0:03

At a time when investors

0:06

are confronted with market volatility

0:08

and a variety of challenges

0:10

fueled by the uncertainty of

0:13

inflation, unsettled geopolitical tensions and

0:15

economic pressures, Luke Guerrero

0:17

stands ready to take your

0:20

finance and investment questions and

0:22

share his unbiased answers. Investalk

0:25

is made possible by KPP

0:27

Financial, a registered investment advisor

0:30

firm serving clients throughout the

0:32

United States. The clarity

0:35

for your path forward

0:37

starts now. Here

0:39

is KPP Financial portfolio

0:41

manager, Luke Guerrero. Good

0:45

afternoon fellow investors and welcome back

0:47

to Investalk. It is Monday,

0:49

April 22nd, 2024 and

0:51

my name is Luke Guerrero and I will be your host over

0:53

this next hour. And hopefully the

0:56

weekend was as restful for all of you

0:58

as it was for me. This

1:00

is the last full trading week of April.

1:03

Next week is a mixture of both April

1:05

and May and certainly it's been an exciting

1:07

month so far and we've talked a lot

1:09

about why over the past couple weeks and

1:11

we will continue to do that today because

1:14

our goal here is to

1:16

help you leave a better educated, better

1:18

investor than when you got here. And

1:20

to that end, we like to offer some educational topics.

1:23

We like to talk about the news. We like to

1:25

talk about some things that have happened that will affect

1:28

finance, the market, the economy, individual

1:30

businesses, but more importantly, we

1:33

like to hear from you because you

1:35

are the one that drives this show. Your

1:37

finance and investment questions help all of us

1:39

learn and all of us become better investors.

1:42

That being said, we'll talk about the market performance today

1:44

as well as run down some show topics in a

1:46

bit, but let's get to our first

1:48

caller question now. I just

1:51

understood I wanted to get your opinion on

1:53

ticker symbol, SDLD Steel Dynamics. I'm up about

1:55

45% right now and wanted to know your

1:57

thoughts on the sector as a whole. And

2:00

if you think the stock will continue in the uptrend, what

2:03

should I look out for as potential sell

2:05

signals? Thank you very much for your time. So,

2:08

ticker STLD is Steel Dynamics Inc.

2:10

and they manufacture steel products, do

2:13

metal recycling, but most of their

2:16

revenue comes directly from the manufacturer of steel,

2:18

about 67% of their revenue. And

2:21

so if you take a look at where the sales growth

2:23

and the net margins have been over the past couple of

2:25

years, they've been improving. So from 2020-21 into 2022

2:27

and then eventually into 2023, when the price of steel was going up,

2:32

their margins got better. Their sales

2:35

growth was pretty significant. From

2:37

2022 to 2023, that kind of tapered

2:39

off a little bit and their margins have been compressing

2:42

as a result. And so over

2:44

the past four quarters, Steel Dynamics actually

2:46

have missed earnings estimates, which is typically

2:49

when stock prices tend

2:51

to react, right? They don't react based upon

2:53

what the figure itself is, but the how

2:56

that figure relates to the consensus estimate.

2:58

So, missing tends to drive stock prices

3:00

down. But because steel has been doing

3:02

well, this company has been doing well as

3:05

well this year. Year to date, they're up about 16%. Over

3:08

the past 52 weeks, they're up about 24%. And

3:11

the relative strength has kind of stayed pretty stable

3:13

over the past six months, but their profitability and

3:16

their cash flow have been falling. Now, the thing

3:18

you got to know about this name is if

3:20

you're looking to take a position in it, right

3:22

now would not be the time. Why is that?

3:24

That's because they're reporting earnings at 23rd. And

3:27

so a lot of price movements around earnings time

3:29

tend to be people that are taking positions and

3:31

bets based upon where they think their earnings to

3:33

go. Or rather, where they think their earnings will

3:35

go. And so the

3:37

question was, what should you be looking

3:39

out for before you start to

3:42

sell this name? And for me, it's see how

3:44

their cost, the

3:47

cost of goods sold, see how the revenue growth looks

3:49

over the past quarter. Like I said, they've missed three

3:51

of the past four. If you have that consistent miss,

3:53

then you're going to tend to see this five year

3:56

annualized growth rate of nine point seven percent, which the

3:58

market has been pricing in in terms of. where

4:00

this stock price has been going fall. Now, you

4:02

said you're up about 40, 45%. Absolutely,

4:05

I would start to take profit. I don't see

4:07

any reason why, especially given where this administration is

4:09

trying to take tariffs on Chinese steel, why you

4:11

would wanna fully divest. But if you're up that

4:14

much, I absolutely think you should start to take

4:16

profit and probably wanna do it before earnings because

4:18

it could easily go any direction. It could be

4:20

pretty volatile over the next couple days. Thanks

4:23

for the call. And we've got a lot of ground to

4:25

cover over the next 45 minutes or so, and here's

4:27

some of what we have time permitted. My

4:30

main focus point concerns this question

4:32

or rather these questions. And it's

4:34

what caused this year's stock market

4:36

rally to stall and what

4:38

happens next? Markets had a pretty

4:40

rocky slide last week, as you all know, with the

4:42

NASDAQ and S&P 500 enduring their

4:44

longest downturn since October of 2022.

