The Stock Market Is Showing Signs Of Technical Breakdown | Lance Roberts
Summary
Market Rotation: Capital has rotated out of mega-cap tech and software into energy, industrials, materials, and staples, prompting profit-taking and higher cash levels.
Software Opportunity: A steep selloff in software has compressed valuations; the guest sees a developing opportunity in large-cap software with durable moats and strong earnings growth.
Companies Highlighted: Salesforce (CRM) cited for low debt, strong cash flow, >20% growth metrics and now ~14x forward P/E; Microsoft (MSFT) viewed as oversold technically with robust margins and steady long-term growth.
AI vs Software: AI won’t “kill” real software businesses; survivors will integrate AI as a complementary feature, preserving moats built on decades of hardened code and customization.
Energy Divergence: Energy equities look rich versus oil fundamentals; the guest is cautious on oil producers and sees a valuation gap likely to mean-revert.
Natural Gas Tailwind: Bullish on Natural Gas and pipelines as data centers rapidly boost CNG/LNG demand; pipeline lead times and behind-the-meter needs support midstream exposure.
Dollar and Macro: A potential dollar rally could pressure EM/international assets; disinflation likely persists as shelter drags CPI lower.
Risk Management: Rebalancing by trimming overbought staples/energy and raising cash; looking to “nibble” on select software/mega-cap tech as weakness creates value.
Transcript
And the really big problem has been for the markets as of late is just that we can't make it above 7,000. 7,000 has been a very very tough level for the markets. We just keep coming up here challenging that level. We think we can get above it for a day or two and then we kind of pull back from it. Um we keep taking out important support the 20 and the 50 days. We we keep taking those out. That's important because we're about to cross the 20 below the 50. That would suggest that we may get another leg lower here in the markets. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. Welcome you back here at the end of another week for another weekly market recap with my good friend, the nihilistic portfolio manager, Lance Roberts. Lance, how you doing? >> Fine. >> You've been reading my articles again? >> I have. I have. We're definitely going to talk about that this time. Um, happy Friday the 13th. >> Yep. What could go wrong? >> What could go wrong? Yeah, we'll see. Um, it's been a heck of a week so far. Um, uh, I've been on the road and barely keep my eyes open here, but hopefully you'll be so entertaining. You will, uh, spark me back to life here. Uh, but look, um, it has been a down week in the market so far. We've seen that uh that weakness in both software and the AI stocks continue from here. Um last time we had you on, Lance, I think the past two times, um we had been looking at how the S&P had kind of broken down uh out of a wedge that had been trading in for a good long while and trying to see if it could get back up uh you know, so that uh upward resistance would become support again. But I don't even think we've gone back up to that upward resistance line anytime soon. So anyways, uh what are you what are you seeing here? Because I I just saw a headline from Goldman Sachs um saying that they're seeing a real lack of willingness uh to buy the dip or they actually said uh you know, buy the effing dip. Um so for some reason, you know, Wall Street seems a little skittish still. It's not it's not uh whether it's tech stocks, whether it's Bitcoin, uh it just seems a little bit reluctant to try to find a bottom here yet. >> Well, yeah. And and and you know, as we're talking about this, the market's down 1.2% I think from its high. So, I mean, >> keep it all in context. >> Yeah. Yeah. So, I mean, yeah, it's it's like, oh my gosh, you know, it's this big correction in the market. It's really not. It's been a really interesting rotation though because we've seen a lot of money rotate out of the large cap, you know, megga cap stocks, those type of things, software stocks, um, into areas of the markets like energy, industrials, materials, um, staples is a good example as well. Um, you'll know that you you'll remember that back in September, October, we were buying stocks like Verizon and and Altria and these very boring companies that nobody wanted. And that's had those have had huge rallies and they're now extremely overbought. In fact, today we just went in and took profits in companies like like Altria, like Verizon, those type of things. Uh just to reduce those back to target weights because now they're so extremely overbought that we're likely going to start to see some some fishing potentially in other areas. So So again, you know, this has just been a very typical market rotation. We had, you know, it's it's always important to keep things in context because remember coming out of, you know, the April liberation day last year, we had a massive rally in these stocks. These stocks had huge rallies from their lows. They were extremely overbought. So, a bit of a correction is not surprising in a lot of cases. Um, software has been the more notable one because it's been such a huge correction. Um over the last kind of three months uh software stocks are down about 24% relative to the S&P 500. So there's been a very big decline there. Um but you know that's where opportunity exists. Nobody wants to buy them right now. But there's a lot of opportunity that's now starting to develop in big meggaap tech companies, big meggaap software companies because they are so beaten up. their valuations have come down dramatically and they have the highest rate of earnings growth and revenue growth in the overall market. Interestingly enough, the areas that people are chasing right now like emerging markets, international markets, um staples, energy, those have the lowest rate of revenues and earnings growth relative to other areas of the market. So you're paying a big premium a big you know everybody's always talking about oh the valuations in tech stocks those are actually fairly cheap relative to what you're paying for say energy stocks right now which are grossly deviated from their underlying revenue source which is oil prices. >> So um when you say software stocks is it important to make a distinction between sort of software as a service stocks and AI stocks? Um >> well those are two different things. When we say software, we mean software. So, we're talking about companies like Oracle, Service Now, those type of things. When you're talking about AI stocks, you're talking about companies like Microsoft, Google, those type of things. Right. >> Right. Right. And that's why I'm trying to parse here because I mean those have been thought of as software companies. I mean, Microsoft makes software, right? But the the narrative, correct or or incorrect, is that a lot of these software companies um everyone thought they had a huge moat. Um but now they're worried that AI is is going to quickly maybe erode those moes and that's part of the at least the narrative on on why um you should be wrong and there's nothing wrong with the narrative. Um, you know, let's go back to the.com era as a good example, right? There you and we've talked about before, but there were thousands of people that were starting companies saying, "Oh, yeah, we're an internet-based company and we're going to do this, that, and the other thing." Had no had no revenues, had no real, you know, business plan or whatever. They just kind of wanted to jump onto the dot thing. But there were other companies that were actually developing the internet, right? That they were the backbone of the internet. Those were the providers. So we can now look back and we can say, "Oh yeah, Cisco, which got discounted by 80% during the during the selloff in the dotcom crisis, that was a survivor because they had a they were the guys connecting the internet to make it work. They were the routers and the servers and all those type of things." So you know, you have to look at the software sector today and go, okay, there are going to be companies in the software sector that go away because AI can simply just do what they do. But there's a whole another batch of these companies in the software as a service sector space that have real businesses, real revenue growth, and they are going to add AI as complimentary services and and that will that will increase their rate of revenue growth over time because of lower productivity cost those type of things. So there are going to be real survivors there that you can now start to look at buying with fairly cheap multiples in a lot of cases. Now there there like for instance Oracle is a good example of this. Oracle is going to survive this. They are going to come out on the other side of this. They're going to be a winner long term. I'm not buying Oracle here because when I look at Oracle's fundamentals, I have a problem with their debt to equity ratios. But that's just me. I'm just kind of oldfashioned that way. >> I would much rather buy just as an example. I'm again by the way just we're just talking here. These are not recommendations. These are not, you know, these aren't things that I'm doing right now. We don't own any software stocks currently at all because we're waiting for this to kind of, you know, kind of source itself out. But if I'm going to buy a software company, I would rather buy Salesforce versus Oracle because they have a debt to equity ratio of 0.19. They have huge cash flows. They have huge sales. Their earnings growth rates are running above 20%. Their operating margins are above 20%. they are going to survive this. And this is a company that's now trading at a 14 times forward PE after this after this correction. So I can now buy a stock that was trading in the 30 time PE range at half that valuation because of this correction. Again, I'm not these aren't recommendations. I'm not saying go out and buy these stocks today, but I'm just, you know, this is just the way I'm looking at the sector. I think there's going to be a huge opportunity here for savvy investors >> to start nibbling at certain areas. And the same thing goes on on the big tech cap names as well. Microsoft's been hugely beaten up. They're not going away. Um they're going to be here for a long time. And so if you can, you know, the whole goal is is we should be buying trying to buy things cheap, but what everybody's buying right now is the stuff that is most grossly overbought and grossly extended and are no longer cheap anymore, but that's what everybody wants to buy, >> right? So, a couple of things. Um, one, you know, I've talked with you and your partner there, Michael Liowitz, on this channel a lot in in recent months about capital rotation. We've seen capital, you know, starting to leave the the hyperscalers, which was notable because they've been hoovering it all up for years and starting to find its way into more sort of value areas. Um, I think the big question for this year, which I think the jury is still out on, is is this the rotation theme of 2026, which is out of the stuff that was popular into the stuff that that wasn't popular? Um, or is it going to be more of a back and forth slloshing, right? And you talked about how you you created your um recently with Simplevisor your value growth model that will tip back and forth between the two based on a number of calculations. And that thing you've told us, hey, that might go back and forth every couple weeks or it might not shift for three years. We don't know yet. We're gonna we're gonna watch it, right? Um, but what I find interesting about what you're saying is is in in, you know, 2000, early 2000, we had a bunch of companies that had no earnings that everybody thought were was going to make a gazillion dollars and they bit up the prices to the moon and then those companies, you know, basically got uh decimated, destroyed with the bubble bursting. There's sort of the opposite effect potentially going on here is what I hear you saying, which is we have some companies with great businesses, lots of cash flow, lots of earnings growth that everyone is all of a sudden assuming is going to are going to die >> and they may surprise to the upside, right? So, this may be an opportunity to buy some great companies, you know, at at a really good value if prices keep coming down here. Um, >> so we'll see. Um, I I I we're going to talk about AI in the in in the rant and I've actually got two rants to get to today, Lance. So, we got to chop a lot of wood quickly between now and then, but I was listening to the All-In podcast. Um, you know, which is for VC guys. It's one of the most popular podcasts around. Um, they're all very tech-savvy. And they were talking about this, hey, is is is AI going to kill software? And they generally don't think so. Um, and there's a couple of reasons why they don't think so, but one that that that really stuck in my mind was there, look, if you're if you're running your company and you're trying to choose between an Oracle or, you know, an AI tool that you're going to build your own whatever with, they're like, look, that Oracle has like millions of lines of code in whatever software that you're using that has been, you know, debugged and troubleshot for years, maybe even decades, right? um what are you going to trust more to run your business on, right? Something that has been debugged to the nth degree and a zillion people use and it's, you know, bulletproof and rock solid or the new thing that this AI comes up with that, you know, no one's ever used before, right? And yet AI is going to keep improving, but but the delta is is going to be hard to to, you know, to to to fully uh dissipate presumably with AI at least anytime soon. >> Yeah. No, I I I saw that interview and and it was a great interview and it was actually right on the spot which is this is kind of the same thing we've been saying also is that we've been looking very closely at this sector and but but they're right I mean we do it we use a lot of AI in our shop um it's you know it's great I mean um when we want to write code for Simplevisor as an example I can go into to you know AI and say hey write me code for this and then it's great it provides a good outline fine. It gives you a good starting point. There's nothing wrong with that, but it's full of errors. It's full of calculation issues. It's it's, you know, there's a lot of problems with it that again, it's great for an outline. Um, and it's great for a starting point, but I would not pull that code and immediately deploy it and trust it to make sure that it's going to be running my business efficiently versus what you just said. And it's absolutely that's the whole point is that you know for a lot of these companies like Oracle like Salesforce they have millions upon millions upon millions of these you know interactions that occur and remember also like we use Salesforce as a good example um in our office for our CRM and our Salesforce is customized for our business individually. So when we we we bought the Salesforce package, right? You buy you buy Salesforce and you bring it in and then you hire their company to basically customize that CRM to do exactly what you want to do. So for instance, as a good example, when somebody goes to your website and they click on the link for an advisor on thoughtful money and they put in their information and they email me, well, that lead is automatically captured, quantified as that it came from from your website. So we know where that lead source came from and then pulls in all that data and organizes it in a manner that we need to operate our business efficiently. But again, you may have Salesforce and your Salesforce looks entirely different than ours. My wife's Salesforce looks entirely different than ours looks. AI can't AI does not have that capability to customize to that type of degree. At least not right now. could in the future. But again, I think to the point of the of the All In podcast, which absolutely agree with 100% is that all that history there is is going to be the moat that allows Salesforce to survive where again some of these other companies in this in the software space aren't there. There there are going to be companies that that fail because of AI. There's no doubt about that. But I think when you start looking at these at these larger companies that are very well seated, have lots of history, lots of cash flow revenues, there's going to be a really good opportunity to buy those cheap. >> Okay. So that's the opportunity that you and your team are looking at. And if and when you start buying into those companies, you'll let us know on this program when we get to the >> Well, after the fact after we bought them, made a lot of money, then we'll tell you about them. Yes, of course. >> No, you won't. You're going to tell me as soon as you do it. Um, all right. And uh so when we get to the rant we are going to talk about sort of the other side of that coin because there is >> there there is a lot of advancement going on in AI and that's not news to anybody but but there seems to be something going on recently with um the acceleration of the capabilities of AI and again I think in the case of these software companies they may be able to protect their mode and sort of enhance their their solutions with AI but there is the potential for our whole previous discussions about AI coming for people's jobs and stuff like that. Lance, that may be coming a lot sooner than most people can imagine right now. And we'll get to that in the um in the rant here. Okay. So, um um why don't we, if we can, just to get out of the way, why don't why don't you pull up uh the chart of the S&P? Let's look at the current technical action. Let's get a sense for you know uh whether this market appears to be uh consolidating, stabilizing or whether you think it's there's some signs of concern there. Um I also want to note uh that the VIX has been rising. Um and that has been a theme that you declared here at the beginning of the year in your South Park episode was to expect more volatility. So kudos to you for the year at least starting the way that you thought it might. >> Yeah, we we'll see how the year turns out. It's still very early. >> It is early, but I just Hey, while I can give you some props, I'll give it to you. >> Yeah, I appreciate that. Now, I did want to share this one before we jump over the technicals on the market. I just want to share this one chart with you. This is the price to earnings growth for the S&P 500. And I just wanted to to because we're talking about, as we were talking about a moment ago, you know, there's opportunities that are starting to show up. >> Yeah. >> Look at Walmart versus Nvidia. >> That's kind of my point. Everybody's ch Look, and and by the way, look, we own Walmart. We own Costco. We own Coke. We own Proctor Gamble. So we own those stocks in that sector. But that's why we were taking profits over there. These things are getting grossly overvalued. And these are very slow growth earnings. These companies are not growing earnings at 15 20 30% a year to justify a a PEG ratio of of 4.6 for Walmart. Walmart grows has steady earnings growth. They're great, but that's not enough to justify that rate of of valuation. when you go but then you go look at Eli Liy or Abby down here on on the bottom. We own these two companies as well. Um these companies are doing great. They their earnings growth are just exploding and they have a long-term trend ahead of them that you know these are these are the things you want to look at. You can't really look Brooksker Hathaway. You have to set that aside. Um you they they have a lot of insurance and financial companies and it's really hard to to get peg out of that. So again, kind of yeah, it's 109 for Bergkshire Hathway, but I would not We own Bergkshire Hathaway because it's basically an S&P index replica. So we just we own that one kind of as as a staple. Um but but again, just as you're thinking about investing, you know, Palunteer at 1.4, you know, it gets a lot of slack. Even PaloAlto Networks is only 2.74 versus Walmart at 4.61. So, you know, again, this is why I'm just saying valuations are very important to pay attention to and don't just take headline narratives and say, "Oh, I'm I'm going to sell all my tech stocks because somebody said this." Sit back and do the work and and I think you'll be a lot better off kind of over the longer term. Okay. >> Hey, how how uh I mean, I know you say valuations are a terrible timing tool, but but how correlated is price toearnings growth with future performance of the stock? a lot. Um, and I haven't I haven't actually done the actual calculation work on that. I I could do that at some point. Um, >> it'd be it'd be interesting to see I don't want to invent it work for you, but let me let me ask you this along with it. What tends to win out? Um, and Nvidia might be a really good example of this at times. I don't know if it is right now, but like all right, company has a really attractive price to earnings growth ratio, >> but they have a really high price to sales ratio. >> Right. >> Right. Um, which which one tends to win out? Like I'm nervous about the high price to sales, but I'm attracted by the high price to earnings growth. >> It a little bit. It kind of depends on on the method that you invest with. Um, you know what I look I look at both. We do look at price to sales, but price to sales is kind of on a trailing basis versus PEG, which is on a forward basis. Mhm. >> So, you know, one thing you have to do is you have to take that price to sales and you have to look at what their sales growth is expected to be and then back into that number as well. But, but both of them are very good indicators. I mean, you know, we've talked about before, you know, companies with 40 and 50 times price to sales and everybody was like, "Oh my gosh, these stocks are going to collapse. You know, they can't maintain these multiples." Nvidia was a good example of this. So they used uh when we started talking about Nvidia probably 3 years ago um the price to sales ratio on Nvidia was above 60 and now that price to sales ratio is below 10. So, you know, it's they grew in to that overvaluation over time. And so price to sales is is important and nothing wrong with it, but you have to take that in context with the growth rate of what's going to go and say, can this company grow into that number over time and in Nvidia's case it was in other companies cases it won't be. And that's where the real for instance Walmart cannot grow in to its price to sales ratio right now. Does it have a high price to sales ratio? I don't know. >> Sorry. >> Does it have a high price to sal high price to sales ratio right now? I I know it has a high >> peg ratio, but uh price to sales and again you're going to see you'll see this um there's price to sales. So this is price to sales. So now you look at Nvidia. So the price to sales on Walmart's 152 which isn't bad actually. So again I was going off the top of my head that's not bad but again they don't grow earnings that fast. Um, Nvidia used to be over 60, so it's at 20 now. So, again, we have to look at how they're growing the earnings over time. So, again, none of these are are absolute measures. And then the reason that we like PEG more than we like price to sales, just the way we do the way we do our work is that this looks forward versus looking backwards. >> So, and I don't want to totally spend a ton of time on this, but it's really interesting. So, I mean, let's say you and Michael are sitting down together and one of you says, "I kind of like this company." and it's a company that has a high price to sales but a a low PEG ratio. How do you then what's what's the art and the science you guys use to determine whether it's attractive or not given >> okay >> you know either one of those >> it's a great example let's just let's just stay with Nvidia for a minute right so um Ford you know so if you look at price to sales on Nvidia right now like I said is 23 so that's high right so if we go back to uh that company uh Sun Micro back at the docom era they were trading at a 10 times price to sales and got me time says you're paying10s price of sales, you're an idiot, >> right? >> And of course, that company went almost to zero during the dot crisis. Um, so again, when you're paying 20 times that, you go, well, there's just no way the company can support 20 times price of sales. And that's true if you assume that there's no sales growth going forward. So at 20 times price to sales, if I have a very slow rate of sales growth, it's going to be very hard to maintain that multiple over time because literally every dollar that I'm making has to go back to the investor rather than the business. And that's just not realistic. So in this case, this is where we look at for instance price to earnings growth because you start looking at their EPS growth rate which has just been astronomical and still projected to grow. I mean they're running a gross margin of 70% with an operating margin of 58 and you're looking at sales growth going forward. So so again price to sales looking on a trailing basis is 23 but they're expected to grow year-over-year their sales are expected to grow by 65%. So let's just do round math. If they grew at 100% next year, that price that that price to sales ratio would be cut in half, right? >> Does sorry to interrupt, but does anybody publish a price to forward sales ratio just like with earnings growth? >> Not that I don't know of a public like for instance, if you wanted to go get a price to forward sales growth, we do it internally. >> Okay. >> Um because again, you can that we we know what the year-over-year sales expectations are. So what you do is just say, "Okay, if if sales are this next year, what's my price to sales?" That's not hard to do, but I don't know if anybody publishes that. Every price to sales ratio I know is always based on a trailing basis. >> Okay. But but it sounds like if you were trying to determine this company's prospects, knowing the price to future sales ratio would be really important because you could deter you could say, "Okay, hey, yeah, high high price to sales ratio today, but given the way their sales are growing, it's going to get cut in half in a year, like you said." >> Right. Right. And and and actually Nvidia is not that great of a case because, you know, if you take a look at the stock, it's gone nowhere. It's just trading sideways. >> Microsoft is I think Microsoft's a much better example. Big correction. >> Question right now is, by the way, we're long Microsoft. We reduced our exposure to Microsoft, but we still own it. Um question now is is do you buy it here or is this potentially going lower? Is this is this going to be the the next big crash? Are we going to see, you know, Microsoft down 60 70 80% because that's kind of what the narrative is in the markets right now. So, you know, just starting with a basic analysis. I I I I like to look at weekly charts versus daily charts because once you pull out to a weekly chart, it kind of slows things down a bit. You get rid of volatility. >> Microsoft's still in a very nice uptrend coming off the 2022 October 2022 lows. So, yeah, it's given up some of those it had huge gains. Giving up some of those gains. That's really, you know, we've had these corrections before. They weren't the end of the world. And when we having this correction back in 21 and sorry in 24 and 25 it was deepseek and it was you know this reason or that reason AI's dead. You know we kind of have these narratives that occur on a regular basis and then the stock gets its you know everybody goes hey look that stock's cheap let's go buy it and the whole market shifts to go buy that and it runs the stock price back up. So if you take a look on a weekly basis it's getting very very oversold on a weekly basis. previous levels of oversold conditions at this magnitude were where the stock previously bottomed and rallied. So from a technical basis, this is starting to look a lot more appetizing. Maybe if we can get down here into the, you know, into the 375 range along this kind of long-term monthly moving average, get about two standard deviations oversold on a weekly basis. I know it's a lot of technical stuff, but just >> Yep. >> these deep oversold conditions are typically where stocks bottom. And this is where nobody wants to own them. Everybody's like, "Oh, that stock sucks. I'm losing money in it. I don't want to own it." But this is kind of where we should start looking to buy stuff that nobody else wants. That's how we make money. Um, but looking if we go down and let's look at their fundamentals. So, you know, on a PEG ratio, they're trading at 1.17. A price to sales ratio, they're at 9.73. So, again, still expensive. As >> expensive as as Nvidia, but still expensive. But you take a look at their sales growth going forward, they're going to grow at almost 20%. Um their EPS is is uh over the last 12 months has been at 28%. Operating margins are at 46%. These are huge numbers. Gross margins are at 68%. And look at the sales trajectory, EPS trajectory. It just continues to rise. Yes, they're buying back shares, but not that aggressively, but you just have a this just a very steady increase in sales and revenue over time, which allows this company to grow into those valuations. So when you get these big discounts, those are t you know do I want to buy this company or do I want to buy a company where their sales are flat or declining where you know things may be not as lucrative for instance like let's take a I'm just I'm just picking stocks out of the blue here. So let's just take a look at Exxon Mobile. Here's Exon Mobile. Sales have been flat. So I showed you this chart. I said hey would you buy this company? Sales have gone nowhere for the last 10 years. is earnings are flat basically for the last 10 years and shares outstanding have been flat for the last 10 years. >> Yeah, scroll up. >> Their sales on a year-over-year basis are negative 4.9%. EPS on a year-over-year trading basis down 15%. Who wants to buy this stock? Uh, apparently everybody. >> Yeah, look at that. >> So again, this and but this is the narrative in the markets. This is where people are speculating right now. So as a contra and and again look at you know the last time that you know these stocks get these kind of these big overbought conditions that's typically kind of near peaks. Um but this is the question we need to ask ourselves as investors is do I want to be buying these stocks because everybody else is buying them or should I be looking for the stuff that nobody wants? Where am I most likely going to make money in the markets over the next 5 to 10 years? >> Yeah. Um you guys own Exxon though just to be clear, right? Uh >> no, we do not own Exxon. We sold Exxon Mobile um a while back but bought a um two other companies instead in the energy sector. We bought which is a pipeline >> and Kinder Morgan Energy which is also a pipeline indicator. We bought those stocks because of our thesis behind the behind the meter play. >> But we do know but but sorry let me that that is not correct. Let me rephrase that. That's in our primary model, our 6040 allocation model. We made that swap. But we own Exxon Mobile in our dividend high our high growth dividend model. So So it depends on which model you're talking about, but yes, we do own Exon Mobile and some some portfolios and don't others. So >> Okay. So do me a favor because we still haven't looked at the S&P, but bring up that Microsoft chart again