Smart Investing is the radio show where Brent and Chase try to make investing easier to understand. They demonstrate long-term investment strategies to help you find good value investments.
Episodes
4 days ago
4 days ago
Bank stocks feel the pain from private credit
You may have noticed that the bank stock index is down about 10%, which is more than the S&P 500’s decline of 3% at the beginning of the year. It is estimated that banks made roughly 10% of their total loans to non-depository financial institutions known as NDFIs, which includes private credit companies. It’s also estimated that these types of loans in the past three years have grown from $1.1 trillion to $1.9 trillion. The banking stocks may struggle for a few more months, but the good news is a recent study from the Office of Financial Research found that private funds and BDCs, which are Business Development Corporations, use lines of credit and currently they’ve only used about 50 to 65% of the buying capacity. The tough decision for the banks is do they cut off the line of credit now or do they take on more risk and let those lines of credit increase to 70 or 80%? I feel I hope they stop it now because the risk I think is too great going forward on these private loans. We do hold two banks in our portfolio, which means we may see little to no gain in those stocks in 2026 due to the concerns around private lending. However, we do invest in companies for the long term and understand that difficulties can arise and cause a down year for any company. Long-term I don’t believe this will have a major impact on the financial situation for most of the bigger banks.
The big business of youth sports
I remember growing up and wishing for a baseball or maybe a football for Christmas so I could go down the street and play with my friends. Fast forward to today and youth sports are a multibillion-dollar business for companies. The average American family spends $1,000 on sports per child. Whenever there’s an opportunity someone or some business will step in and fill the void, Dick’s Sporting Goods has helped fill this void. Dicks opened back in the 1940s by a gentleman name Richard Stack, who had the nickname, Dick. His grandmother had $300 cash in her cookie jar and that is what Dick used to start a fishing supply shop in Binghamton, New York. There are now more than 700 stores across the country and their newest concept known as Dick’s House of Sport is expected to have around 100 stores by the end of next year. These are mega stores that are 150,000 square feet, which is three times the size of a normal store. In these mega stores you will find batting cages, climbing walls, golf simulators, and even fields to run around to test out your new cleats. Dicks have been doing well considering it saw revenue skyrocket to $14.1 billion last year. This was twice what it was 10 years ago, not a bad feat for any company.
It’s not just oil; aluminum prices have been surging!
With the recent war in Iran, the rising price of oil and gasoline has been quite noticeable and has been discussed heavily by various news outlets. One lesser-known impact from the difficulties within the Strait of Hormuz is the price for aluminum has surged. People may not notice it since they don’t necessarily buy aluminum directly, but if the problem persists you could see price increases for your favorite six pack of soda or beer. Outside of packaging, aluminum is also used across electronics, construction, transportation, and solar panels. In 2025, the Middle East accounted for roughly 21% of unwrought aluminum imports, which is the raw, unprocessed metal, and 13% of wrought aluminum imports, which is aluminum that has been mechanically shaped into sheets, rods, or other finished forms. Due to supply concerns, the price of aluminum has now increased to 4-year highs and there are concerns it could push even closer to $4,000 per ton from the current price around $3,400 per ton. Aluminum is the most abundant metal on earth, but production has slowed with locations like Bahrain’s Alba cutting production by 19%, this location is home to the world’s largest smelter. Unlike oil, China could have a huge impact when it comes to producing aluminum. China is already the biggest producer of aluminum, but to try and reduce emissions and prevent overcapacity they keep production constrained. They currently have several idle smelters that could be restarted if they feel aluminum prices are too high. Like we have said with the price of oil, I don’t see this as a long-term problem, but the longer supply is constrained for these input costs, the more problematic it is for inflation.
Surprise, US oil inventories actually increased
I know what you’re thinking with the price of gasoline and oil increasing, oil inventories must be declining. Fortunately, that is not the case. If the inventories were decreasing the price of oil and gasoline at the pump would probably be even higher. For the week ending March 13th, crude oil inventories rose by 6.2 million barrels to 449.3 million barrels. This does not include the Strategic Petroleum Reserve (SPR). Everyone including the analysts thought for sure there would be a decline and the estimate was for a decline of around 40,000 barrels. Gasoline inventories did fall by 5.4 million barrels to 244.1 million barrels as of March 13th, but that inventory level is still 3% above the five-year average for gasoline inventories. If the inventories remain high, we could see the price of oil and gasoline begin to decline in another couple weeks or so. It will not go back to where it was a month or so ago, but we should hopefully start seeing a decline back to more normal levels soon.
Financial Planning: How to Create a Tax-Free Account for a Child
A powerful way to build tax-free wealth for a child is by strategically using the kiddie tax rules with investments that generate qualified dividends and long-term capital gains. Under the kiddie tax, the first $1,350 of investment income is tax-free, and the next $1,350 is taxed at the child’s rate, which for capital gains and qualified dividends is typically also 0%. This means a child can receive up to $2,700 of investment income each year with no federal tax. Income above this level is taxed at the parent’s rate, which may be 15% or 20%. While $2,700 may not seem like much, it can support a surprisingly large portfolio because dividend yields are typically low and capital gains are only recognized when assets are sold. For example, a portfolio with a 2% dividend yield would not generate $2,700 of dividends until it reaches about $135,000. While the account is below that level, capital gain harvesting can be used each year to bring total income up to $2,700, allowing gains to be realized tax-free while increasing the cost basis. Because this involves realizing gains (not losses), there are no wash sale restrictions, and investments can be immediately repurchased. By consistently harvesting gains over time, the child can build a portfolio with minimal tax drag and potentially access those funds later with little to no capital gains tax, especially if they continue the strategy after they are no longer subject to the kiddie tax.
Companies Discussed: Super Micro Computer, Inc. (SMCI), SL Green Realty Corp. (SLG), Public Storage (PSA) & The Campbell's Company (CPB)
Friday Mar 13, 2026
Friday Mar 13, 2026
Private credit woes continue!