4:48

And so we'll talk about the 2024 stock market rally coming

4:51

out of the beginning of the year, inflation

4:53

rate cuts, how those play a role in

4:55

what's been going on, and how the labor

4:57

market and the job outlook could

5:01

affect markets and rates going

5:03

forward. Also,

5:05

we'll be talking a little bit about the

5:08

New York Stock Exchange and

5:10

how the New York Stock Exchange put out a

5:12

survey recently, trying to

5:14

garner responses from both retail

5:17

and institutional managers, or rather

5:19

investors, and figure out is there any appetite for

5:21

a 24-7 stock market? We'll

5:25

also touch a little bit about how

5:27

Venezuela is accelerating its move

5:29

to cryptocurrency as a way to protect

5:32

itself against some of the sanctions

5:34

that it has seen

5:39

and countries like Russia have seen, something we've been

5:41

talking about for quite some time. And should we

5:43

have some time at the end of the show?

5:45

We'll also talk about the oil market's kind of

5:47

subdued reaction to the Israeli retaliation

5:50

on Iran and the break of the strikes

5:52

that happened a couple weeks ago, and

5:54

what that tells us about the oil market as a

5:57

whole. Now, we're going to do short break, and

5:59

on the other side, we'll talk about that. Today's market activity. Please

6:01

remember you call anytime and leave your

6:03

questions on invest like voice big screen

6:05

calls now and talk to Me Lives

6:07

and Eighty Ninety Nine shirt. Invest

6:13

talk callers make each podcast

6:16

unique. Aus Cohen about is

6:18

how if it's worth holding

6:20

onto our show solid. Their

6:22

questions are curious. Oh, I

6:24

had saved up around about

6:26

dollars. Mouthwatering of what I

6:29

should do debated rope careful

6:31

I'm just wondering. Like

6:34

quite a bit concerned.

6:37

it's. Quite the complex

6:39

than at the Chinese It added to. this

6:41

was how while I waited. Too. Long and

6:43

clever the similarly situated in

6:45

some areas of expanding population

6:47

and just incline steep easily

6:49

and now Luke Guerrero are

6:51

always ready with their unbiased

6:53

dancers and this is good

6:55

for your class. Example of

6:57

choosing your don't see the

6:59

yields next twelve months price

7:01

earnings is around thirty. I

7:03

just don't see it at

7:06

this price to call Invest

7:08

Talk Eight Eight eight. And.

7:18

Investment Questions and Luke

7:20

Guerrero is here taking

7:23

your calls. Live. Invest.

7:25

Start Eight Eight Eight

7:27

Ninety Nine Charge. now

7:31

thought a little bit about the market today

7:33

us stocks and did hire certainly after last

7:35

week it's good sign of the rally maybe

7:37

taking a a second go at it but

7:39

really off best level he's on the path

7:42

in the last hour of treating them are

7:44

kind of fell off a little bit and

7:46

like i said that's after the us and

7:48

few last week logged it's third street weekly

7:50

pullbacks the nasdaq one hundred dropping nearly five

7:53

and a half percent which was it's biggest

7:55

weekly decline since november twenty twenty two and

7:57

in the wake of that big tech was

7:59

mostly higher today, as were,

8:01

let's see, airlines, semis were up, banks were

8:04

doing well, asset managers were doing well. And

8:07

really detracting from overall market performance

8:09

was telecoms. Verizon did particularly poorly.

8:11

Entertainment didn't do so well. Healthcare

8:14

distributors and oil services as well as precious

8:16

metals were down today relative to

8:18

the rest of the market. Gold finished down

8:21

2.8%. It's

8:23

worth session in more than a year. And

8:25

crude oil finished down as well. I

8:28

think overall the market bounce gained

8:30

some traction today. And that

8:32

was primarily due to some

8:35

people thinking, myself included maybe, that the sell-off

8:37

was more of a technical than a fundamental

8:39

thing that was going on. The 5.5% drawdown

8:41

that we've seen from the recent peak is

8:44

orderly and a little bit shallow, especially compared

8:46

to some historical drawdowns in the wake of

8:49

some robust rallies. And overall, I

8:51

think it was a big benefit to the market that

8:53

you saw a lack of further escalation

8:57

of Middle East tensions. And so

8:59

looking forward, we have the start

9:01

of big tech earnings, which

9:03

will kind of put a focus

9:06

on those high-profile secular growth themes,

9:08

particularly artificial intelligence. From

9:11

an economic perspective, it looks like the calendar

9:13

is pretty quiet this week. It was quiet

9:15

today. But we will get

9:17

to Q1 Advanced GDP on Thursday, as

9:20

well as core PCE inflation on Friday.

9:22

We all know, if you've been listening,

9:24

that that is the Fed's preferred metric

9:26

when looking at inflation. So that will

9:29

certainly perhaps move some markets. Now,

9:32

let's keep moving forward and swing back to the

9:34

Investalk Voice Bank for a question from a listener

9:37

in Seattle. Hello, Justin. This

9:39

is Lewis from Seattle. You're

9:42

calling about the company Zozdes, ticker

9:44

simple, ZTS. About

9:47

a week ago, the company had some bad press on

9:49

the Wall Street Journal, dropping the price to

9:51

a point where I had set an alarm to purchase.

9:54

I Bought a position in my IRA to hold

9:56

for the long term. I Like the company's growing

9:58

cash flow and margins. The great

10:00

the about their dead do you feel

10:02

that it would be saved to continue

10:04

to add on abused your that the

10:06

current situation will cause a price to

10:08

drop more much weight. As you

10:10

for your advice and have a good day

10:12

by. Suez.

10:16

Ticker Z T S Hopefully that's how

10:18

you pronounce it. Is

10:20

a. Bios:

10:23

Pharmaceutical Company right? They do discovery

10:25

and creating new drugs and. With.