just for a second. >> Sure. Um, so I want to I want to ask a couple of questions about it, but I want to also um, you know, just give you a little bit of I don't know why I'm giving you so much praise this week. I'm definitely going to have to next week. >> Um, but first I'm an idiot. So yeah, >> well so you know you showed how you can see there in the chart how Microsoft you know it did have you know a great couple years up until recently >> and you know when you were selling up there at the peak um you know trimming back to target weight you know I know you get people who are screaming at you like Lance like what are you doing you know you're you're selling your winners here right and you have always been extremely consistent in telling us hey you know when we've got a position that outgrows its target weight size, we trim it back. That's part of our discipline, >> right? >> And um yeah, nobody likes you doing that when the party's raging. But now when this corrections happened, it makes all the sense in the world. So, first I just want to, you know, >> I want to acknowledge the wisdom and the prudence of what you've been doing there. Let me ask you a technical question here. And I do not, you know, I'm not as knowledge about technical analysis as you, but you could look at this and say, um, gosh, you know, this looks like if if if the the stock, you know, trends down a little bit and then starts recovering again. Boy, it's really starting to look like it's got a big left shoulder there, now a perfect head, and then would start to be getting to create a right shoulder. Do you worry about a head and shoulder pattern here? Uh the the problem with head and shoulder patterns in a lot of cases are like pink fuzzy bunnies. Everybody sees them everywhere >> and every time there's a wiggle here and a wiggle there and a wiggle here, they go, "Oh, that's a head and shoulders pattern and that means all this is going to crash and then it doesn't crash and then everything is fine and we forget about that head and shoulders." There are times, look, I'm I'm not discounting the importance of a head and shoulders pattern at all because they do matter technically, but again, it's really easy to go look at look at, you know, a bump here or there and say, "Oh, well, there's a head and shoulders right there." And then you get a big rally, right? That happens all the time. >> So, again, it's it's they are worth paying attention to and your your question is absolutely valid that you could say, "Well, this looks like a left shoulder. That could be the head." And if we have a huge rally here that doesn't make it to all-time highs, then rolls over and then breaks this long-term trend line, that's the completion of your head and shoulders pattern. That would be a true statement, but that might be four years from now before you do that because these can this this is a weekly chart. So this can take a long time to get, >> right? >> Right. >> So important, but you know to to what you were saying, this is why that we were selling Altria today. We bought Altria back over here. Um so we're taking profits in it. It's now it's well into three standard, you know, pushing into three standard deviations overbought on a weekly basis. Same thing for Verizon. Uh we bought Verizon back over here. This has been the move lately. It's pushing four standard deviations now as well. Just when you get these types of moves where you where you push stocks into extreme overbought conditions, they are going to correct. That was my whole argument previously about metals and other stuff is that right >> get these big spikes, you are going to eventually get a correction. It may not seem like it today, but that that is just some that mean reversion process you cannot get around. It is going to occur. It just takes sometimes it just takes longer to get there than you expect. >> This is why so this is why we say take profits, rebalance risk. Doesn't mean sell everything. Just means, you know, kind of take some take some of your chips off the table and you can always buy stuff back later cheaper. >> So that's exactly what I was just going to say. And and this is where the regular retail investor, and I'm going to suggest it's probably the majority of people watching this video, if you own Verizon, this is where the moment you're like, "Yes, I was right. We're going to ride this thing for as long as it can." Right? And this is where people sort of tighten their grip on the stock, right? Like I'm going to, you know, I'm so smart. I I I I got in before this and I'm going to ride it, you know, because surely it's going even higher here, right? And this is where the discipline of the adviser that basically says, "No, I'm going to do the unsexy thing and I'm going to sell some of this position uh while it's running hot here, right?" And it's it's something that the average investor has a really tough time doing because you feel so validated by this. But as Lance has said many many times, you you really can't escape the cruel math of aversion to the mean. And e even if this is an exception, even if it goes on to double or triple, you still have a position in the stock, so you're doing okay. But what you're doing is you're limiting your downside risk. And I was just talking about this. Can't remember who it was with this week. It might have been Luke Groman, but um you know, Charlie Mer at Bergkshire Hathaway, you know, he said, look, I'm not you know, necessarily the smartest guy. I think I'm smart. I try to work hard, but he said like if I have one superpower, it is trying to it is identifying and fixating on the things that could kill me. And he's like, if I just make sure I don't do anything catastrophically dumb, largely the upside will take care of itself. And I think that's a big part of what you guys do at Raa, Lance. >> Yeah. Well, again, you know, this is, you know, we were buying Verizon and Altria when nobody wanted them. They were like, "Oh, these stocks are terrible. They're dead. It's dead money. why do you own it? Um and and they're boring, you know. Um but when and and the reason I like boring is that when the market turns and you have this kind of what's going on in AI and software now, that's where money goes to. And that was our whole premise for buying is like when this market rotates, it's going to go to the areas that everybody hates. And that's exactly what's happened now. Everybody hates software and tech. So just as a investor, where should you be? You know, as I was talking about this, I think on Tuesday or Wednesday on the radio show saying um you know, as an investor, I like the the old Wayne Gretzky anomaly, right? You know, skate where the puck's going to. So where is >> analogy, not anomaly, but yes, >> go ahead. >> I'm sorry. >> No, I said analogy, not anomaly, but go ahead. >> Oh, I'm sorry. Sorry. It's anomaly. Yes, absolutely. Thank you for the correction. >> I mean, Gretzky was an anomaly. He was a once in a generation player. But yeah, >> exactly. Um, so I I know you wanted to talk a little bit about Hey, this is actually kind of a good point here about what you were saying a second ago. Um, if you kind of I'm going to take Let me take this money flow chart off real quick just so you can see this better. >> Sure. >> So, look, this is this is what I was talking about with patterns and things. Here's your left shoulder. Here's your head. Here's your right shoulder, right? And then you got a huge rally. So I can I can say, oh, and people were saying, oh, it's a head and shoulders pattern. We're about to have this major correction in the markets. And then the market took off. And then there was a shoulder ahead, a shoulder here, shoulder here, a head here. Here's another shoulder. You know, the markets can can do a lot. This is the problem with patterns. And again, I'm not poo pooing patterns at all. I'm not they have validity. You just have to be careful with them. And you know, there's a it's easy to start extrap if you have a bias here. Here's the important point. If you have a bias towards wanting the market to crash, you're going to see head and shoulders patterns everywhere you look, right? Because they're easy to pick. Our minds can put them together, say, "Oh, that's a head and shoulders pattern." Um, just be careful with that. You know, we the the the way a head and shoulder pattern works is that what you're looking for is and let's just use this kind of example I was setting up here. You know, you had a right. So here's your left shoulder, here's your head, here's your right shoulder, here's your rising neckline. And so technically, I complete the head and shoulders pattern by breaking the neckline, which we did. And then immediately the market reversed and took off again. So it completely negated that whole head and shoulders pattern. But you as an investor that were following that, you went and sold the market short. You got out of stocks, you know, because the head and shoulders pattern was there. And then you missed the rally after that. And then what happens? you get sucked into the markets about right here because now the markets are just at an all-time high. was like, "Oh crap. Well, now I got to get back in." And then the market does this, >> right? So, you buy, you sell low, you buy high, which it brings us up. Well, well, I'll show you this chart when we talk about financial nihilism. Uh recent chart about uh retail traders on Robin Hood. They've made no money since 2021. >> Yeah. >> The market because they they do all this type of stuff over and over. Anyway, let's let's real quick, let's just go through the markets because you were asking me about that. Um so, here's that wedge pattern that we were building. uh from from kind of the lows um that we saw back in kind of December and we did break below that. We came up, challenged it, failed and then we've been unable to get a really above this at all. And and the really big problem has been for the markets as of late. It's just that we can't make it above 7,000. 7,000 has been a very very tough level for the markets. We just keep coming up here challenging that level. We think we can get above it for a day or two and then we kind of pull back from it. Um, we keep taking out important support, the 20 and the 50 days. We we keep taking those out. That's important because we're about to cross the 20 below the 50. That would suggest that we may get another leg lower here in the market. So, part of the reason that we were taking profits today in some of the stocks is just to raise our cash levels in our portfolio. We're we're we're probably going to try to start reducing our cash levels a bit. If we can get another rally here, we'll probably, you know, raise our Sorry, I said reduce. We're going to try to raise our cash levels a little bit more in our portfolio um just on any rallies that we can get. I think we'll get some more rallies. February, by the way, happens to typically be a very weak month. March and April tend to be much stronger. So, if we can survive this month, we've got a shot in March and April for another rally before we get to the summer period. So you so again just I think navigating this is going to be a bit challenging. We're on we're obviously on a sell signal right now. So that's putting pressure on the markets. We've got a negative divergence and relative strength that's putting pressure on the markets. So there's certainly some deterioration here that is worth paying attention to. It's not worth panicking over yet, but it's definitely worth paying attention to, which is why we're starting to slowly kind of adjust portfolios a bit. >> Okay. All right. So, I mean, it does sound like you are, I don't know, let's use the right analogy. You're driving the car. Um, maybe you're not pumping the brakes just yet, but you're taking your foot off the accelerator, right? Just like, all right, I'm not certain what's going to happen from here, but I'm feeling a little bit less positive than I was, so let's just >> Yeah. >> We're not going to the bunker yet, but we're just being a little more wary. >> Yeah. Yeah. Uh, you know, it's like you're driving down the you're driving down the road and there's a sharp turn coming up ahead and the the road sign says sharp turn ahead. You you you slow down, right? >> Yep. Okay. Um All right. So, let's see where to go next. Um I got a long list. We don't have a ton of time left. >> We'll we'll go fast. We'll we'll do lightning round Q&A. So, take off. >> Yeah. Yeah. Well, we don't have to. Yeah. I I'll I'll tell you when you need to wrap it up, but um so you we're starting to see some of the things that you and I have been talking about. Um >> uh so we're seeing some more volatility in the market. Um you know, we're we're we're seeing some of the euphoria around the hyperscalers obviously, you know, start to diminish here. These are all things that we sort of thought probabilistically were more likely than not heading into this year. Um, we just got the latest CPI numbers, headline CPI numbers, and lo and behold, you know, they're they're disinflating. Uh, headline CPI came in at 2.4. Um, you I think I think both you and I have been expecting that this year. Um, for a variety of reasons. Um, but in large part just to the math of how the headline CPI is calculated where 40% of it is shelter and shelter is really disinflating. And folks, I just recorded an interview yesterday with Nick Jerley, um, you know, who has a ton of data at his fingertips and, um, it's really getting, um, interesting or scary in the housing market, depending upon your your perspective, but but housing demand has like almost never been this low, Lance. Um and we're seeing rents come down and there's a lot of reasons to expect um uh average home prices to to go down this year in an increasing number of of uh metropolitan areas. So, you know, it seems like that shelter component, which is 40% of the overall calculation, is just going to keep pulling CPI down relentlessly this year. So, unless there's big inflationary uh impulses elsewhere in the CPI calculator, and we don't really see a lot of that right now. Um, I think it's going to continue to disinflate. It looks like it's going to continue to disinflate as the year goes on. You see the same? >> Yeah. Yeah. Yeah. I mean, uh, Mike and I have been talking a lot lately about the true inflation index, which measures like 10 million different data points or something that it's just and it's all real-time data. So, they get price data from like Walmart and everybody else and they calculate that. But, that's been dropping extremely sharply. Runs about a 75day lead over CPI. So if you take a look at the true flation index, this suggests that that CPI is probably closer to two by summer than than than not, right? Unless something just kind of changes. It also really kind of throws into a problem with like say, you know, we're talking about energy stocks a few moments ago. If you take a look at energy stocks, in fact, I just wrote about this. Let me let me show you this this chart. I just published this in today's daily market commentary. Um >> All right. All right. And while you're pulling that up, I'll just note here that um Truflation's current year-over-year um inflation calculation right now is is under 1%. It's 0.72%. >> Yeah. So, I mean, it kind of tells you where things going. So, here I posted this chart this morning. This is the dollar. And so, part of the analysis I'm working on right now is that we should be expecting a dollar rally. Um >> Okay. >> Hey, just increase this if you can. >> Yes. Thank you. >> Better. So this is just this is WTIC versus crude. Now what you would expect normally and this is a hit. So this is 25 years of history. If you go back prior to 2022, there was a very good negative correlation between the value of the dollar and energy prices. Exactly what you should expect because energy prices trade in dollars. However, since 2022, every asset class has now become very correlated. interest rates, inflation, bonds, uh, energy prices, the dollar, they're all been very correlated with each other, which is unusual because normally there's things that have this inverse correlation to the dollar because of exchange basises and those type of things. And that's all been broken over the last few years uh because of the speculation and things that have been going on in the markets that'll eventually revert back to normal. But here's the the but this is the important part about this is that this is a chart of XLE which is the representation of the energy stock complex versus oil prices. >> Now if you'll notice prior to 2022 there was a very high correlation between energy stock prices and oil prices which makes complete sense because where did energy companies get their >> from the price of oil >> from the price of oil. So that correlation is is very likely. But now you've had this huge gap between these two that just simply don't make a lot of sense. But energy stocks are running up on this idea of this economic reflation and that we're about to have this massive surge in economic growth. Energy prices are going to surge because of this reflation. So stocks are are front running that. But yet the inflation data, the oil price data, which by the way, oil price data has a very high correlation to CPI as well because of all the inputs. Um, you know, that all tells you that the economy is actually functioning a lot weaker. The employment report that we saw this week, it was all seasonal adjustments. You actually stripped those out and we're going to see that 130 revise down to 50 probably next month. Um, or the next couple of months, we'll see it revise down. Um, but again, that was all kind of seasonal adjustments that were going on. birth death adjustment etc. you know doesn't suggest that this economy is firing on all cylinders. So that big gap between energy stocks and oil prices that's going to correct at some point because energy stocks are the lowest revenue growth se this is this is what you're chasing right now. This is the lowest re they have negative revenue growth for energy stocks as a sector. This is what you're chasing. You're also chasing materials you and and consumer staples and industrials which do have revenue growth but far less than the areas you're selling off. You're selling off info, technology, communication services and healthcare and financials. Those are your highest growth revenue companies. These are the companies you should be buying long-term, not selling them and vice versa. But that's just where markets are doing right now. >> Okay. Do you think the market is wrong here? Or do you think the market's just the the I mean, yes, they're growing their earnings faster than the other sectors, but their share prices were growing faster, too, and they >> could it just be that this is just taking some of the froth out? >> Yeah. Yeah. No, no. Markets go through these rebalancings, and that's what it is. And then we get these narratives that that come along to help support what's happening in the market. So, right now, that narrative is this reflation narrative. And so that's why we're all chasing energy stocks and staples, those type of things, and pushing those prices up dramatically. Eventually, the market's going to start to realize, look at the when the when the fundamentals become reality, the market's going to go, oh, that narrative is now shifted back over here. So, we're all going to start chasing technology stocks again because that's where all the growth is, right? And so, that's just a function of time until we make that narrative shift. And that's just how markets work over time. Markets just eb and flow from one area to the next. And the narratives that we come up with are just the rationalization for why we're chasing prices higher in those markets, right? You never hear a rationalization for, man, AI is really beat up now. Even though they're growing earnings like crazy, nobody wants to own them. You and and you know, and I would just keep selling them, right? You you never hear those narratives. You just hear the narratives for why AI stocks are going to keep going. AI is going to fail. You can't re you can't monetize the revenue. We heard that with the.com crisis and we had a lot of companies that came out and monetized the crap out of it out of the internet, right? Google is a good example. >> Although after a tremendous bust, but yes. >> Sure. Sure. Absolutely. We're gonna and that's going to happen. We're going to go through that cleansing cycle. Absolutely. >> Okay. So, I've got a couple >> pardon me. >> We might be starting that. I don't know. But maybe we are starting that cleansing of the AI >> hype. We'll see. >> Right. which why may it's why it makes sense to maybe take your foot off the accelerator a little bit which is we just talked about you guys are doing >> um all right so I've got I've got two sort of narrative uh topics I'm trying to figure out which one to go I guess I'm going to go with the energy one just because we're talking about energy right now so uh news yesterday um Trump revokes Obama era greenhouse gas finding in the largest deregulatory action in US history so basically it sounds like the Trump administration just said look we uh are changing our our national policy towards greenhouse gases. We no longer think that they are an existential threat to humanity and and they're they're as I understand it from having just breezed through some of these articles is that um they have reclassified the greenhouse gas threat and now that it is reclassified it is something the EPA cannot regulate now, >> right? Um and so my question for you is is yes this is a narrative but um is this bullish for overall economic growth in general and for the fossil energy sector in particular? >> It's not going to make any difference one way or the other because at the end of the day what drives the fossil fuel industry is supply and demand. Right? If if you have a big supply of oil come onto the market and you don't have the demand to keep up with that supply, prices are going to fall, which is then going to make drilling less productive. And so they're going to stop drilling to curtail oil supplies. That's what that's what ultimately drives it. So So declassifying uh greenhouse gases is good. That's going to that's going to help companies be more exploratory if they want, but the prices also have to justify it. And right, and I'm just guessing here, but presumably there's a a lot of regulatory costs that have been added to the fossil fuel industry to make it harder to >> produce the these fuels. >> If we're removing those, then the cost of, >> like it or not, coal, oil, whatever, right, should go down because it's it's cheaper to produce. Right. >> Right. Well, again, you know, remember during the Obama administration and during the Biden administration, they put lots of regulations on the oil and gas industry, restriction of leases, um, you know, all kinds of of, you know, regulatory issues that that increase the drilling cost, particularly in in the fracking, uh, in industry in particular, which is huge in Texas. So, yes, absolutely. To your point, you're going to lower the price point to where companies can drill profitably. That's a that's that is a that is an absolute fact and that's great, >> right? But they can sell cheaper and cheaper energy means more economic activity, right? >> Well, potentially, but if the economy is slowing down and again, so that so it's all going to come back to economic supply and demand because at the end of the day, oil goes into everything, right? I mean, it's in the it's in the plastic we use in bottles, it's in your iPhones, it's in your clothes, it's everywhere, right? Petroleum is everywhere. So if economic demand is slowing and so this all ties back to economic growth and inflation. If economic inflation which we just saw is declining and if you're in your my expectations that we're going to see lower rates of inflation over the course of this year that means that economic supply and demand is falling and that potentially puts downward pressure on energy prices which then becomes a function of profitability for drilling for these companies. If economic activity is going down, but if the reflation narrative turns out correct, then it's not. Right. >> Exactly. That I'm I'm even thinking less about just the next couple of quarters. I'm thinking about the next 10 years. And and look, folks, I'm I'm interpreting this in real time. And I am very intentionally not touching upon whether more fossil fuels is good or bad. That's a whole big discussion for a different time. But let's just say the US decided to Chinaify, right? and say, "You know what? We need all this new electricity. Data centers are hogging, you know, everybody prices are going up for consumers and everybody's angry about that. Man, we make coal much cheaper and we do coal fired, you know, electrical generation plants. Man, we can produce a lot more electricity at a lot lower cost. We can bring down, you know, we can we can boost uh we can build more data centers as a result and we can take down the consumer cost of electricity. that seems to be really potentially beneficial for economic growth. Whole different thing if it's good for the planet. Let's put that aside for now. But that's the question I'm asking. >> Right. Right. So that question is absolutely right. Yes, that I'm I'm sorry I misunderstood your question. >> Okay. >> Because you're absolutely right there. What it's not good for is energy stock prices because Okay, >> that the more supply you bring onto markets, you know, that's going to lower the prices, which is fine, but that also lowers the revenue for these companies. So from an investing standpoint, you know, I don't think this is going to be the boom cycle for energy stocks that everybody's expecting it is if we have this big increase in supply. Again, all supply demand dynamics. And that big gap I showed you between energy prices, between energy stock prices and the actual underlying revenue generator of oil prices, >> that's going to correct at some point. That's just that's not sustainable. And and those stocks are trading at very high premiums. They're in their 70 and 80th percentile of historical valuations over the last 30 years. They're trading very expensive relative to their own histories. Yeah, they may be trading cheaper than the S&P valuation, but they're very expensive relative to their earnings and revenue growth rates as well as their historical valuations. And so again, >> okay. >> All right. So, so it sounds like you're a little bit skeptical on the attractiveness of the fossil energy sector um from an investing standpoint, but to to my question, it sounds like you're thinking, but yeah, over next decade, this could this could add >> a material uh additional percentage points of GDP growth. I I am much more bullish on the natural gas sector than I am the oil production sector right now because >> you know these data centers they are sucking up every bit of CNG. They they basically have have sucked up all the supply of CG. They're now turning to LG. There's not that much domestic production use of LG in the US. We we create a lot of LG here that all gets exported overseas like Shaneer Energy and others they export all their LG. We don't have that much production of LG in the United States. And if I'm building a data center, um, I need to tap into the pipeline. But if I'm not close to a pipeline, it could take up to two or three years to get a pipeline run from wherever the main pipeline is for natural gas to my facility, which to bridge that gap, I've either got to use CNG or LNG to power the turbines to to power these data centers, or I go back to diesel, which there's efficiency issues and other stuff with that. So there's I think that I think there's a big opportunity because these data centers in the natural gas sector even though I'm worried about companies like Exxon Mobile as an example trading at huge valuation premiums relative to oil sector right so I'm trying there's a little bit of a bifurcation that that we're kind of digging through right now. >> Okay. And we never talk about it um but I'm just curious does an announcement like this make you start thinking about like maybe I should just check out the coal industry? Yeah. Um I'm I'm not a huge coal fan, but you know th those are are very big boom buds, but yeah, I mean coal is just another one of those factors in the in kind of the energy complex that I think yeah is worth probably paying attention to. >> Yeah, I mean again I haven't had a chance to look into this, but but but this announcement makes me think that okay, coal all of a sudden has a much brighter future. Right. >> Look, and I'm doing my part over here, right? Bill Gates just came out recently and said that cows are emitting too much methane. So steak last night. So, I'm it's here. >> Wow. Well, uh I'm thinking about getting my own, you know, uh natural gas uh facility here or coal fired plant cuz it's cold in this room where I am right now. >> It's really cold. Yeah. Um yeah, we we turned the heat off last night and this room didn't get any heat, so it's like sitting in an ice box. >> What's the temperature in Nevada today? >> Um it's probably going to be in the high 40s. Um, I mean it's not terrible terrible here, but just this room did not get any heat last night. It didn't chance to heat it this morning. >> Yeah, I know. We're in the we're in the mid to high 70s today in Texas. >> Well, lucky you. And look, I shouldn't complain because I know there's still parts of the country that are still stuck in that horrible, you know, >> polar vortex or whatever it is. >> Oh, yeah. Michael Michael was was the happy yesterday because they were in the 40s. So, >> yeah. Yeah. Because it had been like in the single digits where he was, right? >> Yeah. Exactly. He's coming off two. So, >> which is rare in Virginia. Yeah. >> Um, okay. Uh, or Maryland, I forget where he lives, but somewhere over there. Um, so you've written two articles, and I'll let you address any either or both of them as as you like. Um, but they both kind of have to do with narratives. Um, one is the speculative narrative, which you know, you've said is unwinding, and that's I think sort of what we're seeing here in the software and AI stocks. Um, but then you also wrote this piece about um, financial nihilism. Um, I think you were following up on a piece that Kyla Scanland had done, who hopefully is coming back on this program at some point soon. I'm trying to get a date with her. Um, so anyways, I thought your observations on both were good. So why don't you tackle those anyway you like. >> Well, um, we can just start with the financial nihilism. It's just it's an interesting story because, uh, you know, again, the the So, okay, so first of all, let's back up if you're not familiar with financial this term financial nihilism. It was it was a term that was thrown out in 2020 2021 by a YouTuber young YouTuber and he was talking about this idea >> Demetri Kafinus right? >> Correct. >> Yeah. Who I've met. Yeah. >> Yeah. And and you know it was in 2020 and this was right after the the the shutdown of the of the pandemic and you know young young individuals saw no future hope etc. And so why not just go speculate in the markets and and take all these risks because you know I've got no other opportunity. Everything is just you know the whole world the whole thing is rigged against me. And of course you know this is where we saw the rise of GameStop and and you know the speculative trading remember the whole uh issue around spaxs and and this was