Market Outlook: The podcast discusses the current market environment, highlighting concerns over stretched price-to-earnings ratios and the potential for market corrections, particularly in high-flying tech stocks like AMD and Nvidia.
Investment Strategy: Emphasis is placed on the importance of income-generating assets, with Goldman Sachs predicting 2025 as the "year of generating income," suggesting that adding income-earning assets can help achieve returns while reducing volatility.
Economic Insights: The discussion touches on inflation concerns, particularly in consumer goods, and the impact of tariffs on pricing structures, with insights from manufacturing industry insiders about increasing price pressures.
Company Performance: The podcast highlights winners and losers from recent earnings reports, noting that consumer-related sectors are struggling, while industrials, fintech, and AI-related companies are performing well.
Investment Opportunities: LeftBrain Wealth Management focuses on identifying "super winners" with significant upside potential, emphasizing the importance of momentum in business fundamentals and technical strength at the time of entry.
Investor Behavior: Common mistakes by high-net-worth investors are discussed, including neglecting tax planning, lifestyle creep, and the risks of do-it-yourself investing without professional guidance.
Interest Rate Environment: The podcast suggests that the current interest rate environment is favorable for income securities, with expectations of stable or declining rates and a supportive economic backdrop.
Transcript
This episode is sponsored by Interactive Brokers. And here's a question for you. Will August 2025 be the warmest August on record? The Yes forecast contract recently traded at 36% and the no was at 62%. With Interactive Brokers forecast contracts, you can trade on future events like climate change, the economy, or even politics. You choose yes or no, and if you're right, you get paid. It's that simple. Explore trending data, spot the trends, and make your prediction. Trade forecast, contracts, and interactive brokers, and earn a dollar for every correct prediction. Plus, you'll earn 3.83% APY on your investment with an interest like incentive coupon, and you'll get $3 when you start trading forecast contracts. Now, forecast contracts are not suitable for all investors. Go to ibkr.com/for and start predicting today. The last day for this contract is September 11th. >> The disciplined investor is all about you, your money, and the markets. Sit back and get ready for this edition of the disciplined investor podcast. >> This episode of the disciplined investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits and company from seed through harvest. Cultivating financial success. [Music] [Applause] >> The highf flyers get shot down. The Fed seems to be a little bit conflicted. And we have some discussions from Powell. Our guest today is null Langford from LeftBrain Research. Lots to talk about there. All this and much more on episode number 935 of the Disciplined Investor podcast. [Music] Hey there, it's Jer Horowitz and thanks for joining me again for another great episode of the Disciplined Investor podcast all the way up to episode number 935. Been at this since 2007 going strong. More listeners than ever and thank you so much for all your comments, your concerns, your suggestions, of course. I get those a lot from a lot of people and all the uh the ideas that you have. If you do want to send me something, it's very simple. All you have to do is go over to the disciplinedinvestor.com and just simply click on whether it's a contact us or ask Andrew. Just put a note, comment, suggestion, a complaint if you want. Of course, whatever it is, send it on over. And of course, if you have some things you want to talk about relative and related to your particular investment, financial money, uh, concerns about your future with regards to how things are shaping up for you, well, just simply go over to the disciplined investor and uh, get in touch somehow. We'll we'll make sure to be in touch with you. Now, uh, what's happening, what's going on, what's going wrong, what's going right. There's a lot of things that are really percolating in the markets right now from the aspect of shooting down the high flyers. I mean, we saw things that were just jamming up for so long and seemed like there was no stopping them and there was no limitation on how high they can go. We talked about over the last few episodes and during DH Unplugged how the price earnings ratio uh one metric, just one simple metric seems stretched. We looked at the case Schiller or the case u the excuse me the Schiller PE ratio uh which looks at a 10-year averaging and that was also elevated and all these things made up the potential for a significant amount of concern with regard to where things were going to be going. you know, whether or not we would simply see a consolidation, a digestion in the markets as we saw at the beginning of last week and to to a degree the week before or we would see some reality set in and maybe more of a corrective action happen as we saw things move. Now, we saw stocks like AMD in Nvidia. We saw things like Palanteer Palunteer was 175 or 180 and dropped down in the 140s. That's a pretty good move in a short period of time. Now, those short period of time, those quick and reactive and very much um uh sudden types of moves seem to be reversed relatively quickly. It's the ones you worry about where all of a sudden they start ticking down 2 or 3% a day for a period of time, coming back a little, then going down again, where sellers are in charge, where sellers are actually out there and and making waves. Not just maybe one particular Momo group saying that, you know, well, we're going to sell out and take our profits here on this one stock. No, I'm talking about where there's a concerted effort by many that are in cell mode. We haven't seen that for some time. And the re the reasons why we haven't seen that is very simple that the general trend has been higher. And when that trend is higher, nobody's going to push the eject button so fast. It's just not necessary. But what we saw, I would say last week and the week before to a degree was the elements that come together when the cell programs and and these don't have to be dump. Oh my god, get out emergency. You know, this is not the kind of thing I'm talking about. Let's just trim our position. Let's be prudent. Take some profits, put them on the side, and see what happens. We could always buy back in and nothing happens so quickly that we're going to miss it. are not really worried about it, but at least we take the better course of caution in an environment where we have so much chaotic rhythm that is going on throughout the world in a geopolitical sense and on top of that a lot of things that could be happening with regard to monetary policy. We already know the fiscal policy what that is and that is going to be a debt pile that we've never seen the likes of before if you understand what I'm saying. the greatest and the biggest and the best level of debt ever in the history of debt like never seen before under this administration. And the issue is that there is a significant amount of concern when it comes to the levels you have now, the interest rate environment that we have, and that last PPI number we saw two weeks ago. remember that or a week and a half ago the the PPI number came out it was 0.9 now I would like to tell you some inside baseball discussion right here I spent last week with a few friends and colleagues uh there was six people from all different industries those industries those that they represented were primarily in the upper part of manufacturing so therefore they had their finger on the pulse of what is going on with regard to pricing and they said I got to tell you something we're increasing our pricing because we're getting price increase. And I said, "Wait, wait, hold on a second. Back up. What you're telling me is all of a sudden now," they said, "No, we've had some price increases over the last few months, but now is when there is a little bit more or not even a little, a lot more conviction on the price increases." And I said, "Why is that?" They responded to me and told me that because now there is knowledge and an understanding of where the tariffs are and they are locked in theoretically in many of these places that the companies that are producing the products that are being sent to us or the raw materials that are being utilized as I I have both sides of that they are much more comfortable and confident in the pricing structure and what it's going to be and therefore they can make those numbers right now and maybe I'm thinking putting that conversation together with the latest data that we've seen with regard to PPI at a 0.9 month over month almost 1% equivalent of what 10% per year inflation rate. I'm not I am definitely not suggesting that's the case, but not not impossible either. If we have a baseline of 15% price increase is coming through because the 15% baseline tariffs and a little bit of a trickled through and now all of a sudden there's a lot higher level of conviction and need need to actually send that through. We can extrapolate what is actually going on here. Now, I know I've been talking about, you know, somewhere in June or July, we're going to start seeing this inflation number, and that's gone in past and all, and I'm even scratching my head saying, well, why is that the case? How come we didn't see that? April is when these tariffs went on. But this makes a lot of sense. This little tidbit of knowledge that companies were willing to absorb part of it until they knew the total amount possible of these tariffs where they're going to be and they had uh better better clarity and shorty of where they were and then they would pass these through. Makes a whole lot of sense. So they must have been talking to each other saying, you know, what are we doing here? Everybody's like, "Well, we don't know if they're going to go through or not. Just, you know, suck it up for a couple of months. Once we know the final answer, we'll do what we got to do." So, that's where we are right now. And no wonder that the Fed has been coming through with this discussion of, you know, not only their independence like Powell talked about and the central bank being what it is, the importance of making sure it's non-political and that whole discussion that went on just a couple days ago, Jackson Hole. But I think what he was saying, even though there's a lot of things he was saying there, I think what he was talking really about was how you can't necessarily make these important moves too quickly. Now, part of you are that are listening saying, "Of course he doesn't. He doesn't do it at all quickly." As a matter of fact, that's why, in fact, he's been late. Now, some would say better late than never or better late than making the wrong move. Some would say, you know what, they made the wrong move all the time, so what's the point of even having this body make these decisions? I mean, we can go around in circles about this. But but but I think what we're really seeing here is a need to be uh a little more patient in the process because this is not a normal circumstance by any means. what has gone on with the price increases with the global supply chain with the various countries having differing rates something to look at and maybe that's why the concern now is with a higher inflation rate could mean a higher cost of money and capital and then we saw of course what was going on with Intel and the buyin by the the administration saying that the chips act is now going to maybe require that the money that you take we're going to take back a piece of your capital we're take a bite out of your company to repay this. And Lucknick saying, you know, hey, we may do this with other parties. And then Intel coming out and saying they're looking to do a deal where there's going to be capital infusions at a discount. Who does that? Who in their right mind as a company offers, especially a major company, a discount? It stinks from fear. Fear that they don't have enough money to do what they need to do. Shocking for Intel. and probably why it took down AMD and you know Palanteer and all these other companies that are in the tech sector some more than others but clearly the ones that have valuations that are well extended felt the pain question is how long is that going to last with all the money floating around with sovereign wealth funds and money that's come through all these uh these deals out there but that's something we're going to get to with our guest I think that's better suited to discuss but I felt that it was really important to convey that discussion I had with my friends and colleagues in that group that I spent a few days with them last week fishing and we talked about this and I thought it was pretty fascinating. So there you go. Before we get to our guest, let's talk about Interactive Brokers because at Interactive Brokers bond marketplace, you can access over 1 million global bonds including government, corporate, and municipal bonds all in one place with IBKR's bond search tool. Finding and and comparing yields against other brokers has never been easier, which streamlines your investment decisions. Plus, you can trade US treasuries around the clock 5 days a week, allowing you to react to market news and economic events whenever they happen. And you can trade bonds with no markups or built-in spreads and low transparent commissions, which can help you improve your returns. Rated a top online broker, Interactive Brokers has won awards from Barons, Investopedia, Stockbrokers.com, and has been Benzinga's number one overall online broker for bonds for count them four years in a row. Interactive Brokers is a member SIPC. Visit IBKR.com/bonds and start