10:28

The color was hinting at is that last

10:30

week the guy had some trouble because it

10:32

turns out that one of their own of

10:34

on other new drugs or drug or they

10:37

already had but they were using it on

10:39

a animals and animals got sick of arthritis

10:41

medication and so because of that you saw

10:43

kind of a steep drop off in the

10:45

past week from about one sixty five to

10:47

where it is today which is one forty

10:49

five and you know from a debt perspectives

10:51

that six billion dollars in debt honest sixty

10:53

seven billion dollar market cap company that southern

10:55

to worry about. Their.

10:58

Interest expense ratio. Remember that interest coverage

11:00

ratio which is how much you earn

11:02

and how that covers your debt expenses

11:04

your interest expense for ten times, so

11:07

they're not highly leveraged at all. The

11:09

castles that improving the profitability. He's been

11:11

pretty stable and up until about January

11:13

the relative strength for good as well.

11:15

Over the past couple years of and

11:18

buy back shares, Bay has a pretty

11:20

consistent dividend that sitting at about one

11:22

point two percent right now. But you

11:24

know, I think any time you have

11:27

for drug. Company. News

11:29

come out that they're adverse side effects to

11:31

their. New medications

11:33

or any medications they have, I think

11:35

it's probably safe to stay away from

11:37

it. And the reason

11:39

why is because. When. That

11:41

occurs, you tend to have increase

11:44

regulatory scrutiny and. The.

11:46

Market certainly reacted to this news. It could

11:48

consolidate where it is, but I think there's

11:50

still little bit. of risk

11:52

that should subsequent news come out about this

11:54

dragon particular it'll be a negative market reaction

11:56

as well so it kind of last supper

11:59

which was about 150 over the past year,

12:01

I think it's going to probably most likely

12:03

head a little bit lower to try and

12:05

find some new support. From a fundamental perspective,

12:07

it looks good. I have nothing

12:10

really against this company as a long-term

12:12

hold, but you could see some some

12:14

short-term volatility, especially given that earnings

12:16

is coming next week, May 2nd. So I would

12:19

hold that till after earnings, make sure in the

12:21

wake of all this news that the dust settles

12:23

before I would invest more in this company. Thanks

12:26

for the call. Now

12:29

before we know we got plenty of time, let's get

12:31

into it. So let's

12:33

talk about our main focus point today,

12:36

which concerns this question

12:39

or these questions. What caused this year's stock

12:41

market rally to stall and

12:43

what happens next? And

12:46

so as we mentioned at the top, really what you have

12:48

to understand about the 2024 stock market

12:50

rally and what is causing

12:52

its stall is two-fold, really

12:54

one thing, which is inflation, rate

12:58

cuts, it's all lumped into one group,

13:02

and the labor market. And

13:04

so after a strong start to 2024, the

13:07

rally has kind of hit a speed bump in

13:09

April. Since the start of this month

13:11

before the rally today, the S&P

13:13

500 index had dropped 4.6%, which

13:17

is on track to be its first negative

13:19

month since last October. Now

13:21

the Dow Jones Industrial Average is barely holding onto

13:24

its gains for this year, up only about 20

13:26

basis points. Again, this is going till

13:28

Friday of last week. And the

13:30

NASDAQ composite has managed a almost 4%

13:33

increase year to date. And

13:37

it's not just about price movements, right? It's

13:39

about investor sentiment as well. CNN's fear and

13:41

greed index moved after last

13:43

week from greed to fear. And

13:46

so we have to take a step back and

13:48

say, what is driving this shift? And

13:50

the answer is several factors. One is

13:52

economic data and inflation. And

13:54

it's been pretty robust. And sometimes in these situations,

13:57

good news is in fact bad news. If the

14:00

Market is for rate cuts.

14:02

And. There continues to be robust economic news. The

14:04

said really has no reason to cut. And

14:07

so you'll recall that in March

14:09

we were at we had three

14:11

hundred and three thousand jobs added,

14:14

far exceeding expectations that only that

14:16

consumer spending has continued to rise

14:18

despite higher interest rates. And.

14:20

Strong economic performance has led a lot of

14:23

analyst the market as a whole to adjust

14:25

and revise their expectations for when the said

14:27

is gonna start cutting interest rates now possibly

14:29

going even into September. Another

14:32

thing that has affected. The.

14:35

Rally is the Federal Reserve

14:37

stance itself. You. Had

14:39

many voting members a non voting members

14:41

like talking about how we may need

14:43

to have rates higher for longer. An

14:45

exact Jerome Powell has no indicated that

14:47

any rate cuts will likely be delayed

14:49

until there's clear signs of moderating inflation.

14:52

Vasa. Some global factors: tensions in

14:54

the Middle East particularly what

14:56

that says about oil prices

14:58

and how that affects global

15:00

supply chains and really overall

15:02

just geopolitical uncertainty that contributes

15:05

to investor caution understandably and

15:07

market volatility. That

15:09

we talked about the first three and will talk

15:11

about the next three after we back from this

15:13

break. And after we

15:15

come back was we hear from Dan from

15:17

Walnut Creek because he will be next before

15:20

we finish this focused. I

15:23

will grow. This is a desktop and if you want

15:25

to talk to me, please call. Now that Eighty Eight,

15:27

Ninety Nine checked. Every

15:40

investor is working to build

15:42

a skewer natural future. The

15:45

more you learn about how

15:47

the market works, the better

15:49

your chances for success. Invest.