Investors continue to worry about the private credit market and this week has been filled with troubling news from the sector. According to the Financial Times, Glendon Capital Management said private credit funds run by Blue Owl (OWL) and several of its peers may have understated loss rates in their portfolios, suggesting actual losses could be higher than reported. This has led to concerns around the “true valuation” of these assets. This wouldn’t be surprising given the little clarity that we have for these loans. We also saw JPMorgan Chase take a conservative approach and mark down the value of some loans tied to private credit vehicles. All the negativity has now caused investors to question the long-term viability of this investment, and many are now wanting to redeem their shares. The problem is these companies don’t have to give you all your money back when you ask for it. Blackrock, Morgan Stanley, and Cliffwater all had to curb withdrawals as requests exceeded the pre-existing limit, which normally looks to be around 5%. Looking at Morgan Stanley’s North Haven Private Income fund in particular, redemption requests totaled 10.9% of shares outstanding in Q1 and the fund said it would honor 5% of those requests, which is roughly just 45.8% of each investor’s tender request. This now means those investors have to continue holding the fund until next quarter and can try again at that time to sell additional shares. I also recently learned of a term in the private credit space called Paid in Kind interest, also referred to as PIK. It is essentially an IOU that borrowers give to lenders instead of cash. When this occurs, the borrower’s debt just increases by the interest due rather than the borrower needing to make an interest payment. The crazy thing is that these PIK receipts are still counted as interest income and it counts towards the management fee. An analyst by the name of Ron Kahn, who runs a unit at the Chicago investment bank Lincoln International that does valuations for about a third of all U.S. private credit loans, wondered why private credit companies were showing such few defaults. What he found was lenders were proactively amending loan agreements by allowing PIK interest rather than cash payment so they could avoid default. Lincoln International saw private credit loans with PIK interest rise to 11% at the end of 2025, which was up from 5% in early 2022. There are many concerns in this space right now and I’m sure glad I don’t have any assets in this space!
Prediction markets are hitting college campuses to find gamblers
Prediction markets have something FanDuel and DraftKings don’t, access to the 18 to 21-year-olds in college. Gambling is generally limited to adults 21 years or older, however, prediction markets that are run by companies like Polymarket and Kalshi are trades that are regulated as financial derivative contracts by the Commodity Future Trading Commission. This allows anyone 18 years or older to gamble using these prediction markets. Both Kalshi and Polymarket are hitting college campuses across the country and throwing cash around to lure in 18 to 21-year-old students to place bets via the prediction market. They are doing this by using fraternities and even campus clubs to promote their platforms and in some cases, they pay them $10 per each new account they sign up. There was one fraternity who received $30,510 in two weeks which the fraternity used for parties and new furniture. They are also using student influencers as brand representatives to sell other students on the prediction market. These two companies have no shame as they have even used college athletes to influence others to bet on sports with prediction markets.
Don’t pay attention to the price of oil on a daily basis
I say that because there’s so much speculation out there and likely the information you receive on the price of oil is useless when you look forward to a few months and maybe even just a few weeks from now. Last week the price of oil surged around 35%, but on Monday after comments from the President that this will not last long in the Middle East, crude oil fell back down to under $85 a barrel. Why is this volatility in the price of oil happening? Roughly 20% of global oil consumption is exported through the Strait of Hormuz and about 20% liquefied natural gas exports worldwide also pass through the narrow waterway. The United States over the years along with other allies have spent billions of dollars making sure the waterway remains open. At the smallest part it is only 21 miles across and to the northeast there sits, Iran. Officially the waterway is not closed or blocked physically, but there are concerns of going through the strait for fear of being hit by a missile shot from Iran. The other concern is how long this will go on because storage facilities for oil have pretty much reached full capacity and when that happens the producers need to turn off the well in a process known as “shutting in” occurs. When this happens, there can be problems and delays turning the wells back on and some may not regain the original flow. As you can tell, it is not a simple process and it’s not just oil that’s goes through the strait but also liquified natural gas and even large amounts of fertilizer flow through the area as well. I would not recommend making any investment decisions during this time around anything that has to do with oil or even energy for that matter.
The International Energy Agency (IEA) agrees to historic oil release
The IEA, which is an organization of 32 member countries primarily with advanced economies in Europe, North America and northeast Asia, agreed to release 400 million barrels of oil from strategic reserves. Currently, IEA members hold more than 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation. While the strategic release is helpful, it is only a temporary fix considering nearly 20 million barrels passes through the Strait of Hormuz per day in normal times. China also could help with oil prices if it reduced its purchasing or released some of its stockpile. Ahead of the war China was buying oil at an elevated rate and in the first two months of the year, crude imports soared 15.8% compared to a year earlier. It's estimated as of January China had a stockpile of 1.2 billion barrels as well. China has also been continuing to receive oil from Iran and since the war began it's estimated they've received close to 12 million barrels from the country.
Surprise.... Gen Z is going to the mall for in-person shopping!
You may be hearing that younger people don’t go to the mall any longer, but that is not true, it’s just a little bit different than when people went 20 years ago. Gen Z, the generation consisting of 14 to 29-year-olds, shops at the mall but first they check online sources like Instagram and TikTok to see what's in style. According to Nielsen IQ, the global annual retail spending by this generation is expected to be over $12 trillion by 2030. Shoppers between 18 and 24 years old made 62% of their general merchandise purchases in stores last year, but shoppers 25 and older made just 52% of their purchases in person. Some of the reasons given for the in-person preference was that Gen Z does not like to pay the shipping fees along with common sense things like they want to touch the item and see it in person especially if it’s clothing, they want to see how it looks on them. Malls understand this, and many of them have actually set up areas so that the young shoppers can take their selfies in fitting rooms and other areas that are social media friendly. If you’re a salesperson in a retail store and if you’re talking to this generation, you’d better be up to date when it comes to what’s going on in social media. Some salespeople even have a tablet to show shoppers how influencers are styling different items. It is a misconception that this generation is averse to talking to people, but how you talk to them is different. They’d rather get their advice from an influencer or a friend rather than a salesperson.
Companies Discussed: The Gap, Inc. (GAP), StubHub Holdings, Inc. (STUB), Delta Air Lines, Inc. (DAL) & Uber Technologies, Inc. (UBER)
Friday Mar 06, 2026
Friday Mar 06, 2026
Friday Feb 27, 2026
Friday Feb 27, 2026
These massive AI deals look concerning
The numbers are exciting when companies like Meta or OpenAI announce they'll be purchasing billions of dollars in chips or computing power from companies like Nvidia or AMD, but there always seems to be a catch. Most recently, Meta announced that it entered a multiyear deal with AMD to deploy up to 6 gigawatts of the company’s graphics processing units for artificial intelligence data centers and includes use of AI-optimized central processing units, or CPUs. This deal comes a week after Meta committed to using millions of Nvidia's processors to power its AI expansion. While I have my concerns with all the money Meta is spending, my bigger concern with this new AMD deal is the use of stock warrants. Full details for the deal weren't announced, but we did see the deal includes a performance-based warrant for Meta to acquire 160 million AMD shares, about 10% of the company. The first tranche vests when the first 1GW of Instinct GPUs are shipped. Other tranches vest as Meta, makes purchases to 6GW. Vesting is also tied to stock price thresholds for AMD and technical and commercial milestones for Meta. AMD also struck a similar deal with OpenAI where they received warrants to acquire 160 million shares of AMD and it was tied to deployment and stock price benchmarks. The reason this is concerning is because of the potential dilution and again the circular nature of these deals. Essentially these companies are saying they will spend $30 B buying our products and we will give you $30 B in stock warrants back. Stock warrants give holders the right but not the obligation to buy or sell shares at specific strike price before an expiration date. If they are exercised, it creates new stock, which would dilute current shareholders. Based on what I have seen, the exercise price for these warrants is $0.01. Ultimately, I just don't believe this will end well for all players in this space, and I think there is a lot of money that will be lost by investors.