trading today. Let's talk about No Langford a little bit. He's our guest today and he started in the financial services industry working as a financial adviser at Meil Lynch and after many years of managing separate accounts on a discretionary basis for high netw worth clients. He decided to launch his own RAIA firm registered investment advisory leftrain wealth management LLC in 2014. And once the firm was well established, he progressed to his ultimate goal of launching his own hedge fund vehicle. Left brain capital appreciation fund launched in uh 2016. He's passionate about the markets and spent most of his working hours dedicated to investment research and portfolio management. He received his MBA from the University of Chicago Booth School of Business and is a certified financial planner lency. So let's get right to our guest today and he is Nolan Langford. I'm very excited. We just talked about who he is, what he did. Noland, how are you? >> All is well. All is well. Happy to be. >> Anything exciting happened over the summer? >> Well, you know, it's August now and I must tell you this is uh fantasy football draft season. >> Ah, >> yes. So, um very very excited and I've been following our beloved Dolphins throughout the Midwest. I was at the I was at a Bears preseason game >> featuring the Dolphins >> that ended up in a tie, I believe. >> It did. >> Mhm. >> And um the Dolphins are going next to Detroit, which is my hometown. >> Yeah, that's a tough team. >> Tough tough team. >> Lions tough. >> You'd be excited. So that's the exciting thing that's happening. >> Very nice. So that's good. I I I um I haven't done fantasy. This is I guess I missed it again. And I've asked a few people, hey, are there any any openings in your league? And most of them say no. Um, I actually won my fantasy about not last year, but the year before. But before getting too excited about that, there was only about 10 people in it. But still, but still, I'll take it. I'll take it. >> Congrats. Congrats. >> And And by the way, coming from a background of really not knowing all the players, I just did all the statistical work on it. That was it. Probably if I did it this year, now that I think about it, I would throw it into all a couple different AI generators and figure out what's going on and get my answers that way. I did that, by the way, for the uh Kentucky Derby and I got the winning the winning horse. >> Look at her. Look at her. >> Yeah, that's pretty cool. Why should I do it if someone else could do it better than me? I always figure. >> Yeah. Very the the most exciting two minutes in sports. Very exciting. made my way to the derby yet, but I'd be just as happy picking a winner. >> Let's talk about let's go back and let's talk about investments, finance, left brain research. Um, you started your career back in I think 1999, and um you you were with Meil Lynch, one of the big houses. You you left, you decided, you know, I'm going to do this on my own. I'm going to start um leftrain wealth management, leftbrain research. Uh 2014, I think that's when it all began. I guess I want to ask you so that we kind of get a picture of who is Nolan Langford. What inspired you to take that leap to take that that move into entrepreneurship? I can do this. I know that I can build something and I can do it on on my own. Um and and it's a better something blank blank blank for clients, for me, etc. Tell me about that experience. >> Yeah. Wow. This is um you've taken me back some time. Yeah, this is good. So, you're right. I started at Meil Lynch and when I came into the business, Andrew, I had already um went to school. I had gotten and passed my CFP. I had my insurance license and I'd done that all before coming into this industry because I was in a different industry before this one. So, I really wanted to be prepared and make sure because I was leaving a successful career prior to coming over. But after I done my CFP work, you know, I was like, man, I really, you know, my prior work, I was sort of entrepreneurial because I was running a college sales office on my own away from HQ headquarters. And my initial thought with this entrepreneurial spirit and this new knowledge and all this energy of a 20some, I was like, you know what? Um, I can just start my own firm. um why do I need to go work for somebody else? And you know, I went to go talk to one of my mentors at the time who highly encouraged me uh just to go talk to one of the brokerage firms. If nothing else, they said it would be a really good education. And uh just so happens a couple of guys that were in my CFP course with me, I mentioned this to them and they said, "Hey, I think our manager might be looking for people." I gave them my resume. The manager called >> I went in for the interview. I was thinking I was just going to be, you know, I was just going to get information from him because I didn't know much about the industry. I just knew I wanted to be in it. And so I was thinking I was going to be there pumping him for information. Turns out we hit it out, we hit it off really, really well. And uh he offered me a job right in the first interview and >> wow. >> Yeah, the element of surprise. So that's what got me into the industry, got me started. the rest is history and that's why I decided to um sort of take this road instead of the entrepreneurial road right away but eventually Andrew it came time where I had another opportunity you know I did leave Merrill I was there for five or six years really enjoyed my time there knew I wanted to get to a sort of a smaller firm to be closer with the client and I went to a regional which was uh at the time in '05 we know what happened in >> Yeahovia became Well, >> then the rest is history. But in 2014, I figured we're farther enough past all of that that um I could finally was finally time to take my step, make my move to entrepreneurialship. And I did that in 2014. >> And you started LeftBrain Research at that time, right? Leftrain uh capital appreciation fund which you created which a hedge fund was what 2016 that we just mentioned before you got on. Um now left brain research my understanding from what I know and from what we've talked about is that you have this you emphasize what you call um flexibility, freedom and intelligence, right? This approach that you you bring to what you do in the practice of of of um making your investment decisions. break that down for us and and give me um kind of really what happens behind the scenes of each of those components, how they come together. >> Absolutely. And first I wanted to um just clear something up because I know you mentioned a few of our entities. You're right. We've kind of splintered a little bit um as we've grown. But in 2014, we started the RAIA, Left Bright Wealth Management, and we work with high netw worth investors and manage custom crafted portfolios and do holistic planning. And part of that is the asset management that we do inhouse. And so because we knew we were going to be doing investment selection inhouse, we knew we needed to build a staff, a team, a process, and everything that uh sort of goes along with it. And so that was in 2014. We started Leftbrane Wealth Management. And then I thought, you know, we need some sort of vehicle that can appeal to accredited investors, something that is a little bit different, but more importantly, something where we can produce a published track record. So we started left brain capital appreciation fund which is a private fund i.e. hedge fund for credit investors and that launched in January of 2016. So I know you mentioned earlier LeftBrain Capital Management, LeftBrain Capital Appreciation Fund. >> That's one of the strategies that LeftBrain Management runs is this hedge fund. And that's sort of the research work we do. But we don't we no longer have the separate research firm, LeftBrain Investment Research. We've consolidated that into Left Brain Wealth Management. And we still are producing our proprietary research. It's just under the wealth management banner. >> Right. Gotcha. Gotcha. So the process is we are looking for winners. Uh Andrew, we're looking for super winners. We're looking for securities that we think have significant upside. We like to say things we think can double over the course of the next two to three years. And we're looking at these securities through multiple lenses. You know, obviously we want the fundamental stuff. You know, clearly everybody wants that. You know, we want good balance sheets, good management teams, good in markets, good profits, all of that. But I learned a long time ago that's not enough. So we're also looking for momentum in the business. We're looking for earnings momentum. We're looking for sales momentum, business momentum. And then from a technical side, at least when we enter a position, we want to see some strength in the shares at the time that we enter. And that's generally our process. And there's some technology involved, but there's a lot of fundamentals involved. And when they inter when they intersect and they both point to the same idea, then you know, we get really excited. >> All right, so now we got the backdrop of who you are and all that. Let's get to some nitty-gritty. Let's get to some things that are happening. Um, I'm going to start out with the I'm going to go slow, then speed it up, okay? I'm going to start with uh some some not necessarily uh softballs but some things that are more um you know the the base of investing and then we'll we'll build up because recently there's been this idea that investors are searching for income right they're looking for income securities in fact Goldman Sachs came out with uh you know the Goldman Sachs that's run by the DJ that was talked about a couple weeks ago right that David Solomon should go back to being a DJ by the way I don't know if you know this uh I actually spent some time with David Solomon when he was DJing at an island in the Bahamas um for a day back about two years ago. It's kind of wild watching the CEO of Goldman Sachs pounding on the uh on the on the board. You know what I'm saying? DJing. >> Was he any good, Andrew? Was he belting out hits? >> It was, you know, he was mixing. He was doing It looked like a you know, an old white guy DJing. You know what I'm saying? It was an old bald white guy DJing. It just is like, "No, I don't think so." You know, it it didn't have the vibe. It was fine. The music was great, but the truth of the matter is that was all the people from Baker's Bay, this really hoofy tooty, you know, uh snoody uh island off of where we were and all of them came over on their yachts and their planes and their helicopters and uh to to watch David Solomon, right? That was like an invite. So the place was packed uh and people just you know pretending to be like uh you know vibing you know it was kind of funny but uh but the music was good. The food was good and you know the more you drank it sounded the better it sounded. >> Yes. Yes. So >> that was quite sight. >> Goldman Sachs has emphasized recently the importance of uh of income generation for for investors. They looked at the the markets. They looked at the high valuations. They looked at the polit political and um economic uncertainty and they highlighted 2025 as the quote year of generating income. And this was a suggestion that adding income earning assets could pretty much help your portfolio I don't know achieve the returns that um that we saw without with actually reducing volatility. Wow. So that in itself talk to me about income opportunities. Why what's why are people looking for do you think people are looking for this and where are the opportunities? So I think there are um I think there's a few use cases for people looking for income. I think there's three really. Um the one of them and I'm sure you get this in your own business is the retired person. Like I just had a meeting with a um a client that's pre-retiree. They're going to be retiring here in the next 12 months. And so we had a discussion on you know how are we going to generate the income when we're going to distribute it? And right now they're you know they have a lot of money in stocks not a lot in uh income generating assets. And so I am sure a lot of clients as they move closer to retirement think about that sort of income replacement part of it. And as you know, you know, there's been a lot of volatility in markets the last 15 years. As clients move closer to retirement, they generally like predictability in what they're doing. So I think it's a story if you know a client, for example, needs $10,000 a month and you have securities in the portfolio that are generating that quarterly or semianually, then I think that can be attractive to a certain type of investor. So, I think the retiree or the pre-retiree I think income appeals to. I think that would be the one. Uh, the second is the people we're running into a lot of people, Andrew, who still have a lot of money in cash, which really surprises me. And I'm not talking about high yield savings accounts. I'm talking about passbook savings or checking >> where >> I can tell you stories. I could tell you stories. I could tell you stories about people with cash. When I say cash, I mean cash in the walls, in the closets, in the in the safe, under the mattress. And then, you know, I walked, let me tell you a quick story just not to interrupt this because I want just to confirm this. I was with a client. This client's up a little bit north. I've known them for 30 years. They invite me over to have lunch and I said, "Sure, I'm coming." You know, I know the family forever. So, I go up there and we spend some time having lunch at their house. And uh the wife starts bringing out these passbooks and passbooks are savings accounts uh statements, little baby statements. And I said, "Well, how much is in that account?" "Well, not much. 320." I'm like, "Oh, okay. What's in how much is in this