15:52

Start Eight Eight Eight Ninety

15:54

Nine. Charge. suited

15:57

dan and walnut creek is calling and live

15:59

as question about brokerage accounts, how can we help

16:01

you today? Yeah,

16:04

Luke, thank you for taking my call. And

16:07

I was wondering, if

16:10

someone was to hack into my computer and get

16:12

a hold of my passwords and such, and

16:14

they got in my brokerage account, sold my

16:17

stocks, transferred the money out, would

16:20

I be liable for that? I'm

16:23

with Merrill Edge, or

16:25

would they be liable for that? You

16:29

know, that's an interesting question. And it's a

16:31

legal question, so it's certainly not in my

16:33

area of expertise. But I do imagine that,

16:35

given cybersecurity is such an important and

16:38

trust is such an important aspect of the

16:40

brokerage industry, I think it

16:43

would be pretty difficult for

16:46

somebody to break into your

16:49

brokerage account and execute trades.

16:52

Are you trying to suggest, like, if somebody hacks

16:54

into your home computer and does trades through there

16:57

and gets your passwords or within their system?

17:01

Yeah, somehow they get a hold of my password, and they

17:03

know I have them. Yeah. No,

17:05

it's certainly an interesting question. Here's what I

17:07

would say, because I don't exactly know the

17:09

answer to that, because again, it's a legal

17:12

liability question. But what I would say is,

17:14

any time you can, given

17:16

how important security is, I would always

17:18

set up two-factor authentication. I,

17:21

every morning, pretty much, check my email

17:23

and some random person's trying to log into

17:25

my Microsoft account. And the reason they can't

17:27

get in is because I have

17:29

to authorize it from my cell phone. And

17:32

so you may find, like

17:34

I do over time, I had a friend

17:36

who didn't have two-factor authentication in his checking

17:39

account, the bank he's checking out for, and

17:41

someone drained his checking account, authorized transaction. So

17:43

I think there are some easy ways that

17:45

we can protect ourselves. I think that's the

17:47

most important part, how can you protect yourself?

17:50

And one of those is to, whenever you

17:52

can, set up that two-factor authentication to make

17:54

it as difficult as possible for those bad

17:56

actors to take advantage of you. But

17:58

from the liability perspective, I honestly don't know the

18:00

answer to that question Great.

18:03

Well, thanks for much of the tip. I appreciate it. Yeah, of

18:05

course. Thanks for the call We

18:07

also have another live call from Dave in Ohio who

18:09

has a question about Southern Copper. Do you own it?

18:11

Are you looking to buy it? I

18:15

was looking at buying it. It's been coming down

18:17

and Thanks

18:20

Luke for taking my call Your

18:23

thoughts on the company and

18:25

will be a good buy point Yeah,

18:29

well Southern Copper is actually a name we hold

18:31

for clients It's had quite the performance over the

18:33

past 52 weeks right over the past year. They're

18:36

up about 41% And

18:38

it is the largest copper company And

18:41

so we talk I've spoken before

18:43

about why you would invest in this type of

18:45

company rather than a commodity and it's because They

18:48

can smooth out the volatility and and commodity prices

18:50

tend to be pretty volatile now

18:52

historically speaking copper has been a name

18:54

that has really been a harbinger for

18:56

how the Industrial expansion

18:58

has gone right? They call it. Dr. Copper

19:01

and now more than ever what it really is

19:03

is it is an in-demand Input

19:06

into the green revolution and so over

19:08

the next 10 years I would

19:11

expect that copper demand would go

19:13

up pretty significantly that being said It's also important

19:15

to buy a company at a good price And

19:17

so I certainly wouldn't be selling Southern Copper

19:19

if I owned it But right now it's trading at a price

19:21

the book of about 11.8 after this run-up It's

19:24

for looking PD is about 30. So until

19:26

that comes down closer to its average of

19:29

about six Maybe when this

19:31

thing if it breaks down below a hundred That's when I

19:33

would start to be looking to to buy a little bit

19:35

more It just looks a little overbought to me to be

19:37

honest again It's not a reason to sell it But if

19:39

you're looking to make an investment I would wait for it

19:41

to come down come down a bit before I did that

19:44

Thanks for the call Thank

19:46

you Now before

19:49

we went to a break and answered some questions

19:51

We were talking about this most recent rally in

19:53

the three three of the six factors that have

19:55

really been contributing to why it's fallen off economic

19:59

data the Federal Reserve stance and some

20:01

of those global factors, the exogenous macro

20:03

factors like tension, rising tensions in the

20:05

Middle East. And so

20:07

those are the only things that have contributed to

20:09

the stymieing of this rally. One is bond yields.

20:12

Bond yields have spiked with

20:15

the 10-year yield reaching 4.65% as of last

20:17

week. And

20:19

so what that really tells us is that bond

20:22

investors expect interest rates to remain elevated

20:24

for an extended period of time. So

20:26

this goes back to the whole inflation rate cut

20:28

scenario and investors are coming to terms with the

20:30

fact something we've been saying, which is higher for

20:33

longer, is generally going to be the case. Now

20:36

there is corporate earnings. Overall

20:38

corporate earnings growth has been pretty modest. There

20:41

hasn't been any downward shocks really, but it's

20:43

been at about 90 basis points.

20:45

So nothing really to be excited about.