just a lot of that kind of speculative nature. And so what I did was and again so Kyle Scandan was and not her she got picked up by I think it was the u uh Bloomberg or the Wall Street Journal I can't remember where it was. Um anyway, it got picked up and they were just discussing her article and they said that, you know, there's this kind of, you know, this whole narrative of young in of young individuals now that they're just kind of hopeless and there's no future for them and so they've got to take on all these risk in order to get their kind of, you know, get their brass ring, so to speak. The problem with it is is that it's not the way that money works. And I I've talked about on Monday, I've actually got an article coming out that you and I talked about last week. It's the 10 immutable laws of money. So, I've got this article coming out on Monday kind of kind of following up on this particular article discussing how money actually works over time. And if you want to build wealth, there are just some very basic rules to follow. And they're not hard. It's just we have to start doing the discipline. And the problem that I run into a lot when I meet with younger individuals um you know particularly in the Gen Z and you know people in Kyla's age group right in particular you know they they think that they know differently and that the the era that I grew up in or Adam the era that you grew up in it was different back then and and we don't understand how things are today but things aren't any different today than they were 10 years ago, 20 years, 30 years ago on the way that money works. And if we save and invest and do the right things with our money over time, we can build our outcomes that we want. But if we speculate and gamble, outcomes tend to be much poor. And and I I wish I could there's there's a couple of great videos. If you go to our website realinvestmentadvice.com or go to my Substack, either one at Lance Roberts on Substack, I put in a couple of great uh great videos of they are commercials from 1999 for >> Yeah. They the old E Trade commercials. Yeah. >> And and the and the point of that was is that we were, you know, it's always interesting. My kids are the same way. They're like, "Dad, you don't understand. You know, you just you don't know what you're talking about." We were doing the same stuff in 1999 that everybody's doing now, right? It's just y'all didn't invent, you know, you young people didn't invent the wheel here. You know, we were doing all this younger and we suffered the same consequence, >> right? We did a lot of yolo investing in 99. >> Absolutely. And so the articles got some great e just for just they will make you laugh because these the Erade you have to give Erade props. They did some great commercials. >> They they had some great great ones. Yeah. You had um which I totally remember from the time. What was it that the time to rub the bunions? commercial. >> Yes, that's probably one of my all-time favorites. But, uh, here was just an example, though. Here was a a uh this was Baronss and Forbes magazine covers. Um, this was, you know, a bunch of kids are tormenting Wall Street. That wasn't 2021. But remember, we heard in 2021 how retail investors were, you know, they were getting revenge on Wall Street. The whole Reddit crowd. This is from 1999 where a bunch of kids are tormenting Wall Street. And so again, the point is is that we've been here, we've done that, we've suffered that consequence, right? We learned from experience. And you know, so you know, and this is what's interesting is because we grew up in an era where average rates of return were 67%. Kids today are growing up in an era where average returns are nearly double that. And that's because of monetary interventions, all these things that we've done, zero interest rates. We've talked about moral hazard that we've created in the markets. They've come to expect that speculative investing is going to win out over time because that's just the way it seemed like over the last 10-15 years. That was also in 1999 when that Forbes article was published. Our speculative error started in 1985, really 1982. And so we had about a 15- 18year window between 1982 and 2000 where the average market return was 15% a year. We were in that same secular bare market bubble cycle that we're in today that started in 2010. Which is why these young individuals think they have financial nihilism and they think they have to take all this risk because they've been conditioned that that is is the way things actually are and that we just don't us old people don't understand but we've been through this. >> Hey can I can I just comment on this for a second? Go back to that chart for a second. >> So you know part of what what how I understand financial nihilism which which I get to a certain extent right which is >> I completely understand it. Yeah. Hey, it's harder today. You boomers and Gen Xers don't understand. Everything costs so much more. Um, I think there is truth in that. And I know you and I differ a little bit, Lance, but I agree with you that the tenants of building wealth have not changed, right? But because of that mindset, right, where you feel like the brass ring is getting further and further away, you start to feel a desperation that, okay, the only way I can get it is through Hail Mary. And it it's it's basically the same thing as if you were a coach of a football team, an offensive coach, and you just told the QB to throw a hailmary pass on every play, right? You know, seven to eight of those out of every 10 is going to get picked off as an interception, right? So like, yes, you might get lucky every once in a while, but you know, over the the course of it, you're going to lose a lot more than you win, right? And that that's I think the danger that they're in right now where they're just out there throwing Hail Marys and their performance is bad as a result of it. But what's ironic and again I totally understand why they feel that way and I think it is harder on a lot of dimensions. >> It's actually been easier to make money in the stock market >> prudently through their generation to to this chart. They've had a higher average return after the great financial crisis that we enjoyed you know building our wealth up before then. So there is a real irony there. >> I know and this is and this actually comes right to my next chart. One of their big complaints is well like boomers have all the money. Well, yeah, boomers have more money because they've had a lot more time to accumulate it than Gen Zers have. But Gen Z and millennials are accumulating wealth at a much faster pace than baby boomers and Gen Xers did. And that's because of the to your point, they've had the wind at their back in terms of if they just took money and got that money invested and did it well, they are making they are saving investing money at a much faster rate. They are building wealth. Give them time. And again, so yeah, they may look at the boomers now and go, "Well, they have all the money. It's not fair." Yes, but boomers have had 30, 40, 50 years to accumulate that wealth. You give Gen Xers and millennials 30, 40, 50 years to accumulate wealth if they do it right, they're going to have far more money than the boomers ever did. >> If they do it right, and I think that's the key thing. >> And and and look, boomers made a lot of mistakes, too. But this is, and again, this is this is important, right? The Gen Z's are investing at a higher rate and earlier age than previous generations. This is awesome. The problem is what I'm about to show you, which is that the market has been pulling forward all these returns well above revenue growth and and and economic growth. So, they're investing at a much higher rate, but they're also investing it in some of the most speculative manners, which tends to not work out well. This is this is the charter show. This is Robin Hood. This is data from Robin Hood, which is a great platform for measuring young retail investors because that's where they that's where a lot of them are. If you now this was as of the end of December. If you add in the four to5 billion draw down we had in January, retail investors on Robin Hood have lost money since 2021. So despite the fact that the market's up 75% since then, they've actually lost money. If they had just invested prudently, put their money into an S&P 500 index, they would be far ahead of where they were speculative trade, you know, doing speculative trading on the markets, >> right? And and yeah, and even put your money in an S&P index, forget about it. For forget about watching the markets and just focus on earning income that you can then keep shoveling into that index. >> Correct. And then and and the ones that are doing it, like I like I like I showed you this chart this chart before, you know, the ones that are doing that, they're doing very well. And there's a there's a lot of the younger generation that are doing just that. They're not they're doing their job. They're shoving money away. There's a a guy I follow on YouTube um that he's he's a he's a video game streamer. He's he's a really smart guy, but he talks while he's doing video he's he makes a very good living streaming video games. But he talks about his investing strategy then like while he's when he's talking to his chat and he's like look he says I just buy I I just buy VU and he says there's other stocks I like like I buy Google I like Microsoft and I'm not looking to sell these stocks for 20 years. I just every month I put money into these stocks and that's what I do. He's doing it the right way, right? He's not buying options. He's not trading futures. He's not doing, you know, cra, you know, chasing crazy stuff that's trying to go to the moon. He's just doing a very simple compounded DCA strategy. And he's a young guy. He's in his early 30s, you know. So, he's he's going to do extremely well for himself. It ain't sexy. It ain't pretty, but he's doing exactly what you need to do to build wealth over time. >> Okay. So, what were what was sort of your conclusion of of the article there? Was it just >> embrace the unsexiness, which of course you say all the time, >> right? Which is why on Monday, you know, we'll get into um the the 10 immutable laws of money because that's where it really breaks down. And again, these are things that you're not going to want to hear, right? I'm going to we can talk about this article next week and there's going to be stuff that people do not want to hear. It's but it's simple stuff like look, you probably can't afford to put your kids in private school, right? just you've got to accept that reality and I know we all want to but that's a reality that you probably have to accept because you have to save money first. So we're going to have to figure out ways to cut corners there. You know, you can't buy a new car. You're going to have to buy a used car. You know, those are the and and this is but this is just the basics of saving and invest money. How do we get to that 50 3020 budget so that we can get our savings and investing program on track? Where do we have to cut? Those are the type of things that we'll go through. But again, it ain't pretty innate sexy, but if you follow the rules, the laws of money, it'll work. You'll build wealth. It's, you know, but it's not going to be the there's no recommendations in there for go trade, you know, stock option futures. That that's not in there, >> right? All right. Well, look, we'll look forward to um maybe dedicating a lot of next week's uh recap to walking through your 10 mutable laws. >> Yeah. Again, it's going to cause a lot of controversy. Lance, you you cause a lot of controversy just coming on here every week. It'll be >> I know and that's why I'm saying >> all right. Um well, look, let me um let me pound through one or two more things quickly and then we'll we'll get to our rants and wrap up. Um uh so potential big news, I think it was yesterday. Um I don't know the source of this but it has been floated that there are talks between the US and Russia. >> I saw that >> yeah about and I'm presuming this is based upon some ceasefire in Ukraine right >> that this is sort of you know Trump's all about the art of the deal sticks carrots. So it sounds like the a carrot that is being offered to Russia is is hey you calm things down you know come to some sort of peace agreement um in Ukraine and you know we'll take off a lot of the um uh you know sanctions and stuff that we have on Russia right now and you can rejoin the US system. So here were the five points that were floated. I >> just just real quick that was reported and I I just pulled a quick Google search. >> It was reported by Bloomberg, the Financial Post, and the Economic Times. >> Okay. And I'm sure this was a, you know, trial balloon that the this is all probably all part of the state craft, you know, letting Russia know we're serious because it's getting leaked and >> trying to prepare the rest of the world for something. Um, okay. US and Russia working together on fossil fuels. Okay. Joint investments in natural gas. all makes sense. Offshore oil and critical raw material partnerships. Makes sense. Um windfalls for US companies. I don't know exactly what that means. Um so if you do, Lance, great. Tell me. If not, we'll explain it next time. Uh but then the the last one is the one that's gotten a whole bunch of attention, which is that Russia's return to the US dollar settlement system. So which I'm assuming is Swift, uh which we kicked them out of, right? Uh but it'll be easier for Russia to transact financially around the world. Um so uh I I guess first question for you >> requires them to hold dollar more dollar reserves if they do that. >> Okay. Um so therefore Russia would be you know buying more treasuries. Um so first off um how material is this? I know I've asked you in the past like what what what do you think market implications of um you know truses and or pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe peace breaking out in certain conflicts and stuff like that you basically said ah it's kind of a nothing burger markets wise um something like this were it to happen would that change your thinking in any way from an investment standpoint >> yeah no uh this is so the the premise of the article this weekend in our newsletter and then I've got an article a follow-up article coming out just a one of our regular blog posts probably not this coming week but the following week is on a dollar rally. In other words, a strengthening of the dollar. And there's a lot of reasons why the recent dollar weakness has gotten very overdone and all it takes is either stronger econ so if this reflation story does kick in and we start to see stronger economic growth that's going to drag money back in the US dollar. So that'll strengthen the dollar and you know put us on better footing. Um, the other side of that coin is, yeah, if if you bring a country like Russia back into the dollar trade, then that's obviously going to strengthen the dollar as well because they're going to have to buy bonds. You're going have to hold more US dollar reserves, those type of things, trade in oil. That's all that's that's great. So no, that's a very significant outcome and that would very much impact areas of the market that trade against the value of the dollar like emerging markets like international stocks which are kind of a non-correlation trade against the US dollar because of the of the currency uh because of the currency translation basis. Mhm. So it seems like something like this would really um throw a spanner into the the bricks system um where you know a lot of these countries I mean Russia's the R and bricks right um you know a lot of these countries that are sort of pins >> pardon me >> they just become ballpoint pins they'd be the bicks >> the well the question is is I don't know if it would mean that Russia would necessarily withdraw from bricks but the bricks countries have been, you know, trying to try strike trade deals that settle in different currency, you know, their own currencies versus the dollar. And they've been presumably creating um a a goldbacked payments system. And I wonder if that would sort of dramatically slow it down or make it less appealing if if Russia were not as uh aggressively participating in it. I don't know. I mean, would would this open would would this throw sand in that gears and maybe some of these other countries would start saying, "Well, if Russia's going to do it, maybe I should be >> Well, so first of all, >> the US, too. >> Yeah. So, first of all, remember that that those transactions you're talking about are negligible on on the way the world works, right? So I mean yeah it's you know if if I want to create if I'm Venezuela and I want to trade with India I can and I want to bypass the US dollar system I can set up trade deals directly with them and my currency whatever but those are very very small fractions of the global transaction system it's all you know it's predominantly all dollars um especially when it comes on foreign exchanges but yeah to your point if Russia starts saying hey we're going to get back on the dollar system that's going to put more pressure on some of these other countries to go back to the or or to kind of abandon those trade negotiations because as the dollar strengthen everybody's going to want to at the end of the day if I'm trading if I'm trading in international exports I need a couple of things. I need a rule of law somewhere so I can make sure that if my goods get delivered that I get paid and I have recourse. So I need rule of law and I need stability and I need I need guarantee that my payment will be valued and that's why everything translates back to dollars at at one you know kind of when it comes international trade the yuan has has obviously risen as a percentage of global trade only because the economy of China has grown so much over the last really kind of 20 years. So just as a natural byproduct of the growth of that economy, the yuan has become a much bigger participant in the global transaction basis. But the dollar is still dominant and that's not really changing at any any great speed. So a lot of these stories about the demise US dollar and all that there's really no grounded fact behind that. Um but again to your point if you if you bring somebody like Russia back into the fold so to speak which look Russia's been has been under sanctions economic ruin. I mean, they they've had so much economic problems over the course of the last 20, 30 years. It just seems to make sense. At some point, you're going to go enough, you know, I need to I need to make my people happy and and start to do things to kind of get back into the graces with the rest of the world. And so, it's it's it seems like a kind of a long time coming for Russia to kind of try to move back into the fold at least to get back into the Swift system, be able to trade oil since that's a major product of their country. Rare earth metals are also a big product of Russia as well. So if they can get back into that, that's certainly economically very beneficial for them. >> Okay. Oh, it's interesting. And okay, I know a lot of viewers have pardon me, >> particularly over the last few years of what they've been through with Ukraine, >> right? >> That's that's not made things any easier on them. >> Right. Right. Um, I know there are a lot of viewers of this channel that are, you know, concerned that the BRICS countries, you know, have a whole bunch of reasons to wean themselves off the dollar. And it's it's a it's a concern that they've had >> and I'm not trying to invalidate that concern at all, >> but they can't there there's they can't wean themselves off the dollar. They can't. It is in they are incapable of doing that because the one of the the the way that bricks companies make their economic system work is by exporting goods to the US. And so they can't wean themselves off the dollar because we're one of the major buyers and supporters of their economies. >> Yeah. And look, I I it's a bigger discussion, but all I want to say here is that um obviously this potentially weakens potentially reach weakens Russians commitment to that that alternative brick system. Um we just struck a massive trade deal with India. Um I've got to imagine there were a lot of things put in that deal that said India, you're going to continue to use dollars at least for a lot of the important components of trade. Um, and then Brazil, which isn't super USfriendly under their current administration, they have their uh elections coming up uh this October and the current regime there. Um, I'm not a Brazil expert, but um had a you know, deep discussion with Tabby Costa uh the other day. Great interview we did about commodities, but the topic of Brazil came up and um you know, Tabby who was from Brazil and spends a fair amount of time there. Um, you know, the rest of South America is looking at what's happened with the Venezuela and basically saying, "Look, we're kind of glad Maduro, you know, got removed. Nobody really likes the Venezuelan regime down there." Um, and there's there's a there's a lot of um I think um optimism or hope about what could happen if America were to indeed get more um involved in South America from a trade perspective. Um, and so I I don't know how the election's going to go, but there's certainly, you know, not bad odds that it could go uh to the opponent and then, you know, you get a much more US friendly person down there. And then the B in bricks, you know, may also weaken, too. So, if you see sort of the the R, the I and the B in bricks start becoming more US friendly, uh, it does seem to weaken the potential threat that that system has against us. Um, all right. So, in just wrapping up here, Lance, because I want to try to squeeze two rants in. Um, just a reminder of folks on the housing market, uh, you know, Lance, I guess the only thing I'll say about this is, hey folks, go watch tomorrow's video with with Nick Jurley. But, um, if the housing market continues to weaken from here, I'm going to guess that makes you a little bit more it it increases the odds that you might need to pump the brakes a little bit more in 2026. Correct. Well, I again, you got to be really careful with the housing data because it's very location specific. >> Sure. >> I'll give you I'll give you a good example of this. Um, my neighbor that lives across the street from me just put his house up for sale. He put his house up for sale. The the house is valued at 1.3 million. It's a huge house on a corner lot. He put it up for 1.3 million. It bid out, closed, and sold in one day at over over asking price. >> Okay. So, so again it's like there's in certain areas in certain neighborhoods demand is not a problem. >> No, that's to totally true. I'm talking generally. So, >> that's that's but this is my my this is my this is my broader point. When you're taking a look at housing, it's only the people that are transacting on the fringes that you know, again, if I'm sitting in my house, like I'm not selling my house, so I have no idea what the value of my house is today or tomorrow. And you know, you might know a better value of your house because you just bought one, right? So, you know, those are the >> I'm still running. We haven't We're still running. >> You don't even know what the value of your house. Um, but anyway, I don't know what the value of my house is today. Um, I can guesstimate, you know, based on, you know, comps, those type of things. But when we look at these national housing numbers, a lot of these are estimates. They're only the 20 big major cities. So, once you get out, so when we look at these houses, like, oh, housing is unaffordable. We're only looking at 20 cities. We're looking at the main metro areas of the economy. Once you start moving out outside of the big major metro areas, prices and demand become far different. And and so it's always so if you're think and my point about the reason I'm saying this is yeah, the the metrics are fine. Um but if you're looking to buy a house, don't look at these these kind of major indexes and going, okay, housing prices are crumbling and I can't afford to buy a house. Whatever it is, be sure and do your homework because >> No, I I absolutely agree with that. And to be honest, you should get Nick's tool because it's incredibly granular. And and to Lance's point, he's making the point I don't want to be making here because we're talking about something else. But um you know, real estate's totally local and you can just at the zip code level, you can have neighboring zip codes that have very different uh dynamics going on. Um my point to you, Lance, was if the on the national level, you know, averages median continues to decline maybe even substantially throughout the year. I'm guessing that makes you a little bit more nervous about what would happen with the markets from a you know a ne a national negative wealth effect from that. >> Well, you the housing market is very fringe, right? So, you need something in the housing market that impacts the forward earnings growth expectations for the market. So, what does that mean? You need something to happen in the housing market this year that all of a sudden says that people are just they they are just locked up. They can't afford to buy anything. They can't afford to do anything. You know, something's happened economically and housing prices are falling off a cliff because nobody can afford to do anything. And then all of a sudden the market says, "Okay, well, wait a second. If nobody can afford to do anything now and we're seeing that reflected in the housing market and that's because of consumption trends or dropping off a cliff that's going to affect the forward earnings for the markets that'll become an impact for the S&P 500 if it is very just housing specific that nobody's just willing to buy or sell a house right now. But retail spending trends remain okay, personal consumption expenditures remain okay, market's going to be okay. >> Okay. All right. I could dig into that further with you. Basically, folks, go watch tomorrow's video with Nick Jurley. Um, trades. What trades have you guys done? Sounds like you've done several. >> Yeah. Yeah, we did. Uh, basically, like we talked about earlier, we just there were about three, four positions in our portfolio that we had added back in September, October last year, early November on the value side of the equation. Um, you know, companies like, um, Altria and, uh, Verizon and a couple others. And we just basically just reduced those back to target weight. A lot of those had grown from their original target weights to, you know, you know, 50% more of their target weight within the portfolio. So, we just trim those back to target. You know, this is just beginning of the process. We want to try to to raise five to maybe 10% cash in our portfolios over the course of the next month or two. So, we're just going to be kind of looking for opportunities. Like the market's rattling nicely here on Friday. So, if we can get this market to kind of get some wind under it, get a little bit of a lift, maybe back towards all-time highs, um, which isn't that far away. That's just, you know, a percent or so. If we can get a percent or two of a rally next week, then we'll probably raise some more cash. >> Okay. So, you would you'd be selling into strength to raise some cash >> just for now. And again, not going crazy. I mean, we're we're still we still own, you know, all of our stocks. We're just, you know, kind of rebound. You know, we had sold down some of our technology stocks, you know, uh before earning season started. So, we have reduced exposure in some of those companies. Those have got really beaten up. So, we may, you know, try to add a little bit to those here at some point, but then reduce some other positions that are grossly overbought. Just again, just that rebalancing process as we go. >> Okay. All right. Um All right. Well, look, let's uh let's get to the rants here and then we'll wrap things up. Um two rants. We could probably talk forever about them, but I'm going to try to make it real quick. Um, it's been a really interesting uh week on X for me. I've had a couple tweets that really went much more viral than they normally do. Um, and uh in ways that just kind of flammix me. Um, but there was one that I've still been recovering from, Lance. um which is uh I I retweeted uh a tweet of Elon Musk's um saying that hey SpaceX is is sort of changing its priorities and we're going to now prioritize building basically a lunar colony >> before we focus on building one on Mars. And I I wrote a post just saying like hey you know as a child of the 70s like I'm excited for this because man hasn't stepped on the moon since I was one years old and I'm going to turn 55 this year right? Like I thought by this time we'd have moon cities and you know earth moon shuttle that we could hop on and go visit and all that stuff and we we basically got nothing. So you know it was like hey this is exciting to me and the number of moonlanding deniers that responded to that just blew me away. And so I I I I then put out a poll and I said, "Look, I I I can't believe I'm asking this in 2026." But when you look at the the the manned landings on the moon from 1969 to 1972, were those real or were those a hoax? And Lance, it was 35% said they thought it was a hoax. And and and look, folks, I I'm if you if you believe they were, look, I I've I've I've I've made peace with this. It's not my job to tell you what to believe and and I understand the skepticism that people are bringing to this land. So like when I've sort of probed around why people voted this way, a lot of them are like look I don't believe anything the government tells me and you know how can you ask me after um COVID and the Epstein files to believe anything right that the government says. Um personally I I I believe the moon landings took place. I think there's a prepoundonderance, an overwhelming preponderance of scientific evidence. I think uh over 50 years, uh our enemies and allies with scientific progress and the trips they've made to the moon, uh with probes and whatnot, uh they would have loved to have pointed out to the world that America had had faked all this if if it were fake. But whatever. >> Yeah. All I can tell you is that when you were one, >> I was six and I grew up in Houston and we spent a lot of time at NASA here in Houston, which was the control center. Now, the rockets were launched out of Florida, Cape Canaveral, but you know, we spent a lot of time around NASA growing up and I, you know, we were watching those on television and those type of things. So, yeah. I mean, believe what you want. I mean, it's just like, >> you mean on the movie set where you were watching the guys jump on the >> Exactly. But it's also like people that, you know, claim that the Earth is flat, right? So, okay, if you believe the Earth is flat, that's fine. But how do you explain geocynchronous orbits, >> right? So, let let's let's not get into I I've >> No, I'm I'm just saying these are >> I know, but but I had this exact I've had these exact arguments on that. >> Conspiracy theories are great, right? But what does it matter, right? If if we does it matter. Look, I I will look, I'll give you I'll give you a reason why it's kind of fascinating to me that, you know, and I that kind of agrees with the idea that the lunar landings were faked. It's been 50 years since we've been on the moon. >> It we we in theory we put people on the moon in rocket ships with using slide rules and human computers. You haven't seen the movie Hidden Figures, go watch that movie. That is a fantastic movie. But we did that supposedly and it is kind of interesting that all that knowledge just evaporated for 50 years and now we're having to recreate this from scratch to get people back on the moon. But okay, having said that, you know, I look, believe it or not, I don't freaking care because it doesn't affect my life one way or the other or the markets. But it's just I think it's great we're going to put people on the moon again. We need to do that. If he wants to build a lunar base there, that's fantastic. I mean, we've got to get off this planet at some point if we're going to explore the universe. So, this is just the first step. >> So, I I agree too. Here's the thing I just wanted to discuss as briefly as we can before I get to the next topic is um here's the worry I have. Um so, to me, and again folks, if you disagree with me, I'm not going to fight you. Um this is one of the most sort of unil universally accepted um human triumphs and triumphs of science, right? Getting guys there with slide rules and like I mean forget about the processing power in here. I think if I had like a pocket calculator from the seven, you know, from the from the '9s, it would have more computing power than than what was in the Apollo missions. Um >> uh what I'm what I'm worried about or or what what is weighing heavily on me is um yeah, look, politicians are going to they're going to lie. They're going to be politicians. They're always going to tell you what's politically expedient for them. But but science and and human knowledge, right, it it accretes. We it builds on itself. That's how we progress, right? And if we get to the point where nobody believes like I I to I totally get it folks and I agree the scientific community did itself a massive injury with sort of how CO was handled and it it broke a lot of trust with the average person and obviously it's broken trust with at least 35% of the people that that follow me on X which blew my mind like I said but if we get to the point where we just don't believe anything that our that our our scientific authorities are telling us That's where you like that. That's the setup for like a dark age, right? When you can't build on what came before because nobody wants to believe it. Nobody wants to trust it. You can't advance, right? And with science, you have to prove something, get consensus on it, and then build on top of that consensus and keep moving as long as the the actual scientific results, you know, uh yield the results that you expect them to. If you get to a point where people are like, I don't care if you just told me how cold fusion work you works, you guys lied to me in the past about COVID, so I'm not going to believe this. Right? It's really hard to progress based on that. So anyways, I I I'm still I'm still kind of recovering from the the large amount of people that are that that are in some ways understandably super skeptical, but I do worry that it's hard for sc for society to move forward when we've got no ability to say I trust what some, you know, are who the experts who are running this stuff should be doing. >> You can't concern yourself with society in general because in every society it's just it's Pareto's law, right? 