account?" That's a smaller account. That's 250. I'm like, "Uh-huh. What's in this account?" That account's got 475. I'm like, "Wait a second." You know, there's like seven of these. I said, "This like we we ended up like $2.2 $.2 million just sitting in lowbearing interest rate accounts. I said, "What are you doing? Do you realize you can make like 75 or $80,000 a year on that and you're probably making seven?" >> Yes. >> So, there's a lot of that going around and why why is that? What's the mentality that's holding people back from even making a reasonably sensible horizontal move into higher yielding CDs/money markets treasuries? I don't know if it's apathy. I you know Andrew that's a really good question. I think you know a lot of it there's some personality part that way people are wired. You know I think after you've had cash this is just me. I'm not a psychologist or anything haven't gone to school for it but the sense I get is the more cash you have just sitting at the bank and the longer you have it the tougher it is to part with it. >> Kind of hardens. It's like a It's like concrete. It hardens. Just sits there. You can't get rid of it. >> Yes. >> So, what what So, what do you how are you I mean, I know that we're talking to people a lot about lading very simple, you know, one to two year ladders, maybe even one year, not not going out that far on treasuries, getting, you know, round number four, four and a quarter, 3.8, depending on what you're doing. Um, but you're talking a little bit different. You're not talking necessarily about that, right? You're talking about higher yielding income securities, >> correct? Uh so we produce what we call a model income portfolio. And on here we have 35 securities. We call them income securities because they're different types, but the premise is the same. These are all publicly traded. They trade in the markets. Uh the yields in our portfolio go from 5 to 13. Uh and then the payout streams are different. Some are monthly, some are quarterly, some are semianually. And so it's interesting when you put them together in a portfolio, the stream of income and the payment schedule that that you can generate. But that's the idea is that in the second bucket of people who have cash at the bank, we know these people, Andrew, aren't going from cash to stocks. That's not going to happen. So you need some sort of intermediate way to get them returns at least to keep up with inflation if not to best inflation but certainly to improve on the point whatever they're getting in interest at the bank. And so that's the idea. It's an intermediate onramp into getting higher returns uh but still stay you know relatively low volatility let's put it that way. >> So is this a standalone concept? I mean, what should people be doing right now if they're concerned about and and rightfully so, some people are concerned about valuations? We're in nosble territory for some things. We'll get to that in a second when we get into our our stock discussion because I want to talk about that. But is this something that could be a standalone? Is should people be looking at at at ways in which to enhance their income right now in in terms of um in light of the fact that interest rates are relatively low and they could be I don't know if they're going to go a little lower, a little higher, whatever it is over time. But but is this a standalone or is this something to um be used to enhance other parts of their uh portfolio allocation? >> Yeah, I think you're right. I think it could be both and I think it depends on the size of the account and and how many they have. So, as an example, Andrew, as you know, people retire, the average person is going to have multiple accounts. So, let's say that they have three of the accounts that are sheltered retirement accounts and one of them that's a brokerage account, uh, which is taxable after tax. Now, if that client retires and let's say they're early 60s and they're 62, well, then they may not have social security kick in for 3 to 5 years. And so, where do you get the income from? Well, you probably don't want to take it out of the three accounts that are tax deferred because then any income you take is going to be ordinary income. Yeah. And let's say it's simple. Let's say they only need $50,000 a year. You know, I pull it out of my retirement account. All 50,000 is going to hit my 1040. However, if I have this brokerage account and I have it set up in a way, let's say I've got, you know, a million bucks in there and I need $50,000 a year, a client could decide to turn all $1 million into an income generating portfolio. they could probably generate 70 $75,000 a year. Uh, and that would be steady income. And then that could be distributed to them and off they go. And they could conceivably have the other three accounts invested 100% in equities and continue to have them grow. And even in a downturn, they're still going to get, you know, their income that they need monthly or annually and still being able to participate in the capital markets on the upside. And so there's a lot of ways you can sort of um structure it, but you know, a lot of it is circumstance dependent or it can just be part of a normally diversified, you know, portfolio. Well, we've been doing a lot, you know, we've historically have followed income securities, but most of a lot of our life has been done with high yield company bonds. And for a lot of our life, Andrew, we've been getting yields of eight, nine, sometimes 10. And I remember back when we first started our hedge fund in 2016, we're buying high yield securities at 15 16% yield to maturities. But now there's six which which by the way just to clarify that I think people should understand this that's that's a little abnormal, right? Uh in terms of the differential between the spread of a treasury and a high yield. High yield is supposed to be there's a reason it's called high yield. It's it's low quality, right? Right. And it's it's companies that um are not the same of clear clearly not the same uh stat stature of a of a government of of maybe a bank and they're looking for money. They're willing to pay a little bit more. But right now there is such a desire to for people to they're chasing yield that is bringing down the yields and and it's it's compressing the uh it's compressing the differential, right? It's depressing the spread between >> uh high quality and low quality. Correct. Yes. >> So, so, so how do you then you how how do you mentally go from, hey, I bought 10, 12, 15% bonds to now I'm like I'm buying six and it's the same company. >> Well, that was years ago. I was in 2016. So, at least there's some time differential between the two. So, it was gradual. A few years ago, we were getting eight. So, it came down gradually. But now, we're in sixes. We're kind of locked in sixes. Even if you're looking for opportunity, you know, even if you add on duration, you extend the maturities, you're still looking at something with a six in front of it, which is okay, but not fantastic. And so, um, and as we know with bonds, when you buy them, your income is fixed, which is the good news. And then also your return is fixed, which is the bad news. But when you buy income securities, um, you have the opportunity to win in a couple of ways. one, the income that you're receiving can go up. A lot of these securities we're looking at, one of the things that we're looking at is income increases over time. Uh the other way that you can make money is you can get appreciation. We've got a lot of these income securities that we've purchased over time that have appreciated double digits or more. And um not or more, but double digits or more significantly than just low double digits, let me put it that way. And so you do have an opportunity to do well if you select well and things go your way. So those would be the other reasons that we like these securities at this point in the cycle instead of just you know regular corporate bonds. So where are we in the cycle? I mean a lot of people talk about oh you know let's frame it as a baseball game. I don't want to do that for you. I would do football by the way but no I'm not doing that either. Um but where are we in the cycle? If we think about the idea of a cycle being you know peak to trough uh recovery to um peak again to slow down to trough etc. Where are we right now? And and where are we? You know, are we closer to the climb to the peak? We peaked to the coming down. Are we I don't know, somehow troththing and come where are we? You know, that's a good question and I'm probably not the best guest to ask. Anything macro? Um, but I'm going to respond to that. But when I say cycle, I just meant kind of where we are. Uh, as far as interest rates go, we know interest rates are sort of flat now. We anticipate they're going to go down, but we don't sort of expect them to go up. And so, at this point in the cycle, what I meant is I think income securities have a really positive backdrop just because the economy itself is holding in there really strong. >> Yeah. >> Quiddity is good. Interest rates should be going lower, and you have a a White House that really wants to stimulate growth in the economy. those are really good backdrops for, you know, income type securities. And so I I expect them to to do very well. And back to your question on the macro, >> we're a really a micro shock here. Uh we almost spend no time thinking about, you know, uh politics or currencies or interest rates. What we really do pay attention to um in a fanatical way, Andrew, is the micro. So every quarter we spend a lot of time listening to transcripts, following what companies are reporting, who's delivering, who's not delivering. We really want to keep our ears to the ground to find out, you know, how CEOs are responding and more importantly, what businesses are actually strengthening at this point in the business cycle and and which businesses are actually getting weak. And so we spend more a lot more time on the micro than we do the macro. Um but the economic environment right now, Andrew, I would say I would say it's definitely bifurcated. >> It feels different on Main Street than it does on Wall Street. That much I will say >> Wall Street's in party time. Main Street is questioning. >> Yes. >> And and there's different Main Streets, too, by the way. >> Right. There's I'm serious. There's Main Street, you know, Florida, Fort Lauderdale, Miami. There's Main Street, uh, Wisconsin. >> And many of those things are a lot different. I talked to somebody just a couple days ago about, uh, Nashville and how the restaurants and the and the entire entertainment complex in Nashville is really suffering. And that is something that's a big concern. And we were discussing why that was or or or actually theorizing why that was because it wasn't clear what's going on exactly. But you know then again we talked about food costs and we talked about the people are just exhausted from paying higher prices and um you know they could there's a point of no return when it comes to levels and then the restaurants are unable to really lower prices because beef prices are at an all-time high. Liquor prices are going up like crazy. >> I mean I get there's no inflation out there, right? But but price are going up in some places. Let's kind of move away from that for a second though, but let's talk about the earnings. The earnings that you watch and you look at and is part and parcel of your entire stock picking process. Talk to me about the Q33 earnings and and and the last the last earnings we've seen from some of these major companies um that that you picked up on. So, there's a couple of themes um that run through the earnings winners and the earnings losers. And a couple of things I would say, let's start with the losers. I think anything or most things consumer related right now are really struggling. So if you look at apparel, you look at retailers, uh even if you look at, you know, a lot of the retail stores, you know, Target, Chipotle just reported a a weak report, >> Starbucks had some issues. any place counting on the consumer outside of travel because the consumer is still spending on travel and experiences. But outside of that, um those areas are are really having a hard time. We know that healthc care right now is an industry struggling. I think um it looks like real estate, I know a lot of people are talking about the real estate, you know, turnaround and maybe and this is commercial, not residential, by the way. uh and maybe commercial has bottomed but commercial still scrape and bottom. Uh I don't think there's going to be a Z there. So those areas uh we know are struggling. I think um it looks like consumer packaged goods and everything you buy at the grocery store. You think if the consumer was struggling they'd be at spending at the grocery store and the consumer package goods companies, you know, the beverage companies, the big food companies, you think they would be doing better, but they're not. they're having issues as well and I think that's they've got some separate issues other than macro. I think they've got some industry specific issues. So those are all the areas that we've watched that are struggling uh now but the winners this ear um this season there have been some winners you know the industrials have been doing very well you look at GE and a couple of its offshoots uh they've been doing they've been doing very well fintech um so not only financial industry the usually when you think of you know financials you're thinking of banks or insurance companies which are doing fine but fintech financial technology companies um are doing very well is a theme that we picked up on technology companies you know Roblox is a company that we follow um and those companies are doing very well uh right now digital companies we know anything AI related the data center is still doing very well in the data