2025 trade deficit looks deceiving
Some people are saying that the tariffs didn't work because the trade deficit in 2025 only fell to about $901.5 B from just over $903 B in 2024. However, if you break down the numbers quarter by a quarter, it tells a different story. The first three months of the year, there was a $400 billion trade deficit, but each quarter after that it began to decline. In the second quarter, it fell drastically to $180 billion. There wasn't much of a change in the third quarter with a slight drop to $175 billion and then in the fourth quarter there was a drop to $145 billion. We try to explain to people that the US economy at $31.5 trillion is like a big ship in the ocean; it cannot turn quickly. If people would be patient, I think they would see by the end of 2026 there would be further progress and I believe it's possible the trade deficit could see a decline to somewhere around $600-$700 billion based on the fourth quarter of 2025. I know there’s a snafu with the Supreme Court ruling that the International Emergency Economic Powers Act, which was used in the first quarter last year to implement many of the tariffs, was ruled illegal. But there are other ways to impose tariffs such as section 122 of the Trade Act of 1974 or section 301 of the Trade Act that the president used in his first term. Also available is section 232 of the Trade Expansion Act of 1962. I don't believe the Supreme Court ruling will lead to an end of tariffs as the Administration will look at these other avenues. One major positive from these tariffs has been the announcements of various trade deals that have resulted in trillions of dollars promised by other countries to build manufacturing and other things in our economy.
Why is automobile insurance so high?
Your first thought may be the insurance companies are gouging their customers just to make big profits. First off, insurance companies are generally public companies that have shareholders who would not be investing in their company if it was losing money and not paying dividends. The high cost of premiums is not the insurance companies' fault as in recent years things have really changed. Over the past five years, physical damage costs have increased by 47%. This is because of the higher price of cars and all the extra bells and whistles that add up when there’s damage to a vehicle. Bodily injury claims are up 52% over the last five years because of the vast amount of new personal injury lawyers who have come on the scene and are pushing for higher settlements, even on small fender benders. Around 95% of these cases are settled and do not go to court. Many of your less reputable attorneys know this and hold the insurance companies’ hostage. Either settle up with us now or go to court and spend a lot more money and time. Unfortunately, if you’re a responsible driver that makes your premium payments, you are helping absorb the cost of uninsured and underinsured motorists which is up 72%. I’m not a big person for government regulation, but I do believe governments need to step in and verify that all people on the road have auto insurance and a reasonable amount. There’s a trend starting in Florida, which is tort reform that has reduced litigation, and the top five insurance companies in the state have requested rate reductions of 5.9%. There is something in the auto insurance industry called fender bender litigation and this tort reform would help states like New York, California and other states to prevent insurance companies from having to pay ridiculous settlements for little dings and dents and fake injuries. Wouldn’t it be nice if the state of California passed laws to help consumers to pay less for auto insurance?
Financial Planning: What Is the Goal of Tax Planning?
Most people would assume the goal of tax planning is simply to reduce taxes, or even to reduce lifetime taxes, but that should not be the focus. The true purpose of tax planning is to increase the level of after-tax income by intentionally managing assets and income sources. If the objective were merely to pay less in taxes, the solution would be simple: stop earning money. But earning less would also leave you with fewer resources and less freedom. What people ultimately want is more net income, more access to money, because that provides flexibility, security, and the ability to live life on their terms. Effective tax planning achieves this by building assets and income streams and structuring them in a way that allows you to access them efficiently. This means investing in the right types of assets, placing them in the right types of accounts, adjusting the strategy over time as income and tax laws change, and withdrawing funds at the right time and in the right manner. When you understand that the true purpose of tax planning is to maximize after-tax access to wealth, not merely minimize taxes, you make better decisions that improve your financial life.
Companies Discussed: Vulcan Materials Company (VMC), Leidos Holdings, Inc. (LDOS), Packaging Corporation of America (PKG) & Caesars Entertainment, Inc. (CZR)
Friday Feb 20, 2026
Friday Feb 20, 2026
Is investing in Google’s century bond a good idea?
If you don’t want to read any further, and just want the basic answer, for investors it’s a terrible idea. On the other hand, for companies, universities or even governments, issuing a century bond is a great way to lock in low rates for a hundred years. As I said for investors, it’s a terrible idea, here is an example. In 2020, the Austrian government issued a century bond that locked in a yield of 0.85%, which was a great deal for them. But for investors who purchased that bond, it is now trading for 30 cents on the euro. Another example of how things can change is back in 1997, J.C. Penney issued a 100-year bond. Back then no one would have imagined bankruptcy would occur just a little over 20 years later for the company. You may be wondering who would benefit from buying these bonds? Generally, it would be your insurers or pension funds. They both have long-dated liabilities, so long-term bonds give them comfort, knowing what the future cash flows will be. There will also likely be some hedge funds and high-risk investors that will want to trade the bonds as they will have a high amount of fluctuation based on interest rates. In fixed income investing, there is something called duration, which essentially looks at the number of years it takes to recoup a bond's true cost. The longer the duration, the more price volatility for the bond when it comes to interest rate moves. Ultimately, for the average investor I would say to stay away because predicting which way interest rates are heading can be very difficult game and it could destroy your investment returns.
Big expenses are coming for companies that invest in AI
We have talked about this in the past couple years and now after the companies spent roughly $500 billion in 2025 it's estimated they will spend another $3 trillion by the end of the decade. As the companies spend more money on data centers, chips and other items for AI, their depreciation expense will rise each year, which will reduce their income. The big tech companies are kind of sneaky currently with depreciation. Many companies like railroads and other companies report depreciation as a standalone operating expense on their income statement. The reason depreciation is important for investors to understand is that eventually equipment becomes obsolete or worn out and must be replaced. But the big tech companies currently don’t have to break out depreciation until 2028 after new rule changes take effect. Currently, they include depreciation in the cost of goods sold or sometimes in research and development or general and administrative expenses. This makes it very difficult for investors and analysts to understand the true numbers. The big tech companies defense is they currently include it in the footnotes. However, companies like Microsoft have as many as 15-20 footnotes, which are generally not seen by investors or analysts. Perhaps the big tech companies will continue to hold onto their lofty valuations for now, but at some point, the real earnings will come through, and the stocks could take a major beating.