20 20% of people are going to be idiots and you can't do anything about the 20% that are idiots. You can't do anything about the 20% of people that are poor. They're just that's just a part of statistical normalities >> of of a of a prao distribution. >> Right. Right. But this does bring up a big issue and let's bring this back to finance for a moment. This is why we spend so much time talking about narratives and we publish articles with the data, the facts, everything that supports, you know, our conclusions. And so, you know, just going back to our dollar conversation in Secoo, if you think the world is trying to move away from the dollar, it's fine. You can believe that if you want, but go out and find the data that actually supports that view, right? You can't do it because it's not happening. And you know, trying to extrapolate the end of this or the end of that or the end of the world as we know it, all it does is lead to bad investment decisions. So, so go out and do the work. And if you can prove it to yourself and say, "Look, I've done all the work. I've done all the research. I absolutely believe this to be the the facts. Then invest on that because that's how you make good investments over time. But don't just follow some guy on the internet that said, "Oh, you know, this is the world's going to end because of this or the market's going to crash because of that." Don't just take their word for it and just assume they're correct because maybe they're feeding on a personal fear that you have. Go out and do the work. And once you do that work, you can then start to break these fears and irrational behaviors and those type of things down that lead to bad financial outcomes. You can break those down and start making better investment decisions over time, which is all we do here every week. And I know y'all disagree with me on stuff all the time. You know, I was talking about taking profits and silver and why I was going to have a crash and then, you know, it happened, right? Because that's just the way markets work. So get away from the narratives and focus on the facts that drive markets over time and you'll just be better for it. >> So I I agree and here's here's kind of a challenge I have. Um you know faith in our experts has become injured as I said earlier uh scientific community from co but also you know our academic institutions and in many ways I think our academic institutions have really I mean almost broken their trust in more than the scientific community has uh with us >> they failed miserable >> yeah and and so again it's understandable why why people are rejecting so much of what's out there. Uh, but to your point about doing the work, um, in this discussion about the moon landing, I can't tell you how many YouTube videos I've been sent, Lance, where people have said, "No, Adam, you got to do the work." You know, like, "You got to watch this video here." And it's video of some random guy, right, who's bas, you know, it's like the the corkboard with all the the lines of yarn going from and it's sort of like, all right, well, could this one guy on the internet, you know, said this one thing, you're believing it. So the point is is in doing the work, you know, you either have to do the primary work where you're getting your hands dirty and you're doing the calculations yourself, which you still can do in investing, right? or you really have to to seek out experts who are, you know, have some sort of demonstraable set of credentials that make them uh worthy of your trust, right? And and look, I'm I'm I'm not here to be everybody's nanny and tell them who's right or who's wrong. I just see in the in the age of digital media, there's so much crap information out there that people will turn to that and say, "Oh, I'm doing the work because I'm listening to this person over here." >> And that and that's my whole point. Look how many times, and here's a good example of this. Hugh Henry, um, Steve Drunken Miller, Paul Tudtor Jones, for the last three years, Paul Tudtor Jones and Stephen Steven Dunkin Miller in particular have been talking about how interest rates are going to surge to 6%, inflation's going to return, we're going to have a massive spike in inflation. I don't want to be long bonds. For two years, they've been basically wrong. None of that's happened. Doesn't mean that their their opinion was wrong. It just means that what they said at the time didn't mature into reality. So if you made a bunch of bets based on just what they said, they didn't work out for you over time. So this is So you know, again, just be careful. Don't listen to me. I don't know what the hell I'm talking about. I'm just telling you what I do in portfolio. >> No, that's not true. I mean, you you have 30, 40 years of experience doing this. Like you're >> But look, I'm just one person, right? I do my own research. >> Well, don't listen to just Lance. We'll put it that way. >> Exactly. and and you shouldn't you shouldn't listen to any one person but you should do all your work and that's my whole point is that you know just don't take somebody's word for something and and look when I hear this and that's why we write so many blogs so if you go to our website realvestmentadvice.com you know I've got blogs I post twice a week post a newsletter on Saturday and a lot of those are just simply taking these narratives and then breaking it down saying can I support that narrative or not and so lately we've been all over this reflation trade idea because that's the big narrative are driving the market. Is it valid? Is it real? Is it going to come to fruition? Maybe, maybe not. Don't know. But we can do the work to figure that out. And and that's all I encourage you to do is just, you know, don't listen to people just because there because like for instance, let's just let's you know, Paul Tudtor Jones, he may not own he may say, "Oh, I'm not owning short." He may make this statement two years ago in the media says, "I don't want I don't want long duration bonds in my portfolio." And then he leaves the set and then something happens in two weeks and he's long bonds. But he doesn't tell you that he went long bonds. >> Right. >> Right. It's just you but you took whatever he said and this happens all the time to me. Right. Um I get I get emails from your listeners and I get, you know, comments on my YouTube channels like, "Well, Lance said that he sold gold, you know, two years ago at 2500 or whatever." No, I took profits at 2500 two years ago. We were long gold the whole time in our all weather model. But people take things out of context and they also assume that when I sell something or I buy something that I may or may not buy or sell it later >> and they just take that one point in time but then they miss all the context of what happens after that. So my point is be very careful taking anybody's statement out of the media or in a YouTube channel because whatever their opinion was today might change tomorrow might change the next week and you're not going to know about it and then you're going to be upset when you find out it's like oh they they said sell this but then they turn around and bought it three weeks later and they didn't tell me they bought it. Right. >> Okay. Totally agree. Um I I got to wrap it up here because um I was ah shoot. Well, I was I was trying to I was trying to get this done uh because my wife um I've been traveling this week, which is what the second part of the rant >> was going to be about. Maybe I'll make it about now. Um >> now, >> so I haven't seen my wife much this week. And then uh while I was in the Bay Area, I I took her father out for an early birthday cuz he his birthday is on Valentine's Day, which is tomorrow. My wife just left to go spend the weekend with him for his birthday. And I was desperately trying to finish so I could give her her Valentine's Day gift. She just texted me and saying she's gone. >> Oh, Jesus. >> So, yeah, >> let's get But so anyways, I I I now actually have time for the second rant. Um, so uh I'll keep it brief though. But first off, folks, I just want to say, look, whatever your beliefs, folks, whatever your beliefs are about the moonlanding, whatever your beliefs are about the markets, whatever your beliefs about bricks, whatever your beliefs about religion, I still love you. So, all right. Um, >> do you work? Uh, so I was in the city this week um because I was um very fortunate to be invited to go um moderate a a private dinner discussion that Vanek, the family of funds um was um hosting in in San Francisco. Fantastic event. Um very cool. At some point, Lance will talk about sort of what I learned about digital assets there. Um but there was a fair amount of discussion too about um about AI and um like right after I I came back from this event um I was sent the um that article that went viral uh what was the guy's name? Um I don't have it written here. Um but um it's gone viral this week folks. Um I'll try to post it below this video. Um it's Mark Schumer. That's what it was. Um, he he's a guy who works in a AI. He works with all the AI software and he wrote something big is happening. And Lance, have you read this article yet? >> I have not. >> Okay. Um, I'll send it to you afterwards. So, it's gone really viral this week. And he basically has said, >> hey, I've been working with these AI tools. They're they're very good. I can see the future, you know, that that's that's hurdling towards us through AI. Yes, they're a work in progress, but he said, you know, something's happened in the past two to three months where it has started getting way better way fast. And um >> wait, what was the name of this article? >> Uh it's called something big is happening by a guy named Mark Schumer. Um and he he basically says um you know, it's now beginning to really approach something like a human. He says, "I'm I'm at the point with my agents that I have trained up where I give them a very plain language set of instructions. Like, I want you to build software that does X, and I want you to figure out what the what the user experience should be like, what the data architecture should be like, you know, how it should work. And I want you to test it, and I only want you to come back to me when you think it's done." and he'll go away and a couple hours later the AI will ping him and say, "Hey, you know, I think it's ready for review and he'll look at it and he'll look at the history and he can see that it's it's gone through and it's iterated on what it should do and it goes and does it and then it builds something and then it beta tests it and it finds errors and it fix them fixes them and it iterates it and it gets to a point where the AI says, "Okay, I think we've kind of, you know, gotten to some point where it's pretty darn good. Let's actually get the human in the loop." and he says, "It's getting to the point now where like I don't really have any changes to make. Like, it's coming to me and it's being it's pretty final. It's pretty damn good." Now, he's working with the most sophisticated AI tools. He's paying for all the premium stuff. He says it's it's it's a lot better than what you get when you're using kind of the free version of of Chat DPT. And he says if you're just using it as kind of like a glorified search engine, says you're totally missing out on on the power and the potential of it. But again, as somebody who's really immersed in this, he's like, it's just really getting really good really fast now. So, his whole point is sort of to say um look, this future of AI that everybody's talking about is arriving way faster than most people who even know about AI, you know, thought, but for the general public, like this is going to get here faster than they can imagine, and it's going to be really disruptive. and he goes through a whole bunch of of recommendations that if we have time had more time I' I'd go through but a lot of this is just like hey prepare yourself for this like get smart with AI make sure you're not a total ignor ignoramus around it make sure your kids know what's going on here like part of it is like just just get financially prepared cuz like a lot of you you may get a pink slip a lot faster than you think and you're going to have to figure out how to react from that it's not all bad but he's just basically saying like it is coming way faster faster than you think. And then you probably saw the headline yesterday where Microsoft's a uh AI CEO made the prediction that most most white collar jobs will be fully automated within the next 12 to 18 months, right? And yeah, maybe he's talking his book because he's the CIO of their their AI business, but that's still a really big public declaration to stick your neck out on. Um, I've been talking to people who have been coming back from visiting China and they're like, you know, China, they're big in AI and they're big in robots. He's like, they've already got factories that are called dark factories there where there aren't any humans in them. It's just it's a factory. They don't have any lights or anything like that because the robots don't need them, right? And they're they're being instructed by a II there and they're they're manufacturing stuff already. Um, so this future is just hurdling towards us. And at the VAC dinner, I sat down with this really impressive young woman. She was in her mid20s and she was building um an agentic company where she started with this vision like okay I I don't want to hire an employee and what I want to do is I just want to train my own agents. Um, I've got a I've got a a strategy for the operating structure of this company and what I want it to do. And I'm just my job is right now building or training the agents up to the point where I have all these different functional agents for the company that will run this company. And all I my role as the CEO is just to give them their strategic marching orders and then have them actually run it all. and she's like, you know, it's a work in progress, but it's it's it it's I'm making progress towards what I'm trying to do here. And eventually, I think she wants to have this, you know, a Genta company that's producing I don't know what it's going to be producing, some sort of software or a service or something that she sells to an enterprise company. And to be honest, you know, I wouldn't bet against her. Um, it really was like a glimpse in the future of what the the people who are, you know, in this space are are doing and the level of excitement and confidence. Um, and it's not from people who are like looking at a whiteboard. These are from people who are their hands dirty in the software and they're testing it and and uh reviewing results every day. So anyways, I know you guys at RAIA uh are deploying AI there as well. But you know, again, Lance, just curious to get your thoughts here about the rapidity with which all this is happening. No, no, it it's it's you know, this is one thing that, you know, we're developing now a lot on with Simplevisor is integrating AI. You know, it's it's interesting, too, because I'm I'm an old guy, right? So, I'm stuck in my ways. I still do everything in Excel, spreadsheets, those type of things. But, you know, my son is interning for our company and he's a computer engineer at Texas A&M and the stuff he's doing with AI um is just incredible. Uh, I'm just like, how how did you know how to do that? And it's it's it's it's fascinating to watch because the implementation of AI into into process structures is really kind of daunting to me when I'm looking at I'm like, you know, man, I have no future in in the financial industry because this will do everything that I can do. All I gota once I feed it once I feed AI all my knowledge it will do everything that I do managing a portfolio and better right it's just a function time until it gets there and so so it's just it's just quite fascinating that and I was I just was watching u uh a video yesterday that there are robots now that basically go into bathrooms and clean bathrooms and they were scrubbing down the toilets scrubbing the sinks the whole nine yards so you think about airports and those type of things about all the jobs of janitors that are now just replaced by robots. Think and again, so you start thinking down the list of what your job is. If your and my job is just numbers, that's that's really it all is at the end of the day. It's just analyzing numbers, picking trends, understanding trends, those type of things. AI can do that. There's no magic science to that. So if your job is legal, accounting, janitorial, anything that if on and once you can take AI and stick it inside of a robot, there's no job that's safe. I mean, you know, everybody's kind of convinced right now that trade skills are safe, maybe for a while until I can put AI inside of a a robot that can weld or, you know, do electricians work or build a house, you know, you know, you know, do masonry, whatever. How hard is that going to be eventually to accomplish? So, so to your point, this was the conversation I think you and I were having last week. I don't remember. I was talking to somebody about this last week is that, you know, there's this idea that UBI, universal basic income is inevitable in the United States because basically nobody will be working. And I don't and that's a very dark future because people need a purpose. But, you know, that's the that's the concern right now. >> I I think UBI probably is is it's a high probability. Um, I think it's going to be a non-solution. Um, and I think it's going to be very dilitterious to the human condition for many of the reasons you just mentioned there. >> People People need purpose. You you I've got to Everybody needs a re This is why, you know, people there's a people throw out the stats like there's 20,000 retirees retiring every month or 10,000, pick a number, right? 10,000 people retiring every month. But then you go look at the actual retiree numbers. Yeah. They retire and then what what they do next? They go back to work at least part-time because they need a reason to get up in the morning otherwise you just die off. Or maybe or maybe you're probably too young to remember this. Maybe we become Logan Drum. >> Maybe at 35 the jewel goes off in your hand and you're just like, >> right. Right. I was gonna say, yeah. Or maybe we become Soilent Green or maybe we become what is it? Death Rates 2000. >> Uh so there's a lot of dystopian. maybe become Terminator. And honestly, I still haven't fully figured out how to fully remove that fear that the AI once it's smart enough is just going to get rid of us. Anyways, um, one thing about this though is, um, it does make financial wealth building, I think, even more important. And I hate to say this, but like, you know, I I put out a a poll yesterday on X asking um you know, okay, if if the Microsoft CEO is right, right, that that the majority of of white collar jobs are displaced in the next year, year and a half, um the question was, okay, if your job went away and you couldn't get another one because AI had taken it over, could you make it? could could you basically afford to live the rest of your life? And no surprise, the vast majority of people could not. Um, and so, you know, I'm even thinking just like, look, I I I I I'm hoping it's not going to be as bad as sometimes I fear it is, and I'm hoping there are ways that we can work with AI or it'll create new job opportunities or things like that. Um, but I don't know. And so to me, it makes me feel like, okay, yeah, I really got to make sure that I'm I'm trying to get as much socked away as I can so that, you know, if indeed uh I get replaced by Asian guy, right? I a lot of sober investors uh you know, saw the Asian guy videos that were all over the internet. I think still are. Um that uh if for some reason nobody wants to employ an out of work podcaster, um you know, will I be able to avoid having to uh you know, eat bugs by the end of my lifetime? I don't know. Well, but but this goes back to our conversation earlier is that you have two choices. You can either kind of fold into this idea of financial nihilism and it's all going to be over at the end someday and just you better yolo it now and try to make a whole bunch of money and get out of the rat race when you can. Or you can, you know, learn to save, budget, invest, grow your wealth, secure yourself financially, and then also learn how to work with AI, >> right? >> Just like this. And this is the this is the big frustration I have with a a lot of younger people because I hear this all the time. >> It's like, well, you know, it's just not fair. you know, the, you know, Elon Musk, you know, he, you know, he has all this and Bill Gates has all that and it's not fair that all these big corporate executives have all this stuff and I don't have anything. Well, Bill Gates dropped out of college to start Microsoft. Um, you know, >> Yeah. You he started software coding when he was like 10 years old. Yeah. >> And and and you know, um Paul Mitchell had nothing. He was broke and created the Paul Mitchell company to, you know, make shampoos and all that stuff. You know, the the point is is that a lot of people, you have the ability, and we've talked about this so many times on the show before, you have the ability to create your own path and to create your own wealth. You've just got to be willing to go out there and do it. And you know, this is this is, you know, if you read the article about financial nihilism, this really comes down to one thing. Financial nihilism is just an excuse for victimization. And what that means is is like, oh, I'm a victim of this and I'm a victim of that. rather than look, I need to take responsibility for my actions and start doing things to ensure that I have a place in this new world, whatever it is. So, go learn AI. Go learn how to work with it. Go study it. It's not hard. Um, but then more importantly, just like the girl you talked to, I see I love those stories where people are going, you know what? I'm going to take this idea and I'm going to make it a thing and I'm eventually going to grow a business out of this. That's how you create wealth. That's how you create real wealth. You know, you you take a look at people that have a lot of money. Most of them started a business and then wound up selling it to somebody else. That's how they made their wealth. >> Yeah. No, so I totally agree and I'm, you know, I I use AI, but I need to really up my game on it, especially on the agentic side of it, but I sent that article to my daughters and basically said, "Look, I'm not trying to freak you out at all, but you need to know that this is going on, and this is why you need to, you know, they're in sort of softer industries. Um, but I'm like this is why you need to know how it's being used in your industry. And so like one of my daughters is in school for design and I've said look I mean every informational interview that you have from now on you know you should be asking the person how are you using AI in design right now and specifically like what what which packages are you using? What tasks are you having it do for you? and then go and learn how to do that. Get your hands dirty with the AI, you know, so that when you launch into this field, you've got a really good sense of how to use it and how it's being used as opposed to just being like, oh, well, I guess it's taking more and more of what I could have done, right? So, >> it is I mean, you know, design's a really, you know, architecture, you know, that's hugely at risk. Engineering's hugely at risk. um you know there there's going to be need for humans obviously but you know there's there's there's a big risk to all of these industries and I think that's the thing we've got to really come around to is understanding what that real risk is and then start to and that's why we're the the stuff that we're doing with Simplvisor the next iteration that we come out with on Simpliser will be Simpliser.ai AI. That's coming fairly soon within the next few months. But that's the next step for where I think the financial industry is going. And then this the plans we've got to build off of that are going to be really neat. But it's going to be a lot of that's driven by AI because of where the you know again if you can think about the younger people coming up how many people want to go sit down with a financial adviser and talk about their financial future and all that when they could just communicate online with a with a very intelligent artificial intelligence that says yes I can help you map all this out for you update it real time keep you informed you know take all your current spending actions build that directly real time into your plan and we can adjust your plan on the fly that you can monitor every single day so we can make sure that we're reaching your goals. You know, that's the future. >> Yeah. All right. Well, look, we got to we got to end it there. Um just because uh now I got to go to the next meeting here. But Lance, um great week as usual. Um all right, folks. Well, if you think the best way to prepare for an AI dominated future is to continue to listen to Lance Roberts on this program and then hopefully use Simplify.AI AI when they launch it into the world. Please let Lance know that by hitting the like button and then clicking on the subscribe button below if you haven't already, as well as that little bell icon right next to it. If you would like to get some help uh from a good professional financial adviser for you know navigating this year especially if it looks the way that Lance and I have talked about here that it might um or if you'd you know like to talk to a financial adviser about saying hey you know I'm I'm not sure if my job's safe in this AI world and what should I be doing to make sure that my wealth you know uh either you know grows large enough or or maintains long enough. Um, another good reason to talk to one of these advisors. If you don't already have a good one advising you, consider talking to the ones that thoughtful money endorses, perhaps even Lance and the team there at RAA. To do that, just fill out the very short form at thoughtfulmoney.com and the firms will be in touch with you very swiftly after that. Quick reminder, too, that the thoughtful money fall online conference is coming up. It's just a little bit more than a month away at this point. It's going to be Saturday, March 21st. Don't worry if you can't watch live on that actual day because everybody who buys a ticket will be sent replay videos of the event just a few hours after it ends. You'll get all the live sorry all the presentations, all the live Q&A. Um, and the uh faculty remains amazing. If you haven't heard me give the list already, uh, we've got Lacy Hunt doing the keynote with his usual amazing graduate level charts. We've got first- timers, uh, Ed Dow, uh, Michael Oliver, uh, the journalist Matt Taibbei. We've got Judy Shelton, Daniel T. Marddino Booth, we've got Luke Roman, we've got Brent Johnson, we've got Michael Howell, we've got Darius Dale, we've got Grant Williams, we've got Stephanie Pomboy, we've got Rick Rule, we've got Melody Wright, we've got David Haye, we've got Andy Sheckchman. Uh there's probably one or two I'm forgetting, but as you can see, it's just a phenomenal Murderer Row uh list of just heavy heavy hitters. Um, so if you would like to buy your ticket, I highly recommend you do so now while we're still offering it at the lowest early bird price. To do that, just go f just go to thoughtfulmoney.com/conference and buy your ticket then. And if you're a premium subscriber to our Substack, uh, go check your email for the discount code that I've sent you a couple of times. You can use that to get an additional $50 off of the conference. Lance, my friend, another great week. Thanks so much. Um, crazy future we're entering into here. Um, who knows? Maybe next week I'm going to be talking to the agent Clance Roberts. >> Well, no. I was just thinking the same thing. Eventually they'll just, you know, you can just put yourself inside of an AI and AI will do this weekly video for you and then you can just go take time off. >> Yeah, we'll have Adam Headroom talking to Lance Headroom. >> Yeah, I I like this idea. >> All right, buddy. Well, look, thanks so much. I got to hop here. Everybody else, thanks so much for watching.