center uh we know AI um we know data transformation those businesses are doing very well and anything involving you know uh AI a data center powering the data center those things are still still going gang busters and doing very well um so those are the areas and digital ad sales as we I I don't know if I mentioned that earlier you know the metas Google had a strong quarter because of ad sales some of the smaller companies uh apploven that we follow uh they >> we've had apploven for I cannot even tell you How many how many hundreds of percents we we've that's been unbelievable. >> Yes. Uh so companies like that Palunteer, you know, and AI software. So those have been some of the winners. Um no real surprises on the winners list. Um but those are the winners and the losers from the uh from the from the third quarter. >> So and the consumer itself, we we're finding them because you we we we wo that into the discussion. We talked about a little bit um you know about the areas the sectors that are doing uh having problems but that all rings to me is as as the consumer is the the big issue there. Yes. And you mentioned it earlier, Andrew. It makes sense. You know, if you think about this inflation we've had the last, you pretty much since co, you know, at first it was the supply chains we racked it up to. We said it was going to be transitory, but you know, we had 6 7 8% inflation for a few years in a row and inflation may have come down to 2 or 3% wherever we are now, but it's on top of a four-year stack that has grown and not come down with prices. And you're right, you know, housing prices are up for the consumer. You can forget about refinancing and taking cash out. That's a mug's game. >> Car payments, the average car payment today is $1,000 a month. And you go to the grocery store, you know, you don't see as many sales as you used to. And it doesn't take you many bags of groceries to get to a hundred bucks. >> Right. Right. So the consumer is weak. Uh AI is strong. Productivity is from AI is creating possibly weaker consumers eventually because less people will be working. It's an interesting situation. AI itself there are a lot of areas of that that you mentioned like the power consumption the power consumption the requirements of of fueling the data warehouses the AI the chips and all that. Um, you've been talking about moving away from some of the momentum driven stocks, right? So, is there something that's coming up in your research that's saying something about that? >> No, I didn't mention anything and we haven't mentioned much about uh the momentum driven stocks. I thought recently read something about that what you wrote, but may >> Yeah, there's a reason. So, that's good that you mentioned it. I would say Andrew, I would break the momentum into two categories. I think there's the momentum in buying the shares because the business is so good. The public is just now realizing it. And so let's put Palunteer in that group. You can put AppLoving in that group. Just it's not just the stock has run up. In a lot of cases, the earnings and the fundamentals has outrun the stock price. you can probably throw Nvidia in there. So, that's the one group. Then, there's another group that you would consider like meme stocks and they have momentum. You'll see if you pull up a short list of the most shorted stocks this year, those are probably the ones the last 45 days that have run up the most. And I don't know, you can call that a trash rally or whatever you want to call it. That's a group that has momentum. It was probably built on something else. And so that latter group, yeah, I would be very cautious about. But the first group, you know, I would dig deeper to see if this could be a big winner over the next three to four years. This AI rallies, you know, really gains pace. And, you know, you talk about the trash stocks, you talk about the the Momo, the FOMO, the the uh whatever they call the meme stocks. You know, it's interesting. I saw the other day guy named Anthony Pompiano. You don't have to comment about this, but I don't know if you even know him. He's uh he's he's Oh, I just bought Open Door for my portfolio. >> I'm thinking and Open Door is like a $2 stock by the way. Open Door was the company that was um basically what it did was I don't know automatic payment of your house, right? I mean, exact they'd buy your house, right? Sight unseen kind of thing. And um but but what's interesting is that that doesn't matter. Doesn't matter what they do. He comes out and he says, "Hey, I just bought opened off my portfolio." I text I tweeted back. I said, "Listen, how much did you buy? Why don't you give us the weight of this particular transaction? Number one. Number two, >> is this your first transaction or do you actually have holdings behind this >> and you're just mentioning it today so you could pump the rest of your stuff, >> which why not, right? I mean, I he didn't say I bought an initial I just I bought Open Door for my portfolio today." He could have a huge position behind it and all of a sudden bought three shares today and that's and that's a true statement. Yes, good point. >> So, beware of these kinds of pump and dump. >> So, um but this happens all the time, but investors seem to, you know, grab it anyway. I guess it's just part and parcel of right now. We have a little bit of a euphoric atmosphere going on with this foamy, frothy kind of market. That doesn't mean that necessarily it's going to drop, it's going to be panicked out or something's bad's going to happen. But we did see some of the IPOs that came out, whether it was Figma, whether it was um there was a couple others this week. There was Fly. Um you know, they came out pretty strong and then they dropped like a rock. >> Yes. So, >> yeah, >> that's something to consider. Um, and these are the mistakes that people make sometimes, but you have you have a bunch of common mistakes that you talk about that high netw worth investors make. Can you go through some of those with me? >> Yes. Andrew, do me a favor. I'm going to pull up. Can I put you on Can I pause? Can we pause one second? >> We can pause. Okay, I'm going to pause this. Hang on a second. I'm going to pause the I'm just I'll put the pause button. Here we go. And we are back and that pause was brought to you by LeftBrain Research. So tell Yeah, we we left off with uh the um common mistakes that that that high netw worth investors make, which by the way, I'm certain that many of these are applicable to non- highn networth people as well. So let's go through some of those. >> Yes, they are. Uh the first one is neglecting tax planning. Um, and we know that, you know, taxes take up a much bigger chunk of our nest egg than even, you know, returns can. You know, if we have a great year for a person and we produce double-digit returns, that pales in comparison to if you're in the highest tax bracket and you're getting 37%, you know, taken from you. So, it's a it is a really big deal. So, the tax planning is important. You know, a lot of our clients are corporate executives and a lot of them work at publicly traded companies. So, there's a lot of things that can um can go wrong with these clients, especially as they, you know, uh exercise stock options, restricted stock units, vest, and some of these things are self-inflicted. you know, if you're in the fourth quarter at the end of the year and you have company stock that you've purchased, you know, you need to really be careful about doing a transaction because you could be inadvertently putting yourself in a higher tax bracket right at the end of the year >> and turn around Q1 and really face a bunch of regret. So, I think tax planning is one of them. And even simple stuff, Andrew, we talked about people that, you know, have cash in their account. Some of these people do have cash in low yielding accounts and I don't know if people realize but even that small interest that's generated it is taxable as ordinary income and because it's not a lot even something simple a lot of investors will benefit from just switching to a high yield uh tax-free money market and getting probably the same rate of interest but it'll be tax-free. So just being smart from a tax perspective uh we think is really important. So that would be number one. >> Okay. What do we got next? >> Uh lifestyle creep, >> believe it or not. >> I know this may not seem like a um you know financial, but it actually is. We see lifestyle creep in two places. One is during your working years when you're you know building your net worth. you know, as you get those bonuses and you get raises instead of, you know, you have a couple of choices. You can either spend them all and buy a bigger house, bigger car, bigger boat, better vacation, or you could save more and invest more. Um, and so you have to be careful about the lifestyle creep uh and starting to spend more, especially unnecessarily. But we also see it, Andrew, I see it a lot in retirement. You know, I can't tell you how many times I've built a model for some client and they're like, "Oh, yeah. I'm spending, pick the number, 10,000 a month, 12,000 a month or whatever. We're never going to go over that." And we've been doing that for 10 years or something. Finally, they get into retirement and stop working and, you know, the spending just kind of creeps up there and it never goes down. And a lot of spending I've seen has surprised me because it's from clients who you had not seen that level of spending from in the last however many amount of years and then once retirement happens you know um sometimes you can see spending go the wrong way and so that would be another really big issue uh for investors. >> Okay, what do we got next? So, it would be a lot of um, you know, a lot of do-it-yourself stuff. We see a lot of things where we're talking to people who aren't clients, but they're talking about become clients, and you're reviewing kind of what they've done over the years, and it's amazing kind of how many people have acted as their own advisor. And really, you know, you see some incredible mistakes uh, that people are making. And so I would say if somebody's is out there doing it themselves, I would encourage people to really um talk to a a professional, you know, like yourself or another advisor, especially as you get closer to retirement. A lot of those mistakes, you know, that people make can be irreversible and some things are, you know, really easy not to do and and people are doing them anyway. So, um, >> and I say this all the time, and I'll tell you, this is, um, this is just my way of trying to simplify that. And, and people have heard me a hundred times say this, I'm going to say it again. It's not about whether you can actually functionally do something like buy a stock or sell a stock or, you know, do your own tax return. That's not the point. It's a matter of perspective. It's why I don't do my own haircuts. It's not because I can't hold a scissor, cut some hair, but I can't get that back right. and I'm going to do it with three different mirrors and probably screw it up royally. And it's a matter of perspective is why I can't do it. Emotionally, I can't do it. So, that's why I hand the scissors to somebody else when it comes to those kinds of decisions. So, just think about that when it comes to your your finances. So, I agree with that. Um, we're limited on time, so let's go with maybe one more that you want to pick from that pile. >> Yeah. So, I would just say not having a real plan and a real distribution strategy. You know, I think most people during their working years know that they want to kind of retire early. They don't want to have to work to age 65 if they don't have to. So, you know, clearly you want to do some work up front to find out, you know, am I on pace? Do I have enough? Do I need to make some changes? Um, but then, you know, once you get into retirement, you need to have a a strategy on distribution because it matters. You know, if you retire at 60, that's a very different distribution strategy than if you retire at 65. You know, the taxes are different. The way you would source the income and take it is completely different. And the way that I have my accounts aligned would be completely different. So, I would say not having a real plan and not having a distribution strategy. I guess it goes along with doing it yourself because if you have an advisor, these are things your adviser will be doing for you. But they really could change your outcome and how successfully you retire based off of how well you do your planning and your distributions. >> Yep. Well, we uh hit the the the the gold mine here. You know, we we ran from um issues of of of what kind of stocks are are hot and not the consumer, the environment, how to do things in terms of understanding uh more about you know the idea of of of looking at sectors that are benefiting. giving giving some names there and also some common mistakes. So there I mean I think what more could people ask? >> I think they got it. >> What more could people ask? Nolan Langford. Tell us where everybody can find you. >> Leftbrainwealthmanagement.com is where they can find us. And we're on the socials. You can find us on YouTube. You can find us on Facebook. You can find us on LinkedIn. It's Leftbrain Wealthmanagement. >> That's perfect. Thank you. Uh that's awesome. Thanks so much. >> Thank you, Andrew. Enjoy the rest of the summer. Thank you. >> Hey, you too. And that's a wrap of this episode of the Disciplined Investor podcast. Lots more coming. Lots more great people we have next week coming on. Daniel Park, Danielle Park, uh she's coming on. We got Jack Schwagger, Brian Shannon. Who do we else got? Let give you some foreshadowing. We got in September. Uh Peter Schiff is going to be on here. We got uh Fumahade Isaka. Very interesting discussion about the power modules and a specialized vehicle for transporting well not say not vehicle but uh a tool for minimizing the electrical and energy use when AI is used. Pat Kabuso is coming on from briefing. It's a long list of people that we have uh coming on the show. So, make sure to make sure to go over to YouTube, Amazon Music, Spotify, Apple Podcast. Make sure to subscribe. Make sure to leave a comment as well. And and make sure to listen every single week. You're going to learn something. Thanks for joining me this week. Thanks for joining me every week. I will see you again really soon. [Music] This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowits & Company Inc. an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horowits a company is properly registered or is excluded from registration requirements. Any mention of thirdparty companies, products, or services, is provided for informationational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial adviser before making any investment decisions. Please visit our website for additional information disclosures as well as a copy of our form CS. Advertisements are not related to the host or affiliates and are not considered recommendations by the host of the show or any affiliates or Hollywood. Heat. Heat. [Music]
