquote going silent. Understandable. The guy is what in his mid 90s at this point in time. Uh he's already handed over the reigns to the CEO there at uh at Bergkshire Hathaway. Um so just want to mark that milestone. >> So lots of buffeting today. >> Lots of buffeting today. Um so why don't we go straight to the market buffeting. Um so markets have seem to sort of switch quickly into risk off here and um you know, you can walk us through anything you like. Uh this is Friday. We're recording this earlier in the day as we usually do on Fridays. So the market hasn't closed yet and who knows what'll happen between now and the close. Uh it does seem to be off the lows a bit, but but today's so far at least been kind of a rough day unless you owned the VIX or oil. >> So apparently Adam, you haven't looked. We are now flat on a day >> really. >> The market has done a U-turn. They have bought the dip. Um [snorts] the the uh more conservative stocks that were doing much better yesterday are down today. The high-flying tech stocks are up today. So quite the reversal, quite the unbuffeting over the last uh I don't know. I I I looked at it right before I got on with you and I was kind of surprised as well. So >> wow. Yes. I think I looked at it about 30 minutes ago before I started working on my list here. So that's been pretty pretty pronounced recovery. Yeah, as you know, 30 minutes in this market is different, you know, can be a whole different ballgame. >> Wow. Okay. Well, then let's let's uh well, let's walk through this then because one of the questions I was going to ask you was uh are we seeing any important trend breaks here in the market and maybe we were, but maybe they're unbroken at this point now. >> Right. So, with that, let me uh I I created a few graphs. It's probably easiest to show it. What we have here is the S&P the SPY, the S&P 500 ETF. And you know, Lance and myself have been talking ad nauseium about the the MACD, which has been slowly declining in the face of the rising stock market and very similar action in the RSI at the bottom of the graph, negative divergence. And you know that that tends to be a bearish signal. Um, and we were, you know, we've been paying close attention to it. As you can see, I circled up at the top. Um, we hit a high back in a few weeks ago. Market sold off, came back, but it didn't go back to the higher high. It hit a lower high, and now it's selling off again. So, what we want to see today by Friday's close is whether we stay above that prior low or close above it. We don't really want to see a lower low, especially for the week. U I then drew a dotted line in there, too. that, you know, even if we set a lower low, we'd like to stay above that dotted line, meaning that the market is potentially just working off consolidating and working off some of this overboughtness. Uh those are some things we're looking at. And to your question, the moving averages, you have your 20, 50, and 200, red, blue, and black. We're who knows where we are now. I unfortunately I did this about an hour ago, so it's it's off, but uh we should probably be right above or right on the uh probably right above the 50-day moving average. And that's kind of the key one. That's the one that's provided support since April. >> Okay. And Michael, is that the is that the blue one here? >> The Yes, the blue one. The the reddish one is the 20. And you can see it's been support, but we trade through it. it's not, you know, the pinpoint support. The 50 days been more of a uh more reliable level of support. And, you know, clearly if we break if we convincingly break the 50, we break that dotted line, the next big step is the the 200 day average, which is that black line, which is quite a ways to go. Um, so, you know, that's another 8% or so lower. Uh but the thing to note is the MACD has come down. That's the one on the top, right? But it's still at a relatively high level. So it can certainly come down a lot more. The RSI is slightly below 50. 50 is fair value. So it's not oversold. It's just back to fair value. So you know, there's something in these charts for the bulls and the bears. you know, if we hold support and and today's rally, you know, today we end up green and maybe those tech names lead the way today, the trends of the prior few months are back intact and or we just consolidate for a while before we get back on a bullish track. But again, if we start breaking some of those levels, we have to pay more attention and and think about our risk posture. Um, one of the things that concerns me is kind of the what's going on. The speculative stocks have led the stock market and speculative assets have kind of led this more this uh environment of speculation. So what I have here are the uh called the three horsemen of the uh speculative trade for lack of a better word. The orange is gold. The bar chart is uh IBIT, which is the Bitcoin ETF. It was easier to chart that than Bitcoin, but they're virtually identical. And then that that called Teal Line is an ETF called MGK, and it's the Mega Cap stocks. So, it closely resembles the MAG 7. So, and I I drew a circle at their peaks. You can see Bitcoin peaked before the other two speculative markets, fell off, rallied, but set a lower high and it's, you know, it's gone down and it's it's not looking great here for Bitcoin. You don't see the moving averages, but it's below its 200 day moving average. It's trading sloppy. Gold peaked a little bit after that. Similar behavior. It fell. It started rallying back. And we're still at that point now where we don't know if it's going to rally back to new highs and keep going or set a lower high. Um so that's to be determined. And same with MGK which is representative of the stock market. We peaked. Are we going to start setting lower lows and lower highs? But given that the the focus of the market has been on kind of these three asset classes, gold, Bitcoin, and high-flying stocks, for lack of a better word, these are the ones to watch to help assess where the broader markets are going to go. Um, you know, I'm sure you and Lance have talked about it a lot. The breadth of the market, the breadth of the market has been horrendous. it's been one or two sectors and 10 15 stocks leading the way while a good handful of stocks are lower. Um and um so what I want to do is kind of show how breath is changing a little bit. Now again maybe it's just a corrective action. you know, we're going to see when the market sells off, you're going to see those sectors, the conservative sectors, the ones out of favor, do better than the high-flying sectors, which, you know, control the S&P 500. There's seven stocks that make up 40% or so of the S&P 500. So, some of it is just math. And what we have here, this is from Simplevisor, and what it does is it shows the sector uh relative performance. So, how did it do versus the S&P 500? And I set it up to look at the last 10 days, the 90 days before that, the 90 days before those 90 days, and so on and goes out to uh October 24. And what I highlighted here with that red box is healthcare because that's kind of been the star of the last two weeks. It beat the S&P by 6.72%. Um, and you can see technology when I did this was down almost 3% versus the S&P. There's a little bit of a rotation. So the question is, is you know that call it 8 n% rotation between technology and healthcare? Is that it? Are we good now? Is breath good? And to answer that, you really have to look back in time. In the short run, maybe. In the long run, sectors like health care, like staples, like energy are still grossly out of whack from the broader market. You can see healthc care was lost 5% over the 90 days before that, 8%, 11%. While technology was zooming ahead, you know, beating it by 10, beating it by four, beating it by a percent. So in the short run we may you know this breath may take this rotation may take a little break and if we hit new highs probably technology is going to lead the way but if we continue to see sectors like staples like healthcare like energy continue to outperform that probably means that those tech stocks are heading lower which you could have a weird market where the market's down the ind you know the S&P 500 is down the NASDAQ is down, but there's a good handful of stocks that are up. Um, and you know, we think that's one of the most important parts of investing is rotation. Um, I clipped this from our daily commentary. This these are two screenshots two weeks apart. The one on the right is relatively is I think was from yesterday. The one on the left is about two weeks ago. And we look at a series of stock factors and we assess using technicals are they overbought are they oversold and we do it on both an absolute basis and a relative basis. So just using technicals on the price of whatever ETF represents the stock factor and doing technical analysis on the ratio of that ETF to the S&P 500 and we can create this grid you see on the right side and put each factor in there and without focusing on which sector which factor is where what you can see is that scatter plot is very scattered. There's stuff in the top right. There's stuff in the bottom left. It's all over the place. If you if you look over to the right, you can see they're starting to compact a little bit. The ones that are oversold are kind of moving back towards the overb bought quadrant and vice versa. The ones that are overbought, we're kind of moving back to the middle. So, um you know, another indicator there that breadth is getting better. Um, and I just made this for you, Adam. Um, why do we care? >> Right. The the question is why do we care uh about breath about rotations? And again, I think it is so important. So, what I did was I just took staples and technology and I look at their excess returns since October about two years, >> right? And that's just to give a sense of sort of highly speculative versus very defensive, right? >> Yes. Uh and you can do it for all different factors, sectors, whatever you you could do two stocks. And this again is excess returns. So if you had technology, you beat the S&P by call 11 12%. And if you had staples, you underperformed by 30%. So again, it's not measuring what Staples did. It's how did Staples do versus the S&P 500. So if you look at these, they're not mirror opposites, but they're very close to opposites, right? When one's going down, one's going up, and vice versa. So what that's telling you is that there are times when staples are outperforming the market, underperforming the market. And at those same times when staples are underperforming, technology is probably outperforming and vice versa. So you can hold the S&P 500 or you can spend some time and pick the sectors that will be beating the S&P 500 and avoiding some of the sectors that will be underperforming. So this this combination has a correlation you can see on the bottom right of about of an R squar of about 70. That's pretty tight. And what this this just looks at the data slightly differently. It's the each dot is the daily change in the excess returns. So you can see this bottom right quadrant is when Staples daily returns are higher. And then if you look to your left, corresponds with technology daily excess returns being lower and vice versa. So it's kind of telling you the same thing you see up here, but it's a much more cleaner statistical way of looking at it. And you know, like I said, this has an R squared of 70. Some of the factors that we look at um have R squares over 90. So it so if you look at that graph at the top life light top top left they're they're virtually almost mirror images. So again if you're following rotations and you have the tools which we do offer on simplevisor to tell you when one is overbought and when one's oversold and likely to change the ability to chart the ratios against each other whole bunch of other tools you can better take advantage of the market. So that's why Lance and I talk about rotations a lot because it's a key part of money management and managing risk is not just about buying, you know, is not just about your exposure. How much exposure do you have to the stock market? It's also about what is that exposure look like? Is it conservative? Is it aggressive? Is it oversold? Is it overbought? Even in 2000, there were plenty of sectors or factors that small cap value did extremely well while the market in general really got hit hard. So, you know, the point is there are various ways to hide and some of those ways of hiding from a market that you think is really going to come down is just in different sectors or factors uh in addition to adjusting your exposure. So, you know, I I because breath has been making hide headlines, I think the rotations that we've seen have been very pronounced over the last four or five months. And it provides the opportunity to really show what rotations are, how they have actually played out, and how to take advantage of them. >> Okay. And