Don’t blame the restaurant or the grocery store for the high price of meat
I’m sure you’ve noticed that if you want to go out and have a good steak, you’re probably going to spend somewhere in the neighborhood of $45-$50, depending on the restaurant and how big the steak is. There’s a big shortage of cattle in the United States and the numbers are staggering. In January, there were only 86.2 million cattle and calves, which is down from a peak of more than 130 million in the mid 1970s. The number of people in the United States far surpasses the number of cattle and supply/demand being what it is, it is pushing the price of cattle to higher levels. The 86.2 million heads of cattle may sound like a lot, but when you look at the numbers it is the smallest herd since 1951 and that’s when the population in the United States was 157 million. The population now stands around 344 million people, which is an increase of 119%. All things being equal, there should be around 188 million heads of cattle available. There are three main reasons why the price of meat is high and the number of cattle is low. We used to receive about 5% of our beef supply from Mexico, but a parasitic fly larvae called screwworm has destroyed that supply. Another problem is a lack of rain in Texas, which is the largest producer of our beef supply with 12.5 million cows. If ranchers don’t get enough rain, they produce smaller herds because the cost of feed increases. You may be thinking there’s a lot of cows in California as you drive up 15 and you are right because California is the fourth largest producing state for cows at 5 million, but 1.7 million of those cows are dairy cows. The third reason is simply being a rancher is hard work, and it is generally passed down from generation to generation. Most kids when they’re growing up do not dream about working on a ranch in the hot sun in the dirt all day long. Also, with the price of land some ranchers realize they’re better off selling the ranch for a big profit than continuing to work the land. Fortunately, many ranchers love what they do and despite the hard work continue to do it generation after generation. If you know any young kids that like riding horses, maybe they should consider going to work on a ranch and save all that college money?
Financial Planning: Do Commission-Free Annuities Make Annuities More Attractive?
One of the primary downsides of annuities has always been the layers of fees that drag on returns, along with upfront commissions that create conflicts of interest in how they’re recommended. Commission-free annuities attempt to address these concerns by eliminating the embedded commission and often lowering internal product expenses, which in theory should improve transparency and net performance. However, these products are typically sold by fee-based advisors who charge ongoing advisory fees, meaning that while the conflict of interest may be reduced, the cost savings inside the annuity can be offset by the advisor’s separate fee. Even with improved pricing structures, the fundamental challenge remains, annuities generally offer lower expected long-term internal rates of return compared to investing directly in diversified market portfolios. While annuities provide guarantees such as downside protection and lifetime income, those guarantees come at a cost that often outweighs their benefit. In many cases, investors can generate greater long-term growth and higher income from a well-diversified portfolio. The returns may not be technically guaranteed, but it can still be done in a conservative and sustainable way.
Companies Discussed: Mattel, Inc. (MAT), DraftKings Inc. (DKNG), Ferrari N.V. (RACE) & Restaurant Brands International Inc. (QSR)
Friday Feb 13, 2026
Friday Feb 13, 2026
Should you invest by following when insiders buy?
It sounds like it’s an easy thing. Just do what the insiders do because they obviously know the company well and if the stock were to drop in value and the insiders commit to purchasing shares, it must be a smart investment. Unfortunately, it’s not that easy and there are many other factors involved. Data also shows that longer term it may not even matter. Over my 45 years of doing this, I have even seen sometimes where they borrow money from the company to actually do the purchase of the shares. With that said when they are committing their own money, does the stock do well afterwards? The Wall Street Journal did an analysis of 1,400 publicly disclosed insider purchases using S&P 500 companies. Going back to 2020, they discovered insiders at 327 companies had a total of $3.7 billion in stock trades over $100,000. Most of the purchases were completed after a decline from the previous 30 days and produced a median gain of about 2% a month later but then began to decline after that. The numbers also showed that only 15% of the purchases fully recovered from where they had fallen in the previous 30 days before the share purchase. It should also be noted that they cannot act on insider information, so if there’s something major that can move the stock either up or down, they would probably go to jail if they were to act upon it. In other words, since they can’t act upon insider information, they don’t have much of an advantage over someone doing a good amount of research about the company.
It's not a stock market, it's a market of stocks
I have often made this claim when things get crazy in the stock market. What I mean by this is you don't just have to buy the stock market and instead can look for good companies within the market. The reason this is so important to understand is because individual stocks can still do well even when the broader market struggles, especially when the market gets heavily concentrated like it is today. I often reference the tech boom and bust as an example investors should study and in times like this, I believe it is even more applicable. From the tech-stock peak on March 27th, 2000, through the end of that year, the S&P 500 fell 13.4%. It is important to remember that the S&P 500 is a market-cap weighted index, which means the larger the company the more it makes up of the index. If we instead look at the equal-weighted S&P 500, where every company has essentially the same weighting, it actually gained 10.7% from March 27th through the end of 2000. Looking at specific sectors during that period, utilities, healthcare, and consumer staples were actually up about 40% to 45%, while tech fell 51.8%. It has been nice for many investors to enjoy the easy ride in the S&P 500 for the last decade plus, but I continue to believe that over the next 10 years the returns will be much more subdued in the index than investors have become accustomed to.
Inflation report comes in better than expected
The Consumer Price Index, also known as CPI, showed headline January inflation was just 2.4%. This compares to an estimate of 2.5% and last month's reading of 2.7%. Core CPI, which excludes food and energy, came in line with expectations at 2.5%, but it was also lower than December's reading of 2.6% and the smallest increase since March 2021 when it climbed by just 1.6%. Food prices put a little pressure on the headline number as they were up 2.9% compared to last year. Most of this came from food away from home where prices were up 4.0%. Food at home on the other hand only saw prices climb 2.1%. Energy prices helped the headline number as prices declined 0.1% as gasoline prices fell 7.3%. Offsetting this benefit was utility prices where electricity was up 6.3% and utility gas service was up 9.8%. Many other areas saw muted price changes, and shelter continued to add pressure to both the headline and core CPI numbers. Even though the annual rate of 3.0% was lower than December's level of 3.2%, it is still above both the headline and core numbers. As a reminder, this is a huge weight at around 34-35% of headline CPI and over 40% of core CPI. If all else remains the same and shelter declines this year, I believe we could see that 2% target achieved. I was surprised to learn the Owner's Equivalent Rent (OER), which essentially measures the rate homeowners believe they could rent their house out for, carries most of the weight at over 70% of the shelter category. In January, the OER was up 3.3% while the actual rent of primary residence category was only up 2.8%.
Financial Planning: You May Be Receiving a Larger Refund
New tax rules could help many filers see larger refunds this year, with some benefits happening automatically and others requiring careful reporting. The standard deduction increased for everyone, with taxpayers aged 65 or older receiving an additional $6,000 boost. The state and local tax (SALT) cap rose from $10,000 to $40,000 for those who itemize, and the child tax credit increased by $200, from $2,000 to $2,200. These automatic changes may lower tax liability without any special reporting. However, other deductions such as those for auto loan interest, overtime pay, and tip income must be properly reported to receive the full benefit. Taxpayers should review their returns carefully to ensure all available deductions and credits are captured. If a larger refund does show up, it may be a good time to update 2026 withholding elections to increase monthly take-home pay instead of waiting all year for next year’s refund.