TDI Podcast: The Digestion Phase (#935)
Summary
Transcript
This episode is sponsored by Interactive Brokers. And here's a question for you. Will August 2025 be the warmest August on record? The Yes forecast contract recently traded at 36% and the no was at 62%. With Interactive Brokers forecast contracts, you can trade on future events like climate change, the economy, or even politics. You choose yes or no, and if you're right, you get paid. It's that simple. Explore trending data, spot the trends, and make your prediction. Trade forecast, contracts, and interactive brokers, and earn a dollar for every correct prediction. Plus, you'll earn 3.83% APY on your investment with an interest like incentive coupon, and you'll get $3 when you start trading forecast contracts. Now, forecast contracts are not suitable for all investors. Go to ibkr.com/for and start predicting today. The last day for this contract is September 11th. >> The disciplined investor is all about you, your money, and the markets. Sit back and get ready for this edition of the disciplined investor podcast. >> This episode of the disciplined investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits and company from seed through harvest. Cultivating financial success. [Music] [Applause] >> The highf flyers get shot down. The Fed seems to be a little bit conflicted. And we have some discussions from Powell. Our guest today is null Langford from LeftBrain Research. Lots to talk about there. All this and much more on episode number 935 of the Disciplined Investor podcast. [Music] Hey there, it's Jer Horowitz and thanks for joining me again for another great episode of the Disciplined Investor podcast all the way up to episode number 935. Been at this since 2007 going strong. More listeners than ever and thank you so much for all your comments, your concerns, your suggestions, of course. I get those a lot from a lot of people and all the uh the ideas that you have. If you do want to send me something, it's very simple. All you have to do is go over to the disciplinedinvestor.com and just simply click on whether it's a contact us or ask Andrew. Just put a note, comment, suggestion, a complaint if you want. Of course, whatever it is, send it on over. And of course, if you have some things you want to talk about relative and related to your particular investment, financial money, uh, concerns about your future with regards to how things are shaping up for you, well, just simply go over to the disciplined investor and uh, get in touch somehow. We'll we'll make sure to be in touch with you. Now, uh, what's happening, what's going on, what's going wrong, what's going right. There's a lot of things that are really percolating in the markets right now from the aspect of shooting down the high flyers. I mean, we saw things that were just jamming up for so long and seemed like there was no stopping them and there was no limitation on how high they can go. We talked about over the last few episodes and during DH Unplugged how the price earnings ratio uh one metric, just one simple metric seems stretched. We looked at the case Schiller or the case u the excuse me the Schiller PE ratio uh which looks at a 10-year averaging and that was also elevated and all these things made up the potential for a significant amount of concern with regard to where things were going to be going. you know, whether or not we would simply see a consolidation, a digestion in the markets as we saw at the beginning of last week and to to a degree the week before or we would see some reality set in and maybe more of a corrective action happen as we saw things move. Now, we saw stocks like AMD in Nvidia. We saw things like Palanteer Palunteer was 175 or 180 and dropped down in the 140s. That's a pretty good move in a short period of time. Now, those short period of time, those quick and reactive and very much um uh sudden types of moves seem to be reversed relatively quickly. It's the ones you worry about where all of a sudden they start ticking down 2 or 3% a day for a period of time, coming back a little, then going down again, where sellers are in charge, where sellers are actually out there and and making waves. Not just maybe one particular Momo group saying that, you know, well, we're going to sell out and take our profits here on this one stock. No, I'm talking about where there's a concerted effort by many that are in cell mode. We haven't seen that for some time. And the re the reasons why we haven't seen that is very simple that the general trend has been higher. And when that trend is higher, nobody's going to push the eject button so fast. It's just not necessary. But what we saw, I would say last week and the week before to a degree was the elements that come together when the cell programs and and these don't have to be dump. Oh my god, get out emergency. You know, this is not the kind of thing I'm talking about. Let's just trim our position. Let's be prudent. Take some profits, put them on the side, and see what happens. We could always buy back in and nothing happens so quickly that we're going to miss it. are not really worried about it, but at least we take the better course of caution in an environment where we have so much chaotic rhythm that is going on throughout the world in a geopolitical sense and on top of that a lot of things that could be happening with regard to monetary policy. We already know the fiscal policy what that is and that is going to be a debt pile that we've never seen the likes of before if you understand what I'm saying. the greatest and the biggest and the best level of debt ever in the history of debt like never seen before under this administration. And the issue is that there is a significant amount of concern when it comes to the levels you have now, the interest rate environment that we have, and that last PPI number we saw two weeks ago. remember that or a week and a half ago the the PPI number came out it was 0.9 now I would like to tell you some inside baseball discussion right here I spent last week with a few friends and colleagues uh there was six people from all different industries those industries those that they represented were primarily in the upper part of manufacturing so therefore they had their finger on the pulse of what is going on with regard to pricing and they said I got to tell you something we're increasing our pricing because we're getting price increase. And I said, "Wait, wait, hold on a second. Back up. What you're telling me is all of a sudden now," they said, "No, we've had some price increases over the last few months, but now is when there is a little bit more or not even a little, a lot more conviction on the price increases." And I said, "Why is that?" They responded to me and told me that because now there is knowledge and an understanding of where the tariffs are and they are locked in theoretically in many of these places that the companies that are producing the products that are being sent to us or the raw materials that are being utilized as I I have both sides of that they are much more comfortable and confident in the pricing structure and what it's going to be and therefore they can make those numbers right now and maybe I'm thinking putting that conversation together with the latest data that we've seen with regard to PPI at a 0.9 month over month almost 1% equivalent of what 10% per year inflation rate. I'm not I am definitely not suggesting that's the case, but not not impossible either. If we have a baseline of 15% price increase is coming through because the 15% baseline tariffs and a little bit of a trickled through and now all of a sudden there's a lot higher level of conviction and need need to actually send that through. We can extrapolate what is actually going on here. Now, I know I've been talking about, you know, somewhere in June or July, we're going to start seeing this inflation number, and that's gone in past and all, and I'm even scratching my head saying, well, why is that the case? How come we didn't see that? April is when these tariffs went on. But this makes a lot of sense. This little tidbit of knowledge that companies were willing to absorb part of it until they knew the total amount possible of these tariffs where they're going to be and they had uh better better clarity and shorty of where they were and then they would pass these through. Makes a whole lot of sense. So they must have been talking to each other saying, you know, what are we doing here? Everybody's like, "Well, we don't know if they're going to go through or not. Just, you know, suck it up for a couple of months. Once we know the final answer, we'll do what we got to do." So, that's where we are right now. And no wonder that the Fed has been coming through with this discussion of, you know, not only their independence like Powell talked about and the central bank being what it is, the importance of making sure it's non-political and that whole discussion that went on just a couple days ago, Jackson Hole. But I think what he was saying, even though there's a lot of things he was saying there, I think what he was talking really about was how you can't necessarily make these important moves too quickly. Now, part of you are that are listening saying, "Of course he doesn't. He doesn't do it at all quickly." As a matter of fact, that's why, in fact, he's been late. Now, some would say better late than never or better late than making the wrong move. Some would say, you know what, they made the wrong move all the time, so what's the point of even having this body make these decisions? I mean, we can go around in circles about this. But but but I think what we're really seeing here is a need to be uh a little more patient in the process because this is not a normal circumstance by any means. what has gone on with the price increases with the global supply chain with the various countries having differing rates something to look at and maybe that's why the concern now is with a higher inflation rate could mean a higher cost of money and capital and then we saw of course what was going on with Intel and the buyin by the the administration saying that the chips act is now going to maybe require that the money that you take we're going to take back a piece of your capital we're take a bite out of your company to repay this. And Lucknick saying, you know, hey, we may do this with other parties. And then Intel coming out and saying they're looking to do a deal where there's going to be capital infusions at a discount. Who does that? Who in their right mind as a company offers, especially a major company, a discount? It stinks from fear. Fear that they don't have enough money to do what they need to do. Shocking for Intel. and probably why it took down AMD and you know Palanteer and all these other companies that are in the tech sector some more than others but clearly the ones that have valuations that are well extended felt the pain question is how long is that going to last with all the money floating around with sovereign wealth funds and money that's come through all these uh these deals out there but that's something we're going to get to with our guest I think that's better suited to discuss but I felt that it was really important to convey that discussion I had with my friends and colleagues in that group that I spent a few days with them last week fishing and we talked about this and I thought it was pretty fascinating. So there you go. Before we get to our guest, let's talk about Interactive Brokers because at Interactive Brokers bond marketplace, you can access over 1 million global bonds including government, corporate, and municipal bonds all in one place with IBKR's bond search tool. Finding and and comparing yields against other brokers has never been easier, which streamlines your investment decisions. Plus, you can trade US treasuries around the clock 5 days a week, allowing you to react to market news and economic events whenever they happen. And you can trade bonds with no markups or built-in spreads and low transparent commissions, which can help you improve your returns. Rated a top online broker, Interactive Brokers has won awards from Barons, Investopedia, Stockbrokers.com, and has been Benzinga's number one overall online broker for bonds for count them four years in a row. Interactive Brokers is a member SIPC. Visit IBKR.com/bonds and start trading today. Let's talk about No Langford a little bit. He's our guest today and he started in the financial services industry working as a financial adviser at Meil Lynch and after many years of managing separate accounts on a discretionary basis for high netw worth clients. He decided to launch his own RAIA firm registered