so, Mike, let me just sort of repeat this back to you to make sure I'm clear and the audience is clear on how you guys are using this. So, um, you know, let's say we're looking at one of your factor quadrants there and technology is, um, way up to the right, meaning it's it's looking pretty overbought, right? So, sort of like that chart right there. Yep. Um now now go back to the chart you were just on which basically says hey um we see there's a pretty pronounced inverse correlation between technology and staples. So you know we think at some point this this overbought nature of technology isn't going to be able to sustain forever. So while they're kind of on discount, let's let's put some of the portfolio in these staples so that when technology kind of mean reverts and starts becoming, you know, less overbought, we can ride uh we should be able to ride um we should be able to avoid some of that and we should be able to ride some of the appreciation in the staples which should appreciate as as uh those technology stocks cool off. Am I capturing it correctly? >> Bingo. And what you find is when stocks are in the very upper right corner or very or sectors and factors are in in either corner, they don't stay there for very long and they tend to gravitate towards the middle. So in the process of gravitating towards the middle, if you're in the bottom left corner, it means your technicals are improving, which usually corresponds with the better stock price and vice versa for the one in the top right corner. So when this was taken there was some so you like midcap value was just very oversold. That's the one in the top and the bottom one is I got to look around here was mega cap growth. So those are your your basically your magnificent 7 was very overbought at the time. This was two weeks ago. That trade would have done decent over the last two weeks. Megga cap stocks have led the way down and small cap value has done a little better. Um before doing a trade like that though I would look at what their correlation is. Is there a correlation? So do we can you draw charts like these and show an R square of 70 or is the R squar very small and their relationship isn't meaningful. So likely if I did gold miners, which were also a week or two ago in the top right corner and staples in the bottom left, these charts would not tell me it it could be a great trade, but these charts are not going to tell me that statistically if they revert the odds, you know, it's not going to the odds are in your favor. >> Yeah. >> Um so um you know, in some time when we get a chance, we could go through Simple Visor. could show you how we one of the reasons, you know, we put the stuff the tools up on Simplevisor to help our subscribers use it, but we also do it for ourselves. All of these things are in spreadsheets. We're in spreadsheets and it's really sloppy to share it, you know, to share spreadsheets with [sighs and gasps] God only knows how many tabs are in each spreadsheet and are updating and it it's sloppy. So, so for us, this is a godsend to go to a website, our own website in this case, and just see things real time. >> Yeah, I know. So, supervisor is amazing and Lance does a pretty good job of walking through it in real time. But yeah, Michael, anytime you want to come on and and walk through any particular elements of it, I know the audience would be really interested in that. Um, back back to these these charts for a second. So, you know, [clears throat] Lance has has very often said that trend lines act like gravity. So um you know when when things start getting really overbought or oversold it's sort of the rubber band effect right where stretched rubber band gravity eventually pulls it back more towards you know it's it its equilibrium state so that's sort of what you're playing here and coming into this year um I think both of you and Lance wrote about how you expected more volatility in 2025 than we had seen in 2024 2023 which has totally proven to be the case and in that type of market, I would imagine this approach pays off more, right? Because you get more opportunities, you get more distortions, more times the band is is stretched and more ability to play the the re-equilibration. >> Um, has it proven to be that type of year for you? you feel it's it's in this this kind of you know it it it makes a case that hey in a year where just everything goes up yeah you know passive investors do just fine but in a year where there's more volatility the active investor has a chance to to make superior returns have you been seeing that this year >> yes and no so the year started off I think I was using the word roller coaster when we were talking in December and January I expect the year to be a roller coaster we go up we go down we go up we go down we get nauseous and we end up where we started, right? We went up, we went down in April, and then we've been on a nice steady incline since then. So, the the ro there haven't been that many significant rotation trades, and you can see it in that that first that graph I showed with Staples and technology. uh other than from like January to April when staples outperformed technology, technologies just been going up and versus the S&P and Staples down. So it it's presented itself a couple times. Even now they're not significant enough that that had you done that trade, it would have been nice, but not not significant. So you know, I would characterize this this year more as trending. If we look at from April to today, we're trending. We're starting to get some jitters here, some volatility, but like I started with, we haven't broken really any key trend lines. There's nothing here that tells us we're going back down that we've kind of coming over the top of the roller coaster. Time to buckle up. So, you know, if that is where we're at and we're starting to go back down the roller coaster, then yeah, absolutely you should be looking at at these rotations because I think being in staples, financials, healthcare, you know, a few other sectors, types of stocks, stocks, you know, stocks too, you can't just, you know, you can buy the Staples ETF or you can look at the stocks within the Staples ETF and pick among those as well to to, you know, to to even clarify this analysis further. So um you know the point is that if we are turning you should figure out how to use some of these rotations to protect but you can stay invested instead of just getting out and potentially missing uh whatever the market may have. >> Right. Right. And you know, one of the things that Lance is always really harping on is is while you're still in the market, right? And it's it's he would say it's relatively rare you get signals that it's like an all out like just move to cash and just, you know, he he's he's said many many times those are real tail risks. Uh those moments are real tail risks. And what you don't want to do is is get shaken out prematurely to your point and then the market recovers and then you're you're you've missed the rebound and now you're stuck in cash and you're trying to figure out when to get back into the market and and often times you know people just sit immobile there and the market keeps going up, right? So um you know he's talked a lot about um investing in a way so that um you know you are uh when you see some warning signs like you just walked us through a few with the potentially higher highs and maybe some of these assets starting to make uh lower highs is look at some of these more undervalued parts of the market that would potentially um well either have less froth in them um so if the market goes down they'll go down less hopefully. Um, or they the the capital will will rotate. It'll rotate out of the the super popular stuff that's gotten frothy into these less loved categories and you may actually make some money, right? >> So, you know, he he mentions those strategies and saying, "Hey, um it's great to match the market, you know, if the market's having an upear and and you guys try to do your best to do that. Um, but no guarantees." And part of it's because you're deploying some of these other strategies that that that riskmanage the portfolio, right, that that give you more downside protection. He's always saying, look, it's it's good to catch as much of the upside as you can, but it's far better to catch less of the downside, right? And mitigating that downside risk is really how you get superior long-term uh performance. So, I just want to make sure that that a lot of what you're talking about here, too, is just a way to stay in the market, but with less risk. >> It's risk management, right? Again, you know, we've talked about you can sell stock. You can just sell stocks. That's one way to manage risk. You could buy puts. That's another way to manage risk. A third way to manage risk is just to change what's in your portfolio. Sell your Nvidia and buy Proctor Gamble. That's going to mitigate risk. So, you know, there's there's plenty of ways to mitigate risk, and we use all the above. Uh, and you know, like anything, the more tools you have, the better your chance of success, whatever success may mean for you. So that's why this is one of our tools, especially in a market that we don't really know is definitely heading lower, right? If if we were 100% certain it was heading lower, that would change our strategy. It's showing some signs of topping, it could easily keep going, right? We're we're we're entering the very positive seasonal part of the year. Uh Santa Claus is coming to town and he always brings a rally with him, right? >> Stocks are, you know, we're back for most stocks. They're they're now back in the buyback window where, you know, companies can start buying back their shares. And it's funny, I want to connect a bunch of dots here over the next couple minutes, but to your point, like 2 hours ago, this conversation was going to be all about, you know, um, how are we protecting ourselves from these falling prices if the market's, you know, going to continue going down from here? But to your your observation earlier, I'm looking, the S&P is now up, uh, you know, 40 basis points here. Um, so it's now an upday, you know, for the markets here. The NASDAQ's up almost a percent. Um, a lot of these guys that were down five, six, 7% are now, you know, they've cut those losses in half. We'll see where things end up here. But to your point is it's kind of a market that's keeping everybody on their toes here, right? You for those that are looking for signs of of weakness and cracks there, there definitely some there and we're going to talk about some in just a moment. Um, but the market also, you know, is showing a lot of resilience and it's not that far off all-time highs. And here's one question I wanted to ask you, Michael, which is it's such an interesting market. Um, because it it increasingly seems to have only two states, which is nothing stops this train. This market's just going, you know, perpetually higher or oh my god, the world is ending. And I just want to pull up the uh the fear greed meter here. Um, I know you guys have a slightly different calculation that you use at Real Investment Advice, but you'll see here we're in extreme fear, right? And this this number is a little bit higher than it was about an hour ago when I checked it earlier this morning, but we're still in extreme fear. Now, we are less than 200 basis points off of uh 200 S&P points um off off the S&P all-time high. Right? That's that's 2%. Um, and yet that's been enough to make everybody just freak out like the world is ending here. So, we we seem to have this, you know, strong market, right? It's it's it's been resilient all year. It's it's it's gone up to it's made a number of all-time highs. It's still close to its all-time high, but it kind of it's almost like on a knife edge, right? Just a little bit of wind in in one direction or the other. All of a sudden, everybody's really worried the whole whole house of cards going to come down. What does that tell you about this market? >> Well, I I think most people understand that valuations are very high. And again, I'm not just talking about companies like Palunteer or the Coree or or Nvidia or or the big tech names who actually some of them their valuations are actually not too bad. uh the the bigger ones, the Google's, Microsoft, even Nvidia. But if you look at the staples, if you look at some of those other sectors that we call conservative, they are very overvalued too, right? The cape on the whole S&P 500 is 40. The highest it's ever been was 44, I believe, in 99. In 1929, it hit 27 or 28. So, you know, it's extreme. I think the market knows it. It knows it's extreme. It knows to it thinks to some degree it's playing with fire. But when you're at highs, there's always a narrative that that takes the other side of that argument that says, "Yeah, valuations are extreme, but that's because we're pricing in all this future economic growth due to