20:48

And lastly, investor behavior, which has been

20:50

shifting more and more towards safer assets,

20:52

notably gold. Gold has

20:54

rallied pretty significantly over the

20:56

past year. And we talked about a

20:59

funny but important story about how much

21:01

gold is being sold and bought at

21:03

Costco, about $200 million worth every

21:05

month. So more likely than

21:07

not, it seems like April is the start

21:10

of a repricing trend and investors should brace

21:12

for some continued volatility. But that

21:14

really, for long-term investors, is a good

21:16

thing as the next few months may offer

21:18

good prices on great companies and

21:21

many opportunities to further

21:23

invest. Now

21:26

the next Investalk, we'll look into the story behind

21:28

this question. Can you make

21:30

IRA contributions at any age? Or

21:34

rather, you can make IRA contributions at any

21:36

age, but should you? Traditional

21:38

IRA contributions with RMD age

21:40

may make sense, but it depends on your

21:43

tax situation. We'll dig into

21:45

this topic tomorrow. But for now, I'm Luke

21:47

Guerrero, and I'm ready to take your calls

21:49

at 888-99-Chart. Or

22:00

the best person to ask if is

22:02

it a good idea to sell your

22:04

losses in a Roth Ira and just

22:07

use whatever you have left to reinvest

22:09

into better stock? Invest Talk is ready

22:11

Twenty Four Seven or really appreciate it.

22:13

You could give me an entry point

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for a company called Medtronic M V

22:18

P. Call Invest Talk Eight Eight Eight

22:20

Ninety Nine Short or post your questions

22:22

on the and just talk to you

22:25

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24:15

today. This

24:23

is InvestOn. Luke Guerrero is

24:26

here taking your calls live.

24:29

888-99-CHART. This

24:34

is Kevin calling from La Crescenta,

24:36

California again. I have a question

24:38

regarding municipal bonds. I'm in

24:41

California and I'm in the highest

24:43

tax bracket. I'm wondering if it's

24:45

a good strategy to buy municipal

24:48

bonds that have a high coupon

24:50

rate, high yield to maturity, say

24:53

over 5%, and then a coupon

24:56

rate of like 6%, but then

24:58

buy them over par so that

25:00

I get the interest annually

25:03

and don't pay taxes on

25:05

it. Then at

25:08

maturity I can end

25:10

up with a loss, a capital

25:12

gains loss, that I can use

25:14

to deduct against my gains

25:17

in the year that the bond matures.

25:20

These are pretty long-dated bonds. They mature

25:23

far out in the future. I'm wondering

25:25

if you think that's a good strategy

25:27

for the next 8 to 10 year

25:30

range. I look forward to hearing

25:32

your answer on the show. Thanks again for all your help.

25:36

That's an interesting question and certainly an

25:39

interesting strategy. Let's dissect it a

25:41

little bit. Municipal

25:43

bonds tend to give you,

25:45

well they certainly give you federal exemption from

25:47

the interest income and can give you state

25:49

and local tax exemption as well. That is

25:51

solely for the interest income, so any capital

25:53

gain you don't get tax exemption for. That

25:56

sounds great, but generally speaking municipal bonds

25:58

are going to pay lower

26:02

coupons and that's because

26:04

you do get that tax benefit and

26:06

a lot of people love more than anything

26:08

to beat the tax man I understand that

26:10

but generally speaking municipal bonds should only be

26:12

purchased for people like the caller who are

26:15

in a high income bracket. Now

26:18

the strategy itself could be

26:20

good you're getting interest-free income definitely

26:23

federally maybe even state and local depending on

26:25

the bond and you could

26:28

recognize a loss once

26:30

the bond reaches maturity or if you decide to sell

26:32

it as it gets closer as it moves back to

26:34

par but there are a lot

26:36

of things to consider one is again as much

26:38

as you do love beating the tax man your

26:41

net return is what you should be concerned about

26:43

it could be possible that after taxes you could

26:45

invest in a like-kind bond that

26:47

is at a discount and you

26:49

could actually be more beneficial from even paying

26:51

those taxes so you should always be thinking

26:54

about your after-tax return not just about paying

26:56

the fewest taxes about those new

26:58

dollars coming in another thing to

27:00

consider is why is it trading in a premium maybe

27:02

it's trading at a premium because it's a callable bond

27:05

what happens if they call that bond early now

27:07

you're not getting that

27:10

interest income that's tax deductible anymore and

27:12

they may even call that bond at a premium beyond

27:14

what you paid and now you're paying

27:16

taxes on that game so

27:18

I think it can be an interesting strategy

27:20

but it can also be a complex strategy

27:23

because there are a lot of things that

27:25

go into bond pricing so

27:27

keep all of that in mind I'm not saying don't go

27:29

for it it certainly could be beneficial from a tax perspective

27:31

but there are a lot of things and those are just

27:33

some of them to think about thanks for the

27:35

call now

27:38

let's shift gears back to a talking

27:41

point today that focuses on the

27:44

New York Stock Exchange and a

27:46

potentially radical change and that

27:49

change would be making

27:51

the exchange 24-7 because

27:54

apparently they don't want me to sleep and they don't want you

27:56

to sleep and so it's pulling

27:58

market participants on this idea And

28:01

that survey showed growing interest in trading

28:03

blue chip stocks, which tend to be

28:05

the most liquid, overnight between

28:07

the hours of 8 p.m. and 4 a.m. Eastern.

28:10

And so in essence, this is all in a

28:13

response to really crypto

28:15

in a way that you can trade

28:17

24-7 and the rise of retail investor

28:19

activity in the wake

28:21

of the coronavirus pandemic lockdowns. And so due

28:24

to this demand, some

28:26

retail brokers are actually already doing this Robinhood

28:28

and interactive brokers offer a

28:30

24-hour weekday access to U.S. stocks only

28:32

on the weekday, not on the weekends,

28:35

with trades either matched with their internal

28:37

holdings or conducted via

28:39

a dark pool trading venue, where

28:41

they're often paired with Asian retail investors because

28:44

it's daytime over in Asia during these trading

28:46

hours. And so the

28:48

New York Stock Exchange asked respondents

28:50

some key questions. First,

28:53

whether they thought round-the-clock stock trading should take place

28:56

on weekends and not just the weekday, how

28:59

investors should be protected from price swings, because

29:01

frankly, it would be pretty low liquidity, right?