investment advisory leftrain wealth management LLC in 2014. And once the firm was well established, he progressed to his ultimate goal of launching his own hedge fund vehicle. Left brain capital appreciation fund launched in uh 2016. He's passionate about the markets and spent most of his working hours dedicated to investment research and portfolio management. He received his MBA from the University of Chicago Booth School of Business and is a certified financial planner lency. So let's get right to our guest today and he is Nolan Langford. I'm very excited. We just talked about who he is, what he did. Noland, how are you? >> All is well. All is well. Happy to be. >> Anything exciting happened over the summer? >> Well, you know, it's August now and I must tell you this is uh fantasy football draft season. >> Ah, >> yes. So, um very very excited and I've been following our beloved Dolphins throughout the Midwest. I was at the I was at a Bears preseason game >> featuring the Dolphins >> that ended up in a tie, I believe. >> It did. >> Mhm. >> And um the Dolphins are going next to Detroit, which is my hometown. >> Yeah, that's a tough team. >> Tough tough team. >> Lions tough. >> You'd be excited. So that's the exciting thing that's happening. >> Very nice. So that's good. I I I um I haven't done fantasy. This is I guess I missed it again. And I've asked a few people, hey, are there any any openings in your league? And most of them say no. Um, I actually won my fantasy about not last year, but the year before. But before getting too excited about that, there was only about 10 people in it. But still, but still, I'll take it. I'll take it. >> Congrats. Congrats. >> And And by the way, coming from a background of really not knowing all the players, I just did all the statistical work on it. That was it. Probably if I did it this year, now that I think about it, I would throw it into all a couple different AI generators and figure out what's going on and get my answers that way. I did that, by the way, for the uh Kentucky Derby and I got the winning the winning horse. >> Look at her. Look at her. >> Yeah, that's pretty cool. Why should I do it if someone else could do it better than me? I always figure. >> Yeah. Very the the most exciting two minutes in sports. Very exciting. made my way to the derby yet, but I'd be just as happy picking a winner. >> Let's talk about let's go back and let's talk about investments, finance, left brain research. Um, you started your career back in I think 1999, and um you you were with Meil Lynch, one of the big houses. You you left, you decided, you know, I'm going to do this on my own. I'm going to start um leftrain wealth management, leftbrain research. Uh 2014, I think that's when it all began. I guess I want to ask you so that we kind of get a picture of who is Nolan Langford. What inspired you to take that leap to take that that move into entrepreneurship? I can do this. I know that I can build something and I can do it on on my own. Um and and it's a better something blank blank blank for clients, for me, etc. Tell me about that experience. >> Yeah. Wow. This is um you've taken me back some time. Yeah, this is good. So, you're right. I started at Meil Lynch and when I came into the business, Andrew, I had already um went to school. I had gotten and passed my CFP. I had my insurance license and I'd done that all before coming into this industry because I was in a different industry before this one. So, I really wanted to be prepared and make sure because I was leaving a successful career prior to coming over. But after I done my CFP work, you know, I was like, man, I really, you know, my prior work, I was sort of entrepreneurial because I was running a college sales office on my own away from HQ headquarters. And my initial thought with this entrepreneurial spirit and this new knowledge and all this energy of a 20some, I was like, you know what? Um, I can just start my own firm. um why do I need to go work for somebody else? And you know, I went to go talk to one of my mentors at the time who highly encouraged me uh just to go talk to one of the brokerage firms. If nothing else, they said it would be a really good education. And uh just so happens a couple of guys that were in my CFP course with me, I mentioned this to them and they said, "Hey, I think our manager might be looking for people." I gave them my resume. The manager called >> I went in for the interview. I was thinking I was just going to be, you know, I was just going to get information from him because I didn't know much about the industry. I just knew I wanted to be in it. And so I was thinking I was going to be there pumping him for information. Turns out we hit it out, we hit it off really, really well. And uh he offered me a job right in the first interview and >> wow. >> Yeah, the element of surprise. So that's what got me into the industry, got me started. the rest is history and that's why I decided to um sort of take this road instead of the entrepreneurial road right away but eventually Andrew it came time where I had another opportunity you know I did leave Merrill I was there for five or six years really enjoyed my time there knew I wanted to get to a sort of a smaller firm to be closer with the client and I went to a regional which was uh at the time in '05 we know what happened in >> Yeahovia became Well, >> then the rest is history. But in 2014, I figured we're farther enough past all of that that um I could finally was finally time to take my step, make my move to entrepreneurialship. And I did that in 2014. >> And you started LeftBrain Research at that time, right? Leftrain uh capital appreciation fund which you created which a hedge fund was what 2016 that we just mentioned before you got on. Um now left brain research my understanding from what I know and from what we've talked about is that you have this you emphasize what you call um flexibility, freedom and intelligence, right? This approach that you you bring to what you do in the practice of of of um making your investment decisions. break that down for us and and give me um kind of really what happens behind the scenes of each of those components, how they come together. >> Absolutely. And first I wanted to um just clear something up because I know you mentioned a few of our entities. You're right. We've kind of splintered a little bit um as we've grown. But in 2014, we started the RAIA, Left Bright Wealth Management, and we work with high netw worth investors and manage custom crafted portfolios and do holistic planning. And part of that is the asset management that we do inhouse. And so because we knew we were going to be doing investment selection inhouse, we knew we needed to build a staff, a team, a process, and everything that uh sort of goes along with it. And so that was in 2014. We started Leftbrane Wealth Management. And then I thought, you know, we need some sort of vehicle that can appeal to accredited investors, something that is a little bit different, but more importantly, something where we can produce a published track record. So we started left brain capital appreciation fund which is a private fund i.e. hedge fund for credit investors and that launched in January of 2016. So I know you mentioned earlier LeftBrain Capital Management, LeftBrain Capital Appreciation Fund. >> That's one of the strategies that LeftBrain Management runs is this hedge fund. And that's sort of the research work we do. But we don't we no longer have the separate research firm, LeftBrain Investment Research. We've consolidated that into Left Brain Wealth Management. And we still are producing our proprietary research. It's just under the wealth management banner. >> Right. Gotcha. Gotcha. So the process is we are looking for winners. Uh Andrew, we're looking for super winners. We're looking for securities that we think have significant upside. We like to say things we think can double over the course of the next two to three years. And we're looking at these securities through multiple lenses. You know, obviously we want the fundamental stuff. You know, clearly everybody wants that. You know, we want good balance sheets, good management teams, good in markets, good profits, all of that. But I learned a long time ago that's not enough. So we're also looking for momentum in the business. We're looking for earnings momentum. We're looking for sales momentum, business momentum. And then from a technical side, at least when we enter a position, we want to see some strength in the shares at the time that we enter. And that's generally our process. And there's some technology involved, but there's a lot of fundamentals involved. And when they inter when they intersect and they both point to the same idea, then you know, we get really excited. >> All right, so now we got the backdrop of who you are and all that. Let's get to some nitty-gritty. Let's get to some things that are happening. Um, I'm going to start out with the I'm going to go slow, then speed it up, okay? I'm going to start with uh some some not necessarily uh softballs but some things that are more um you know the the base of investing and then we'll we'll build up because recently there's been this idea that investors are searching for income right they're looking for income securities in fact Goldman Sachs came out with uh you know the Goldman Sachs that's run by the DJ that was talked about a couple weeks ago right that David Solomon should go back to being a DJ by the way I don't know if you know this uh I actually spent some time with David Solomon when he was DJing at an island in the Bahamas um for a day back about two years ago. It's kind of wild watching the CEO of Goldman Sachs pounding on the uh on the on the board. You know what I'm saying? DJing. >> Was he any good, Andrew? Was he belting out hits? >> It was, you know, he was mixing. He was doing It looked like a you know, an old white guy DJing. You know what I'm saying? It was an old bald white guy DJing. It just is like, "No, I don't think so." You know, it it didn't have the vibe. It was fine. The music was great, but the truth of the matter is that was all the people from Baker's Bay, this really hoofy tooty, you know, uh snoody uh island off of where we were and all of them came over on their yachts and their planes and their helicopters and uh to to watch David Solomon, right? That was like an invite. So the place was packed uh and people just you know pretending to be like uh you know vibing you know it was kind of funny but uh but the music was good. The food was good and you know the more you drank it sounded the better it sounded. >> Yes. Yes. So >> that was quite sight. >> Goldman Sachs has emphasized recently the importance of uh of income generation for for investors. They looked at the the markets. They looked at the high valuations. They looked at the polit political and um economic uncertainty and they highlighted 2025 as the quote year of generating income. And this was a suggestion that adding income earning assets could pretty much help your portfolio I don't know achieve the returns that um that we saw without with actually reducing volatility. Wow. So that in itself talk to me about income opportunities. Why what's why are people looking for do you think people are looking for this and where are the opportunities? So I think there are um I think there's a few use cases for people looking for income. I think there's three really. Um the one of them and I'm sure you get this in your own business is the retired person. Like I just had a meeting with a um a client that's pre-retiree. They're going to be retiring here in the next 12 months. And so we had a discussion on you know how are we going to generate the income when we're going to distribute it? And right now they're you know they have a lot of money in stocks not a lot in uh income generating assets. And so I am sure a lot of clients as they move closer to retirement think about that sort of income replacement part of it. And as you know, you know, there's been a lot of volatility in markets the last 15 years. As clients move closer to retirement, they generally like predictability in what they're doing. So I think it's a story if you know a client, for example, needs $10,000 a month and you have securities in the portfolio that are generating that quarterly or semianually, then I think that can be attractive to a certain type of investor. So, I think the retiree or the pre-retiree I think income appeals to. I think that would be the one. Uh, the second is the people we're running into a lot of people, Andrew, who still have a lot of money in cash, which really surprises me. And I'm not talking about high yield savings accounts. I'm talking about passbook savings or checking >> where >> I can tell you stories. I could tell you stories. I could tell you stories about people with cash. When I say cash, I mean cash in the walls, in the closets, in the in the safe, under the mattress. And then, you know, I walked, let me tell you a quick story just not to interrupt this because I want just to confirm this. I was with a client. This client's up a little bit north. I've known them for 30 years. They invite me over to have lunch and I said, "Sure, I'm coming." You know, I know the family forever. So, I go up there and we spend some time having lunch at their house. And uh the wife starts bringing out these passbooks and passbooks are savings accounts uh statements, little baby statements. And I said, "Well, how much is in that account?" "Well, not much. 320." I'm like, "Oh, okay. What's in how much is in this account?" That's a smaller account. That's 250. I'm like, "Uh-huh. What's in this account?" That account's got 475. I'm like, "Wait a second." You know, there's like seven of these. I said, "This like we we ended up like $2.2 $.2 million just sitting in lowbearing interest rate accounts. I said, "What are you doing? Do you