AI." >> Right? And end quote, it's different this time. And and that's the kind of devil and angel on on your shoulders, right? The the the you know, one of them is telling you, "Oh, this is so overvalued. This isn't going to end well." And the other one's saying, "It's not overvalued. Look at everything compared to growth rates, and these are good deals." >> And it's it's if it's a bubble, we're still in 97, and there's years of great gains ahead of us. >> Or we're in 94, right? not even necessarily in the bottom, you know, towards the end of the baseball game. Uh, so one of the things like you should really focus on is price to the PEG ratio, price to earnings to growth. Price to earnings doesn't tell you much. I mean, it it tells you the the price of the stock compared to the last four quarters, but what about the next four quarters? you're buying a stock for the next four quarters, eight quarters, 5 years, 10 years. That's what you really want to know. And in most cases, companies have a somewhat steady earnings trend. So if you are looking at the last four, that's a good approximation for the first four. And that's why PE ratios and other price to sales, other kind of traditional valuations work. But if you look at some of this AI technology and the massive capex being spent and the massive potential, it's a different story. You're looking at growth rates that are explos potentially explosive. >> Yeah. >> So you argument let me just ask you this question because it's it's going into the next big section I want to talk about which is >> is is this a headfake boom? In other words, it's a bunch of capital spending, right? So, it's companies saying, "Look, I gotta buy all this this infrastructure to play in the new world order." But at some point, the infrastructure will be bought. So, you know, a good question is just how realistic are these growth rates? Yeah, they're explosive right now because people just are throwing money hand and fist at at buying, you know, chips and data centers and stuff like that. But you know once it's once you got enough you got enough. So you know are are we are we are we faultily extrapolating this growth further out in the future than we should be >> possibly. I I I think to me the the maybe the bigger risk is that whatever they're buying today will be bad in two years in three years. So >> I'm going there in just a moment too. If you go back to the 1990s, it was the fiber optic optic. They were just spending a massive amounts of money laying fiber optic across the country and still use fiber optic. It's still valuable. But >> it's just as good 10 years later than it is the day it's laid. Yeah. >> Right. These chips that they're developing could be outdated in six months or a year or two years. the you know there's AI AI is proving very beneficial for these companies but it's also giving all their competitors a new way to think about all this stuff and to create an even better product whatever whether the product's a data center or a chip or whatever it may be. So, you know, we may look back on this and said Nvidia did a great job with those Model T's, but but it turns out that AMD is the one that really got this whole thing rolling or some other chip company and they created this chip that uses that doesn't need these big, you know, you don't need these massive data centers. You can put it all in a shed and, you know, it just changes everything. Um, so you know that's the problem with investing in cutting edge technology like this is that you don't know what the lifespan is of these investments. Are they they may not be overinvesting they may be overinvesting into the wrong things >> wrong. To me that's that's a that's a double danger here, right? So even with >> fiber optic cables or even with the railroads, right? You know, we overbought initially because everybody didn't know how high was and so they had they had to go find it, right? You know, hey, transformative new technology. I want to get in on this. I want to be one of the winners. You just overby then you realize, oh my gosh, okay, we've got all this over capacity. There's a big wash out. And then over time, the survivors and the new companies build off of all that excess capacity. So that's you can make an argument that that's likely to happen here too, no matter how long lived these data centers and chips are. But then you're also saying okay well even if we go through that traditional cycle there's also the potential risk that this stuff doesn't age well in the ground the way that fiber optic cable or railroad ties did where the stuff is just largely kind of useless after a couple years. Right? So we've got two we've got two really big concerns there. And hey, how's it going to play out? I don't know. But I think, you know, those are valid concerns to be to be raising. Um, so, okay, here here's the section that I wanted to talk about. So, we've got this we've got this market that is very richly valued, right? Such that, as I said, it's it's sort of on this this knife edge of, you know, a little bit of of uh unwanted wind in either direction. And all of a sudden, you know, everybody gets worried that the the whole thing's going to come down. So, we're starting to see I think we've seen a turn in the media literally I think over the past week or two where there are seem to be all of a sudden a lot more doubts about AI getting thrown around than than there had been. Um, and uh, you know, I I've seen articles recently about um, the amount of funding that they think it's going to take to do the buildout as currently envisioned and they're just saying like I don't know if the capital's there. I I really don't know like if we're going to be able to raise enough money to build out the infrastructure the way in which the industry is saying it needs to be built out. I think the last number I saw floating out there was something like around $5 trillion or something like that, >> right? Right. So that's at the ecosystem level. Then you're hearing the same thing at the company level. So like Oracle, which you know caught the AI fever later in the game, right? It the the stock was up tremendously after its earnings call, right? A big blue chip company tacked on like another third of its market value in in >> No, all it did was have an arrangement with it was either Open AI or Nvidia. That's all it took for that stock. >> Exactly. Which is nuts. I mean, that's that's definitely kind of a sign you see in a near the end of a mania, right, where just big crazy plays like that happen. But people have done the math. I think Barkclay's just downgraded the the Oracle's debt to sell because it's basically saying, look, Oracle is going to run out of money. Like if if looking at what it said it it's it's um you know, capex investment it's going to need to make, they're like, we don't see any way that Oracle is going to be able to raise that money over time. So, you're starting to see real concerns like that. But then um you know you're getting more more voices just saying like hey I just don't know if all this spending is going to be worth it right sure it benefits the guys who make the chips and the guys who build the data centers but are we really going to get enough incremental revenue and profits out of this to justify these gobs and gobs of of hundreds of billions and trillions that are being spent on it. So anyways that's still an active debate. I don't know the answer to that question. it's that that the doubters or the challengers are just getting louder at this point. Um, and then you're seeing, I think, a lot more fear creep into the market right now about like fraud and deception. So, you know, there's obviously been a lot of ink spilled in recent weeks about the circular financing that goes on here. And I think a lot of those questions are still open-ended. They're not they're not fully answered yet. But you probably saw, you know, Michael Bur and his his tweets over the past week or so where first he, you know, came back to Twitter after a long break or X after a long break and said, "Hey, look, I think there's a bubble." Uh, and then he appeared to sort of rage quit the markets. You know, he he'd bend his clothes that his firm had been short Nvidia and Poweer, which obviously he must have gotten his face ripped off on those trades. and he he dissolved his um his investment firm which a lot of people thought was sort of admitting defeat and who knows may maybe maybe it was but he just recently came back on and said hey now that I'm not like bound by um you know my compliance constraints let me really tell you what I'm worried about and he he started talking about this depreciation of the or the the short-lived um lives of of the technology here the chips themselves >> uh and he said look these things last maybe 2, three years, but companies have started getting really creative with their depreciation schedules and they've more or less kind of doubled on their books the lives the active lives of these chips, you know, on paper. Um, and so what that does is it reduces their depreciation expense in any given year. So it artificially inflates their profitability. Um, so Michael, you and I and Lance have talked many times about how with earnings you got to take them with a grain of salt because they can be monkeyed around by all sorts of accounting tricks, but this seems to be like a pretty big accounting I think I think Michael would say deception right now that a lot of these big players and he named Meta and one or two others where he said, you know, this is like if if they were counting what he believes to be correctly, um, it would shave like 20% or more off of their earnings, which would have a real material impact in their stock prices. So my point here, Michael, is just that we're seeing I think a lot of real doubt start to creep into this space and manas are all built on sentiment, right? They end when the net the net buyer switches from being, you know, a net speculator who wants to buy to a net seller who just says, you know what, this is too rich for my blood. And it feels like I don't know where that line is, but it feels like we're getting closer and closer to it. >> Absolutely. I mean, the market is finally questioning everything that's been going on. And look, no one really knows what what the useful life of these chips will be. Will it be two years or may will these companies be right? Could it be six or seven years? We don't know. Uh history tells us it'll be shorter rather than longer. >> Well, I think they know right now from the recent history, two, three years just because the of of the innovation pace, >> right? No. Right. So, you know, the market is finally questioning things. I I was going to bring up with you. I wanted to bring up the debt issue because if you look at kind of where the steam got taken out of the market, it was when Google and Meta brought between the two of them about 5055 billion in debt deals. And to me, that was a significant point. Prior to that, the market the the AI companies were largely self-funding. So you know we talk about all these circular deals. Google, Meta, Nvidia, they were they were lend they were investing in companies, financing companies to go and buy their chips. So they were all using cash flow to do that. They weren't using debt. All of a sudden Google and Meta come to market with big debt deals. That's starting to tell tell the market that cash flows are no longer sufficient enough for some of these companies to keep going. and they have to borrow. Well, when you borrow, you're introducing default risk. And like you said, Oracle, the default risk, if you looked at the credit default swap markets, they've been going up decently. It's not a trivial chance they go out of business based on what the what's implied by the credit default swaps. Same with Coreeave. And the problem is they're all in this web of companies. Um to me, the risk, >> right? So you have sort of counterparty risk too to a certain extent, >> right? Nvidia has counterparty risk to core. They lose their investment if core goes under. To me, the one that's the hardest is open AI. That's the nexus of this whole web and that's where all the money has been in just massive amounts of money is being invested and it's a private company so we don't know what's going on, >> right? And they kind of freaked people out recently, right, by sort of sending up that trial balloon of like, >> hey, and if things go badly for us, hopefully the government's going to bail us out, like trying to get a pre-bail agreement, right? And everybody was like, what? >> Which that came out about the same time as Google and Meta when they did their deals, right? The we I it wasn't even bailout. It was like we could use some government support and then they backed down. >> Well, yeah, they they sort of, you know, changed their tune a little bit, but yeah. >> Right. But they still said the same thing but in >> different words