The Stock Market Is Showing Signs Of Technical Breakdown | Lance Roberts
Summary
Transcript
And the really big problem has been for the markets as of late is just that we can't make it above 7,000. 7,000 has been a very very tough level for the markets. We just keep coming up here challenging that level. We think we can get above it for a day or two and then we kind of pull back from it. Um we keep taking out important support the 20 and the 50 days. We we keep taking those out. That's important because we're about to cross the 20 below the 50. That would suggest that we may get another leg lower here in the markets. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. Welcome you back here at the end of another week for another weekly market recap with my good friend, the nihilistic portfolio manager, Lance Roberts. Lance, how you doing? >> Fine. >> You've been reading my articles again? >> I have. I have. We're definitely going to talk about that this time. Um, happy Friday the 13th. >> Yep. What could go wrong? >> What could go wrong? Yeah, we'll see. Um, it's been a heck of a week so far. Um, uh, I've been on the road and barely keep my eyes open here, but hopefully you'll be so entertaining. You will, uh, spark me back to life here. Uh, but look, um, it has been a down week in the market so far. We've seen that uh that weakness in both software and the AI stocks continue from here. Um last time we had you on, Lance, I think the past two times, um we had been looking at how the S&P had kind of broken down uh out of a wedge that had been trading in for a good long while and trying to see if it could get back up uh you know, so that uh upward resistance would become support again. But I don't even think we've gone back up to that upward resistance line anytime soon. So anyways, uh what are you what are you seeing here? Because I I just saw a headline from Goldman Sachs um saying that they're seeing a real lack of willingness uh to buy the dip or they actually said uh you know, buy the effing dip. Um so for some reason, you know, Wall Street seems a little skittish still. It's not it's not uh whether it's tech stocks, whether it's Bitcoin, uh it just seems a little bit reluctant to try to find a bottom here yet. >> Well, yeah. And and and you know, as we're talking about this, the market's down 1.2% I think from its high. So, I mean, >> keep it all in context. >> Yeah. Yeah. So, I mean, yeah, it's it's like, oh my gosh, you know, it's this big correction in the market. It's really not. It's been a really interesting rotation though because we've seen a lot of money rotate out of the large cap, you know, megga cap stocks, those type of things, software stocks, um, into areas of the markets like energy, industrials, materials, um, staples is a good example as well. Um, you'll know that you you'll remember that back in September, October, we were buying stocks like Verizon and and Altria and these very boring companies that nobody wanted. And that's had those have had huge rallies and they're now extremely overbought. In fact, today we just went in and took profits in companies like like Altria, like Verizon, those type of things. Uh just to reduce those back to target weights because now they're so extremely overbought that we're likely going to start to see some some fishing potentially in other areas. So So again, you know, this has just been a very typical market rotation. We had, you know, it's it's always important to keep things in context because remember coming out of, you know, the April liberation day last year, we had a massive rally in these stocks. These stocks had huge rallies from their lows. They were extremely overbought. So, a bit of a correction is not surprising in a lot of cases. Um, software has been the more notable one because it's been such a huge correction. Um over the last kind of three months uh software stocks are down about 24% relative to the S&P 500. So there's been a very big decline there. Um but you know that's where opportunity exists. Nobody wants to buy them right now. But there's a lot of opportunity that's now starting to develop in big meggaap tech companies, big meggaap software companies because they are so beaten up. their valuations have come down dramatically and they have the highest rate of earnings growth and revenue growth in the overall market. Interestingly enough, the areas that people are chasing right now like emerging markets, international markets, um staples, energy, those have the lowest rate of revenues and earnings growth relative to other areas of the market. So you're paying a big premium a big you know everybody's always talking about oh the valuations in tech stocks those are actually fairly cheap relative to what you're paying for say energy stocks right now which are grossly deviated from their underlying revenue source which is oil prices. >> So um when you say software stocks is it important to make a distinction between sort of software as a service stocks and AI stocks? Um >> well those are two different things. When we say software, we mean software. So, we're talking about companies like Oracle, Service Now, those type of things. When you're talking about AI stocks, you're talking about companies like Microsoft, Google, those type of things. Right. >> Right. Right. And that's why I'm trying to parse here because I mean those have been thought of as software companies. I mean, Microsoft makes software, right? But the the narrative, correct or or incorrect, is that a lot of these software companies um everyone thought they had a huge moat. Um but now they're worried that AI is is going to quickly maybe erode those moes and that's part of the at least the narrative on on why um you should be wrong and there's nothing wrong with the narrative. Um, you know, let's go back to the.com era as a good example, right? There you and we've talked about before, but there were thousands of people that were starting companies saying, "Oh, yeah, we're an internet-based company and we're going to do this, that, and the other thing." Had no had no revenues, had no real, you know, business plan or whatever. They just kind of wanted to jump onto the dot thing. But there were other companies that were actually developing the internet, right? That they were the backbone of the internet. Those were the providers. So we can now look back and we can say, "Oh yeah, Cisco, which got discounted by 80% during the during the selloff in the dotcom crisis, that was a survivor because they had a they were the guys connecting the internet to make it work. They were the routers and the servers and all those type of things." So you know, you have to look at the software sector today and go, okay, there are going to be companies in the software sector that go away because AI can simply just do what they do. But there's a whole another batch of these companies in the software as a service sector space that have real businesses, real revenue growth, and they are going to add AI as complimentary services and and that will that will increase their rate of revenue growth over time because of lower productivity cost those type of things. So there are going to be real survivors there that you can now start to look at buying with fairly cheap multiples in a lot of cases. Now there there like for instance Oracle is a good example of this. Oracle is going to survive this. They are going to come out on the other side of this. They're going to be a winner long term. I'm not buying Oracle here because when I look at Oracle's fundamentals, I have a problem with their debt to equity ratios. But that's just me. I'm just kind of oldfashioned that way. >> I would much rather buy just as an example. I'm again by the way just we're just talking here. These are not recommendations. These are not, you know, these aren't things that I'm doing right now. We don't own any software stocks currently at all because we're waiting for this to kind of, you know, kind of source itself out. But if I'm going to buy a software company, I would rather buy Salesforce versus Oracle because they have a debt to equity ratio of 0.19. They have huge cash flows. They have huge sales. Their earnings growth rates are running above 20%. Their operating margins are above 20%. they are going to survive this. And this is a company that's now trading at a 14 times forward PE after this after this correction. So I can now buy a stock that was trading in the 30 time PE range at half that valuation because of this correction. Again, I'm not these aren't recommendations. I'm not saying go out and buy these stocks today, but I'm just, you know, this is just the way I'm looking at the sector. I think there's going to be a huge opportunity here for savvy investors >> to start nibbling at certain areas. And the same thing goes on on the big tech cap names as well. Microsoft's been hugely beaten up. They're not going away. Um they're going to be here for a long time. And so if you can, you know, the whole goal is is we should be buying trying to buy things cheap, but what everybody's buying right now is the stuff that is most grossly overbought and grossly extended and are no longer cheap anymore, but that's what everybody wants to buy, >> right? So, a couple of things. Um, one, you know, I've talked with you and your partner there, Michael Liowitz, on this channel a lot in in recent months about capital rotation. We've seen capital, you know, starting to leave the the hyperscalers, which was notable because they've been hoovering it all up for years and starting to find its way into more sort of value areas. Um, I think the big question for this year, which I think the jury is still out on, is is this the rotation theme of 2026, which is out of the stuff that was popular into the stuff that that wasn't popular? Um, or is it going to be more of a back and forth slloshing, right? And you talked about how you you created your um recently with Simplevisor your value growth model that will tip back and forth between the two based on a number of calculations. And that thing you've told us, hey, that might go back and forth every couple weeks or it might not shift for three years. We don't know yet. We're gonna we're gonna watch it, right? Um, but what I find interesting about what you're saying is is in in, you know, 2000, early 2000, we had a bunch of companies that had no earnings that everybody thought were was going to make a gazillion dollars and they bit up the prices to the moon and then those companies, you know, basically got uh decimated, destroyed with the bubble bursting. There's sort of the opposite effect potentially going on here is what I hear you saying, which is we have some companies with great businesses, lots of cash flow, lots of earnings growth that everyone is all of a sudden assuming is going to are going to die >> and they may surprise to the upside, right? So, this may be an opportunity to buy some great companies, you know, at at a really good value if prices keep coming down here. Um, >> so we'll see. Um, I I I we're going to talk about AI in the in in the rant and I've actually got two rants to get to today, Lance. So, we got to chop a lot of wood quickly between now and then, but I was listening to the All-In podcast. Um, you know, which is for VC guys. It's one of the most popular podcasts around. Um, they're all very tech-savvy. And they were talking about this, hey, is is is AI going to kill software? And they generally don't think so. Um, and there's a couple of reasons why they don't think so, but one that that that really stuck in my mind was there, look, if you're if you're running your company and you're trying to choose between an Oracle or, you know, an AI tool that you're going to build your own whatever with, they're like, look, that Oracle has like millions of lines of code in whatever software that you're using that has been, you know, debugged and troubleshot for years, maybe even decades, right? um what are you going to trust more to run your business on, right? Something that has been debugged to the nth degree and a zillion people use and it's, you know, bulletproof and rock solid or the new thing that this AI comes up with that, you know, no one's ever used before, right? And yet AI is going to keep improving, but but the delta is is going to be hard to to, you know, to to to fully uh dissipate presumably with AI at least anytime soon. >> Yeah. No, I I I saw that interview and and it was a great interview and it was actually right on the spot which is this is kind of the same thing we've been saying also is that we've been looking very closely at this sector and but but they're right I mean we do it we use a lot of AI in our shop um it's you know it's great I mean um when we want to write code for Simplevisor as an example I can go into to you know AI and say hey write me code for this and then it's great it provides a good outline fine. It gives you a good starting point. There's nothing wrong with that, but it's full of errors. It's full of calculation issues. It's it's, you know, there's a lot of problems with it that again, it's great for an outline. Um, and it's great for a starting point, but I would not pull that code and immediately deploy it and trust it to make sure that it's going to be running my business efficiently versus what you just said. And it's absolutely that's the whole point is that you know for a lot of these companies like Oracle like Salesforce they have millions upon millions upon millions of these you know interactions that occur and remember also like we use Salesforce as a good example um in our office for our CRM and our Salesforce is customized for our business individually. So when we we we bought the Salesforce package, right? You buy you buy Salesforce and you bring it in and then you hire their company to basically customize that CRM to do exactly what you want to do. So for instance, as a good example, when somebody goes to your website and they click on the link for an advisor on thoughtful money and they put in their information and they email me, well, that lead is automatically captured, quantified as that it came from from your website. So we know where that lead source came from and then pulls in all that data and organizes it in a manner that we need to operate our business efficiently. But again, you may have Salesforce and your Salesforce looks entirely different than ours. My wife's Salesforce looks entirely different than ours looks. AI can't AI does not have that capability to customize to that type of degree. At least not right now. could in the future. But again, I think to the point of the of the All In podcast, which absolutely agree with 100% is that all that history there is is going to be the moat that allows Salesforce to survive where again some of these other companies in this in the software space aren't there. There there are going to be companies that that fail because of AI. There's no doubt about that. But I think when you start looking at these at these larger companies that are very well seated, have lots of history, lots of cash flow revenues, there's going to be a really good opportunity to buy those cheap. >> Okay. So that's the opportunity that you and your team are looking at. And if and when you start buying into those companies, you'll let us know on this program when we get to the >> Well, after the fact after we bought them, made a lot of money, then we'll tell you about them. Yes, of course. >> No, you won't. You're going to tell me as soon as you do it. Um, all right. And uh so when we get to the rant we are going to talk about sort of the other side of that coin because there is >> there there is a lot of advancement going on in AI and that's not news to anybody but but there seems to be something going on recently with um the acceleration of the capabilities of AI and again I think in the case of these software companies they may be able to protect their mode and sort of enhance their their solutions with AI but there is the potential for our whole previous discussions about AI coming for people's jobs and stuff like that. Lance, that may be coming a lot sooner than most people can imagine right now. And we'll get to that in the um in the rant here. Okay. So, um um why don't we, if we can, just to get out of the way, why don't why don't you pull up uh the chart of the S&P? Let's look at the current technical action. Let's get a sense for you know uh whether this market appears to be uh consolidating, stabilizing or whether you think it's there's some signs of concern there. Um I also want to note uh that the VIX has been rising. Um and that has been a theme that you declared here at the beginning of the year in your South Park episode was to expect more volatility. So kudos to you for the year at least starting the way that you thought it might. >> Yeah, we we'll see how the year turns out. It's still very early. >> It is early, but I just Hey, while I can give you some props, I'll give it to you. >> Yeah, I appreciate that. Now, I did want to share this one before we jump over the technicals on the market. I just want to share this one chart with you. This is the price to earnings growth for the S&P 500. And I just wanted to to because we're talking about, as we were talking about a moment ago, you know, there's opportunities that are starting to show up. >> Yeah. >> Look at Walmart versus Nvidia. >> That's kind of my point. Everybody's ch Look, and and by the way, look, we own Walmart. We own Costco. We own Coke. We own Proctor Gamble. So we own those stocks in that sector. But that's why we were taking profits over there. These things are getting grossly overvalued. And these are very slow growth earnings. These companies are not growing earnings at 15 20 30% a year to justify a a PEG ratio of of 4.6 for Walmart. Walmart grows has steady earnings growth. They're great, but that's not enough to justify that rate of of valuation. when you go but then you go look at Eli Liy or Abby down here on on the bottom. We own these two companies as well. Um these companies are doing great. They their earnings growth are just exploding and they have a long-term trend ahead of them that you know these are these are the things you want to look at. You can't really look Brooksker Hathaway. You have to set that aside. Um you they they have a lot of insurance and financial companies and it's really hard to to get peg out of that. So again, kind of yeah, it's 109 for Bergkshire Hathway, but I would not We own Bergkshire Hathaway because it's basically an S&P index replica. So we just we own that one kind of as as a staple. Um but but again, just as you're thinking about investing, you know, Palunteer at 1.4, you know, it gets a lot of slack. Even PaloAlto Networks is only 2.74 versus Walmart at 4.61. So, you know, again, this is why I'm just saying valuations are very important to pay attention to and don't just take headline narratives and say, "Oh, I'm I'm going to sell all my tech stocks because somebody said this." Sit back and do the work and and I think you'll be a lot better off kind of over the longer term. Okay. >> Hey, how how uh I mean, I know you say valuations are a terrible timing tool, but but how correlated is price toearnings growth with future performance of the stock? a lot. Um, and I haven't I haven't actually done the actual calculation work on that. I I could do that at some point. Um, >> it'd be it'd be interesting to see I don't want to invent it work for you, but let me let me ask you this along with it. What tends to win out? Um, and Nvidia might be a really good example of this at times. I don't know if it is right now, but like all right, company has a really attractive price to earnings growth ratio, >> but they have a really high price to sales ratio. >> Right. >> Right. Um, which which one tends to win out? Like I'm nervous about the high price to sales, but I'm attracted by the high price to earnings growth. >> It a little bit. It kind of depends on on the method that you invest with. Um, you know what I look I look at both. We do look at price to sales, but price to sales is kind of on a trailing basis versus PEG, which is on a forward basis. Mhm. >> So, you know, one thing you have to do is you have to take that price to sales and you have to look at what their sales growth is expected to be and then back into that number as well. But, but both of them are very good indicators. I mean, you know, we've talked about before, you know, companies with 40 and 50 times price to sales and everybody was like, "Oh my gosh, these stocks are going to collapse. You know, they can't maintain these multiples." Nvidia was a good example of this. So they used uh when we started talking about Nvidia probably 3 years ago um the price to sales ratio on Nvidia was above 60 and now that price to sales ratio is below 10. So, you know, it's they grew in to that overvaluation over time. And so price to sales is is important and nothing wrong with it, but you have to take that in context with the growth rate of what's going to go and say, can this company grow into that number over time and in Nvidia's case it was in other companies cases it won't be. And that's where the real for instance Walmart cannot grow in to its price to sales ratio right now. Does it have a high price to sales ratio? I don't know. >> Sorry. >> Does it have a high price to sal high price to sales ratio right now? I I know it has a high >> peg ratio, but uh price to sales and again you're going to see you'll see this um there's price to sales. So this is price to sales. So now you look at Nvidia. So the price to sales on Walmart's 152 which isn't bad actually. So again I was going off the top of my head that's not bad but again they don't grow earnings that fast. Um, Nvidia used to be over 60, so it's at 20 now. So, again, we have to look at how they're growing the earnings over time. So, again, none of these are are absolute measures. And then the reason that we like PEG more than we like price to sales, just the way we do the way we do our work is that this looks forward versus looking backwards. >> So, and I don't want to totally spend a ton of time on this, but it's really interesting. So, I mean, let's say you and Michael are sitting down together and one of you says, "I kind of like this company." and it's a company that has a high price to sales but a a low PEG ratio. How do you then what's what's the art and the science you guys use to determine whether it's attractive or not given >> okay >> you know either one of those >> it's a great example let's just let's just stay with Nvidia for a minute right so um Ford you know so if you look at price to sales on Nvidia right now like I said is 23 so that's high right so if we go back to uh that company uh Sun Micro back at the docom era they were trading at a 10 times price to sales and got me time says you're paying10s price of sales, you're an idiot, >> right? >> And of course, that company went almost to zero during the dot crisis. Um, so again, when you're paying 20 times that, you go, well, there's just no way the company can support 20 times price of sales. And that's true if you assume that there's no sales growth going forward. So at 20 times price to sales, if I have a very slow rate of sales growth, it's going to be very hard to maintain that multiple over time because literally every dollar that I'm making has to go back to the investor rather than the business. And that's just not realistic. So in this case, this is where we look at for instance price to earnings growth because you start looking at their EPS growth rate which has just been astronomical and still projected to grow. I mean they're running a gross margin of 70% with an operating margin of 58 and you're looking at sales growth going forward. So so again price to sales looking on a trailing basis is 23 but they're expected to grow year-over-year their sales are expected to grow by 65%. So let's just do round math. If they grew at 100% next year, that price that that price to sales ratio would be cut in half, right? >> Does sorry to interrupt, but does anybody publish a price to forward sales ratio just like with earnings growth? >> Not that I don't know of a public like for instance, if you wanted to go get a price to forward sales growth, we do it internally. >> Okay. >> Um because again, you can that we we know what the year-over-year sales expectations are. So what you do is just say, "Okay, if if sales are this next year, what's my price to sales?" That's not hard to do, but I don't know if anybody publishes that. Every price to sales ratio I know is always based on a trailing basis. >> Okay. But but it sounds like if you were trying to determine this company's prospects, knowing the price to future sales ratio would be really important because you could deter you could say, "Okay, hey, yeah, high high price to sales ratio today, but given the way their sales are growing, it's going to get cut in half in a year, like you said." >> Right. Right. And and and actually Nvidia is not that great of a case because, you know, if you take a look at the stock, it's gone nowhere. It's just trading sideways. >> Microsoft is I think Microsoft's a much better example. Big correction. >> Question right now is, by the way, we're long Microsoft. We reduced our exposure to Microsoft, but we still own it. Um question now is is do you buy it here or is this potentially going lower? Is this is this going to be the the next big crash? Are we going to see, you know, Microsoft down 60 70 80% because that's kind of what the narrative is in the markets right now. So, you know, just starting with a basic analysis. I I I I like to look at weekly charts versus daily charts because once you pull out to a weekly chart, it kind of slows things down a bit. You get rid of volatility. >> Microsoft's still in a very nice uptrend coming off the 2022 October 2022 lows. So, yeah, it's given up some of those it had huge gains. Giving up some of those gains. That's really, you know, we've had these corrections before. They weren't the end of the world. And when we having this correction back in 21 and sorry in 24 and 25 it was deepseek and it was you know this reason or that reason AI's dead. You know we kind of have these narratives that occur on a regular basis and then the stock gets its you know everybody goes hey look that stock's cheap let's go buy it and the whole market shifts to go buy that and it runs the stock price back up. So if you take a look on a weekly basis it's getting very very oversold on a weekly basis. previous levels of oversold conditions at this magnitude were where the stock previously bottomed and rallied. So from a technical basis, this is starting to look a lot more appetizing. Maybe if we can get down here into the, you know, into the 375 range along this kind of long-term monthly moving average, get about two standard deviations oversold on a weekly basis. I know it's a lot of technical stuff, but just >> Yep. >> these deep oversold conditions are typically where stocks bottom. And this is where nobody wants to own them. Everybody's like, "Oh, that stock sucks. I'm losing money in it. I don't want to own it." But this is kind of where we should start looking to buy stuff that nobody else wants. That's how we make money. Um, but looking if we go down and let's look at their fundamentals. So, you know, on a PEG ratio, they're trading at 1.17. A price to sales ratio, they're at 9.73. So, again, still expensive. As >> expensive as as Nvidia, but still expensive. But you take a look at their sales growth going forward, they're going to grow at almost 20%. Um their EPS is is uh over the last 12 months has been at 28%. Operating margins are at 46%. These are huge numbers. Gross margins are at 68%. And look at the sales trajectory, EPS trajectory. It just continues to rise. Yes, they're buying back shares, but not that aggressively, but you just have a this just a very steady increase in sales and revenue over time, which allows this company to grow into those valuations. So when you get these big discounts, those are t you know do I want to buy this company or do I want to buy a company where their sales are flat or declining where you know things may be not as lucrative for instance like let's take a I'm just I'm just picking stocks out of the blue here. So let's just take a look at Exxon Mobile. Here's Exon Mobile. Sales have been flat. So I showed you this chart. I said hey would you buy this company? Sales have gone nowhere for the last 10 years. is earnings are flat basically for the last 10 years and shares outstanding have been flat for the last 10 years. >> Yeah, scroll up. >> Their sales on a year-over-year basis are negative 4.9%. EPS on a year-over-year trading basis down 15%. Who wants to buy this stock? Uh, apparently everybody. >> Yeah, look at that. >> So again, this and but this is the narrative in the markets. This is where people are speculating right now. So as a contra and and again look at you know the last time that you know these stocks get these kind of these big overbought conditions that's typically kind of near peaks. Um but this is the question we need to ask ourselves as investors is do I want to be buying these stocks because everybody else is buying them or should I be looking for the stuff that nobody wants? Where am I most likely going to make money in the markets over the next 5 to 10 years? >> Yeah. Um you guys own Exxon though just to be clear, right? Uh >> no, we do not own Exxon. We sold Exxon Mobile um a while back but bought a um two other companies instead in the energy sector. We bought which is a pipeline >> and Kinder Morgan Energy which is also a pipeline indicator. We bought those stocks because of our thesis behind the behind the meter play. >> But we do know but but sorry let me that that is not correct. Let me rephrase that. That's in our primary model, our 6040 allocation model. We made that swap. But we own Exxon Mobile in our dividend high our high growth dividend model. So So it depends on which model you're talking about, but yes, we do own Exon Mobile and some some portfolios and don't others. So >> Okay. So do me a favor because we still haven't looked at the S&P, but bring up that Microsoft chart again just for a second. >> Sure. Um, so I want to I want to ask a couple of questions about it, but I want to also um, you know, just give you a little bit of I don't know why I'm giving you so much praise this week. I'm definitely going to have to next week. >> Um, but first I'm an idiot. So yeah, >> well so you know you showed how you can see there in the chart how Microsoft you know it did have you know a great couple years up until recently >> and you know when you were selling up there at the peak um you know trimming back to target weight you know I know you get people who are screaming at you like Lance like what are you doing you know you're you're selling your winners here right and you have always been extremely consistent in telling us hey you know when we've got a position that outgrows its target weight size, we trim it back. That's part of our discipline, >> right? >> And um yeah, nobody likes you doing that when the party's raging. But now when this corrections happened, it makes all the sense in the world. So, first I just want