realize you can make like 75 or $80,000 a year on that and you're probably making seven?" >> Yes. >> So, there's a lot of that going around and why why is that? What's the mentality that's holding people back from even making a reasonably sensible horizontal move into higher yielding CDs/money markets treasuries? I don't know if it's apathy. I you know Andrew that's a really good question. I think you know a lot of it there's some personality part that way people are wired. You know I think after you've had cash this is just me. I'm not a psychologist or anything haven't gone to school for it but the sense I get is the more cash you have just sitting at the bank and the longer you have it the tougher it is to part with it. >> Kind of hardens. It's like a It's like concrete. It hardens. Just sits there. You can't get rid of it. >> Yes. >> So, what what So, what do you how are you I mean, I know that we're talking to people a lot about lading very simple, you know, one to two year ladders, maybe even one year, not not going out that far on treasuries, getting, you know, round number four, four and a quarter, 3.8, depending on what you're doing. Um, but you're talking a little bit different. You're not talking necessarily about that, right? You're talking about higher yielding income securities, >> correct? Uh so we produce what we call a model income portfolio. And on here we have 35 securities. We call them income securities because they're different types, but the premise is the same. These are all publicly traded. They trade in the markets. Uh the yields in our portfolio go from 5 to 13. Uh and then the payout streams are different. Some are monthly, some are quarterly, some are semianually. And so it's interesting when you put them together in a portfolio, the stream of income and the payment schedule that that you can generate. But that's the idea is that in the second bucket of people who have cash at the bank, we know these people, Andrew, aren't going from cash to stocks. That's not going to happen. So you need some sort of intermediate way to get them returns at least to keep up with inflation if not to best inflation but certainly to improve on the point whatever they're getting in interest at the bank. And so that's the idea. It's an intermediate onramp into getting higher returns uh but still stay you know relatively low volatility let's put it that way. >> So is this a standalone concept? I mean, what should people be doing right now if they're concerned about and and rightfully so, some people are concerned about valuations? We're in nosble territory for some things. We'll get to that in a second when we get into our our stock discussion because I want to talk about that. But is this something that could be a standalone? Is should people be looking at at at ways in which to enhance their income right now in in terms of um in light of the fact that interest rates are relatively low and they could be I don't know if they're going to go a little lower, a little higher, whatever it is over time. But but is this a standalone or is this something to um be used to enhance other parts of their uh portfolio allocation? >> Yeah, I think you're right. I think it could be both and I think it depends on the size of the account and and how many they have. So, as an example, Andrew, as you know, people retire, the average person is going to have multiple accounts. So, let's say that they have three of the accounts that are sheltered retirement accounts and one of them that's a brokerage account, uh, which is taxable after tax. Now, if that client retires and let's say they're early 60s and they're 62, well, then they may not have social security kick in for 3 to 5 years. And so, where do you get the income from? Well, you probably don't want to take it out of the three accounts that are tax deferred because then any income you take is going to be ordinary income. Yeah. And let's say it's simple. Let's say they only need $50,000 a year. You know, I pull it out of my retirement account. All 50,000 is going to hit my 1040. However, if I have this brokerage account and I have it set up in a way, let's say I've got, you know, a million bucks in there and I need $50,000 a year, a client could decide to turn all $1 million into an income generating portfolio. they could probably generate 70 $75,000 a year. Uh, and that would be steady income. And then that could be distributed to them and off they go. And they could conceivably have the other three accounts invested 100% in equities and continue to have them grow. And even in a downturn, they're still going to get, you know, their income that they need monthly or annually and still being able to participate in the capital markets on the upside. And so there's a lot of ways you can sort of um structure it, but you know, a lot of it is circumstance dependent or it can just be part of a normally diversified, you know, portfolio. Well, we've been doing a lot, you know, we've historically have followed income securities, but most of a lot of our life has been done with high yield company bonds. And for a lot of our life, Andrew, we've been getting yields of eight, nine, sometimes 10. And I remember back when we first started our hedge fund in 2016, we're buying high yield securities at 15 16% yield to maturities. But now there's six which which by the way just to clarify that I think people should understand this that's that's a little abnormal, right? Uh in terms of the differential between the spread of a treasury and a high yield. High yield is supposed to be there's a reason it's called high yield. It's it's low quality, right? Right. And it's it's companies that um are not the same of clear clearly not the same uh stat stature of a of a government of of maybe a bank and they're looking for money. They're willing to pay a little bit more. But right now there is such a desire to for people to they're chasing yield that is bringing down the yields and and it's it's compressing the uh it's compressing the differential, right? It's depressing the spread between >> uh high quality and low quality. Correct. Yes. >> So, so, so how do you then you how how do you mentally go from, hey, I bought 10, 12, 15% bonds to now I'm like I'm buying six and it's the same company. >> Well, that was years ago. I was in 2016. So, at least there's some time differential between the two. So, it was gradual. A few years ago, we were getting eight. So, it came down gradually. But now, we're in sixes. We're kind of locked in sixes. Even if you're looking for opportunity, you know, even if you add on duration, you extend the maturities, you're still looking at something with a six in front of it, which is okay, but not fantastic. And so, um, and as we know with bonds, when you buy them, your income is fixed, which is the good news. And then also your return is fixed, which is the bad news. But when you buy income securities, um, you have the opportunity to win in a couple of ways. one, the income that you're receiving can go up. A lot of these securities we're looking at, one of the things that we're looking at is income increases over time. Uh the other way that you can make money is you can get appreciation. We've got a lot of these income securities that we've purchased over time that have appreciated double digits or more. And um not or more, but double digits or more significantly than just low double digits, let me put it that way. And so you do have an opportunity to do well if you select well and things go your way. So those would be the other reasons that we like these securities at this point in the cycle instead of just you know regular corporate bonds. So where are we in the cycle? I mean a lot of people talk about oh you know let's frame it as a baseball game. I don't want to do that for you. I would do football by the way but no I'm not doing that either. Um but where are we in the cycle? If we think about the idea of a cycle being you know peak to trough uh recovery to um peak again to slow down to trough etc. Where are we right now? And and where are we? You know, are we closer to the climb to the peak? We peaked to the coming down. Are we I don't know, somehow troththing and come where are we? You know, that's a good question and I'm probably not the best guest to ask. Anything macro? Um, but I'm going to respond to that. But when I say cycle, I just meant kind of where we are. Uh, as far as interest rates go, we know interest rates are sort of flat now. We anticipate they're going to go down, but we don't sort of expect them to go up. And so, at this point in the cycle, what I meant is I think income securities have a really positive backdrop just because the economy itself is holding in there really strong. >> Yeah. >> Quiddity is good. Interest rates should be going lower, and you have a a White House that really wants to stimulate growth in the economy. those are really good backdrops for, you know, income type securities. And so I I expect them to to do very well. And back to your question on the macro, >> we're a really a micro shock here. Uh we almost spend no time thinking about, you know, uh politics or currencies or interest rates. What we really do pay attention to um in a fanatical way, Andrew, is the micro. So every quarter we spend a lot of time listening to transcripts, following what companies are reporting, who's delivering, who's not delivering. We really want to keep our ears to the ground to find out, you know, how CEOs are responding and more importantly, what businesses are actually strengthening at this point in the business cycle and and which businesses are actually getting weak. And so we spend more a lot more time on the micro than we do the macro. Um but the economic environment right now, Andrew, I would say I would say it's definitely bifurcated. >> It feels different on Main Street than it does on Wall Street. That much I will say >> Wall Street's in party time. Main Street is questioning. >> Yes. >> And and there's different Main Streets, too, by the way. >> Right. There's I'm serious. There's Main Street, you know, Florida, Fort Lauderdale, Miami. There's Main Street, uh, Wisconsin. >> And many of those things are a lot different. I talked to somebody just a couple days ago about, uh, Nashville and how the restaurants and the and the entire entertainment complex in Nashville is really suffering. And that is something that's a big concern. And we were discussing why that was or or or actually theorizing why that was because it wasn't clear what's going on exactly. But you know then again we talked about food costs and we talked about the people are just exhausted from paying higher prices and um you know they could there's a point of no return when it comes to levels and then the restaurants are unable to really lower prices because beef prices are at an all-time high. Liquor prices are going up like crazy. >> I mean I get there's no inflation out there, right? But but price are going up in some places. Let's kind of move away from that for a second though, but let's talk about the earnings. The earnings that you watch and you look at and is part and parcel of your entire stock picking process. Talk to me about the Q33 earnings and and and the last the last earnings we've seen from some of these major companies um that that you picked up on. So, there's a couple of themes um that run through the earnings winners and the earnings losers. And a couple of things I would say, let's start with the losers. I think anything or most things consumer related right now are really struggling. So if you look at apparel, you look at retailers, uh even if you look at, you know, a lot of the retail stores, you know, Target, Chipotle just reported a a weak report, >> Starbucks had some issues. any place counting on the consumer outside of travel because the consumer is still spending on travel and experiences. But outside of that, um those areas are are really having a hard time. We know that healthc care right now is an industry struggling. I think um it looks like real estate, I know a lot of people are talking about the real estate, you know, turnaround and maybe and this is commercial, not residential, by the way. uh and maybe commercial has bottomed but commercial still scrape and bottom. Uh I don't think there's going to be a Z there. So those areas uh we know are struggling. I think um it looks like consumer packaged goods and everything you buy at the grocery store. You think if the consumer was struggling they'd be at spending at the grocery store and the consumer package goods companies, you know, the beverage companies, the big food companies, you think they would be doing better, but they're not. they're having issues as well and I think that's they've got some separate issues other than macro. I think they've got some industry specific issues. So those are all the areas that we've watched that are struggling uh now but the winners this ear um this season there have been some winners you know the industrials have been doing very well you look at GE and a couple of its offshoots uh they've been doing they've been doing very well fintech um so not only financial industry the usually when you think of you know financials you're thinking of banks or insurance companies which are doing fine but fintech financial technology companies um are doing very well is a theme that we picked up on technology companies you know Roblox is a company that we follow um and those companies are doing very well uh right now digital companies we know anything AI related the data center is still doing very well in the data center uh we know AI um we know data transformation those businesses are doing very well and anything involving you know uh AI a data center powering the data center those things are still still going gang busters and doing very well um so those are the areas and digital ad sales as we I I don't know if I mentioned that earlier