Companies Discussed: C.H. Robinson Worldwide, Inc. (CHRW), Cushman & Wakefield Limited (CWK), QUALCOMM Incorporated (QCOM) & PayPal Holdings, Inc. (PYPL)
Friday Feb 06, 2026
Friday Feb 06, 2026
Has the US dollar become too weak?
It can be difficult to filter through the headlines that make it appear that the dollar has dropped and lost 50% of its value and is getting close to collapse as some doom and gloom people would want you to believe. The truth is since January 2025; the dollar has been down about 10% against other major currencies. Keep in mind that it fluctuates every day, every hour, and every minute. This is normal, but the headlines can be very scary and it's also important to understand that over the last five years the dollar index has been up about 7%. There are pros and cons to a weak dollar. If you’re planning on traveling to Europe or some other foreign country, hotels and other items will cost you more when the dollar weakens since our dollar buys less. Also, the price of foreign cars and trucks will increase because again a dollar buys less. But the other side of the coin is that people from other parts of the world can now come to the United States and spend money in our economy since their currency now goes further. Also, many of our products that we export will be less expensive so exports should increase while our imports decrease, reducing our trade deficit. Lower interest rates can cause our dollar to fall, but a strong economy can help counterbalance that decline. Will there be a default on the dollar? The chances of that happening are extremely low for many reasons. The US dollar is still the dominant global reserve currency, which adds strength to the dollar. It is also understood that yes, we do have high debt, but also if needed, the US can print dollars to pay that debt. Looking forward to 2026, there’s a very good chance that the dollar will stabilize as the economy improves. Foreign top trading partners have pledged to invest $5 trillion in the United States. With that large investment, more travel to the US, and people buying more US products such as cars that are now a better deal due to tariffs and a weaker dollar, come the end of the year, we could actually see a firmer dollar, a booming economy and perhaps further declines in gold and silver that are still near all times highs. I get excited, just writing about it, but it will require patience for investors as I do see this as a volatile year.
18% of US adults have taken GLP-1 drugs. What’s the concern?
The price of GLP –1 drugs have come down and roughly 18% of adults in the US are using them. But there are other considerations outside of just weight loss. These drugs came out to treat type 2 diabetes and obesity not as a lifestyle change to lose 20 or 30 pounds. It is estimated that about half of people will stop taking the drug after one year and will probably be very disappointed with their future weight management. Studies have shown that when people stop taking the drug within about a year and a half, they regain most of the weight they lost. Studies also show that the weight gain comes four times faster than those who lost weight through normal dieting. While on these drugs, people see their blood pressure, cholesterol, and blood glucose levels improved, but when they’re off the drug in a little over a year, those levels go back to where they were. Kevin Hall is a former senior investigator at the National Institute of Health and a specialist in nutrition. He says once you’re off the drugs, your appetite will be much higher than it was and you could end up overeating, which leads to taking in too many calories. Another study shows people who gain weight back and decide to go back on the medication that it’s not as successful the second or third time. People also don’t realize a thing called weight cycling or gaining and losing weight and how that can affect the percent of fat to muscle. It is estimated that when you lose weight about 25 to 30% of it is muscle. But the sad part is when you have the weight gain after you’re off the drugs, it is unfortunately more fat than muscle. So, as you can see, this is not a good cycle or a good plan for 10 to 20 years. If one thinks it is a good idea to just stay on these drugs for life, there are long-term risks such as gallbladder diseases, pancreatitis, and kidney damage. The kidney damage is one that would really worry me because as you get older and you have more pain you may want to take a pain reliever like Advil or ibuprofen, but doctors now look at people’s kidneys to see if they can handle Advil or ibuprofen, which is another strain on your kidneys. Being concerned with how you look and taking the easy way to look better by popping a pill or taking an injection may cause you to have regrets when you’re older.
Is the US housing market becoming a buyer's market?
From 2020 to about 2022 it was definitely a seller's market and people could ask whatever they wanted for their home and if you didn’t take it, there would be 10 people behind you that would. Well now things are changing back to where buyers can negotiate and sometimes even get a price below the asking price. Nationwide, about 62% of homebuyers purchased their home under the listing price. The discount of 8% was also the largest since 2012. Buyers are also obtaining concessions from sellers which could be things like cash for closing costs or buying down the mortgage. As recently as December, there were 600,000 more sellers than buyers and that’s the biggest gap going back to 2013. What is helping the housing market is mortgage rates have declined a little bit, which has made homes somewhat more affordable for some buyers along with the cool-off in prices that we have seen. The best place to buy a home currently is Florida and Texas because new home construction has created a big supply of homes for sale. It can really depend on the local market you are looking at, but if you’re buying in West Palm Beach, Fort Lauderdale, or Miami, about 85% of homebuyers paid under the original listing price. However, if you’re buying a home in Newark, New Jersey, San Francisco, or San Jose, only 39% received a discount from the original list price. It was also noted that those markets had a low amount of new construction. There could be more to come if the supply increases, and prices ease somewhat as it would likely bring more buyers back into the market. Depending on where you’re looking at buying, perhaps 2027 will be a great time to buy home.
Financial Planning: How Would an S&P 500 Portfolio Work in Retirement?
Many investors nearing retirement feel comfortable staying fully invested in the S&P 500 because recent performance has been strong, but that confidence is often based on a short window of returns rather than the long reality of retirement. Retirement can last 20 to 30 years, and during that time markets will go through multiple corrections and bear markets. Once withdrawals begin, even modest withdrawal rates can amplify losses and deplete a portfolio. The late 1990s provide a clear example when the S&P 500 produced annual returns in the 20% to 30% range for several years in a row and many investors came to believe strong gains were easy and would continue… then 2000 came. Someone withdrawing an inflation-adjusted 4% from an S&P 500 portfolio in 2000 saw the account fall to roughly half its value within just three years, meaning a retiree at 62 with $1 million was left with barley $500k by 65. For those who stayed invested, after the Great Recession 9 years into retirement around age 71, the portfolio had lost close to 2/3rds of its original value. At that point, the withdrawal rate needed to continue income was now 14%, up from the original 4%. Today the S&P 500 sits near all-time highs and trades at historically elevated forward earnings multiples, mirroring the late 90’s. While the index has delivered roughly 10% annual returns over the long term, those averages hide the danger of sequence of returns risk, where starting withdrawals before or during a downturn can permanently impair a portfolio and leave too little capital to fully recover even when markets eventually rebound.