to, you know, >> I want to acknowledge the wisdom and the prudence of what you've been doing there. Let me ask you a technical question here. And I do not, you know, I'm not as knowledge about technical analysis as you, but you could look at this and say, um, gosh, you know, this looks like if if if the the stock, you know, trends down a little bit and then starts recovering again. Boy, it's really starting to look like it's got a big left shoulder there, now a perfect head, and then would start to be getting to create a right shoulder. Do you worry about a head and shoulder pattern here? Uh the the problem with head and shoulder patterns in a lot of cases are like pink fuzzy bunnies. Everybody sees them everywhere >> and every time there's a wiggle here and a wiggle there and a wiggle here, they go, "Oh, that's a head and shoulders pattern and that means all this is going to crash and then it doesn't crash and then everything is fine and we forget about that head and shoulders." There are times, look, I'm I'm not discounting the importance of a head and shoulders pattern at all because they do matter technically, but again, it's really easy to go look at look at, you know, a bump here or there and say, "Oh, well, there's a head and shoulders right there." And then you get a big rally, right? That happens all the time. >> So, again, it's it's they are worth paying attention to and your your question is absolutely valid that you could say, "Well, this looks like a left shoulder. That could be the head." And if we have a huge rally here that doesn't make it to all-time highs, then rolls over and then breaks this long-term trend line, that's the completion of your head and shoulders pattern. That would be a true statement, but that might be four years from now before you do that because these can this this is a weekly chart. So this can take a long time to get, >> right? >> Right. >> So important, but you know to to what you were saying, this is why that we were selling Altria today. We bought Altria back over here. Um so we're taking profits in it. It's now it's well into three standard, you know, pushing into three standard deviations overbought on a weekly basis. Same thing for Verizon. Uh we bought Verizon back over here. This has been the move lately. It's pushing four standard deviations now as well. Just when you get these types of moves where you where you push stocks into extreme overbought conditions, they are going to correct. That was my whole argument previously about metals and other stuff is that right >> get these big spikes, you are going to eventually get a correction. It may not seem like it today, but that that is just some that mean reversion process you cannot get around. It is going to occur. It just takes sometimes it just takes longer to get there than you expect. >> This is why so this is why we say take profits, rebalance risk. Doesn't mean sell everything. Just means, you know, kind of take some take some of your chips off the table and you can always buy stuff back later cheaper. >> So that's exactly what I was just going to say. And and this is where the regular retail investor, and I'm going to suggest it's probably the majority of people watching this video, if you own Verizon, this is where the moment you're like, "Yes, I was right. We're going to ride this thing for as long as it can." Right? And this is where people sort of tighten their grip on the stock, right? Like I'm going to, you know, I'm so smart. I I I I got in before this and I'm going to ride it, you know, because surely it's going even higher here, right? And this is where the discipline of the adviser that basically says, "No, I'm going to do the unsexy thing and I'm going to sell some of this position uh while it's running hot here, right?" And it's it's something that the average investor has a really tough time doing because you feel so validated by this. But as Lance has said many many times, you you really can't escape the cruel math of aversion to the mean. And e even if this is an exception, even if it goes on to double or triple, you still have a position in the stock, so you're doing okay. But what you're doing is you're limiting your downside risk. And I was just talking about this. Can't remember who it was with this week. It might have been Luke Groman, but um you know, Charlie Mer at Bergkshire Hathaway, you know, he said, look, I'm not you know, necessarily the smartest guy. I think I'm smart. I try to work hard, but he said like if I have one superpower, it is trying to it is identifying and fixating on the things that could kill me. And he's like, if I just make sure I don't do anything catastrophically dumb, largely the upside will take care of itself. And I think that's a big part of what you guys do at Raa, Lance. >> Yeah. Well, again, you know, this is, you know, we were buying Verizon and Altria when nobody wanted them. They were like, "Oh, these stocks are terrible. They're dead. It's dead money. why do you own it? Um and and they're boring, you know. Um but when and and the reason I like boring is that when the market turns and you have this kind of what's going on in AI and software now, that's where money goes to. And that was our whole premise for buying is like when this market rotates, it's going to go to the areas that everybody hates. And that's exactly what's happened now. Everybody hates software and tech. So just as a investor, where should you be? You know, as I was talking about this, I think on Tuesday or Wednesday on the radio show saying um you know, as an investor, I like the the old Wayne Gretzky anomaly, right? You know, skate where the puck's going to. So where is >> analogy, not anomaly, but yes, >> go ahead. >> I'm sorry. >> No, I said analogy, not anomaly, but go ahead. >> Oh, I'm sorry. Sorry. It's anomaly. Yes, absolutely. Thank you for the correction. >> I mean, Gretzky was an anomaly. He was a once in a generation player. But yeah, >> exactly. Um, so I I know you wanted to talk a little bit about Hey, this is actually kind of a good point here about what you were saying a second ago. Um, if you kind of I'm going to take Let me take this money flow chart off real quick just so you can see this better. >> Sure. >> So, look, this is this is what I was talking about with patterns and things. Here's your left shoulder. Here's your head. Here's your right shoulder, right? And then you got a huge rally. So I can I can say, oh, and people were saying, oh, it's a head and shoulders pattern. We're about to have this major correction in the markets. And then the market took off. And then there was a shoulder ahead, a shoulder here, shoulder here, a head here. Here's another shoulder. You know, the markets can can do a lot. This is the problem with patterns. And again, I'm not poo pooing patterns at all. I'm not they have validity. You just have to be careful with them. And you know, there's a it's easy to start extrap if you have a bias here. Here's the important point. If you have a bias towards wanting the market to crash, you're going to see head and shoulders patterns everywhere you look, right? Because they're easy to pick. Our minds can put them together, say, "Oh, that's a head and shoulders pattern." Um, just be careful with that. You know, we the the the way a head and shoulder pattern works is that what you're looking for is and let's just use this kind of example I was setting up here. You know, you had a right. So here's your left shoulder, here's your head, here's your right shoulder, here's your rising neckline. And so technically, I complete the head and shoulders pattern by breaking the neckline, which we did. And then immediately the market reversed and took off again. So it completely negated that whole head and shoulders pattern. But you as an investor that were following that, you went and sold the market short. You got out of stocks, you know, because the head and shoulders pattern was there. And then you missed the rally after that. And then what happens? you get sucked into the markets about right here because now the markets are just at an all-time high. was like, "Oh crap. Well, now I got to get back in." And then the market does this, >> right? So, you buy, you sell low, you buy high, which it brings us up. Well, well, I'll show you this chart when we talk about financial nihilism. Uh recent chart about uh retail traders on Robin Hood. They've made no money since 2021. >> Yeah. >> The market because they they do all this type of stuff over and over. Anyway, let's let's real quick, let's just go through the markets because you were asking me about that. Um so, here's that wedge pattern that we were building. uh from from kind of the lows um that we saw back in kind of December and we did break below that. We came up, challenged it, failed and then we've been unable to get a really above this at all. And and the really big problem has been for the markets as of late. It's just that we can't make it above 7,000. 7,000 has been a very very tough level for the markets. We just keep coming up here challenging that level. We think we can get above it for a day or two and then we kind of pull back from it. Um, we keep taking out important support, the 20 and the 50 days. We we keep taking those out. That's important because we're about to cross the 20 below the 50. That would suggest that we may get another leg lower here in the market. So, part of the reason that we were taking profits today in some of the stocks is just to raise our cash levels in our portfolio. We're we're we're probably going to try to start reducing our cash levels a bit. If we can get another rally here, we'll probably, you know, raise our Sorry, I said reduce. We're going to try to raise our cash levels a little bit more in our portfolio um just on any rallies that we can get. I think we'll get some more rallies. February, by the way, happens to typically be a very weak month. March and April tend to be much stronger. So, if we can survive this month, we've got a shot in March and April for another rally before we get to the summer period. So you so again just I think navigating this is going to be a bit challenging. We're on we're obviously on a sell signal right now. So that's putting pressure on the markets. We've got a negative divergence and relative strength that's putting pressure on the markets. So there's certainly some deterioration here that is worth paying attention to. It's not worth panicking over yet, but it's definitely worth paying attention to, which is why we're starting to slowly kind of adjust portfolios a bit. >> Okay. All right. So, I mean, it does sound like you are, I don't know, let's use the right analogy. You're driving the car. Um, maybe you're not pumping the brakes just yet, but you're taking your foot off the accelerator, right? Just like, all right, I'm not certain what's going to happen from here, but I'm feeling a little bit less positive than I was, so let's just >> Yeah. >> We're not going to the bunker yet, but we're just being a little more wary. >> Yeah. Yeah. Uh, you know, it's like you're driving down the you're driving down the road and there's a sharp turn coming up ahead and the the road sign says sharp turn ahead. You you you slow down, right? >> Yep. Okay. Um All right. So, let's see where to go next. Um I got a long list. We don't have a ton of time left. >> We'll we'll go fast. We'll we'll do lightning round Q&A. So, take off. >> Yeah. Yeah. Well, we don't have to. Yeah. I I'll I'll tell you when you need to wrap it up, but um so you we're starting to see some of the things that you and I have been talking about. Um >> uh so we're seeing some more volatility in the market. Um you know, we're we're we're seeing some of the euphoria around the hyperscalers obviously, you know, start to diminish here. These are all things that we sort of thought probabilistically were more likely than not heading into this year. Um, we just got the latest CPI numbers, headline CPI numbers, and lo and behold, you know, they're they're disinflating. Uh, headline CPI came in at 2.4. Um, you I think I think both you and I have been expecting that this year. Um, for a variety of reasons. Um, but in large part just to the math of how the headline CPI is calculated where 40% of it is shelter and shelter is really disinflating. And folks, I just recorded an interview yesterday with Nick Jerley, um, you know, who has a ton of data at his fingertips and, um, it's really getting, um, interesting or scary in the housing market, depending upon your your perspective, but but housing demand has like almost never been this low, Lance. Um and we're seeing rents come down and there's a lot of reasons to expect um uh average home prices to to go down this year in an increasing number of of uh metropolitan areas. So, you know, it seems like that shelter component, which is 40% of the overall calculation, is just going to keep pulling CPI down relentlessly this year. So, unless there's big inflationary uh impulses elsewhere in the CPI calculator, and we don't really see a lot of that right now. Um, I think it's going to continue to disinflate. It looks like it's going to continue to disinflate as the year goes on. You see the same? >> Yeah. Yeah. Yeah. I mean, uh, Mike and I have been talking a lot lately about the true inflation index, which measures like 10 million different data points or something that it's just and it's all real-time data. So, they get price data from like Walmart and everybody else and they calculate that. But, that's been dropping extremely sharply. Runs about a 75day lead over CPI. So if you take a look at the true flation index, this suggests that that CPI is probably closer to two by summer than than than not, right? Unless something just kind of changes. It also really kind of throws into a problem with like say, you know, we're talking about energy stocks a few moments ago. If you take a look at energy stocks, in fact, I just wrote about this. Let me let me show you this this chart. I just published this in today's daily market commentary. Um >> All right. All right. And while you're pulling that up, I'll just note here that um Truflation's current year-over-year um inflation calculation right now is is under 1%. It's 0.72%. >> Yeah. So, I mean, it kind of tells you where things going. So, here I posted this chart this morning. This is the dollar. And so, part of the analysis I'm working on right now is that we should be expecting a dollar rally. Um >> Okay. >> Hey, just increase this if you can. >> Yes. Thank you. >> Better. So this is just this is WTIC versus crude. Now what you would expect normally and this is a hit. So this is 25 years of history. If you go back prior to 2022, there was a very good negative correlation between the value of the dollar and energy prices. Exactly what you should expect because energy prices trade in dollars. However, since 2022, every asset class has now become very correlated. interest rates, inflation, bonds, uh, energy prices, the dollar, they're all been very correlated with each other, which is unusual because normally there's things that have this inverse correlation to the dollar because of exchange basises and those type of things. And that's all been broken over the last few years uh because of the speculation and things that have been going on in the markets that'll eventually revert back to normal. But here's the the but this is the important part about this is that this is a chart of XLE which is the representation of the energy stock complex versus oil prices. >> Now if you'll notice prior to 2022 there was a very high correlation between energy stock prices and oil prices which makes complete sense because where did energy companies get their >> from the price of oil >> from the price of oil. So that correlation is is very likely. But now you've had this huge gap between these two that just simply don't make a lot of sense. But energy stocks are running up on this idea of this economic reflation and that we're about to have this massive surge in economic growth. Energy prices are going to surge because of this reflation. So stocks are are front running that. But yet the inflation data, the oil price data, which by the way, oil price data has a very high correlation to CPI as well because of all the inputs. Um, you know, that all tells you that the economy is actually functioning a lot weaker. The employment report that we saw this week, it was all seasonal adjustments. You actually stripped those out and we're going to see that 130 revise down to 50 probably next month. Um, or the next couple of months, we'll see it revise down. Um, but again, that was all kind of seasonal adjustments that were going on. birth death adjustment etc. you know doesn't suggest that this economy is firing on all cylinders. So that big gap between energy stocks and oil prices that's going to correct at some point because energy stocks are the lowest revenue growth se this is this is what you're chasing right now. This is the lowest re they have negative revenue growth for energy stocks as a sector. This is what you're chasing. You're also chasing materials you and and consumer staples and industrials which do have revenue growth but far less than the areas you're selling off. You're selling off info, technology, communication services and healthcare and financials. Those are your highest growth revenue companies. These are the companies you should be buying long-term, not selling them and vice versa. But that's just where markets are doing right now. >> Okay. Do you think the market is wrong here? Or do you think the market's just the the I mean, yes, they're growing their earnings faster than the other sectors, but their share prices were growing faster, too, and they >> could it just be that this is just taking some of the froth out? >> Yeah. Yeah. No, no. Markets go through these rebalancings, and that's what it is. And then we get these narratives that that come along to help support what's happening in the market. So, right now, that narrative is this reflation narrative. And so that's why we're all chasing energy stocks and staples, those type of things, and pushing those prices up dramatically. Eventually, the market's going to start to realize, look at the when the when the fundamentals become reality, the market's going to go, oh, that narrative is now shifted back over here. So, we're all going to start chasing technology stocks again because that's where all the growth is, right? And so, that's just a function of time until we make that narrative shift. And that's just how markets work over time. Markets just eb and flow from one area to the next. And the narratives that we come up with are just the rationalization for why we're chasing prices higher in those markets, right? You never hear a rationalization for, man, AI is really beat up now. Even though they're growing earnings like crazy, nobody wants to own them. You and and you know, and I would just keep selling them, right? You you never hear those narratives. You just hear the narratives for why AI stocks are going to keep going. AI is going to fail. You can't re you can't monetize the revenue. We heard that with the.com crisis and we had a lot of companies that came out and monetized the crap out of it out of the internet, right? Google is a good example. >> Although after a tremendous bust, but yes. >> Sure. Sure. Absolutely. We're gonna and that's going to happen. We're going to go through that cleansing cycle. Absolutely. >> Okay. So, I've got a couple >> pardon me. >> We might be starting that. I don't know. But maybe we are starting that cleansing of the AI >> hype. We'll see. >> Right. which why may it's why it makes sense to maybe take your foot off the accelerator a little bit which is we just talked about you guys are doing >> um all right so I've got I've got two sort of narrative uh topics I'm trying to figure out which one to go I guess I'm going to go with the energy one just because we're talking about energy right now so uh news yesterday um Trump revokes Obama era greenhouse gas finding in the largest deregulatory action in US history so basically it sounds like the Trump administration just said look we uh are changing our our national policy towards greenhouse gases. We no longer think that they are an existential threat to humanity and and they're they're as I understand it from having just breezed through some of these articles is that um they have reclassified the greenhouse gas threat and now that it is reclassified it is something the EPA cannot regulate now, >> right? Um and so my question for you is is yes this is a narrative but um is this bullish for overall economic growth in general and for the fossil energy sector in particular? >> It's not going to make any difference one way or the other because at the end of the day what drives the fossil fuel industry is supply and demand. Right? If if you have a big supply of oil come onto the market and you don't have the demand to keep up with that supply, prices are going to fall, which is then going to make drilling less productive. And so they're going to stop drilling to curtail oil supplies. That's what that's what ultimately drives it. So So declassifying uh greenhouse gases is good. That's going to that's going to help companies be more exploratory if they want, but the prices also have to justify it. And right, and I'm just guessing here, but presumably there's a a lot of regulatory costs that have been added to the fossil fuel industry to make it harder to >> produce the these fuels. >> If we're removing those, then the cost of, >> like it or not, coal, oil, whatever, right, should go down because it's it's cheaper to produce. Right. >> Right. Well, again, you know, remember during the Obama administration and during the Biden administration, they put lots of regulations on the oil and gas industry, restriction of leases, um, you know, all kinds of of, you know, regulatory issues that that increase the drilling cost, particularly in in the fracking, uh, in industry in particular, which is huge in Texas. So, yes, absolutely. To your point, you're going to lower the price point to where companies can drill profitably. That's a that's that is a that is an absolute fact and that's great, >> right? But they can sell cheaper and cheaper energy means more economic activity, right? >> Well, potentially, but if the economy is slowing down and again, so that so it's all going to come back to economic supply and demand because at the end of the day, oil goes into everything, right? I mean, it's in the it's in the plastic we use in bottles, it's in your iPhones, it's in your clothes, it's everywhere, right? Petroleum is everywhere. So if economic demand is slowing and so this all ties back to economic growth and inflation. If economic inflation which we just saw is declining and if you're in your my expectations that we're going to see lower rates of inflation over the course of this year that means that economic supply and demand is falling and that potentially puts downward pressure on energy prices which then becomes a function of profitability for drilling for these companies. If economic activity is going down, but if the reflation narrative turns out correct, then it's not. Right. >> Exactly. That I'm I'm even thinking less about just the next couple of quarters. I'm thinking about the next 10 years. And and look, folks, I'm I'm interpreting this in real time. And I am very intentionally not touching upon whether more fossil fuels is good or bad. That's a whole big discussion for a different time. But let's just say the US decided to Chinaify, right? and say, "You know what? We need all this new electricity. Data centers are hogging, you know, everybody prices are going up for consumers and everybody's angry about that. Man, we make coal much cheaper and we do coal fired, you know, electrical generation plants. Man, we can produce a lot more electricity at a lot lower cost. We can bring down, you know, we can we can boost uh we can build more data centers as a result and we can take down the consumer cost of electricity. that seems to be really potentially beneficial for economic growth. Whole different thing if it's good for the planet. Let's put that aside for now. But that's the question I'm asking. >> Right. Right. So that question is absolutely right. Yes, that I'm I'm sorry I misunderstood your question. >> Okay. >> Because you're absolutely right there. What it's not good for is energy stock prices because Okay, >> that the more supply you bring onto markets, you know, that's going to lower the prices, which is fine, but that also lowers the revenue for these companies. So from an investing standpoint, you know, I don't think this is going to be the boom cycle for energy stocks that everybody's expecting it is if we have this big increase in supply. Again, all supply demand dynamics. And that big gap I showed you between energy prices, between energy stock prices and the actual underlying revenue generator of oil prices, >> that's going to correct at some point. That's just that's not sustainable. And and those stocks are trading at very high premiums. They're in their 70 and 80th percentile of historical valuations over the last 30 years. They're trading very expensive relative to their own histories. Yeah, they may be trading cheaper than the S&P valuation, but they're very expensive relative to their earnings and revenue growth rates as well as their historical valuations. And so again, >> okay. >> All right. So, so it sounds like you're a little bit skeptical on the attractiveness of the fossil energy sector um from an investing standpoint, but to to my question, it sounds like you're thinking, but yeah, over next decade, this could this could add >> a material uh additional percentage points of GDP growth. I I am much more bullish on the natural gas sector than I am the oil production sector right now because >> you know these data centers they are sucking up every bit of CNG. They they basically have have sucked up all the supply of CG. They're now turning to LG. There's not that much domestic production use of LG in the US. We we create a lot of LG here that all gets exported overseas like Shaneer Energy and others they export all their LG. We don't have that much production of LG in the United States. And if I'm building a data center, um, I need to tap into the pipeline. But if I'm not close to a pipeline, it could take up to two or three years to get a pipeline run from wherever the main pipeline is for natural gas to my facility, which to bridge that gap, I've either got to use CNG or LNG to power the turbines to to power these data centers, or I go back to diesel, which there's efficiency issues and other stuff with that. So there's I think that I think there's a big opportunity because these data centers in the natural gas sector even though I'm worried about companies like Exxon Mobile as an example trading at huge valuation premiums relative to oil sector right so I'm trying there's a little bit of a bifurcation that that we're kind of digging through right now. >> Okay. And we never talk about it um but I'm just curious does an announcement like this make you start thinking about like maybe I should just check out the coal industry? Yeah. Um I'm I'm not a huge coal fan, but you know th those are are very big boom buds, but yeah, I mean coal is just another one of those factors in the in kind of the energy complex that I think yeah is worth probably paying attention to. >> Yeah, I mean again I haven't had a chance to look into this, but but but this announcement makes me think that okay, coal all of a sudden has a much brighter future. Right. >> Look, and I'm doing my part over here, right? Bill Gates just came out recently and said that cows are emitting too much methane. So steak last night. So, I'm it's here. >> Wow. Well, uh I'm thinking about getting my own, you know, uh natural gas uh facility here or coal fired plant cuz it's cold in this room where I am right now. >> It's really cold. Yeah. Um yeah, we we turned the heat off last night and this room didn't get any heat, so it's like sitting in an ice box. >> What's the temperature in Nevada today? >> Um it's probably going to be in the high 40s. Um, I mean it's not terrible terrible here, but just this room did not get any heat last night. It didn't chance to heat it this morning. >> Yeah, I know. We're in the we're in the mid to high 70s today in Texas. >> Well, lucky you. And look, I shouldn't complain because I know there's still parts of the country that are still stuck in that horrible, you know, >> polar vortex or whatever it is. >> Oh, yeah. Michael Michael was was the happy yesterday because they were in the 40s. So, >> yeah. Yeah. Because it had been like in the single digits where he was, right? >> Yeah. Exactly. He's coming off two. So, >> which is rare in Virginia. Yeah. >> Um, okay. Uh, or Maryland, I forget where he lives, but somewhere over there. Um, so you've written two articles, and I'll let you address any either or both of them as as you like. Um, but they both kind of have to do with narratives. Um, one is the speculative narrative, which you know, you've said is unwinding, and that's I think sort of what we're seeing here in the software and AI stocks. Um, but then you also wrote this piece about um, financial nihilism. Um, I think you were following up on a piece that Kyla Scanland had done, who hopefully is coming back on this program at some point soon. I'm trying to get a date with her. Um, so anyways, I thought your observations on both were good. So why don't you tackle those anyway you like. >> Well, um, we can just start with the financial nihilism. It's just it's an interesting story because, uh, you know, again, the the So, okay, so first of all, let's back up if you're not familiar with financial this term financial nihilism. It was it was a term that was thrown out in 2020 2021 by a YouTuber young YouTuber and he was talking about this idea >> Demetri Kafinus right? >> Correct. >> Yeah. Who I've met. Yeah. >> Yeah. And and you know it was in 2020 and this was right after the the the shutdown of the of the pandemic and you know young young individuals saw no future hope etc. And so why not just go speculate in the markets and and take all these risks because you know I've got no other opportunity. Everything is just you know the whole world the whole thing is rigged against me. And of course you know this is where we saw the rise of GameStop and and you know the speculative trading remember the whole uh issue around spaxs and and this was just a lot of that kind of speculative nature. And so what I did was and again so Kyle Scandan was and not her she got picked up by I think it was the u uh Bloomberg or the Wall Street Journal I can't remember where it was. Um anyway, it got picked up and they were just discussing her article and they said that, you know, there's this kind of, you know, this whole narrative of young in of young individuals now that they're just kind of hopeless and there's no future for them and so they've got to take on all these risk in order to get their kind of, you know, get their brass ring, so to speak. The problem with it is is that it's not the way that money works. And I I've talked about on Monday, I've