you know the metas Google had a strong quarter because of ad sales some of the smaller companies uh apploven that we follow uh they >> we've had apploven for I cannot even tell you How many how many hundreds of percents we we've that's been unbelievable. >> Yes. Uh so companies like that Palunteer, you know, and AI software. So those have been some of the winners. Um no real surprises on the winners list. Um but those are the winners and the losers from the uh from the from the third quarter. >> So and the consumer itself, we we're finding them because you we we we wo that into the discussion. We talked about a little bit um you know about the areas the sectors that are doing uh having problems but that all rings to me is as as the consumer is the the big issue there. Yes. And you mentioned it earlier, Andrew. It makes sense. You know, if you think about this inflation we've had the last, you pretty much since co, you know, at first it was the supply chains we racked it up to. We said it was going to be transitory, but you know, we had 6 7 8% inflation for a few years in a row and inflation may have come down to 2 or 3% wherever we are now, but it's on top of a four-year stack that has grown and not come down with prices. And you're right, you know, housing prices are up for the consumer. You can forget about refinancing and taking cash out. That's a mug's game. >> Car payments, the average car payment today is $1,000 a month. And you go to the grocery store, you know, you don't see as many sales as you used to. And it doesn't take you many bags of groceries to get to a hundred bucks. >> Right. Right. So the consumer is weak. Uh AI is strong. Productivity is from AI is creating possibly weaker consumers eventually because less people will be working. It's an interesting situation. AI itself there are a lot of areas of that that you mentioned like the power consumption the power consumption the requirements of of fueling the data warehouses the AI the chips and all that. Um, you've been talking about moving away from some of the momentum driven stocks, right? So, is there something that's coming up in your research that's saying something about that? >> No, I didn't mention anything and we haven't mentioned much about uh the momentum driven stocks. I thought recently read something about that what you wrote, but may >> Yeah, there's a reason. So, that's good that you mentioned it. I would say Andrew, I would break the momentum into two categories. I think there's the momentum in buying the shares because the business is so good. The public is just now realizing it. And so let's put Palunteer in that group. You can put AppLoving in that group. Just it's not just the stock has run up. In a lot of cases, the earnings and the fundamentals has outrun the stock price. you can probably throw Nvidia in there. So, that's the one group. Then, there's another group that you would consider like meme stocks and they have momentum. You'll see if you pull up a short list of the most shorted stocks this year, those are probably the ones the last 45 days that have run up the most. And I don't know, you can call that a trash rally or whatever you want to call it. That's a group that has momentum. It was probably built on something else. And so that latter group, yeah, I would be very cautious about. But the first group, you know, I would dig deeper to see if this could be a big winner over the next three to four years. This AI rallies, you know, really gains pace. And, you know, you talk about the trash stocks, you talk about the the Momo, the FOMO, the the uh whatever they call the meme stocks. You know, it's interesting. I saw the other day guy named Anthony Pompiano. You don't have to comment about this, but I don't know if you even know him. He's uh he's he's Oh, I just bought Open Door for my portfolio. >> I'm thinking and Open Door is like a $2 stock by the way. Open Door was the company that was um basically what it did was I don't know automatic payment of your house, right? I mean, exact they'd buy your house, right? Sight unseen kind of thing. And um but but what's interesting is that that doesn't matter. Doesn't matter what they do. He comes out and he says, "Hey, I just bought opened off my portfolio." I text I tweeted back. I said, "Listen, how much did you buy? Why don't you give us the weight of this particular transaction? Number one. Number two, >> is this your first transaction or do you actually have holdings behind this >> and you're just mentioning it today so you could pump the rest of your stuff, >> which why not, right? I mean, I he didn't say I bought an initial I just I bought Open Door for my portfolio today." He could have a huge position behind it and all of a sudden bought three shares today and that's and that's a true statement. Yes, good point. >> So, beware of these kinds of pump and dump. >> So, um but this happens all the time, but investors seem to, you know, grab it anyway. I guess it's just part and parcel of right now. We have a little bit of a euphoric atmosphere going on with this foamy, frothy kind of market. That doesn't mean that necessarily it's going to drop, it's going to be panicked out or something's bad's going to happen. But we did see some of the IPOs that came out, whether it was Figma, whether it was um there was a couple others this week. There was Fly. Um you know, they came out pretty strong and then they dropped like a rock. >> Yes. So, >> yeah, >> that's something to consider. Um, and these are the mistakes that people make sometimes, but you have you have a bunch of common mistakes that you talk about that high netw worth investors make. Can you go through some of those with me? >> Yes. Andrew, do me a favor. I'm going to pull up. Can I put you on Can I pause? Can we pause one second? >> We can pause. Okay, I'm going to pause this. Hang on a second. I'm going to pause the I'm just I'll put the pause button. Here we go. And we are back and that pause was brought to you by LeftBrain Research. So tell Yeah, we we left off with uh the um common mistakes that that that high netw worth investors make, which by the way, I'm certain that many of these are applicable to non- highn networth people as well. So let's go through some of those. >> Yes, they are. Uh the first one is neglecting tax planning. Um, and we know that, you know, taxes take up a much bigger chunk of our nest egg than even, you know, returns can. You know, if we have a great year for a person and we produce double-digit returns, that pales in comparison to if you're in the highest tax bracket and you're getting 37%, you know, taken from you. So, it's a it is a really big deal. So, the tax planning is important. You know, a lot of our clients are corporate executives and a lot of them work at publicly traded companies. So, there's a lot of things that can um can go wrong with these clients, especially as they, you know, uh exercise stock options, restricted stock units, vest, and some of these things are self-inflicted. you know, if you're in the fourth quarter at the end of the year and you have company stock that you've purchased, you know, you need to really be careful about doing a transaction because you could be inadvertently putting yourself in a higher tax bracket right at the end of the year >> and turn around Q1 and really face a bunch of regret. So, I think tax planning is one of them. And even simple stuff, Andrew, we talked about people that, you know, have cash in their account. Some of these people do have cash in low yielding accounts and I don't know if people realize but even that small interest that's generated it is taxable as ordinary income and because it's not a lot even something simple a lot of investors will benefit from just switching to a high yield uh tax-free money market and getting probably the same rate of interest but it'll be tax-free. So just being smart from a tax perspective uh we think is really important. So that would be number one. >> Okay. What do we got next? >> Uh lifestyle creep, >> believe it or not. >> I know this may not seem like a um you know financial, but it actually is. We see lifestyle creep in two places. One is during your working years when you're you know building your net worth. you know, as you get those bonuses and you get raises instead of, you know, you have a couple of choices. You can either spend them all and buy a bigger house, bigger car, bigger boat, better vacation, or you could save more and invest more. Um, and so you have to be careful about the lifestyle creep uh and starting to spend more, especially unnecessarily. But we also see it, Andrew, I see it a lot in retirement. You know, I can't tell you how many times I've built a model for some client and they're like, "Oh, yeah. I'm spending, pick the number, 10,000 a month, 12,000 a month or whatever. We're never going to go over that." And we've been doing that for 10 years or something. Finally, they get into retirement and stop working and, you know, the spending just kind of creeps up there and it never goes down. And a lot of spending I've seen has surprised me because it's from clients who you had not seen that level of spending from in the last however many amount of years and then once retirement happens you know um sometimes you can see spending go the wrong way and so that would be another really big issue uh for investors. >> Okay, what do we got next? So, it would be a lot of um, you know, a lot of do-it-yourself stuff. We see a lot of things where we're talking to people who aren't clients, but they're talking about become clients, and you're reviewing kind of what they've done over the years, and it's amazing kind of how many people have acted as their own advisor. And really, you know, you see some incredible mistakes uh, that people are making. And so I would say if somebody's is out there doing it themselves, I would encourage people to really um talk to a a professional, you know, like yourself or another advisor, especially as you get closer to retirement. A lot of those mistakes, you know, that people make can be irreversible and some things are, you know, really easy not to do and and people are doing them anyway. So, um, >> and I say this all the time, and I'll tell you, this is, um, this is just my way of trying to simplify that. And, and people have heard me a hundred times say this, I'm going to say it again. It's not about whether you can actually functionally do something like buy a stock or sell a stock or, you know, do your own tax return. That's not the point. It's a matter of perspective. It's why I don't do my own haircuts. It's not because I can't hold a scissor, cut some hair, but I can't get that back right. and I'm going to do it with three different mirrors and probably screw it up royally. And it's a matter of perspective is why I can't do it. Emotionally, I can't do it. So, that's why I hand the scissors to somebody else when it comes to those kinds of decisions. So, just think about that when it comes to your your finances. So, I agree with that. Um, we're limited on time, so let's go with maybe one more that you want to pick from that pile. >> Yeah. So, I would just say not having a real plan and a real distribution strategy. You know, I think most people during their working years know that they want to kind of retire early. They don't want to have to work to age 65 if they don't have to. So, you know, clearly you want to do some work up front to find out, you know, am I on pace? Do I have enough? Do I need to make some changes? Um, but then, you know, once you get into retirement, you need to have a a strategy on distribution because it matters. You know, if you retire at 60, that's a very different distribution strategy than if you retire at 65. You know, the taxes are different. The way you would source the income and take it is completely different. And the way that I have my accounts aligned would be completely different. So, I would say not having a real plan and not having a distribution strategy. I guess it goes along with doing it yourself because if you have an advisor, these are things your adviser will be doing for you. But they really could change your outcome and how successfully you retire based off of how well you do your planning and your distributions. >> Yep. Well, we uh hit the the the the gold mine here. You know, we we ran from um issues of of of what kind of stocks are are hot and not the consumer, the environment, how to do things in terms of understanding uh more about you know the idea of of of looking at sectors that are benefiting. giving giving some names there and also some common mistakes. So there I mean I think what more could people ask? >> I think they got it. >> What more could people ask? Nolan Langford. Tell us where everybody can find you. >> Leftbrainwealthmanagement.com is where they can find us. And we're on the socials. You can find us on YouTube. You can find us on Facebook. You can find us on LinkedIn. It's Leftbrain Wealthmanagement. >> That's perfect. Thank you. Uh that's awesome. Thanks so much. >> Thank you, Andrew. Enjoy the rest of the summer. Thank you. >> Hey, you too. And that's a wrap of this episode of the Disciplined Investor podcast. Lots more coming. Lots more great people we have next week coming on. Daniel Park, Danielle Park, uh she's coming on. We got Jack Schwagger, Brian Shannon. Who do we else got? Let give you some foreshadowing. We got in September. Uh Peter Schiff is going to be on here. We got uh Fumahade Isaka. Very interesting discussion about the power modules and a specialized vehicle for transporting well not say not vehicle but uh a tool for minimizing the electrical and energy use when AI is used. Pat Kabuso is coming on from briefing. It's a long list of people that we have uh coming on the show. So, make sure to make sure to go over to YouTube, Amazon Music, Spotify, Apple Podcast. 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