afterwards. >> Not a bailout. We just want the government to backs stop everybody. Yeah. >> Well, I think what they're saying is they're questioning whether there's enough capital. >> That that's I think really what's going on. And Google and Meta are telling you they need more capital. All these smaller companies that keep going to Nvidia and Microsoft and Google and Meta for financing don't have the capital. So it's starting to some degree to be capital constrained and that only gets worse when investors debt investors question start make you know why why do we need so why do you need so much capital that you know it prompts the question of what's going on here uh you know we're also liquidity is strained right now so that's another kind of complexity to this whole debt funding scheme that's that's going on. Um, so, you know, I I think we're finally at the point in this AI trade, you call it a bubble, call it whatever you want, where the right questions are finally being asked and the market is thinking about that and digesting it and we're getting a lot of volatility. But there's nothing that's really overly upsetting where you would really see it in the market. So I I agree with you in terms of market technicals right now. Although I think we're seeing more volatility like you said, right? So there's, you know, we're seeing signs that we should be paying more attention, but nothing yet that's saying, hey, the wheels are coming off here. But I would say >> the fact that the right questions are being asked puts us in a more dangerous era if indeed there is an AI bubble, right? And folks can still debate that if they want, but if they are, asking the right questions finally gets you to the point where the answers might cause a sentiment shift. And a sentiment shift in sentiment is that that that's what's fatal to a bubble, right? So, let me ask you this. Let me ask you this question. >> So, I I put a post out on X last night. Um, and and I'm I I want I want to connect a couple of different things here and I'm going to say something that's going to sound fairly um pessimistic and then I'm going to going to argue the other side in just a couple minutes. Um, but [clears throat] it is increasingly clear, I think, that the the economy of real things, right? not not not not AI and software and whatever but but just you know logistics where things get from point A to point B, things get manufactured and whatnot that that that economy is in recessionary territory, right? Um and and that economy employs a lot more people than the information economy. [snorts] Um, if you add up like all the mag seven or 10, you know, companies, I I think they employ like two million people versus, you know, tens and tens of millions of people who are in the real, you know, get your hands dirty economy. >> Um, and we're seeing an increasing number of signs that, you know, the bottom half of society is having more and more trouble getting by, right? Um, and yet on average things still look okay, right? And this is this this is the difference between mean and median. And we've talked about this in the past. In fact, somebody on X summarized my argument very aptly by saying um two guys two steaks, you assume that both guys are eating well. But if it's one guy sitting at a table eating two steaks and the other guy looking in outside through the window, you know, or looking inside through the window standing outside in the cold, you know, it's a very different story, right? And it really feels like that's the type of economy that we have right now. Right? So the question is is you know so what's propping things up is all of this massive spending in the AI part of the economy. Right? Um and because that's supporting asset prices and and and the concentration of these top seven or 10 stocks supports the indices and drives the industries sorry the indices higher. um the people who own financial assets are doing just fine, right? And and they're supporting on average retail spending, right? So the question is is how long can that continue to sustain? And my question is or my challenge is is you know unless we we or or if we don't start getting some real incremental revenue and profit growth out of companies that aren't the ones that are you know making the AI infrastructure. If we don't start seeing some real corporate return on investment here the bloom is going to come off that rose. And if it does, I mean, my question to you is is is, you know, how bad could things get? But I guess before I ask you that, my question to you is is, you know, how sustainable is this, right? Because we're we're we're getting far enough into the AI story that I think we should be starting to see some real use cases to say, "Oh, okay. Well, this worth spending all this much because these companies are are making gobs of new profits off of incremental new services that AI has has enabled, right? And I don't feel like we're seeing that yet. >> No, you you said that really well. There's 400 companies that are barely seeing their earnings grow. There's, pick a number, 70% of 80% of citizens that are struggling financially. whatever the number is, it's that K-shaped economy. Uh, and from a stock market perspective, it worked because Nvidia, Microsoft, Apple, you know, the Mag 7 are 40% 30 40% of the index. So, they can go up and offset a lot of bad news. But, as we're finding, when they run into trouble, there are issues because they can't support the market. We had plenty of days where we'd have four, you know, we have 20, 25 stocks in our equity model, three, four, five were up, the rest were down, and our portfolio would be up for the day. >> I mean, then that's what's going been going on with the market and in general and with the economy. You know, they're all kind of K-shaped K-shaped versions of the same thing. So my concern is I mentioned this to you earlier. If you look at price to earnings for the other companies, you know, all the ones that aren't the MAG 7, the AI companies, they're high. They're very high. So you run the risk that the company's keeping the whole market afloat. And look, I I know staples haven't been doing as well as the market, but they haven't been crashing either. they have been brought down to valuations that make sense or utilities or pick you know pick your conservative sector uh you know so the risk is that if the AI bubble collapses it's going to bring down other things with it so you know to your point there's nothing sustainable about it and I think some of it gets political too you know we just saw it's tough to make too much sense of the last you know the thection ction that occurred in early November. But if Trump loses the House and Senate, that's a vote that that prices are still a problem that the economy it's really an economic vote to some degree. There's obviously other issues that are very important to people, but it's the economy stupid as who was that Bush. U >> that was Clinton. >> Clinton same error. So, you know, that's what people vote on. And I think we're going to, you know, we're starting to get this problem where the voices of the 70% of the economy where the, you know, the the large majority companies can't live can't sustain themselves well and that doesn't bode well for risk assets. >> Yeah. So, it's interesting. So, you're talking right there about the sustainability of the weak side of the K. >> Well, I think that's a a concern. I'm I'm actually much more concerned about the sustainability of the upper side of the K >> because I' I'd feel more sanguin about it if if we were seeing lots of incremental new revenues and profits kick off of AI and just these companies were just benefiting from it all. Right? Um to me this is like a this is a balance sheet transfer, right? We're just we're taking cash flows that otherwise would have just become assets on the balance sheet or we're raising debt and we're feeding these companies that are building the data centers and building chips. But we don't know what the return of that's going to be yet. And if we don't start to see that, if that does force a repricing of those stocks, then the top 10 20% that's doing all the consumer spending, there's a negative wealth effect. they reign in and then kind of I don't want to be too, you know, dark here, but then kind of everything goes to hell in a hand basket, right? Because then you have the weak bottom half of the K and the top half of the cake gets a lot weaker all of a sudden and then we're really >> Yeah. >> So I I I think another way to think about this is not is a K, but not necessarily. You have your your upper part and you you everyone thinks of a K like what a K looks like. What I would say is you got your upper part and then you got this. The bottom one is not really like that. It's more flat and there's ropes holding the top part onto that kind of bottom part. And if when that bottom part starts slouching, it's going to go down, but it's also going to bring down that lower leg, that lower part of the K. So, they're tied to each other just like consumption is tied. I It's all economically tied to each other. So >> yeah, >> I I think I >> because once that top part of the K reigns in its spending from a consumer standpoint, >> well that's when companies have to start laying everybody off and that's when the bottom of the half really feels terrible, right? I think what I'm trying to say, Adam, is I I kind of feel exactly the same as you, that that is a potential problem coming down the pike, that we can't continue to have an economy, a stock market driven by 10 companies and an economy driven by AI spending when everything else is flat to even negative. You know, shipping is a disaster. That's a great sign of what's going on in trucking. Great signs of what's going on in the economy. They're they're disasters. There is no more real estate market. Houses don't trade, right? Big segments of our economy are stagnant. >> Are stagnating. And I'm so glad you mentioned trucking because I've got this is one of the dots I wanted to connect. I've got an interview coming out, I think on Tuesday, uh with Craig Fuller. I've already recorded it, folks. Um it is really scary. Um so, so Craig Fuller of Freight Waves. um they're I think like basically the leading like freight tracking company out there. >> Um and so he's got you know laser granular sight into what goes on in shipping whether it's trucks or whether it's trains or shipping or whatever, right? Um and he's saying, "Yeah, oh, we're like we're definitely at at recessionary levels here and and it doesn't look like it's going to get any better anytime soon." Um, I will say too, just a quick side note, um, as scary as that part of the discussion is, it gets way scarier, uh, because we get into the huge number of, um, uh, basically illegal immigrants that that came into America over the past several years who have been able to obtain commercial driver's licenses with basically no experience at all. So when you you learn about the just vast amount hundreds of thousands of drivers on the road driving these heavy trucks who you know paid someone to to to to get the license right so they didn't even pass a test they don't even speak English it's super super frightening but but but back to your overall point there Michael yeah we've got these big parts of like as I said the economy of real things right that that's that that's really struggling here so um I'm not the only one thinking this way and right before we sat down here, I I I saw this article that really, you know, showed other people are thinking the same way. The title was why the world's fate hangs on 2.5 million older Americans. Um, and the the headline or the the subheader was the worry isn't a recession causing a market crash, it's a market crash causing a recession. So, it's basically consumer spending is being propped up by, you know, this sort of top 20, this 10 20% who are more affluent Americans. they tend to be older, right? So, they're doing fine because their 401ks are nice and flush right now. But if all that changes that then, you know, that's a market correction that then changes their consumer spending behavior that then if they reign that in, that's then potentially what creates the next recession and we get this sort of, you know, vicious cycle going for. So to your point, it just >> and I would argue I would argue it's sentiment that it it also so when Trump signed the uh the the opening of the government the other night, he said something like the stock market hits has hit 40 something 48 new highs this year. It's record wealth is being generated. Everyone's 401ks are at record highs. That's great for the top 10% of people, but it doesn't apply to 90%. But I think what the reason he says that and the reason other presidents talk about the stock market is because it's the sentiment gauge. And I think even the people at the bottom end that don't own any stocks, they hear about the stock market, stock market's