Companies Discussed: Lennar Corporation (LEN), Sysco Corporation (SYY), Microsoft Corporation (MSFT) & Visa Inc. (V)
Friday Jan 30, 2026
Friday Jan 30, 2026
China’s population is declining
Last year's birth numbers for China recently came out and it was the lowest since 1949. What was the population of China in 1949? It was only around 540 million people so percentage wise it was a much higher birth rate than the 7.9 million we saw in 2025. With over 1.4 billion people and about 11 million people dying every year in China, it will take a long time to have results of a large declining population, but he problem with a lower birth rate than death rate is that it has major changes for an economy. China has a life expectancy of 79 years old. This means that the population is getting older, and there are fewer young people working to support the older generation that generally need more medical and social services. With an aging population, there’s generally less need for housing, schools, and businesses because older people have less need for these services which can grow an economy versus the cost of higher medical demand. China also has a problem with immigration as they have over 300,000 people more leaving versus coming in. You may be wondering how the United States stacks up? In 2025 we had 3.7 million babies born and 3.2 million deaths in the country. I was surprised to learn that the mortality age is under China’s at 78.4 years. With all the illegal immigration and the heightened status of what is going on with immigration in the United States, it is hard to come up with a concrete number. However, it is obvious that more people want to come to the United States than leave, which could help support a low birth rate.
Another history lesson shows why we don’t overpay for hot stocks
We know it's exciting to be in the next hot thing on Wall Street, but that was the same way people felt just a few years ago with hot software companies like Salesforce, Adobe and ServiceNow. Looking back, many of these once hot companies now have seen very disappointing five-year returns. As an example, Salesforce is only up around one percent over the last five years, and Adobe has actually fallen around 35% during that timeframe. The reason we won’t overpay for earnings on high flying companies is because many things can change like we have seen in the software industry. Software companies were supposed to benefit from AI, but now Anthropic's Claude code, which is an AI tool, says it can shrink the time it takes to build complex software. Also, new competition can come from startup companies that can slowly take away market share of the older companies a little bit at a time. Unfortunately, some of the software companies began to borrow substantial amounts of money and now have a highly leverage balance sheet, which could cause some problems in the future. In just the last 24 months, 13 software companies have defaulted on loans. I don’t think many of these big software companies will go out of business anytime soon, but I don’t believe their stock will run up to levels seen in the past anytime soon.
Gold has done well, but silver has surged! Should you buy it now?
Silver is now up over 250% in the last year alone as it has become immensely popular with retail investors. Many investors are excited to point out that silver has a strong use case as an industrial metal. It’s a key component in electronics, including circuit boards, switches, and solar panels thanks to the fact that it’s an excellent conductor of electricity. Thanks to increasing demand for areas such electric vehicles and growing electricity needs, largely due to the AI push, industrial use cases now account for around 60% of demand. This compares to under 50% just a decade ago. I was also surprised to learn that silver may be subject to supply shortages as about ¾ of new silver is created as a byproduct of mining other metals like copper, zinc, and lead. This has led to silver demand outstripping supply every year since 2018. While all this sounds positive, generally markets have a way of reconfiguring the supply and demand equation. I believe this could lead to companies that have silver as an input cost will instead look for alternative sources as the price has become prohibitive after the recent surge. This would then hurt demand for silver. On the supply side since the economics of finding silver is strong at this time, you could see more mining for silver and the other metals, which would then increase the supply of silver. Declining demand and increasing supply would be problematic for the price of silver. Another way to look at the value of silver is the silver-to-gold ratio which tells you how many ounces of silver you need to buy one ounce of gold. The 50-year average is around 65, but today that ratio has fallen below 50. That is the lowest ratio in over a decade. Ultimately, your guess is as good as mine for where the top is for silver, but long term I don’t believe we will see strong results from this level. Don’t forget this is a volatile asset with other historical instances of massive rallies that were followed by large declines. We have talked about the Hunt Brothers’ attempt to corner the market in the 80s, but more recently there was a bubble that occurred in 2011. The price peaked at around $49 in April of that year but quickly tumbled about 25% in just a week and ultimately ended the year at $27 for a total decline of nearly 45% from the high.
Financial Planning: Best Accounts for Kids and Grandkids
When saving for kids and grandkids, the “best” account depends on the tradeoff between tax benefits, flexibility, and control. 529 plans offer tax-free growth and withdrawals for qualified education expenses, but non-qualified withdrawals trigger federal and state taxes and penalties on earnings. Up to $35,000 can be rolled into a Roth IRA over time without federal taxes or penalties, though some states, including California, still impose taxes and penalties. Roth IRAs provide tax-free growth and tax- and penalty-free access to contributions at any age, but contributions require earned income, which many children do not have. Trump accounts function similarly to a retirement account. Funds generally cannot be accessed before age 18, and early withdrawal penalties apply until age 59½. Growth is tax-deferred, but earnings are taxed at ordinary income rates upon withdrawal, similar to a traditional IRA funded with after-tax contributions. Unlike other retirement accounts, contributions can be made before age 18 even without earned income, and funds may later be converted to a Roth IRA, though taxes would apply to earnings at conversion. Custodial accounts (UTMA/UGMA) do not offer tax-deferred growth but benefit from the kiddie tax rules. In most cases, the first $2,700 of long-term capital gains and qualified dividends are taxed at 0%, allowing smaller accounts to grow largely tax-free. However, assets must be turned over to the child at adulthood with no restrictions on use. Finally, taxable accounts in a parent’s or grandparent’s name offer maximum flexibility and control over timing and purpose of gifts, but investment earnings are taxable to the adult each year, though usually at the lower capital gain and dividend rates. Because of the control and simplicity, we often recommend taxable accounts as a core strategy, supplemented by other account types when specific needs justify them.
Companies Discussed: McCormick & Company, Incorporated (MKC), Zoom Communications, Inc. (ZM), Booz Allen Hamilton Holding Corporation (BAH) & Pinterest, Inc. (PINS)
Friday Jan 23, 2026
Friday Jan 23, 2026
Looks like it is over for the Mag Seven stocks
The name Magnificent Seven came out in 2023 by a strategist from Bank of America named Michael Harnett. The idea is the name came from a classic western movie featuring seven heroic gunfighters and their push to save a small town. But just like other hot themes like the Nifty 50 back in the 60s and BRIC where you had to be invested in the emerging markets of Brazil, Russia, India and China, it looks like the Mag Seven glory days are over. In 2025, only two companies, Alphabet and Nvidia, outperformed the S&P 500. Microsoft, Meta, Apple, Amazon, and Tesla were no longer called stock market stars, and I believe this year will be another year of underperformance for most of these players. The Magnificent Seven still accounts for 36% of the S&P 500’s market cap, which is why I believe the S&P 500 will not have a great year in 2026. It will be hard for investors to give up these companies because as they look in the rearview mirror, they feel they're worth their value because they made very good returns in the past. However, just like the Nifty 50 and other hot investment themes throughout history, everything comes back to the mean. The question for many is what will be the next hot investment idea? No one knows for sure but I’m confident someone on Wall Street will come up with some exciting name for investors to chase and they'll tell them not worry about the fundamentals of the business.
Is using part of your 401(k) for a down payment on your home a good idea?