29:03

And so because of that, there'd be a

29:05

lot of volatility. And

29:07

also how respondents would staff any

29:10

overnight sessions. And all

29:12

this comes at a time when a

29:14

startup 24 exchange, which is backed by

29:16

Stephen Cohen's 0.72 venture fund, is

29:19

seeking SEC approval to launch the first

29:22

round-the-clock exchange. And

29:25

so because of that, the SEC has several

29:27

months to scrutinize the plans, but there are

29:29

definitely some important questions that they're going to have to

29:31

ask. How many people are even going

29:33

to participate? How will

29:35

clearing houses, who are

29:37

the ones that make sure trades don't default

29:39

generally within these exchanges, how

29:41

do they help settle trades? Are they going to have

29:44

to keep the same set hours to troubleshoot? So

29:48

will it happen? I don't know. Will

29:50

the SEC, what are they

29:52

going to decide? Again, who knows? I

29:54

think frankly, I'm in favor of it. I think

29:56

that you try and set up a regulatory regime

29:59

to give market participants. as

30:01

much ability to trade in and out of assets at

30:03

any given time and then from there it's

30:05

a market. See what

30:07

those people think, see if there's actually volume that

30:10

comes but overall I think this

30:12

is one of the knock-on effects that I saw

30:14

coming when crypto trading became a thing and that

30:16

is you know news

30:18

happens, happens on

30:20

the weekend, markets can't react until

30:22

Monday generally so I think overall

30:24

as instantaneous as possible market reaction

30:26

to news is always a good

30:29

thing because it's going to

30:31

drive asset prices towards what their fair value

30:33

is. Now we

30:35

have another live call Frank from San Mateo and

30:38

he has a question about new company that is not

30:40

public yet. Hi, yeah

30:44

you know I was just reading Barron's and it was

30:47

very intriguing because it you

30:49

know is backing up against the San

30:51

Vidi and the thing that caught my

30:53

intention was its ship is

30:55

what 72 inches or something

30:58

like that but the statement

31:00

was it can do in like one

31:02

day what Nvidia can do in a

31:04

month that I was thinking yeah well

31:06

you know this is I just wanted

31:08

somebody to evaluate that the possibility of

31:10

this thing kind of taking over from

31:13

Nvidia I just don't know if you had an

31:15

opinion on that. Yeah

31:18

well you know so is this a startup company

31:20

or what's the name of this company? Yes

31:23

sir the company is

31:26

founded by Andrew

31:28

Fieldman and the

31:30

name of it is

31:32

Cerebra, C-E-R-E-B-R-A-S systems is

31:34

not yet it

31:36

hasn't done an IPO and it

31:39

builds these microchips that are just

31:41

gigantic you know like he

31:43

was saying you know like Nvidia's ship is one

31:45

inch by one inch and this thing is like

31:47

the whole ship is like 72 inches and

31:50

the statement somewhere in the article was I

31:52

thought it was interesting that you know they

31:55

can do in one day what Nvidia does

31:57

in one month and I thought gee you

31:59

know I mean, they're

32:01

building these chips and

32:04

I don't know if they're selling them or just letting

32:08

people subscribe to the use of their

32:10

computers. And I didn't know if you knew

32:12

anything about it, but I just thought, you know,

32:14

that boy, that sure, you know,

32:16

speed is what we're looking at for

32:19

all these people to run this

32:21

data down. I

32:24

sure thought this company could

32:27

claim a lot of work away from NVIDIA. I didn't know

32:29

if you had an opinion, but anyway. No,

32:31

I mean, certainly it's an interesting question. I think

32:34

there's a lot to consider here. One

32:36

is a private company, therefore us as investors, we don't

32:39

really have access to it. And

32:41

so secondarily, because we investors don't

32:43

have access to it, a public company in NVIDIA is

32:45

going to have a lot better time raising capital. So

32:48

if somebody tries to take a slice

32:51

out of NVIDIA's business, they have

32:53

the benefit of actually having revenue.

32:55

They actually have money coming in. They actually have

32:57

cash flow. They're a public company. They have an

32:59

ability to raise capital pretty easily. And frankly, their

33:01

shares are pretty in demand. And

33:04

so, you know, any time that these public companies

33:06

come out and say, we have this that beats

33:08

this, or rather when a private company

33:10

comes out and says, we have this new product that

33:12

beats a public company. My reaction is, sounds good. Sounds

33:14

to me like there's some investment banks trying to take

33:16

you on a road show to bring you public and

33:18

boost up your IPO. And I'll check you out in

33:20

a year. Once you actually have a history,

33:22

all your owners just locked up shares have been sold. And

33:25

I can get some fundamental analysis of you. So

33:27

I mean, this sounds very interesting. From

33:30

our perspective, we certainly can't invest in it yet. But

33:32

maybe something to keep an eye on. Thanks for the tip.

33:36

Yeah, thanks for talking about it. Thanks again. Cool.

33:40

I hope you've been telling your friends about

33:42

our Invest Talk audio podcast and how it's

33:45

also posted in video format on our YouTube

33:47

channel. And it seems that every

33:49

day now we receive finance and investment questions from

33:51

the comment section of our Invest Talk YouTube channel.

33:53

And here's one that came in recently. What

33:56

about ticker symbol ADC for a long

33:59

term investment in my Roth. I

34:01

don't have any REITs in my portfolio, and

34:03

I started a small position at the current

34:06

price. I'm not yield chasing, but the potential

34:08

for growth seems promising if interest rates ever

34:10

head down from this sticky inflation. Any

34:13

thoughts on a long-term hold and a

34:15

price point? So

34:17

ADC is Agri-Realty Corporation. I feel

34:19

like we looked at this recently,

34:21

and it is a retail REIT.