doing well. Oh, the economy must be fine, right? So, so it impacts whether you own stocks or not. Everyone's sentiment. And when sentiment regarding the economy changes, consumption changes. And it takes a little bit of a a a downslide in consumption to have a big impact on the economy. So sentiment narrative matter. >> So I I agree mostly with you. Um where the nuance I would inject in there is uh so yes sentiment among those who have wealth totally matters in terms of the direction of the economy. I I almost think it doesn't m I hate to say this. I almost think it doesn't matter how the bottom 80% are doing. If the top 20% are doing well, they can just they can be the engine that just keeps economic growth moving and and you know, whatever. And that's that that's not a healthy economy. I don't like it, but I just I I'm not sure the bottom 80% matter all that much anymore from a spending point. But the longer that the narrative out there, the public narrative is everything's great and everybody's 401ks are doing great, right? The as that bottom 80% gets gets further and further left behind, their sentiment becomes much more bitter and then you end up getting real change at the voting booth. And I think we're already starting to see that. I think we started to see that in these most recent elections, right? So I would argue that you're that the bottom 80% matter because economics is always on the margin, right? We look at things as percentage changes. Retail sales was up 3/10en of a percent or down 4/10en of a percent or whatever it is. So the impact of the top 20 may be more, but they're more stable. They're they're fluctuates. His spending doesn't he doesn't care what the economy is doing. He's whether you know it it is he going to dinner tonight? It depends if he's hungry and if he wants to meet someone. It it has nothing to do with the economy. The bottom 80% if are they going to dinner tonight? What's the economy doing? How do I feel about spending money? I I'm thinking about this is going to cost me a hundred bucks. That's kind of in my head. So, I I think it's that 80% that tip the scales. They don't, you know, their impact may or may not be what it is for the top 20, but they're the ones that can change retail sales growing by two or three% to slipping by two or 3%. And in economics, those percentage changes can have a big impact on, you know, what's a bad what's a recession when the GDP slips three or 4%. That's really not much, right? That's that's one or two tables at a restaurant not being filled. So, you know, it's on the margin that tips the economic scales. And that's where I think those 80% do have a big role. >> They they they may and I don't have the chart at my fingertips here, but you've probably seen the chart that's circulating recently that shows like the top 10% I mean it's like 50% of all consumer spending. I mean, they're they punch way above their weight. the bottom 50 or 60% I can't remember what it was. I want to say it's maybe like 15% or 17% of overall spending like they're marginalized in their spending amount. Um I also think too a lot of that cohort is already spending on the things they need, right? So it it's it's harder for them to drop their spending by 10% because they don't have a lot of fat to cut, right? It's it's just stuff they're just doing to to get by, right? Whereas that top 10%, yeah, they can if if they say, you know what, I'm still doing okay, but I'm going to cut my spending by 10%. I'm just a little less, you know, uh I'm feeling a little less flush than I normally am. You're going to see that immediately in the consumer spending. So, we don't have the data in front of us. I'm not I'm not saying you're wrong by any stretch. I'm kind of even hoping you're right. I don't I don't like the fact that so many people are are are you know almost don't matter in the data anymore. But but maybe you're right. >> Well, I think they all matter, right? It all matters. But I I think the propensity to spend or not spend increases as you go down to the to the lower classes. Whereas the variability in spending at the top is irrelevant. It's based on other things other than the economy. So, if you want to kind of know what the economy is doing, I think that lower, you know, wherever you I don't know where you draw the line, but when you're starting to look at that lower percentage and they're buying more adorable, you know, more of the, uh, you can tell by the types of goods, too, uh, what they're buying and how it's changing. Um, and look, by the way, we have the holidays coming up, so it'll be interesting to see what what the holiday sales look like. Uh, you know, Black Friday is only what, a week Actually, that's right. We we we'll know pretty soon. Yeah. Again, what um what the latest sort of heartbeat of the the health of these folks are. I'm gonna I'm gonna Well, I don't know. I was I was going to stick my neck out and take the under on the estimates, but I'm not I'm not sure I want to be that risky yet, but we'll we'll see. >> And and who knows what the estimates are. >> Yeah. But but this is where like um I I don't envy your role as a capital manager but at the same time I appreciate it much more given this type of environment right where we have this party going on in the markets but you just don't trust it for a lot of really valid reasons right and it seems premature to just totally get out of the party and move to cash and all that stuff. There's a lot of risks that are associated with that, but it also seems increasingly risky to be in the party, too. Like, it's like I said, I I I don't I don't I don't envy your position to have to bear the weight of of hey, I've I've I've got my fiduciary responsibility to all my clients, and that's telling me I can't be fully out, but I can't be blindly long either. So, that's tough. Now, at the same time, this is the time where you really want to have a financial expert who is doing all the things that you mentioned, the the risk management and all this stuff to still be in, but to be doing things to hopefully save your neck in case, you know, some of these fears that we're talking about with the AI trade actually get realized. >> And look, here's the bottom line. It's kind of like flying an airplane. I have a million gauges in front of me, rules, tools, all kinds of things that tell tells me what's going on with the plane, with the path, with what's what's ahead. If I was flying a plane with no instrumentation and just looking out the window, that's scary. And that's, you know, I think most investors are kind of doing that. But when you have all these tools that that we've built and the experience, look, Lance and I both have 35, I have 35 years. He's what? 50 years of experience. He's at least 50 years old. >> He's probably 70. I mean, that >> I was going to say 80, but you may be right. Uh, [laughter] no, I mean, we probably have at least 70 plus years of experience between the two of us through, you know, numerous crises and periods of volatilities and bubbles and boring markets and all of the above. And when you you can sleep at night knowing that you have tools that you have risk monitors that tell you that start flashing yellow or red and that you can easily get out of the market if you want to or get into the market or rotate or buy hedges or do whatever it is you need to do. So, you know, there I'm not saying that like days like yesterday or even earlier this morning when everything, you know, when the the tech sector was bright red don't get to me, but but I'm not a nervous Nelly because I know that I have all these tools and I've weathered these storms before and we'll weather them again. So I I think that's you know what we've been seeing for the last few weeks is very different than April was a mess but very different than the general trend of the last couple years and that's again we're having tools and wherewithal makes a huge difference >> right and experience. Um, and this is this is really where you separate the pros from the tourists, right? We talk all the time, Michael, about how um it's our emotions that oftentimes are our worst enemies um when it comes to building wealth over time. >> Um because they generally force us to make the wrong decisions right at the wrong time. Um, and as we're starting to get some more volatility in here, you know, I'm I'm definitely seeing when I showed you the general great fear index, but I'm I'm I'm starting to hear stories of of individual investors saying, "Oh, you know, I panicked out of the market or I sold everything yesterday or you I went all in on X and it went down and now I'm contemplating, you know, putting my head in the oven." Um, so you know, it's time like these folks where unless you you do have a lot of experience as a DIY investor, you've got a good set of tools, you've got your um, >> you know, portfolio mission statement that that Lance, you know, talks about and all that grounding and and all those that experience uh, and knowledge to to to really leverage. You're probably better off here saying, "Hey, you know, who who's a who's a more experienced, you know, captain of my financial ship than I?" and and you know look towards trying to find that person for you. All right. Um here's another >> Adam real quick. Here's another thing. >> Yeah. >> We have a team. So it's not just Lance. It's not just me. We talk to each other all the time. And we don't always have the same opinion. Half the time we don't. Being able to talk to and it's not just Lance and I. We have a whole team of people, many of which are our age or old people that have been through these same cycles. So it it's for the individual investor. You may have all the tools in the world, but it's also helpful to just look at other opinions and be able to have a conversation with a friend or a colleague or whoever and discuss conditions because they may have a different view and that view may help you immensely or it may cement your view. You may say, "Wow, I was even more right than I thought I was." Well, and you know the the individual investor I think they tend to approach investing as okay so what's the right best next stock right what or investment you know what what what's the thing I want to buy that I think is undervalued is going to do well or whatever right and that's where they place all their their focus right so it's really on trying to assess the probability around this particular security whereas I'm sure you guys do that to a certain extent um but a lot of what you guys do is you have the the institutionalized knowledge about portfolio construction, right? So, what you bring is like, well, hey, here's a way to construct the portfolio so that if A happens or B happens or C happens or D happens, we can kind of control the outcome more than just throwing darts at a board and crossing our fingers, right? >> Yeah. And I think [clears throat] that's what the average DIY investor is is is a lot a lot lighter on than just the, you know, forensic skills of, oh, I think this company might be undervalued, >> right? You know, we we got the question or I got the question a week or two ago. Why do we own Abby and Lily? Or probably about three weeks ago, four weeks ago, and because they were underperforming, they've been doing the best. They've been our two leading stocks through the healthcare through what we've kind of experienced over the last week or two because it's a diversified portfolio and you don't want to put all your eggs in one basket. And understanding how you're diversified and what parts are doing what is incredibly important to managing money and and honestly to sleeping at night because if we had all our money in a Magnificent 7, I wouldn't sleep at night. >> Yeah. Yeah. Yeah. >> But we I may have retired already so it may not be a problem. >> Right. Right. Uh well that's the thing. You never know. Right. Um all right. [clears throat] Um speaking of things that we don't know, um what's the latest on the credit markets? I see that uh the repo usage has continued to to to respike. Um you know are things equilibrating or are we still seeing signs that that nervousness is growing in the credit markets? >> So um there is stress growing in the liquidity markets. I think my article this week actually kind of talks about what I won't go into it in detail unless you want to, but the gist of it is is what changed in 2008. Why is the Fed always involved in the liquidity markets? Why is it always providing liquidity, saving the market, quote unquote? It never did that prior to 2008 or it only did it on special occasions. What changed? And you know, here we are again. The Fed stopped QT. Fed members are telling you they're going to be buying assets soon enough, which is QE. They're going to be providing liquidity. What's changed? The economy is doing fine. The markets are fine. Doesn't appear that anything has changed. And what this comes down to is after 2008 when the banking system