The President is trying very hard to stimulate the housing market and allow younger people to buy their first home. One idea that has been tossed around is allowing people to use their 401(k) for a down payment. People can currently borrow from their 401(k) and I often hear uninformed people say it’s a great thing because you get to pay yourself the interest. Briefly, it is not a great idea because those "interest" payments don't account for the negative impact of the opportunity for what those funds could have grown at. You also don't get a tax deduction when paying the loan, and then you pay taxes on distributions at a later date, so it also has a negative tax impact. Outside of 401k loans, how’s the administration looking to help first time homebuyers? Kevin Hassett, who is director of the National Economic Council, threw out one possibility that a homeowner could put 10% of the equity of their home into a 401(k). That may make your 401(k) balance look artificially high because as the home grows in value so does that 10%. The problem I see is when it comes to retiring that 10% cannot provide retirement income. I still believe the best way to fix the affordability problem is to increase the supply of homes to match the demand, which would reduce prices.
AI will create jobs that have not even been imagined yet
There are jobs that are starting to be seen and developed as AI becomes more involved in business. One example is someone has to make sure that the systems are kept up-to-date and function properly. There’s also going to be people that have to understand the technology thoroughly and then translate the output, so managers, judges, regulators, or anyone else that is using it understands the answer. Experts will have to understand such things as self-driving vehicles and how the technology works. Say there is a car accident with two self-driving cars, who determines who’s at fault? There will need to be experts that understand the self-driving technology and then try to explain the situation. The AI system will have to be checked from time to time to verify that the AI system did not produce results that were unfairly skewed in one direction or the other. Once that is discovered, another expert would have to know how to fix and eliminate those problems using new data that helps eliminate the bias. Training is another area of opportunity. As people’s jobs change, they will need training in the new technology. The expert trainer would also use the technology to figure out what teaching style works best for the individual. Yes, the future is always scary because of the unknown, but innovation continues onward creating new opportunities and problems that need to be solved.
Financial Planning: Start Social Security Early to Invest?
When evaluating when to start Social Security, there are generally two schools of thought. Either collect early at age 62 to invest the funds or wait until age 70 for a larger monthly benefit. Proponents of waiting argue that the age-70 benefit is roughly 77% higher than collecting at 62 and that deferring protects against longevity risk. Regular people and some financial advisors alike believe this is the superior strategy. A recent article in the Wall Street Journal takes this stance, stating that many retirees will live until age 85, so collecting at 70 increases guaranteed income and reduces market risk. However, the article illustrates its conclusion using an inflation-adjusted return assumption of –3% on invested funds. While technically possible, such an outcome is extremely unlikely over a 23-year period (ages 62 to 85), especially because the analysis applies returns to monthly payments over time rather than a lump sum, meaning the cash flows would benefit from dollar-cost averaging rather than suffer from sequence-of-returns risk. In reality, retirees who collect at 62 rarely invest the benefits directly; instead, they reduce withdrawals from an existing portfolio, preserving capital that can compound and generate additional income to offset the lower Social Security benefit. When the math is examined with multiple expected returns, a retiree is better off collecting at 62 if they live to age 78 assuming a 0% return, age 84 with a 5% return, age 94 with an 8% return, and any lifespan with a 10% return. Ultimately, the decision is less about maximizing guaranteed income and more about understanding expected returns, cash-flow dynamics, and the opportunity cost of delaying benefits.
Companies Discussed: Expand Energy Corporation (EXE), Citigroup Inc. (C), The Kraft Heinz Company (KHC) & GameStop Corp. (GME)
Friday Jan 16, 2026
Friday Jan 16, 2026
There are many headwinds for short term interest rates to drop in 2026
It is no secret that the President wants our interest rates to drop dramatically to improve the economy, which as a sidenote is really not that bad. However, even though he gets to appoint a new Federal Reserve Chairman, that doesn’t guarantee lower short-term interest rates. The Federal Reserve Chairman's term ends May 15th, which means a new chairman will be appointed by the President. But the Chairman running the Federal Reserve, no matter who they are, does not make a sole decision on interest rates. It is done as a vote from all members, and it takes a majority of the 7 members to move interest rates up or down. Other factors include Mr. Powell can stay until January 2028, when his term as governor expires. This means a new governor who is in favor of reduce interest rates cannot be appointed until January 2028. There will also be changes to other members come January 31st when there are term expirations. This will be another opportunity to appoint members that are aggressive on reducing interest rates. Also, sometime this month, the Supreme Court will rule on removing or keeping Governor Lisa Cook over legal issues. If she is removed, that’s another opportunity to bring in someone aggressive on lowering rates. At the January meeting, there will be a rotation for the voting Regional Bank Presidents, which will include New York, Cleveland, Philadelphia, Dallas and Minneapolis. Some of these new voting bank presidents have explained their concerns when it comes to lowering rates, especially with the inflation target of 2% still not achieved. Speaking of that 2% inflation target, that was set back in 2012, and it’s been above 2% since March 2021. All this to say, the direction of interest rates is uncertain. If we were to see unemployment rise and more signs of slowing in the economy, we probably would see more interest rate cuts. However, if things stay status quo, I still stand behind the fact the most we will see is probably two interest rate cuts in 2026.
The tariffs seem to be working with the October trade deficit at the lowest level since 2009
The October trade deficit was only $29.4 billion, which is far better than the expected deficit of $58.4 billion. Not only was it almost half the expected amount; but it was also the lowest deficit going back 16 years to 2009. The low trade deficit was due to imports falling to $331.4 billion, but exports also increased to $302 billion. Exports benefited from the high price of gold, silver and other metals as that increased exports by $10 billion during October. The big benefit on the reduction of imports came from pharmaceuticals dropping sharply probably because in late September the administration threatened 100% tariffs on overseas pharmaceuticals. The drug makers were apparently scrambling on what to do and trying to minimize the impact going forward. The Supreme Court will not make the decision on whether the tariffs are legal or not just because they are working; they will determine if the use of the International Emergency Economic Powers act to impose tariffs is legal or not. My hope is that they do agree with it, and if not, hopefully the administration can come up with some other way of keeping the tariffs in tack as they seem to be working very well.
Is the 10% credit card interest cap a good idea?
At first glance, the average person is going to say yes that is great because current credit card rates around 23 to 24% are ridiculous. However, when you dig deeper into credit cards and how they work, people have to realize the risks for defaults and late payments are rather high. Banks that issue credit cards are in business to make a profit for their shareholders and if there’s no profit to be earned, then there’s no point in a business offering that service. The current default rate on credit cards is about 3%, which means banks have to write off the entire balance of whatever that person owed. The higher default rates are seen in ZIP Codes with lower incomes and also for younger borrows who got in over their head. If the 10% cap on credit cards does go through, it will hurt people with lower incomes and those that have lower credit scores because banks would no longer be able to be profitable on those accounts, and they would stop offering credit to them. It would also affect many across-the-board as you could see a reduction if not elimination of points and cash rewards on credit cards, which would be disappointing for many. In my opinion, it is better to have the higher interest rate on credit cards like we have today, as it broadens the pool of people that can access this tool. Unfortunately, people need to use some self-discipline to not get in over their head and make sure they can pay their payments and hopefully not carry a balance on the card. If they can do that, they pay no interest and also can benefit from cash-back and other reward programs.