34:23

Now, just anytime you look at REITs, what

34:25

we want to do first is we want

34:27

to take a look at how its revenue

34:29

is exposed, where its properties. Is it regionally

34:31

diverse? Does it have different types of tenants,

34:35

right? Because if you were all focused in one,

34:37

it's not very helpful. And so

34:39

it looks like it's pretty regionally diverse. They

34:41

got properties in Florida, Michigan,

34:43

New York, Georgia, the South,

34:45

the Northeast. We like that. That's a good thing.

34:49

Secondarily, we want to take a look at its debt

34:51

levels. Does it have too much long-term debt? It's got

34:54

$2.4 billion on debt on a $5.7 billion market cap

34:56

company. And so that's pretty

35:00

good for REIT, actually. And year-to-date,

35:02

it's only down about 10%. I

35:05

think that's beating the industry. Yeah, just slightly. It's

35:07

beating the industry by about a percentage point in

35:11

2024. And I think this REIT specifically has had

35:13

some pretty good cash flow growth as well as

35:15

profitability growth. It's not too highly

35:17

levered, which is a good thing. So that means

35:19

it has room to raise more debt capital, raise

35:21

more equity capital if it needs, make further investments.

35:23

And like you said, now would be a good

35:25

time to invest in REITs if you believe that

35:28

interest rates are going down or at least there's

35:30

going to be a stable path of interest rates

35:32

going forward. I think that interest rates

35:34

are probably going to be higher for longer. I

35:36

think maybe REITs still have an opportunity to fall

35:38

as well. But certainly, if you don't have any

35:41

real estate exposure, you're looking for real estate exposure,

35:43

you're a long-term investor. This seems to be a

35:45

company that has a pretty consistent dividend over the

35:47

years, low debt, a lot of room to grow.

35:50

Thanks for watching and leaving a comment. Here's

35:55

another question that came into our YouTube channel because we got

35:57

plenty of time to answer. And that is

35:59

interesting. I wanted to hear your

36:01

thoughts on NLCP Newlake Capital

36:03

Partners. It is an over-the-counter

36:05

reach in the cannabis sector. From

36:09

what I can see, it has minimal debt, and

36:11

with some growth, what do you

36:14

think of its valuation and how do

36:16

you think de-scheduling or legalization would affect

36:18

the company if that ever happens? So

36:21

Newlake Capital Partners is a

36:23

very, very small

36:25

company. Its market cap is $368

36:27

million. And

36:30

in terms of debt, it actually has quite

36:32

a bit of debt. Let me check something

36:34

else just to make sure that we got

36:36

the correct debt figures here. And

36:41

so while that's pulling up now, they have about $3

36:43

million in debt. So they don't have really any debt

36:45

at all. Their cash flow has been improving, their profitability

36:47

has been improving, and their price

36:49

performance has been pretty good over the past year. For

36:51

most REITs are down, they are up

36:54

14% year-to-date, 45% over the past 52 weeks. For

37:00

me, frankly,

37:03

it's a high-risk, higher-run play. It's a

37:05

very small REIT. It got no debt, which

37:07

is good. But their future is going to

37:09

be tied to the regulatory burden associated with

37:12

cannabis. We're in an election year. We

37:14

don't know what's going to happen. Certainly, both candidates have

37:16

differing opinions on cannabis legalization. So

37:18

if you're willing to take the risk, go

37:21

for it. If not, I think this is a little too

37:23

rich for my blood. In terms of

37:25

risk, it's an over-the-counter REIT. It's very small. One

37:28

thing they got going for them is decent growth and no

37:30

debt. But again, for me, I think the

37:32

regulatory issues here seem to be a little bit too risky

37:35

for myself. Now,

37:37

this is Investalk now with more than 58 million

37:40

downloads. Let's keep moving and play another question

37:42

that came in earlier to 888.99 chart. Hey,

37:47

Luca Justice, Mattson South, Florida. I

37:49

wanted to call to get your opinion on Pay Matches. Take

37:51

your simple P-A-Y. You guys

37:53

compete with companies like ACI Worldwide and

37:55

REIT Pay. Looking

37:58

to bolster my... payments

38:01

holding beyond companies like PayPal

38:03

to more specific companies. Again

38:05

ticker symbol PAY looking for your opinion on

38:07

a three to five year hold. Thank you.

38:12

So ticker PAY is paymentis,

38:15

which honestly I think is a great name for a company, and

38:18

it is a cloud-based bill

38:20

payment technology. It's

38:23

decent-sized small cap, it's kind of the mid-range of

38:25

small caps, 2.3 billion dollars, and year to date

38:27

it's done pretty well. Up 8%, up 136% over

38:29

the past year. Now it looks like

38:36

their revenue growth is kind of

38:38

all over the place. They didn't grow much until

38:41

the pandemic happened, then they started growing

38:43

a little bit. They're set to grow

38:45

by about 15 to 20 percent, 15

38:48

percent this year, which is pretty significant. They've

38:51

had a run-up over the past year, so their shares look

38:53

a little bit overbought to me, and the market tends to

38:55

agree with me. Short interest at 6.18%. They

38:58

have very minimal debt, only 11 million

39:00

dollars in debt, and again they're a

39:02

relatively new company in terms of their

39:04

public reporting, and so their cash flow

39:06

has been pretty steadily increasing as has

39:09

their profitability. One

39:12

thing to note is they had

39:14

some blowout Q4 guidance, and or

39:17

rather some blowout Q4 earnings, and pretty

39:19

strong guidance. So you know for me

39:21

looking at this company that is very,

39:24

very highly valued from a relative

39:26

valuation perspective, forward-looking price earnings is

39:29

48. If this doesn't hit its

39:32

projected earnings, I think you're gonna see

39:34

a pretty steep drop-off come May 1st.