literally almost collapsed, they changed a lot of rules. It used to be that the private so the overnight funding markets are the the the core of every other every other market. It's kind of the nexus. Without that overnight funding, without that leverage, these other markets would have massive problems. It supports all the leverage that supports all the markets. You need o you need healthy overnight borrowing markets, lending markets. So there were a series of rules uh put in place after 2008 that really took those overnight markets away from private institutions and put them into the Fed's hands. um you know like you've basel 3 rules for instance you've probably heard of LCRs or SLRs leverage ratios essentially that have changed the capital rules that have really had a big impact on what banks can do or can't do. uh proprietary trading desks. Banks can no longer trade their own books, which means they can no longer stop, you know, provide liquidity when it's needed. Money markets, there used to be a thing called prime money market funds that would provide a lot of money into the markets. Well, now after one of them broke the buck because it held Lehman bonds in 2008, what we really have now are government pretty much primarily government money market funds. So, a lot of a lot of what's happened is the Fed has kind of handcuffed and the the regulated regulators have handcuffed all the private private suppliers of liquidity. They're the ones that have to supply liquidity now on a daily basis. And what we're see, you know, what we've seen recently is that the Fed put way too much liquidity in the market in 21, 20, 22 even. And we know that that excess liquidity is now gone. We could see it in their overnight repurchase program. That's where all that liquidity was sitting. It's now very close to zero. And sure enough, the Fed stopped QT. They reduced QT. Then they stopped QT. they're talking about QE. We're seeing rates that are not kind of overnight borrowing rates that are not quite where they should be. That tells you that there's stress in the market. So, the point is that liquidity is no longer ample. We we don't know where it is on the scale. The Fed doesn't know. Um but it's the Fed that manages all this. So, you know, one of the things that also kind of helps us invest is just understanding things like the liquidity situation, understanding what the Fed is talking about. Because if, you know, I think most people were to read these Fed speeches, they'd be like, "What? I don't even know what I just heard." uh Fed white papers uh how the how all these what you know esoteric overnight borrowing rates what they mean and how they interact with with each other and what they tell you u so you know to I think to your original question is yes there's still stress in the market uh there are a lot more Fed tools that kind of limit the stress put a floor ceiling on some of that stress. So, it's not maybe as concerning as it would have been in 2019, but nonetheless, there's liquidity issues and the Fed will be doing some variation of QE. And by that, I just mean they'll be adding to their balance sheet, putting reserves in the system. How that plays out, you know, I don't think anyone knows, including the Fed at this point, but that is coming because there is a liquidity shortfall. Okay. So, um if if the government really now is in charge of providing the liquidity that the system needs, which is pretty much what you've said, is their reaction function now? Um I'm thinking of like Minority Report with pre-rime where they arrest you before you even make the crime, right? Like are they now much more likely to to foam the runway? Um, so to be like, look, um, we we don't want to wait for a crack or an accident. We'll we'll actually provide liquidity in advance if we think that things are getting a little bit wonky. >> I I I think so. And and I when I was uh Lance and I did our podcast yesterday and I I kind of walked through the article a little bit, but I really said, "Look, if you don't want to read the whole thing, I get it. It's kind of wonky. At the end of the day, it doesn't matter. What you need to know is that a lot of that liquidity has been put into the Fed's hands providing that liquidity. What really matters though is it's kind of a pick your poison. Who do you want managing liquidity? You know, when the street did it, it wasn't, you know, we had bubbles, but bubbles burst because confidence burst. Banks stopped lending money to people. Leman goes under, you know, things like that. You know, things break. Uh now we have the Fed and where bubbles arising and and bursting were somewhat commonplace and to be expected. I'm not sure we can ex you know not that the bubble won't deflate. I think it's a big question of how it deflates now. it can the Fed somehow get a slow leak or can you know will it ultimately burst anyway with or without the Fed? But to your point, I think the Fed is in a position where when JP Morgan's providing liquidity, all JP Morgan cares about is JP Morgan. Will JP Morgan get paid? How much money is JP Morgan making on this? When the Fed provides liquidity, it's what's the impact on the economy? not not our balance sheet. Will we lose or make money? They don't care. Will we be able to meet our goals of inflation and employment? Can we stop? They don't want the stock market from cracking because that can feed bad sentiment and kill the banks, hurt the economy, you know, the whole nine yards. So we now have a a provider of liquidity that has that's not profit and risk uh constrained but just focused on the economy and basically focused on keeping the bubble intact and you know it's an awful thing. That's not how free markets work and it's very detrimental for capital allocation, productive investment, all that. But that may be the optimist story here is that the Fed will not let this AI bubble burst. >> So, all right. I I said earlier I was I was going to make an optimistic argument, too. So, the interview I have coming out after this one. So, uh this one launches on Saturday. This one I'm referring to will launch the next day on Sunday. It's with Mike Green, >> um of Simplify Asset Management. as you probably know well, he is a um big student of the market's passive capital flows, right? He coined that term, the giant mindless robot to >> describe the just relentless buying that happens every month. >> Um in large part from corporations that have employee retirement funds that they have to get into the market, right? So no matter whether the market's up, no matter what market's down, it's just price blind. it's buying stocks and because of the way in which um it buys stocks uh a dis a vastly disproportionate amount of that capital goes into the top 10 stocks right >> um giving them this sort of relentless price blind bid right that just pushes asset assets higher and higher over time and Mike has has done a lot of research around this and he's released white papers and done a lot of real advanced research on this and and says he they his firm has in their opinion successfully isolated a passive factor. So you talk about the factors that you have there on uh uh on invisor. Um they have a factor that they have calculated that is the passive factor that a uh a security enjoys from the giant mindless robot and uh kind of like you with the Fed being this this you know super eager backs stop now and that that's the robot. >> Yeah. He's like, he's like, "This passive factor kind of matters more than anything else." And he's like, "Until the passive capital flows get compromised," he's like, "I I I I fear that nothing else will really matter." And he had a really good analogy, and you guys can watch, if you're interested in this, you can watch the the interview, you should watch the interview with Mike tomorrow. Um, but he likened it to water, right? Like, we know the properties of water really well. we've got water in a bowl and you know we can do a lot of things to it and we we have a lot of confidence as to how it's going to react, right? But he's like, you put that bowl on a stove and you start heating it up, the thing that's going to matter most is that you're adding more and more heat to this water and that's what's going to drive its properties more than anything else, right? And if you ignore that heat, you're you're ignoring the most important factor that's driving what's happening to to this the the the environment you have there. So he kind of feels that that that's a pretty apt analogy for the passive bid where he's like it's just the one that matters more than everything else and until and unless you take that bowl of water off the stove. Um that's just going to what's going to drive the action here. And so you know of course it begs the question well how long can this continue? And his answer is I don't know. You know it could end next month or we could be old men you know. So, um, again, to really hear, you know, Mike's full argument for the passive bid, what it is, and and what impact it has, listen to the interview. But, I mean, I guess that's the optimist story. It kind of depresses me because again, I don't think that's a fair market. Um I think it just creates greater and greater distortions that that if and when at some point that heat source gets compromised. The uh you know the the collateral damage that will then ensue as you and I were referring to earlier is going to be really tremendous. But market doesn't care what I think. It's the way the market's currently operating. >> Right. And I I I agree. You have these two mindless force not mindless but well his is mindless. mine has a mind behind it, but it's set on one goal. Uh these two forces that are very optimistic for asset prices. A difference is is that, you know, I've read a lot of Mike's stuff and listen to him is that there's a demographic aspect to to to this passive flow and that as people get older, they have to start selling stocks or they don't keep buying stocks and that that trend changes. Uh whereas I'm not sure what's going to change the Fed. And to be honest, when in I think it's March or May or whenever Powell leaves, you're going to have a new Fed chairman that will be even more invested to keep the stock market up. >> Even more doubish. Yeah. >> Right. Right. So, you know, whereas my robot may even get stronger come May or March, whenever Powell leaves, there is a change, a trajectory that's going to change in Mike's robot that will become less optimistic and becomes pessimistic if the flows actually reverse. >> Oh, if the flows reverse, it's it's >> lights out. >> It's lights out. Yeah. Um and and I get your point about the the the demographics. And it's funny, I didn't talk to Mike about that this time. I have in the past. Um, I will say just given his general demeanor, he doesn't think that, you know, boomers are going to become sort of net sellers, uh, and and and pushing those flows into reverse, I think, anytime soon. >> Um, now there could be other factors that that do make that happen sooner, but but you know, he he he wasn't like, "Oh, I see the cavalry coming and don't worry, in a year or two, you know, it's it's all going to be different." So anyway, so so the point here is just look, >> if you're watching this, I'm going to guess the majority of people watching this probably share a lot of the same concerns that you and I have been raising through this, particularly about, you know, what happens if a bloom comes off the AI rose and all that stuff, right? Or the problem the credit markets get bigger or whatever. But I I think you you have to be very careful about saying this thing's going to end in tears and it's going to end in tears soon because of reasons X, Y, or Z. You've got to have a really really good compelling reason why the the hyperinterventionary Fed isn't going to matter or the giant mindless robot isn't going to continue to matter. Um and um and I think even if you decide to bet against those forces, you better have some plan B in case they continue to sustain. >> Well said. >> Yeah. >> Well said. And and I'm just curious, we'll start wrapping up here, but do you what do you guys do in terms of how do you take into account the passive factor if at all in your capital management there at RA? >> We acknowledge it. I mean, we know it's there. And when we're thinking about what stocks to buy, we we do look at which ones are at the top of a, you know, so if we're looking at staples, we may we may have a little more interest in the the largest staple than the 20th staple because if flows are going into staples, it's the same thing. So, you know, we we certainly factor that into our >> invest in who's getting fed by the robot >> to some that's just one of many factors that we think about, but it certainly is a factor. >> All right. Uh well, look, um we'll start wrapping up here. Um I'll squeeze this in. We we can talk more about this later on. Um there were two bits of news that came up