actually got an article coming out that you and I talked about last week. It's the 10 immutable laws of money. So, I've got this article coming out on Monday kind of kind of following up on this particular article discussing how money actually works over time. And if you want to build wealth, there are just some very basic rules to follow. And they're not hard. It's just we have to start doing the discipline. And the problem that I run into a lot when I meet with younger individuals um you know particularly in the Gen Z and you know people in Kyla's age group right in particular you know they they think that they know differently and that the the era that I grew up in or Adam the era that you grew up in it was different back then and and we don't understand how things are today but things aren't any different today than they were 10 years ago, 20 years, 30 years ago on the way that money works. And if we save and invest and do the right things with our money over time, we can build our outcomes that we want. But if we speculate and gamble, outcomes tend to be much poor. And and I I wish I could there's there's a couple of great videos. If you go to our website realinvestmentadvice.com or go to my Substack, either one at Lance Roberts on Substack, I put in a couple of great uh great videos of they are commercials from 1999 for >> Yeah. They the old E Trade commercials. Yeah. >> And and the and the point of that was is that we were, you know, it's always interesting. My kids are the same way. They're like, "Dad, you don't understand. You know, you just you don't know what you're talking about." We were doing the same stuff in 1999 that everybody's doing now, right? It's just y'all didn't invent, you know, you young people didn't invent the wheel here. You know, we were doing all this younger and we suffered the same consequence, >> right? We did a lot of yolo investing in 99. >> Absolutely. And so the articles got some great e just for just they will make you laugh because these the Erade you have to give Erade props. They did some great commercials. >> They they had some great great ones. Yeah. You had um which I totally remember from the time. What was it that the time to rub the bunions? commercial. >> Yes, that's probably one of my all-time favorites. But, uh, here was just an example, though. Here was a a uh this was Baronss and Forbes magazine covers. Um, this was, you know, a bunch of kids are tormenting Wall Street. That wasn't 2021. But remember, we heard in 2021 how retail investors were, you know, they were getting revenge on Wall Street. The whole Reddit crowd. This is from 1999 where a bunch of kids are tormenting Wall Street. And so again, the point is is that we've been here, we've done that, we've suffered that consequence, right? We learned from experience. And you know, so you know, and this is what's interesting is because we grew up in an era where average rates of return were 67%. Kids today are growing up in an era where average returns are nearly double that. And that's because of monetary interventions, all these things that we've done, zero interest rates. We've talked about moral hazard that we've created in the markets. They've come to expect that speculative investing is going to win out over time because that's just the way it seemed like over the last 10-15 years. That was also in 1999 when that Forbes article was published. Our speculative error started in 1985, really 1982. And so we had about a 15- 18year window between 1982 and 2000 where the average market return was 15% a year. We were in that same secular bare market bubble cycle that we're in today that started in 2010. Which is why these young individuals think they have financial nihilism and they think they have to take all this risk because they've been conditioned that that is is the way things actually are and that we just don't us old people don't understand but we've been through this. >> Hey can I can I just comment on this for a second? Go back to that chart for a second. >> So you know part of what what how I understand financial nihilism which which I get to a certain extent right which is >> I completely understand it. Yeah. Hey, it's harder today. You boomers and Gen Xers don't understand. Everything costs so much more. Um, I think there is truth in that. And I know you and I differ a little bit, Lance, but I agree with you that the tenants of building wealth have not changed, right? But because of that mindset, right, where you feel like the brass ring is getting further and further away, you start to feel a desperation that, okay, the only way I can get it is through Hail Mary. And it it's it's basically the same thing as if you were a coach of a football team, an offensive coach, and you just told the QB to throw a hailmary pass on every play, right? You know, seven to eight of those out of every 10 is going to get picked off as an interception, right? So like, yes, you might get lucky every once in a while, but you know, over the the course of it, you're going to lose a lot more than you win, right? And that that's I think the danger that they're in right now where they're just out there throwing Hail Marys and their performance is bad as a result of it. But what's ironic and again I totally understand why they feel that way and I think it is harder on a lot of dimensions. >> It's actually been easier to make money in the stock market >> prudently through their generation to to this chart. They've had a higher average return after the great financial crisis that we enjoyed you know building our wealth up before then. So there is a real irony there. >> I know and this is and this actually comes right to my next chart. One of their big complaints is well like boomers have all the money. Well, yeah, boomers have more money because they've had a lot more time to accumulate it than Gen Zers have. But Gen Z and millennials are accumulating wealth at a much faster pace than baby boomers and Gen Xers did. And that's because of the to your point, they've had the wind at their back in terms of if they just took money and got that money invested and did it well, they are making they are saving investing money at a much faster rate. They are building wealth. Give them time. And again, so yeah, they may look at the boomers now and go, "Well, they have all the money. It's not fair." Yes, but boomers have had 30, 40, 50 years to accumulate that wealth. You give Gen Xers and millennials 30, 40, 50 years to accumulate wealth if they do it right, they're going to have far more money than the boomers ever did. >> If they do it right, and I think that's the key thing. >> And and and look, boomers made a lot of mistakes, too. But this is, and again, this is this is important, right? The Gen Z's are investing at a higher rate and earlier age than previous generations. This is awesome. The problem is what I'm about to show you, which is that the market has been pulling forward all these returns well above revenue growth and and and economic growth. So, they're investing at a much higher rate, but they're also investing it in some of the most speculative manners, which tends to not work out well. This is this is the charter show. This is Robin Hood. This is data from Robin Hood, which is a great platform for measuring young retail investors because that's where they that's where a lot of them are. If you now this was as of the end of December. If you add in the four to5 billion draw down we had in January, retail investors on Robin Hood have lost money since 2021. So despite the fact that the market's up 75% since then, they've actually lost money. If they had just invested prudently, put their money into an S&P 500 index, they would be far ahead of where they were speculative trade, you know, doing speculative trading on the markets, >> right? And and yeah, and even put your money in an S&P index, forget about it. For forget about watching the markets and just focus on earning income that you can then keep shoveling into that index. >> Correct. And then and and the ones that are doing it, like I like I like I showed you this chart this chart before, you know, the ones that are doing that, they're doing very well. And there's a there's a lot of the younger generation that are doing just that. They're not they're doing their job. They're shoving money away. There's a a guy I follow on YouTube um that he's he's a he's a video game streamer. He's he's a really smart guy, but he talks while he's doing video he's he makes a very good living streaming video games. But he talks about his investing strategy then like while he's when he's talking to his chat and he's like look he says I just buy I I just buy VU and he says there's other stocks I like like I buy Google I like Microsoft and I'm not looking to sell these stocks for 20 years. I just every month I put money into these stocks and that's what I do. He's doing it the right way, right? He's not buying options. He's not trading futures. He's not doing, you know, cra, you know, chasing crazy stuff that's trying to go to the moon. He's just doing a very simple compounded DCA strategy. And he's a young guy. He's in his early 30s, you know. So, he's he's going to do extremely well for himself. It ain't sexy. It ain't pretty, but he's doing exactly what you need to do to build wealth over time. >> Okay. So, what were what was sort of your conclusion of of the article there? Was it just >> embrace the unsexiness, which of course you say all the time, >> right? Which is why on Monday, you know, we'll get into um the the 10 immutable laws of money because that's where it really breaks down. And again, these are things that you're not going to want to hear, right? I'm going to we can talk about this article next week and there's going to be stuff that people do not want to hear. It's but it's simple stuff like look, you probably can't afford to put your kids in private school, right? just you've got to accept that reality and I know we all want to but that's a reality that you probably have to accept because you have to save money first. So we're going to have to figure out ways to cut corners there. You know, you can't buy a new car. You're going to have to buy a used car. You know, those are the and and this is but this is just the basics of saving and invest money. How do we get to that 50 3020 budget so that we can get our savings and investing program on track? Where do we have to cut? Those are the type of things that we'll go through. But again, it ain't pretty innate sexy, but if you follow the rules, the laws of money, it'll work. You'll build wealth. It's, you know, but it's not going to be the there's no recommendations in there for go trade, you know, stock option futures. That that's not in there, >> right? All right. Well, look, we'll look forward to um maybe dedicating a lot of next week's uh recap to walking through your 10 mutable laws. >> Yeah. Again, it's going to cause a lot of controversy. Lance, you you cause a lot of controversy just coming on here every week. It'll be >> I know and that's why I'm saying >> all right. Um well, look, let me um let me pound through one or two more things quickly and then we'll we'll get to our rants and wrap up. Um uh so potential big news, I think it was yesterday. Um I don't know the source of this but it has been floated that there are talks between the US and Russia. >> I saw that >> yeah about and I'm presuming this is based upon some ceasefire in Ukraine right >> that this is sort of you know Trump's all about the art of the deal sticks carrots. So it sounds like the a carrot that is being offered to Russia is is hey you calm things down you know come to some sort of peace agreement um in Ukraine and you know we'll take off a lot of the um uh you know sanctions and stuff that we have on Russia right now and you can rejoin the US system. So here were the five points that were floated. I >> just just real quick that was reported and I I just pulled a quick Google search. >> It was reported by Bloomberg, the Financial Post, and the Economic Times. >> Okay. And I'm sure this was a, you know, trial balloon that the this is all probably all part of the state craft, you know, letting Russia know we're serious because it's getting leaked and >> trying to prepare the rest of the world for something. Um, okay. US and Russia working together on fossil fuels. Okay. Joint investments in natural gas. all makes sense. Offshore oil and critical raw material partnerships. Makes sense. Um windfalls for US companies. I don't know exactly what that means. Um so if you do, Lance, great. Tell me. If not, we'll explain it next time. Uh but then the the last one is the one that's gotten a whole bunch of attention, which is that Russia's return to the US dollar settlement system. So which I'm assuming is Swift, uh which we kicked them out of, right? Uh but it'll be easier for Russia to transact financially around the world. Um so uh I I guess first question for you >> requires them to hold dollar more dollar reserves if they do that. >> Okay. Um so therefore Russia would be you know buying more treasuries. Um so first off um how material is this? I know I've asked you in the past like what what what do you think market implications of um you know truses and or pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe pe peace breaking out in certain conflicts and stuff like that you basically said ah it's kind of a nothing burger markets wise um something like this were it to happen would that change your thinking in any way from an investment standpoint >> yeah no uh this is so the the premise of the article this weekend in our newsletter and then I've got an article a follow-up article coming out just a one of our regular blog posts probably not this coming week but the following week is on a dollar rally. In other words, a strengthening of the dollar. And there's a lot of reasons why the recent dollar weakness has gotten very overdone and all it takes is either stronger econ so if this reflation story does kick in and we start to see stronger economic growth that's going to drag money back in the US dollar. So that'll strengthen the dollar and you know put us on better footing. Um, the other side of that coin is, yeah, if if you bring a country like Russia back into the dollar trade, then that's obviously going to strengthen the dollar as well because they're going to have to buy bonds. You're going have to hold more US dollar reserves, those type of things, trade in oil. That's all that's that's great. So no, that's a very significant outcome and that would very much impact areas of the market that trade against the value of the dollar like emerging markets like international stocks which are kind of a non-correlation trade against the US dollar because of the of the currency uh because of the currency translation basis. Mhm. So it seems like something like this would really um throw a spanner into the the bricks system um where you know a lot of these countries I mean Russia's the R and bricks right um you know a lot of these countries that are sort of pins >> pardon me >> they just become ballpoint pins they'd be the bicks >> the well the question is is I don't know if it would mean that Russia would necessarily withdraw from bricks but the bricks countries have been, you know, trying to try strike trade deals that settle in different currency, you know, their own currencies versus the dollar. And they've been presumably creating um a a goldbacked payments system. And I wonder if that would sort of dramatically slow it down or make it less appealing if if Russia were not as uh aggressively participating in it. I don't know. I mean, would would this open would would this throw sand in that gears and maybe some of these other countries would start saying, "Well, if Russia's going to do it, maybe I should be >> Well, so first of all, >> the US, too. >> Yeah. So, first of all, remember that that those transactions you're talking about are negligible on on the way the world works, right? So I mean yeah it's you know if if I want to create if I'm Venezuela and I want to trade with India I can and I want to bypass the US dollar system I can set up trade deals directly with them and my currency whatever but those are very very small fractions of the global transaction system it's all you know it's predominantly all dollars um especially when it comes on foreign exchanges but yeah to your point if Russia starts saying hey we're going to get back on the dollar system that's going to put more pressure on some of these other countries to go back to the or or to kind of abandon those trade negotiations because as the dollar strengthen everybody's going to want to at the end of the day if I'm trading if I'm trading in international exports I need a couple of things. I need a rule of law somewhere so I can make sure that if my goods get delivered that I get paid and I have recourse. So I need rule of law and I need stability and I need I need guarantee that my payment will be valued and that's why everything translates back to dollars at at one you know kind of when it comes international trade the yuan has has obviously risen as a percentage of global trade only because the economy of China has grown so much over the last really kind of 20 years. So just as a natural byproduct of the growth of that economy, the yuan has become a much bigger participant in the global transaction basis. But the dollar is still dominant and that's not really changing at any any great speed. So a lot of these stories about the demise US dollar and all that there's really no grounded fact behind that. Um but again to your point if you if you bring somebody like Russia back into the fold so to speak which look Russia's been has been under sanctions economic ruin. I mean, they they've had so much economic problems over the course of the last 20, 30 years. It just seems to make sense. At some point, you're going to go enough, you know, I need to I need to make my people happy and and start to do things to kind of get back into the graces with the rest of the world. And so, it's it's it seems like a kind of a long time coming for Russia to kind of try to move back into the fold at least to get back into the Swift system, be able to trade oil since that's a major product of their country. Rare earth metals are also a big product of Russia as well. So if they can get back into that, that's certainly economically very beneficial for them. >> Okay. Oh, it's interesting. And okay, I know a lot of viewers have pardon me, >> particularly over the last few years of what they've been through with Ukraine, >> right? >> That's that's not made things any easier on them. >> Right. Right. Um, I know there are a lot of viewers of this channel that are, you know, concerned that the BRICS countries, you know, have a whole bunch of reasons to wean themselves off the dollar. And it's it's a it's a concern that they've had >> and I'm not trying to invalidate that concern at all, >> but they can't there there's they can't wean themselves off the dollar. They can't. It is in they are incapable of doing that because the one of the the the way that bricks companies make their economic system work is by exporting goods to the US. And so they can't wean themselves off the dollar because we're one of the major buyers and supporters of their economies. >> Yeah. And look, I I it's a bigger discussion, but all I want to say here is that um obviously this potentially weakens potentially reach weakens Russians commitment to that that alternative brick system. Um we just struck a massive trade deal with India. Um I've got to imagine there were a lot of things put in that deal that said India, you're going to continue to use dollars at least for a lot of the important components of trade. Um, and then Brazil, which isn't super USfriendly under their current administration, they have their uh elections coming up uh this October and the current regime there. Um, I'm not a Brazil expert, but um had a you know, deep discussion with Tabby Costa uh the other day. Great interview we did about commodities, but the topic of Brazil came up and um you know, Tabby who was from Brazil and spends a fair amount of time there. Um, you know, the rest of South America is looking at what's happened with the Venezuela and basically saying, "Look, we're kind of glad Maduro, you know, got removed. Nobody really likes the Venezuelan regime down there." Um, and there's there's a there's a lot of um I think um optimism or hope about what could happen if America were to indeed get more um involved in South America from a trade perspective. Um, and so I I don't know how the election's going to go, but there's certainly, you know, not bad odds that it could go uh to the opponent and then, you know, you get a much more US friendly person down there. And then the B in bricks, you know, may also weaken, too. So, if you see sort of the the R, the I and the B in bricks start becoming more US friendly, uh, it does seem to weaken the potential threat that that system has against us. Um, all right. So, in just wrapping up here, Lance, because I want to try to squeeze two rants in. Um, just a reminder of folks on the housing market, uh, you know, Lance, I guess the only thing I'll say about this is, hey folks, go watch tomorrow's video with with Nick Jurley. But, um, if the housing market continues to weaken from here, I'm going to guess that makes you a little bit more it it increases the odds that you might need to pump the brakes a little bit more in 2026. Correct. Well, I again, you got to be really careful with the housing data because it's very location specific. >> Sure. >> I'll give you I'll give you a good example of this. Um, my neighbor that lives across the street from me just put his house up for sale. He put his house up for sale. The the house is valued at 1.3 million. It's a huge house on a corner lot. He put it up for 1.3 million. It bid out, closed, and sold in one day at over over asking price. >> Okay. So, so again it's like there's in certain areas in certain neighborhoods demand is not a problem. >> No, that's to totally true. I'm talking generally. So, >> that's that's but this is my my this is my this is my broader point. When you're taking a look at housing, it's only the people that are transacting on the fringes that you know, again, if I'm sitting in my house, like I'm not selling my house, so I have no idea what the value of my house is today or tomorrow. And you know, you might know a better value of your house because you just bought one, right? So, you know, those are the >> I'm still running. We haven't We're still running. >> You don't even know what the value of your house. Um, but anyway, I don't know what the value of my house is today. Um, I can guesstimate, you know, based on, you know, comps, those type of things. But when we look at these national housing numbers, a lot of these are estimates. They're only the 20 big major cities. So, once you get out, so when we look at these houses, like, oh, housing is unaffordable. We're only looking at 20 cities. We're looking at the main metro areas of the economy. Once you start moving out outside of the big major metro areas, prices and demand become far different. And and so it's always so if you're think and my point about the reason I'm saying this is yeah, the the metrics are fine. Um but if you're looking to buy a house, don't look at these these kind of major indexes and going, okay, housing prices are crumbling and I can't afford to buy a house. Whatever it is, be sure and do your homework because >> No, I I absolutely agree with that. And to be honest, you should get Nick's tool because it's incredibly granular. And and to Lance's point, he's making the point I don't want to be making here because we're talking about something else. But um you know, real estate's totally local and you can just at the zip code level, you can have neighboring zip codes that have very different uh dynamics going on. Um my point to you, Lance, was if the on the national level, you know, averages median continues to decline maybe even substantially throughout the year. I'm guessing that makes you a little bit more nervous about what would happen with the markets from a you know a ne a national negative wealth effect from that. >> Well, you the housing market is very fringe, right? So, you need something in the housing market that impacts the forward earnings growth expectations for the market. So, what does that mean? You need something to happen in the housing market this year that all of a sudden says that people are just they they are just locked up. They can't afford to buy anything. They can't afford to do anything. You know, something's happened economically and housing prices are falling off a cliff because nobody can afford to do anything. And then all of a sudden the market says, "Okay, well, wait a second. If nobody can afford to do anything now and we're seeing that reflected in the housing market and that's because of consumption trends or dropping off a cliff that's going to affect the forward earnings for the markets that'll become an impact for the S&P 500 if it is very just housing specific that nobody's just willing to buy or sell a house right now. But retail spending trends remain okay, personal consumption expenditures remain okay, market's going to be okay. >> Okay. All right. I could dig into that further with you. Basically, folks, go watch tomorrow's video with Nick Jurley. Um, trades. What trades have you guys done? Sounds like you've done several. >> Yeah. Yeah, we did. Uh, basically, like we talked about earlier, we just there were about three, four positions in our portfolio that we had added back in September, October last year, early November on the value side of the equation. Um, you know, companies like, um, Altria and, uh, Verizon and a couple others. And we just basically just reduced those back to target weight. A lot of those had grown from their original target weights to, you know, you know, 50% more of their target weight within the portfolio. So, we just trim those back to target. You know, this is just beginning of the process. We want to try to to raise five to maybe 10% cash in our portfolios over the course of the next month or two. So, we're just going to be kind of looking for opportunities. Like the market's rattling nicely here on Friday. So, if we can get this market to kind of get some wind under it, get a little bit of a lift, maybe back towards all-time highs, um, which isn't that far away. That's just, you know, a percent or so. If we can get a percent or two of a rally next week, then we'll probably raise some more cash. >> Okay. So, you would you'd be selling into strength to raise some cash >> just for now. And again, not going crazy. I mean, we're we're still we still own, you know, all of our stocks. We're just, you know, kind of rebound. You know, we had sold down some of our technology stocks, you know, uh before earning season started. So, we have reduced exposure in some of those companies. Those have got really beaten up. So, we may, you know, try to add a little bit to those here at some point, but then reduce some other positions that are grossly overbought. Just again, just that rebalancing process as we go. >> Okay. All right. Um All right. Well, look, let's uh let's get to the rants here and then we'll wrap things up. Um two rants. We could probably talk forever about them, but I'm going to try to make it real quick. Um, it's been a really interesting uh week on X for me. I've had a couple tweets that really went much more viral than they normally do. Um, and uh in ways that just kind of flammix me. Um, but there was one that I've still been recovering from, Lance. um which is uh I I retweeted uh a tweet of Elon Musk's um saying that hey SpaceX is is sort of changing its priorities and we're going to now prioritize building basically a lunar colony >> before we focus on building one on Mars. And I I wrote a post just saying like hey you know as a child of the 70s like I'm excited for this because man hasn't stepped on the moon since I was one years old and I'm going to turn 55 this year right? Like I thought by this time we'd have moon cities and you know earth moon shuttle that we could hop on and go visit and all that stuff and we we basically got nothing. So you know it was like hey this is exciting to me and the number of moonlanding deniers that responded to that just blew me away. And so I I I I then put out a poll and I said, "Look, I I I can't believe I'm asking this in 2026." But when you look at the the the manned landings on the moon from 1969 to 1972, were those real or were those a hoax? And Lance, it was 35% said they thought it was a hoax. And and and look, folks, I I'm if you if you believe they were, look, I I've I've I've I've made peace with this. It's not my job to tell you what to believe and and I understand the skepticism that people are bringing to this land. So like when I've sort of probed around why people voted this way, a lot of them are like look I don't believe anything the government tells me and you know how can you ask me after um COVID and the Epstein files to believe anything right that the government says. Um personally I I I believe the moon landings took place. I think there's a prepoundonderance, an overwhelming preponderance of scientific evidence. I think uh over 50 years, uh our enemies and allies with scientific progress and the trips they've made to the moon, uh with probes and whatnot, uh they would have loved to have pointed out to the world that America had had faked all this if if it were fake. But whatever. >> Yeah. All I can tell you is that when you were one, >> I was six and I grew up in Houston and we spent a lot of time at NASA here in Houston, which was the control center. Now, the rockets were launched out of Florida, Cape Canaveral, but you know, we spent a lot of time around NASA growing up and I, you know, we were watching those on television and those type of things. So, yeah. I mean, believe what you want. I mean, it's just like, >> you mean on the movie set where you were watching the guys jump on the >> Exactly. But it's also like people that, you know, claim that the Earth is flat, right? So, okay, if you believe the Earth is flat, that's fine. But how do you explain geocynchronous orbits, >> right? So, let let's let's not get into I I've >> No, I'm I'm just saying these are >> I know, but but I had this exact I've had these exact arguments on that. >> Conspiracy theories are great, right? But what does it matter, right? If if we does it matter. Look, I I will look, I'll give you I'll give you a reason why it's kind of fascinating to me that, you know, and I that kind of agrees with the idea that the lunar landings were faked. It's been 50 years since we've been on the moon. >> It we we in theory we put people on the moon in rocket ships with using slide rules and human computers. You haven't seen the movie Hidden Figures, go watch that movie. That is a fantastic movie. But we did that supposedly and it is kind of interesting that all that knowledge just evaporated for 50 years and now we're having to recreate this from scratch to get people back on the moon. But okay, having said that, you know, I look, believe it or not, I don't freaking care because it doesn't affect my life one way or the other or the markets. But it's just I think it's great we're going to put people on the moon again. We need to do that. If he wants to build a lunar base there, that's fantastic. I mean, we've got to get off this planet at some point if we're going to explore the universe. So, this is just the first step. >> So, I I agree too. Here's the thing I just wanted to discuss as briefly as we can before I get to the next topic is um here's the worry I have. Um so, to me, and again folks, if you disagree with me, I'm not going to fight you. Um this is one of the most sort of unil universally accepted um human triumphs and triumphs of science, right? Getting guys there with slide rules and like I mean forget about the processing power in here. I think if I had like a pocket calculator from the seven, you know, from the from the '9s, it would have more computing power than than what was in the Apollo missions. Um >> uh what I'm what I'm worried about or or what what is weighing heavily on me is um yeah, look, politicians are going to they're going to lie. They're going to be politicians. They're always going to tell you what's politically expedient for them. But but science and and human knowledge, right, it it accretes. We it builds on itself. That's how we progress, right? And if we get to the point where nobody believes like I I to I totally get it folks and I agree the scientific community did itself a massive injury with sort of how CO was handled and it it broke a lot of trust with the average person and obviously it's broken trust with at least 35% of the people that that follow me on X which blew my mind like I said but if we get to the point where we just don't believe anything that our that our our scientific authorities are telling us That's where you like that. That's the setup for like a dark age, right? When you can't build on what came before because nobody wants to believe it. Nobody wants to trust it. You can't advance, right? And with science, you have to prove something, get consensus on it, and then build on top of that consensus and keep moving as long as the the actual scientific results, you know, uh yield the results that you expect them to. If you get to a point where people are like, I don't care if you just told me how cold fusion work you works, you guys lied to me in the past about COVID, so I'm not going to believe this. Right? It's really hard to progress based on that. So anyways, I I I'm still I'm still kind of recovering from the the large amount of people that are that that are in some ways understandably super skeptical, but I do worry that it's hard for sc for society to move forward when we've got no ability to say I trust what some, you know, are who the experts who are running this stuff should be doing. >> You can't concern yourself with society in general because in every society it's just it's Pareto's law, right? 