39:36

So you know if they continue their

39:38

growth trajectory over the past two years

39:41

into this quarter, maybe I would consider

39:43

buying it if their forward-looking guidance brings

39:45

its forward-looking price earnings multiple down to

39:48

something way more realistic than 48,

39:51

but where it's priced at right now, I think I'd have to

39:53

pass on this one. Now

39:56

we're gonna head into a short break. As

39:58

always, we enjoy answering your voice paint calls

40:01

and your live calls during the podcast when you call

40:03

into 88899 chart. Looking

40:05

forward to talking to Paul from

40:08

Walnut Creek when we get back from this

40:10

break. Every

40:20

investor is working to build

40:22

a secure financial future. How

40:24

they get there and when

40:26

they get there, that depends

40:28

on many variables. The

40:30

more you learn about how the market works,

40:33

the better your chances. So

40:35

don't forget to call Investalk.

40:37

88899 chart. We

40:42

have someone calling in live, Paul from Walnut Creek who has

40:44

a question about Uber. Do you own it or are you

40:46

looking to buy it? I

40:49

own it in a diversified account. I have

40:51

a small position in it and

40:54

it's taken a step back

40:56

here in the near term. I just wanted

40:58

to get your take on timing. I like

41:00

it long term but

41:03

given the current state of the market,

41:05

I'm wondering if I should put

41:08

it to the sidelines, get rid of it and maybe buy

41:10

it back in the future at a better buy point. Everyone

41:14

knows what Uber is. Certainly, if you've left

41:16

the house and didn't feel like driving, it's

41:19

a big part of everybody's life. I think

41:23

Uber benefited from two things over the past year. One

41:25

is the market did very poorly in 2022 and so every tech

41:28

name, every name did poorly. And

41:30

then secondarily, they also made profit for the

41:32

first time in 2023. And

41:35

so they've had a pretty significant run up over the past year.

41:37

123% is what they're up

41:39

right now. But I think that

41:41

where it's priced at right now, it's relative

41:43

valuation. It's about 12 times

41:46

priced a book, 46 for looking price

41:48

earnings. I think what you saw last

41:50

week is a rotation out

41:52

of those growthy tech names. And,

41:55

You very well may see that over the next

41:57

couple months. So, you know, I may not trim

41:59

on that. All of it. if you still

42:01

want to hold onto it. It sounds like

42:03

it's a smaller part of your diversified portfolio,

42:05

but certainly you know you're probably up a significant

42:07

amount. I would that would at least think about

42:10

taking profits as as this rotation seems like

42:12

a it's it's it's gonna be a theme

42:14

over the next couple months. And.

42:16

So the call. Them. For we had

42:18

Oss on a talk a little bit about

42:20

a shifts. In the oil

42:22

industry. And Venezuela's P

42:24

D V S A in

42:27

the wake of Us sanctions,

42:29

is increasingly turning to digital

42:31

currencies. Specifically.

42:35

U S D T, which is

42:37

also known as Tether for it's

42:39

crude and fuel exports and so.

42:42

Busy. Movies more than anything designed

42:44

to try to sidestep sanctions.

42:48

That friend to freeze their sale

42:51

proceeds in foreign banks Because the

42:53

Us Treasury Department recently allowed P

42:55

D V S A the general

42:57

license to expire without renewing it.

43:00

Citing a lack of electoral reforms in the

43:02

country, And. So

43:04

what this does is it requires.

43:09

Customers and providers to wrap up

43:11

transactions by the end of May.

43:14

And so companies must now wait.

43:17

To. Get individual Us authorization to

43:19

deal with Ptv Essay. And

43:23

Venezuela's oil minister noted that digital

43:25

currencies might become the preferred method

43:27

of payments. Under. Some contracts

43:30

mostly because transacting in.

43:32

You. As a D T or other

43:35

digital currencies rather than Us Dollar removes

43:37

that layer of the ability of the

43:39

Us Treasury Department to sanction new customers

43:41

whole crypto currency in a digital wallet.

43:44

So I said Interesting. Well, Could.

43:46

It points to a further

43:48

use. Of crypto currency beyond

43:50

words currently use. Maybe. I

43:53

think I've been saying for some time a lot

43:55

of people have been saying for some time the

43:57

primarily views of crypto currency has been money, money

43:59

laundering and avoid. Sanctions The seems to

44:01

be a. A

44:03

further it's. A vat of

44:06

that that use case. But to

44:08

me it's interesting in that. You.

44:11

Know these countries that are now

44:13

seeing a way to get past

44:15

Us sanctions have created a new

44:17

business because most customers of this

44:19

company. Are get

44:22

a whole digital wallets means that

44:24

they're going to be trading houses

44:26

and intermediaries that come in that

44:28

both reduce Venezuelan oil was proceeds,

44:30

profits and also said profits for

44:33

themselves. So you're as investors this

44:35

raises several consider is. Because

44:37

integration, digital currencies and major sea

44:40

level transactions could signal brought her

44:42

acceptance. Maybe not for a good

44:44

reason, but it also is. This

44:46

becomes the predominate use case means

44:48

that crypto currency will see a

44:51

lot more regulatory scrutiny moving forward.

44:55

Hundred Rounds completes another episode of the

44:57

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