on the mortgage side. So, you talked about how the housing market is, you know, basically super dysfunctional right now, which totally is, and I've talked about that a lot with a lot of housing experts on this channel. Um, but we had, uh, recently the trial balloon floated by the administration about 50-year mortgages, which I've written about on X of why I'm totally not in support of that. I think it's a bad idea. Um, I think the administration is sort of potentially saying, "Okay, well, all right, we we sort of put it out there. We're getting some bad feedback. Maybe we won't do it." Whatever. They're still saying, "Oh, it's a tool that might be in the chest going forward." But the other thing that they're now starting to talk about are um portable mortgages. Um which I think is kind of interesting and I haven't fully thought through it, but this is obviously you own a house, you have a mortgage. Let's say you're someone who's lucky enough to be sitting on a three or sub 3% mortgage. It's been a limiter to to sell your house and move right now because the new mortgage you're going to have to take out on your new house is going to be like double, right? Um, now you might [clears throat] be able to take your mortgage with you, right? That might be good because it might open up some transactions in the in the market helping unfreeze it. It's kind of still not super fair, right? The people who got a great deal continue to get a great deal going forward. But if the mortgages are also assumable where let's say I'm buying your house, Michael, and you've got a a tasty low mortgage rate on it. Let's say you're now moving into the you're you're you're older, you're you're Lance's age, and you're now moving into the nursing home, right, of the assisted living facility. Um, you might be able to sell me your house with your mortgage on it, and that would actually make it a lot more affordable for me to buy in. So, I've always kind of been a fan of the assumable mortgage idea. They they have been out there. They have existed prior to now. They're just >> they're they're they're few and far between, and it's kind of hard to find out who's got an assumable mortgage. There's a lot of work that you have to do to get in there. But I'm curious, do you have strong thoughts either way on either of those two things? The 50-year mortgage or the portable/assumable mortgage? >> I think the 50-year mortgage is ridiculous. You Yeah, you save a few hundred bucks on your monthly payment, you're building no equity. I went through an example and if you compare 50-year to 30-year, in 30 years, you have 100% equity in the house. You've paid off your loan. for 50y year. At the 30-year mark, you only have about 25% equity. Yeah. >> So, you're not building equity. You're saving a few bucks monthly, but over the life of the loan, you're going to pay the additional amount in interest versus a 30-year is more than the original loan amount. >> Yeah, it's crazy. >> So, you know, the longer it's a spectrum. If you borrow my credit card, right, that essentially it's a it's a one month loan and that's it. But when you start moving out the spectrum, it kind of it it flows from from just kind of a delayed purchase to a lean to a loan to a lease. So even though you're buying a home on a 50-year mortgage, you're essentially leasing it. You're not building equity unless the price is going up. The problem with assumable or or any of the or transportable mortgages is that you can only apply it to new mortgages. you will destroy the banks if if all of a sudden my mortgage can be, you know, basically assumed by someone else. So my mortgage is my mortgage is at like at 3%. If it all of a sudden becomes it's definitely going to become a full 30-year mortgage versus me paying it off early, you have destroyed the banking system. You have created massive losses for those investors of mortgage back securities. So, you know, you this can only be on loans going forward, which 30 years from now, that may be great. That that that system may work, but the impact of it will take so long before you have enough mortgages that matter. And now they're at high rates, so no one wants to assume any of these in theory. >> Yeah. So, help me just understand this real quick. Um, and I don't want to rat hole on this, but let's say you've got, you know, you're I buy your house from you today and you're going to the nursing home, so you're not going to buy a new house. You you don't want to take that mortgage with you. Right now, presumably, you've got, let's make this up, but was a 30-year mortgage. You now have 15 years left on it, right? So, if I'm buying your house, why can't I assume your mortgage and then just take out a new mortgage for the remaining part of the purchase price that I need to afford? >> So, so let's just look at my personal example. I refied in, I believe it was 2020 into a brand new 30-year mortgage at 3%. So, it's 5 years old approximately, right? The bank lent me money at 3%. Their current borrowing rate is 7% or 6%, 5%, whatever it is. They're losing money on my mortgage. Now, they're saying, "Okay, we're only going to lose money on Mike's mortgage until he moves. >> Hopefully, you know, he's he's coming up on retirement someday. I'm betting he moves when he's 65, which would be seven six seven, eight years from now, right?" So, they only have to withstand that loss for seven or eight more years. But if it gets assumed, it's a 30-year mortgage. It's going to last 30 years. So, they made a bad loan. >> They want to get stuck. >> It's the negative carry that they're getting stuck. >> So, they've got on their books assuming a shelf life of less than 30 years, and by making them assumable, it extends that. Okay. >> Right. Right. I mean, most mortgages, you know, my bet are gone within 10 years. >> Okay. Because the person's moved and then took out a new mortgage. They refin refinancing gets rid of the mortgage. You know, there's all kinds of ways mortgages go away. >> So, you have just extended negative carry on financial institutions for 10, 20 years. That's, you know, we've talked about duration. Do the math on that and it gets pretty ugly. >> Okay. Um All right. Well, I like it for the consumer, but yeah, I >> I like your idea. Believe me, I think it's a great idea, but the banking lobby ain't going to Well, you can't change it anyway. I have a contract with the bank. I, you know, it says I can't give this mortgage to someone else. So, >> Got it. Meaning you're saying >> no matter what the law say, contract laws on their side. >> Got it. Okay. So, so you're saying if if if we ended up adopting assumability, it would just be on mortgages that are struck from now into the future. It wouldn't apply to past, >> right? And they're six, seven% mortgages. Who wants to assume those? >> Right. Right. Um hopefully those will prove to be relatively high in the future. >> Right. >> All right. Um well, look, as we as we wrap up here, I think we do have time for a quick rant before I get to it. Trades. Have you guys made any notable trades over the past week? >> We have not done any trades, but we did introduce a new thematic portfolio, an energy model. I think Lance talked to you about it last week. >> He did. So, is that now live? >> So, it's live. If you go on Simple Advisor, you could see it. It should be better be up on uh our site where people can invest in it. I'm not a 100. I know there was some email chatter right before I got on with you, but I think it is up. The models have been built in our systems. It's just a matter of being able to click on it within the the website. So, but you can certainly see it. I'm actually looking at it now on Simplevisor. Uh it's actually having a great day. energy must be doing well today. >> Yeah, as I said earlier earlier today it was oil and VIX were the only two things that were up. So, >> right, >> sounds like that's continued. >> All right. Well, look, so so next week then whether it's you or Lance. I'd love to do a walk through that. Um I talked about that with Lance and he he said he wasn't sure when it was going to launch. He knew it was launching soon, but sounds like it's now officially out in the wild, >> right? >> Okay, great. >> It's out there. lot of interest lot of interest in this audience about investing in energy but but more specifically sort of oil and gas. Um just given how beat up that sector has been and uh you know thinking at some point in time for a whole bunch of different reasons that it could could eventually uh experience an upcycle again TBD on when that's going to be and maybe when we go through your model we can talk about your guys' general outlook on the energy space but but super interesting to now know that you've got a vehicle there for people who want to invest in a >> a basket of of stocks that you think are well positioned they can go and and find that important on Simple Advisor. >> Correct. >> All right. All right. Um so just in uh doing a quick rant here. Um Michael, you and I have talked about how um we bond on a lot of the fitness stuff. Um so I just finished a a couple days ago I finished a fiveday fast and >> Yeah. Yeah. Um and uh it's funny >> just water. It's a little bit it's called a fast mimicking diet. Um so it's a >> dirty fast. >> It's um you know scientifically engineered to get you into ketosis and then into autophagy and it's it's all kind of designed to kind of like get your body into all the benefits of fasting, but you do have some like thin soups and stuff along the way so you're not having just water. Um and they give you some electrolytes so you don't, you know, your system doesn't go out of whack or stuff like that. But um uh very glad I did it. You know, I do it is about once a year or so, and I'll explain why in just a second. But first off, I think they should call it a slow because there's nothing I've done that makes time go by more slowly than being on a fast. Um and and you realize how kind of addicted we are to eating. Um you know, not not for the calories to sustain, but so much of it's just habit and it's just something to do. >> The ritual. >> Yeah. The ritual. and it's just, you know, it's a little pickme up, right? And when you remove that from your life and you're just sort of sitting around trying to find ways to occupy the time, otherwise like the clock moves real slow. So, anyways, first off, uh I I I thought, yeah, they really should rebrand it to call it a slow. Um and look, um you know, I I did it um for a couple of benefits. Um, one, um, you know, it's I I I've kept folks generally updated on the strength training that I I ramped up over the past year. Um, and my trainer was really big on me eating for muscle gain, which is good. And it definitely it definitely resulted in some real performance gains. Um, but it also got me up to a weight I just didn't love being at. And so I wanted just to trim a little bit of some of the padding. So, hey, that was good. Um, it's also really good for reducing inflammation and um, I had injured my knee about a year ago and putting on the weight wasn't helping, right? I think it's something like every pound of weight you put on it, it's actually like your knee gets like four pounds of extra pressure on it. So, giving my knee a little bit of relief by getting rid of some weight, but also reducing the inflammation, which is what the thing that was just keeping my knee from from healing. Um I I have now on this side of the fast I don't want to say it's been like 100% fixed but I mean I'm feeling like maybe like 85 90% at this point. Um as long as I don't pack the weight back on again. Um so that was that was a nice benefit of this. But the reasons why you know they say that uh you know fasting is beneficial. I'll go through them in just a second. But it kind of makes sense right? I mean think back to kind of caveman days right? you didn't catch a gazelle every day, right? So, the human body is designed to go through periods where calories are not plentiful, right? And there are things that the body does during those periods that um uh you know, we we've just our our whole metabolism is is evolved around and we don't generally give ourselves that exposure anymore in the modern era because calories are plentiful, right? So, there are health benefits you get. So, when you when you aren't um eating a lot of calories and and certainly when you aren't eating like simple sugars and carbs, um your body will actually switch its metabolic pathway. Um it'll switch from burning sugar to burning fat. You know, that's what fat is. It's it's a fuel storage and it's it's designed to be used when you're not getting access to to simple calories. And so, um that process is called getting into ketosis. Um, and ketosis is good because it it it does give you appetite control. So, a lot of the hunger pains you feel, those are payings for the the simple calories that we like. Um, and when you're burning sugar, your body is saying, "Yeah, get