20 20% of people are going to be idiots and you can't do anything about the 20% that are idiots. You can't do anything about the 20% of people that are poor. They're just that's just a part of statistical normalities >> of of a of a prao distribution. >> Right. Right. But this does bring up a big issue and let's bring this back to finance for a moment. This is why we spend so much time talking about narratives and we publish articles with the data, the facts, everything that supports, you know, our conclusions. And so, you know, just going back to our dollar conversation in Secoo, if you think the world is trying to move away from the dollar, it's fine. You can believe that if you want, but go out and find the data that actually supports that view, right? You can't do it because it's not happening. And you know, trying to extrapolate the end of this or the end of that or the end of the world as we know it, all it does is lead to bad investment decisions. So, so go out and do the work. And if you can prove it to yourself and say, "Look, I've done all the work. I've done all the research. I absolutely believe this to be the the facts. Then invest on that because that's how you make good investments over time. But don't just follow some guy on the internet that said, "Oh, you know, this is the world's going to end because of this or the market's going to crash because of that." Don't just take their word for it and just assume they're correct because maybe they're feeding on a personal fear that you have. Go out and do the work. And once you do that work, you can then start to break these fears and irrational behaviors and those type of things down that lead to bad financial outcomes. You can break those down and start making better investment decisions over time, which is all we do here every week. And I know y'all disagree with me on stuff all the time. You know, I was talking about taking profits and silver and why I was going to have a crash and then, you know, it happened, right? Because that's just the way markets work. So get away from the narratives and focus on the facts that drive markets over time and you'll just be better for it. >> So I I agree and here's here's kind of a challenge I have. Um you know faith in our experts has become injured as I said earlier uh scientific community from co but also you know our academic institutions and in many ways I think our academic institutions have really I mean almost broken their trust in more than the scientific community has uh with us >> they failed miserable >> yeah and and so again it's understandable why why people are rejecting so much of what's out there. Uh, but to your point about doing the work, um, in this discussion about the moon landing, I can't tell you how many YouTube videos I've been sent, Lance, where people have said, "No, Adam, you got to do the work." You know, like, "You got to watch this video here." And it's video of some random guy, right, who's bas, you know, it's like the the corkboard with all the the lines of yarn going from and it's sort of like, all right, well, could this one guy on the internet, you know, said this one thing, you're believing it. So the point is is in doing the work, you know, you either have to do the primary work where you're getting your hands dirty and you're doing the calculations yourself, which you still can do in investing, right? or you really have to to seek out experts who are, you know, have some sort of demonstraable set of credentials that make them uh worthy of your trust, right? And and look, I'm I'm I'm not here to be everybody's nanny and tell them who's right or who's wrong. I just see in the in the age of digital media, there's so much crap information out there that people will turn to that and say, "Oh, I'm doing the work because I'm listening to this person over here." >> And that and that's my whole point. Look how many times, and here's a good example of this. Hugh Henry, um, Steve Drunken Miller, Paul Tudtor Jones, for the last three years, Paul Tudtor Jones and Stephen Steven Dunkin Miller in particular have been talking about how interest rates are going to surge to 6%, inflation's going to return, we're going to have a massive spike in inflation. I don't want to be long bonds. For two years, they've been basically wrong. None of that's happened. Doesn't mean that their their opinion was wrong. It just means that what they said at the time didn't mature into reality. So if you made a bunch of bets based on just what they said, they didn't work out for you over time. So this is So you know, again, just be careful. Don't listen to me. I don't know what the hell I'm talking about. I'm just telling you what I do in portfolio. >> No, that's not true. I mean, you you have 30, 40 years of experience doing this. Like you're >> But look, I'm just one person, right? I do my own research. >> Well, don't listen to just Lance. We'll put it that way. >> Exactly. and and you shouldn't you shouldn't listen to any one person but you should do all your work and that's my whole point is that you know just don't take somebody's word for something and and look when I hear this and that's why we write so many blogs so if you go to our website realvestmentadvice.com you know I've got blogs I post twice a week post a newsletter on Saturday and a lot of those are just simply taking these narratives and then breaking it down saying can I support that narrative or not and so lately we've been all over this reflation trade idea because that's the big narrative are driving the market. Is it valid? Is it real? Is it going to come to fruition? Maybe, maybe not. Don't know. But we can do the work to figure that out. And and that's all I encourage you to do is just, you know, don't listen to people just because there because like for instance, let's just let's you know, Paul Tudtor Jones, he may not own he may say, "Oh, I'm not owning short." He may make this statement two years ago in the media says, "I don't want I don't want long duration bonds in my portfolio." And then he leaves the set and then something happens in two weeks and he's long bonds. But he doesn't tell you that he went long bonds. >> Right. >> Right. It's just you but you took whatever he said and this happens all the time to me. Right. Um I get I get emails from your listeners and I get, you know, comments on my YouTube channels like, "Well, Lance said that he sold gold, you know, two years ago at 2500 or whatever." No, I took profits at 2500 two years ago. We were long gold the whole time in our all weather model. But people take things out of context and they also assume that when I sell something or I buy something that I may or may not buy or sell it later >> and they just take that one point in time but then they miss all the context of what happens after that. So my point is be very careful taking anybody's statement out of the media or in a YouTube channel because whatever their opinion was today might change tomorrow might change the next week and you're not going to know about it and then you're going to be upset when you find out it's like oh they they said sell this but then they turn around and bought it three weeks later and they didn't tell me they bought it. Right. >> Okay. Totally agree. Um I I got to wrap it up here because um I was ah shoot. Well, I was I was trying to I was trying to get this done uh because my wife um I've been traveling this week, which is what the second part of the rant >> was going to be about. Maybe I'll make it about now. Um >> now, >> so I haven't seen my wife much this week. And then uh while I was in the Bay Area, I I took her father out for an early birthday cuz he his birthday is on Valentine's Day, which is tomorrow. My wife just left to go spend the weekend with him for his birthday. And I was desperately trying to finish so I could give her her Valentine's Day gift. She just texted me and saying she's gone. >> Oh, Jesus. >> So, yeah, >> let's get But so anyways, I I I now actually have time for the second rant. Um, so uh I'll keep it brief though. But first off, folks, I just want to say, look, whatever your beliefs, folks, whatever your beliefs are about the moonlanding, whatever your beliefs are about the markets, whatever your beliefs about bricks, whatever your beliefs about religion, I still love you. So, all right. Um, >> do you work? Uh, so I was in the city this week um because I was um very fortunate to be invited to go um moderate a a private dinner discussion that Vanek, the family of funds um was um hosting in in San Francisco. Fantastic event. Um very cool. At some point, Lance will talk about sort of what I learned about digital assets there. Um but there was a fair amount of discussion too about um about AI and um like right after I I came back from this event um I was sent the um that article that went viral uh what was the guy's name? Um I don't have it written here. Um but um it's gone viral this week folks. Um I'll try to post it below this video. Um it's Mark Schumer. That's what it was. Um, he he's a guy who works in a AI. He works with all the AI software and he wrote something big is happening. And Lance, have you read this article yet? >> I have not. >> Okay. Um, I'll send it to you afterwards. So, it's gone really viral this week. And he basically has said, >> hey, I've been working with these AI tools. They're they're very good. I can see the future, you know, that that's that's hurdling towards us through AI. Yes, they're a work in progress, but he said, you know, something's happened in the past two to three months where it has started getting way better way fast. And um >> wait, what was the name of this article? >> Uh it's called something big is happening by a guy named Mark Schumer. Um and he he basically says um you know, it's now beginning to really approach something like a human. He says, "I'm I'm at the point with my agents that I have trained up where I give them a very plain language set of instructions. Like, I want you to build software that does X, and I want you to figure out what the what the user experience should be like, what the data architecture should be like, you know, how it should work. And I want you to test it, and I only want you to come back to me when you think it's done." and he'll go away and a couple hours later the AI will ping him and say, "Hey, you know, I think it's ready for review and he'll look at it and he'll look at the history and he can see that it's it's gone through and it's iterated on what it should do and it goes and does it and then it builds something and then it beta tests it and it finds errors and it fix them fixes them and it iterates it and it gets to a point where the AI says, "Okay, I think we've kind of, you know, gotten to some point where it's pretty darn good. Let's actually get the human in the loop." and he says, "It's getting to the point now where like I don't really have any changes to make. Like, it's coming to me and it's being it's pretty final. It's pretty damn good." Now, he's working with the most sophisticated AI tools. He's paying for all the premium stuff. He says it's it's it's a lot better than what you get when you're using kind of the free version of of Chat DPT. And he says if you're just using it as kind of like a glorified search engine, says you're totally missing out on on the power and the potential of it. But again, as somebody who's really immersed in this, he's like, it's just really getting really good really fast now. So, his whole point is sort of to say um look, this future of AI that everybody's talking about is arriving way faster than most people who even know about AI, you know, thought, but for the general public, like this is going to get here faster than they can imagine, and it's going to be really disruptive. and he goes through a whole bunch of of recommendations that if we have time had more time I' I'd go through but a lot of this is just like hey prepare yourself for this like get smart with AI make sure you're not a total ignor ignoramus around it make sure your kids know what's going on here like part of it is like just just get financially prepared cuz like a lot of you you may get a pink slip a lot faster than you think and you're going to have to figure out how to react from that it's not all bad but he's just basically saying like it is coming way faster faster than you think. And then you probably saw the headline yesterday where Microsoft's a uh AI CEO made the prediction that most most white collar jobs will be fully automated within the next 12 to 18 months, right? And yeah, maybe he's talking his book because he's the CIO of their their AI business, but that's still a really big public declaration to stick your neck out on. Um, I've been talking to people who have been coming back from visiting China and they're like, you know, China, they're big in AI and they're big in robots. He's like, they've already got factories that are called dark factories there where there aren't any humans in them. It's just it's a factory. They don't have any lights or anything like that because the robots don't need them, right? And they're they're being instructed by a II there and they're they're manufacturing stuff already. Um, so this future is just hurdling towards us. And at the VAC dinner, I sat down with this really impressive young woman. She was in her mid20s and she was building um an agentic company where she started with this vision like okay I I don't want to hire an employee and what I want to do is I just want to train my own agents. Um, I've got a I've got a a strategy for the operating structure of this company and what I want it to do. And I'm just my job is right now building or training the agents up to the point where I have all these different functional agents for the company that will run this company. And all I my role as the CEO is just to give them their strategic marching orders and then have them actually run it all. and she's like, you know, it's a work in progress, but it's it's it it's I'm making progress towards what I'm trying to do here. And eventually, I think she wants to have this, you know, a Genta company that's producing I don't know what it's going to be producing, some sort of software or a service or something that she sells to an enterprise company. And to be honest, you know, I wouldn't bet against her. Um, it really was like a glimpse in the future of what the the people who are, you know, in this space are are doing and the level of excitement and confidence. Um, and it's not from people who are like looking at a whiteboard. These are from people who are their hands dirty in the software and they're testing it and and uh reviewing results every day. So anyways, I know you guys at RAIA uh are deploying AI there as well. But you know, again, Lance, just curious to get your thoughts here about the rapidity with which all this is happening. No, no, it it's it's you know, this is one thing that, you know, we're developing now a lot on with Simplevisor is integrating AI. You know, it's it's interesting, too, because I'm I'm an old guy, right? So, I'm stuck in my ways. I still do everything in Excel, spreadsheets, those type of things. But, you know, my son is interning for our company and he's a computer engineer at Texas A&M and the stuff he's doing with AI um is just incredible. Uh, I'm just like, how how did you know how to do that? And it's it's it's it's fascinating to watch because the implementation of AI into into process structures is really kind of daunting to me when I'm looking at I'm like, you know, man, I have no future in in the financial industry because this will do everything that I can do. All I gota once I feed it once I feed AI all my knowledge it will do everything that I do managing a portfolio and better right it's just a function time until it gets there and so so it's just it's just quite fascinating that and I was I just was watching u uh a video yesterday that there are robots now that basically go into bathrooms and clean bathrooms and they were scrubbing down the toilets scrubbing the sinks the whole nine yards so you think about airports and those type of things about all the jobs of janitors that are now just replaced by robots. Think and again, so you start thinking down the list of what your job is. If your and my job is just numbers, that's that's really it all is at the end of the day. It's just analyzing numbers, picking trends, understanding trends, those type of things. AI can do that. There's no magic science to that. So if your job is legal, accounting, janitorial, anything that if on and once you can take AI and stick it inside of a robot, there's no job that's safe. I mean, you know, everybody's kind of convinced right now that trade skills are safe, maybe for a while until I can put AI inside of a a robot that can weld or, you know, do electricians work or build a house, you know, you know, you know, do masonry, whatever. How hard is that going to be eventually to accomplish? So, so to your point, this was the conversation I think you and I were having last week. I don't remember. I was talking to somebody about this last week is that, you know, there's this idea that UBI, universal basic income is inevitable in the United States because basically nobody will be working. And I don't and that's a very dark future because people need a purpose. But, you know, that's the that's the concern right now. >> I I think UBI probably is is it's a high probability. Um, I think it's going to be a non-solution. Um, and I think it's going to be very dilitterious to the human condition for many of the reasons you just mentioned there. >> People People need purpose. You you I've got to Everybody needs a re This is why, you know, people there's a people throw out the stats like there's 20,000 retirees retiring every month or 10,000, pick a number, right? 10,000 people retiring every month. But then you go look at the actual retiree numbers. Yeah. They retire and then what what they do next? They go back to work at least part-time because they need a reason to get up in the morning otherwise you just die off. Or maybe or maybe you're probably too young to remember this. Maybe we become Logan Drum. >> Maybe at 35 the jewel goes off in your hand and you're just like, >> right. Right. I was gonna say, yeah. Or maybe we become Soilent Green or maybe we become what is it? Death Rates 2000. >> Uh so there's a lot of dystopian. maybe become Terminator. And honestly, I still haven't fully figured out how to fully remove that fear that the AI once it's smart enough is just going to get rid of us. Anyways, um, one thing about this though is, um, it does make financial wealth building, I think, even more important. And I hate to say this, but like, you know, I I put out a a poll yesterday on X asking um you know, okay, if if the Microsoft CEO is right, right, that that the majority of of white collar jobs are displaced in the next year, year and a half, um the question was, okay, if your job went away and you couldn't get another one because AI had taken it over, could you make it? could could you basically afford to live the rest of your life? And no surprise, the vast majority of people could not. Um, and so, you know, I'm even thinking just like, look, I I I I I'm hoping it's not going to be as bad as sometimes I fear it is, and I'm hoping there are ways that we can work with AI or it'll create new job opportunities or things like that. Um, but I don't know. And so to me, it makes me feel like, okay, yeah, I really got to make sure that I'm I'm trying to get as much socked away as I can so that, you know, if indeed uh I get replaced by Asian guy, right? I a lot of sober investors uh you know, saw the Asian guy videos that were all over the internet. I think still are. Um that uh if for some reason nobody wants to employ an out of work podcaster, um you know, will I be able to avoid having to uh you know, eat bugs by the end of my lifetime? I don't know. Well, but but this goes back to our conversation earlier is that you have two choices. You can either kind of fold into this idea of financial nihilism and it's all going to be over at the end someday and just you better yolo it now and try to make a whole bunch of money and get out of the rat race when you can. Or you can, you know, learn to save, budget, invest, grow your wealth, secure yourself financially, and then also learn how to work with AI, >> right? >> Just like this. And this is the this is the big frustration I have with a a lot of younger people because I hear this all the time. >> It's like, well, you know, it's just not fair. you know, the, you know, Elon Musk, you know, he, you know, he has all this and Bill Gates has all that and it's not fair that all these big corporate executives have all this stuff and I don't have anything. Well, Bill Gates dropped out of college to start Microsoft. Um, you know, >> Yeah. You he started software coding when he was like 10 years old. Yeah. >> And and and you know, um Paul Mitchell had nothing. He was broke and created the Paul Mitchell company to, you know, make shampoos and all that stuff. You know, the the point is is that a lot of people, you have the ability, and we've talked about this so many times on the show before, you have the ability to create your own path and to create your own wealth. You've just got to be willing to go out there and do it. And you know, this is this is, you know, if you read the article about financial nihilism, this really comes down to one thing. Financial nihilism is just an excuse for victimization. And what that means is is like, oh, I'm a victim of this and I'm a victim of that. rather than look, I need to take responsibility for my actions and start doing things to ensure that I have a place in this new world, whatever it is. So, go learn AI. Go learn how to work with it. Go study it. It's not hard. Um, but then more importantly, just like the girl you talked to, I see I love those stories where people are going, you know what? I'm going to take this idea and I'm going to make it a thing and I'm eventually going to grow a business out of this. That's how you create wealth. That's how you create real wealth. You know, you you take a look at people that have a lot of money. Most of them started a business and then wound up selling it to somebody else. That's how they made their wealth. >> Yeah. No, so I totally agree and I'm, you know, I I use AI, but I need to really up my game on it, especially on the agentic side of it, but I sent that article to my daughters and basically said, "Look, I'm not trying to freak you out at all, but you need to know that this is going on, and this is why you need to, you know, they're in sort of softer industries. Um, but I'm like this is why you need to know how it's being used in your industry. And so like one of my daughters is in school for design and I've said look I mean every informational interview that you have from now on you know you should be asking the person how are you using AI in design right now and specifically like what what which packages are you using? What tasks are you having it do for you? and then go and learn how to do that. Get your hands dirty with the AI, you know, so that when you launch into this field, you've got a really good sense of how to use it and how it's being used as opposed to just being like, oh, well, I guess it's taking more and more of what I could have done, right? So, >> it is I mean, you know, design's a really, you know, architecture, you know, that's hugely at risk. Engineering's hugely at risk. um you know there there's going to be need for humans obviously but you know there's there's there's a big risk to all of these industries and I think that's the thing we've got to really come around to is understanding what that real risk is and then start to and that's why we're the the stuff that we're doing with Simplvisor the next iteration that we come out with on Simpliser will be Simpliser.ai AI. That's coming fairly soon within the next few months. But that's the next step for where I think the financial industry is going. And then this the plans we've got to build off of that are going to be really neat. But it's going to be a lot of that's driven by AI because of where the you know again if you can think about the younger people coming up how many people want to go sit down with a financial adviser and talk about their financial future and all that when they could just communicate online with a with a very intelligent artificial intelligence that says yes I can help you map all this out for you update it real time keep you informed you know take all your current spending actions build that directly real time into your plan and we can adjust your plan on the fly that you can monitor every single day so we can make sure that we're reaching your goals. You know, that's the future. >> Yeah. All right. Well, look, we got to we got to end it there. Um just because uh now I got to go to the next meeting here. But Lance, um great week as usual. Um all right, folks. Well, if you think the best way to prepare for an AI dominated future is to continue to listen to Lance Roberts on this program and then hopefully use Simplify.AI AI when they launch it into the world. Please let Lance know that by hitting the like button and then clicking on the subscribe button below if you haven't already, as well as that little bell icon right next to it. If you would like to get some help uh from a good professional financial adviser for you know navigating this year especially if it looks the way that Lance and I have talked about here that it might um or if you'd you know like to talk to a financial adviser about saying hey you know I'm I'm not sure if my job's safe in this AI world and what should I be doing to make sure that my wealth you know uh either you know grows large enough or or maintains long enough. Um, another good reason to talk to one of these advisors. If you don't already have a good one advising you, consider talking to the ones that thoughtful money endorses, perhaps even Lance and the team there at RAA. To do that, just fill out the very short form at thoughtfulmoney.com and the firms will be in touch with you very swiftly after that. Quick reminder, too, that the thoughtful money fall online conference is coming up. It's just a little bit more than a month away at this point. It's going to be Saturday, March 21st. Don't worry if you can't watch live on that actual day because everybody who buys a ticket will be sent replay videos of the event just a few hours after it ends. You'll get all the live sorry all the presentations, all the live Q&A. Um, and the uh faculty remains amazing. If you haven't heard me give the list already, uh, we've got Lacy Hunt doing the keynote with his usual amazing graduate level charts. We've got first- timers, uh, Ed Dow, uh, Michael Oliver, uh, the journalist Matt Taibbei. We've got Judy Shelton, Daniel T. Marddino Booth, we've got Luke Roman, we've got Brent Johnson, we've got Michael Howell, we've got Darius Dale, we've got Grant Williams, we've got Stephanie Pomboy, we've got Rick Rule, we've got Melody Wright, we've got David Haye, we've got Andy Sheckchman. Uh there's probably one or two I'm forgetting, but as you can see, it's just a phenomenal Murderer Row uh list of just heavy heavy hitters. Um, so if you would like to buy your ticket, I highly recommend you do so now while we're still offering it at the lowest early bird price. To do that, just go f just go to thoughtfulmoney.com/conference and buy your ticket then. And if you're a premium subscriber to our Substack, uh, go check your email for the discount code that I've sent you a couple of times. You can use that to get an additional $50 off of the conference. Lance, my friend, another great week. Thanks so much. Um, crazy future we're entering into here. Um, who knows? Maybe next week I'm going to be talking to the agent Clance Roberts. >> Well, no. I was just thinking the same thing. Eventually they'll just, you know, you can just put yourself inside of an AI and AI will do this weekly video for you and then you can just go take time off. >> Yeah, we'll have Adam Headroom talking to Lance Headroom. >> Yeah, I I like this idea. >> All right, buddy. Well, look, thanks so much. I got to hop here. Everybody else, thanks so much for watching.