me more of that stuff." And and the hunger pains as a way to drive you to get more of that stuff. Once you're in ketosis and you're you're consuming your own fat stores, you don't really have those hunger pains anymore. It's really interesting. and going through these fasts. You know, for me, the hardest part is like the end of day two, sometimes beginning of day three. That's when your old system is saying, "No, no, just give me the really good, tasty, simple stuff." Right? Once you get into ketosis, that goes away. And the rest the rest of the days while you're kind of thinking about food, you know, you're you're not your stomach isn't like driving you to rush to the pantry and get something. You get kind of in almost a sort of zen state. Um, so that's nice. It just it's it's a break from us um to realize that, you know, we don't really need nearly as many calories as we think we do to function. Um we eat generally in such an unnecessary surplus. I'm not even talking about the quality of the food, just the quantity to just subsist as a human and still function. You really don't need nearly as many calories as the average, you know, one of us eats on a daily basis. Um, but obviously when you get into ketosis, you're fat burning as well. So that's good for if you're trying to lose a little bit of weight. Um, it's really good for blood sugar regulation and it can even repair your body like if your body is getting compromised in in processing sugar, like if you're diabetic or pre-diabetic. Um, it's it's not a magic bullet, but it actually can kind of help your body be more efficient once you start eating sugar again, once you've gone through ketosis for a long enough time. Um, it's good for neurological health. In fact, it's actually used, the diet is used to treat people with a whole variety of different neurological conditions. Um, it's good for your heart and it's good for mental clarity. And I I I got to say, you know, that's what I experienced. It really does sort of sharpen your senses and and if you you know, we all talk about food torper and kind of the brain fog that eating too much can bring on, being in ketosis really helps get rid of that stuff. Uh, and I mentioned earlier inflammation reduction. So, those are the benefits of ketosis. And then when you're in ketosis long enough, your body goes through this process called autophagy. And autophagy basically is saying, "Look, I still have to run my metabolic processes." Um, and I need ingredients to do that. I'm not eating anymore right now, so I need to start looking for ways to get those ingredients. And it's pulling some from fat, but it's also looking around your body. And what it does is it starts targeting your damaged cells or your old or your scinesscent cells and it breaks them down and then it uses those components to to rebuild the new things that you your body needs to to function. And so it's kind of like a spring cleaning for your your body. Um I I don't want to say like it's something you can feel like, oh, I feel like autophagy is scrubbing my arms right now. But you do feel better as the days go on. Um, and they say that it's actually really helpful to kind of do this on some sort of periodic basis. Just just just like an oil change, you know, just just kind of scrub out the system. So, um, so you get that benefit from doing it. Another benefit you get is you get way too much credit from other people. when I was sharing my I was posting on X every day my progress. I was just posting the the what the scale was was reporting and and just describing what I was going through and people were like, "Oh my god, I can't believe you haven't you know, you've been fasting for 3 days or 4 days." I could never do that. Um yeah, you could you could your body is designed to do it. Um it's it's not the easiest thing in the world, but it is certainly not the hardest thing in the world either. But it's I I won't lie. It's kind of nice having people treat you like you're curing cancer just for, you know, not eating for a couple of days, right? So, that's kind of fun. Um, and uh, and then I guess the last thing I'd say here, too, is is um, when I talk about, you know, you realize how how you don't need all the calories that we just shove shove down our throats every day. I'm reminded of that line from Raiders of the Lost Arc where Indiana Jones is uh he's he's pretty beat up and he's sore and his girlfriend says something about his age and he says, "Ah, it's it's not the age, sweetheart. It's the mileage." Right? That's what a lot of health and fitness is about. It's it's not necessarily our age, it's what we're doing to our bodies. And if we're putting repetitive stress on our systems, our joints or whatever, right? That that's what catches up with us. It's not so much the the age that's, you know, on your birthday cake. >> And I I do think we kind of overstress our digestive systems by eating a lot more every day than we we really need to. And look, folks, I it's not like I've come out of this fast and I've totally changed my entire life around it, but it's just made me more mindful of this stuff, right? And the hope there is just to put a little bit less stress on my system going forward and hopefully that extends my my longevity. So anyways, folks, if um if you're thinking I had a lot of people say, "Hey, you're inspiring me to think about doing this." Um if you I would totally recommend it. Um I I would recommend following a program. I wouldn't recommend just like not eating and doing a water fast for x number of days if you've never done anything like this before. So if you want to follow the program that I did, um it's a company called Prolon. And in fact, uh, if you want to get 25, if you want to learn about them, but if you're interested, this this link will get you 25% off, uh, their the fast that I did, you can just go to thoughtfulmoney.com/prolon. So, anyways, that's my whole diet tribe on fasting, Mike. But curious to hear your thoughts since I know you're a guy who takes his health real seriously. >> Yeah. No, I've looked into it. I Tim Ferrris talks about that occasionally. I've listened to him. Uh, I don't want to lose any more weight. my So, I'm believe it or not pre-diabetic. Uh, I'm skinny. I work out a lot. I do >> that surprises me. >> I just don't produce enough insulin, right? It's metabolic, I guess. So, I've actually I've been wearing a glucose monitor. My cardiologist said, "Try a glucose monitor for a few weeks. See what it is. See if there's something >> that's spiking it that that's causing it to stay elevated for long periods. That may be the problem." So, I've had this thing on for two, three weeks now. And the problem with it is I'm way too analytical for this. And I'm I'm I'm always now I'm playing games. I'm trying to exactly identify everything. And you know, it's I could never have this thing on forever. I can't wait to take it off because it makes me think way too much about everything I'm eating, when I'm eating, how I'm eating. It makes you takes a lot of joy out of dinner, >> right? It Yeah. So, u I've thought about the fast and I do a uh >> I I used to do a uh like a 16-hour fast three, four times a week >> and I stopped doing that. Um I was just finding I wasn't getting enough protein. So now I do it, it's actually on my days with Lance when I do our podcast. I pretty much go from dinner the night before till about 1 or two in the afternoon the next day and I do a 16, 17, 18 hour fast, whatever it is once a week. Um, but you know, I think about that all the time, Adam. I just I don't know. Well, it sounds like in your case, and and this goes for anybody with with a health condition, obviously talk to your doctor then before you you do something like a five, you know, as long as a five-day fast. >> Um, but that's interesting. You know, there's a a nutritionist, he's he's one of the more famous sort of nutritional influencers, is a guy named Rob Wolf. Um, and uh he was actually a co-developer of the Paleo diet. Um and uh when those those monitors came out um so you know he he's a big thing he's a big focus on your insulin response to different foods and what impact that has on you. So Rob's been a big proponent of the keto diet and um so he he kind of like Tim Ferrris just wanted to analyze the stuff and he he realized after doing that he said wow you know there's a lot of nutrition rules that apply to everybody but he said but then there's a whole bunch of personal idiosyncrasy that that comes into play as well and so he wore the that same meter and had his wife wear it and he said it was crazy. So, we we kind of have the same genetic backgrounds. I mean, we're we're we're I don't know, you know, I believe both sort of like Western European descent type of thing, but he was like, there were certain foods I ate that would send this thing screaming through the roof that it wouldn't move at all for his wife and vice versa. Yeah. So, anyways, hopefully you've been finding some interesting things about like and and to him too, it was a lot of times it wasn't something that he thought that would spike his insulin. So, I'm curious if you've had any foods where you're like, "Wow, I thought it was a safe food, but after I ate it, my my system spiked." >> I had pizza and a beer uh Wednesday night and it had very little impact. Uh there I had Saturday night. So, I've been testing this thing. I want to do all extremes. >> Yep. >> Saturday night, we went out for Mexican food. It was delicious, but it was probably pretty bad. high in carbs and a few beers and it not only spiked it, which I knew it would, but it just stayed elevated a long period. So, it's it's hard. I think what you really need to do is just have pizza, then a few weeks later or later, have a salad and then eat your pizza. and you know, you just have to do all these different experiments where you're separating out all these different food types and not just putting it all together because then you don't know what really is causing the spike. Um, there's a guy that I saw on Facebook that basically he fasts and then he eats something, chocolate bar, a bowl of quinoa, banana, whatever. And he he measures it and he shows you exactly what it did. And what I see with him is it's not the same for me. There are things that had a big effect on him and don't really impact me and vice versa. Uh sleep matter, exercise, days where I do a hard work, my high intensity workout, the glucose stays lower than on days where I'm doing more of a aerobic type or even lifting. >> So it's the type of workout too matters. >> Wow, that's so interesting. Well, okay. So folks, the key takeaway here is is, you know, the good news is we live in an era where you got a lot of potential solutions available to you, tools and things like that. Um, but there's a fair amount of of self-learning that needs to go on through all this. So it's kind of like look, as I always say, you know, one of the forms of true wealth is your health. Um, you know, invest in it. And the good news is is you you you've got a lot of resources here that can help you, but you got to take advantage of them to benefit from them. >> But don't let it drive you crazy like this thing is doing to me. >> Yeah. Don't let it bring out your inner OCD, which it sounds like there is. Yeah. >> Right. It's still okay to have beer and pizza. >> All right. Well, look folks, um if you think one of the best ways to improve your health, both physical and mental, is to continue to listen to uh Michael and Lance every week when they appear on this channel, please 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. Obviously, if you'd like to get some guidance from a good um professional financial adviser uh to help you prepare for the road ahead and and what it might involve, particularly if it takes some of the twists and turns that Michael and I talked about uh that could potentially happen from here. Um if you don't already have a good professional adviser who is providing that advice to you, consider talking to one of the ones that Thoughtful Money endorses. These are the firms you see with me on this channel week in and week out. Maybe you'd like to talk to Mike and Lance themselves there at RAA. To do that, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. These discussions are totally free. It's just a service these firms offer to help as many people as they possibly can. Um, Michael, can't thank you enough. You did great pinching in for Lance this week. Uh, again, really hope things are going as best as can be hoped for with his wife. Um, but that doesn't mean if they are, that doesn't mean we don't want you have you back on this program regularly going forward. Absolutely. Whenever you want. >> All right. Thanks so much, buddy. Everybody else, thanks so much for watching. >> Take care.

Stocks Becoming More Volatile Due To Growing Liquidity Shortfall | Michael Lebowitz

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