Financial Planning: Who Benefits from the New Auto Loan Interest Deduction?
The new auto loan interest deduction created by the July 2025 “One Big Beautiful Bill” allows taxpayers to deduct up to $10,000 per year of interest paid on a qualified auto loan during tax years 2025 through 2028. This is an above-the-line deduction, meaning it is available even if the standard deduction is taken. To qualify, the loan must be an auto loan for a new vehicle that had final assembly in the United States purchased in 2025 through 2028. Leases, personal loans, and cars purchased before 2025 do not qualify. The deduction is subject to income phase-outs, beginning at $100,000 for single filers and $200,000 for married couples, and fully phasing out at $150,000 for single filers and $250,000 for married couples. Most states, including California, do not conform to this federal deduction, meaning it won’t reduce state income tax. However California lawmakers have proposed a separate state deduction (AB 490), but it has not become law. For people who receive the deduction, the actual tax savings will likely range from a hundred to a thousand dollars because most auto loans don’t have anywhere near $10,000 of annual interest and only taxpayers in the 10%, 12%, and 22% bracket will qualify.
Companies Discussed: Constellation Brands, Inc. (STZ), Walmart Inc. (WMT), Expedia Group, Inc. (EXPE) & The Boeing Company (BA)
Friday Jan 09, 2026
Friday Jan 09, 2026
What the recent changes in Venezuela means for consumers
Without getting into the benefits of less drugs coming into our country, there are economic benefits from the large amount of oil reserves that are in the ground of Venezuela. The current daily consumption worldwide of oil is about 100 million barrels per day. Venezuela has in their ground over 300 billion barrels of oil. That alone would keep the world supplied for over eight years. Venezuela has the highest proven reserves in the world even above Saudi Arabia. Venezuela accounts for about 20% of the world supply of oil. Venezuela has four times the reserves compared to the US, yet in 2024 the United States produced over 13 million barrels per day compared to Venezuela producing under 1 million barrels per day. There is talk that the big oil companies could be going into Venezuela and they could definitely increase that production by a large amount, which would benefit not just Venezuela but also the world markets and the United States consumer. The way the United States consumer would benefit is from lower gas prices at the pump and with oil currently trading in the high 50s, we could see that drop to the low 50s maybe even a little bit below that. This will not only put more money in US consumers' pockets, but it would also help the Venezuela population as the production of oil would create many good paying jobs and could lead to a ripple effect for other businesses with more money coming into their economy. The recent events occurred just a few days ago and a lot has yet to be played out, but make no mistake there are many benefits if Venezuela can produce a lot more oil for the world.
It’s a new year, is it time to hire or change to a new investment advisor?
With the new year, investors should take a look to see how their investments have done and how their investment advisor has been working with them. The beginning of the year is a fresh start, so it’s time to see what your percentage return was on your portfolio in 2025 and evaluate if your advisor kept you updated and gave you the customer service you need like returning your phone calls in a reasonable timeframe. You don’t want to jump from the pan into the fire, so when you’re looking for a new investment advisor, be sure that the company and the advisor are full fiduciaries, which means they must do what is best for you, not what is best for themselves. Ask yourself the question, is the advisor trying to sell me products that he or she makes a big commission off of? That could be a red flag that they don’t have your best interest in mind. It's also important to understand the investment strategy the firm and the advisor use. Do they use mutual funds or build your own portfolio with individual equities and investments that are liquid and don’t tie your money up for years to come in case the investment underperforms. I always believe it is worth asking the advisor how they manage their own personal portfolio. If it’s good enough for them, why is it not good enough for you? I know some advisors will say they have different objectives, but I think everyone has the same objective of making a reasonable return on their investments. And lastly, don’t be afraid to ask how they get paid when managing your investments. It may seem like an uncomfortable question, but if it’s an excessive amount, that can be a red flag. If the advisor is trying to dodge the question, that means to me, they’re trying to hide something from you at the very beginning, and you should runaway immediately. Take your time to find the right advisor, if you feel pressure from constant phone calls and high sales tactics, you probably want to look for someone else to work with on your investments.
The labor market ends the year on a soft note
This jobs report was special considering it was the first on time report in 3 months, but I'd say the data was lackluster. Nonfarm payrolls in December increased by 50,000, which was short of the estimate of 76,000. The two prior months also saw downward revisions that totaled 76,000. For the full year, payroll employment grew by 584,000, which equates to a monthly average of about 49,000 new jobs per month. This was less than 2024's gain of 2 million jobs or about 168,000 per month and actually registers as the worst payroll growth outside of a recession since 2003. While this all might sound troubling, it is important to remember that changes to government jobs had a large impact on the data. Since reaching a peak in January, government employment fell by 277,000 jobs. This obviously created a huge headwind for headline payroll growth. With that said, the labor market was still in a slower growth environment, and I continue to believe that will be the case as we move forward considering the unemployment rate still remains healthy at 4.4%. It's also important to remember that of those counted as unemployed, about 26% or 1.9 million people are considered long-term unemployed as they have been jobless for 27 weeks or more. I always do wonder how actively these people are looking for jobs. In terms of areas of strength in the report, both healthcare and foodservices and drinking places remained healthy. Health care employment was up 21,000 in the month and for the full year averaged monthly gains of 34,000. This was down from 2024's monthly average of 56,000, but still strong. Foodservices and drinking places saw employment grow by 27,000 jobs in the month and for the full year averaged monthly gains of 12,000 jobs, which was similar to 2024's average of 11,000 jobs added per month. Retail trade was the real headwind for the month as employment declined by 25,000 jobs. This could be due to seasonal changes, but it was interesting to see retail trade employment showed little net change in both 2024 and 2025. The other major industries in the report showed little to no changes in the month. Overall, I believe this continues to show that we remain in a slow hire/low fire labor environment and I don't see much evidence that will change this year.
Financial Planning: Mortgage-Backed Security Purchase Lowers Mortgage Rates
The U.S. government’s announcement of a $200 billion purchase of mortgage-backed securities (MBS) through Fannie Mae and Freddie Mac is already pushing 30-year mortgage rates below 6%, creating an opportunity for homeowners and prospective buyers. During the COVID-19 pandemic, the Federal Reserve lowered interest rates and also purchased MBS, which helped push mortgage rates down. Mortgage rates are not directly tied to the Federal Reserve interest rates, but the purchase of mortgage-backed securities is something that would directly lower mortgage rates. This is because investors purchase mortgages after origination for the interest income paid by homeowners, so Fannie Mae and Freddie Mac buying these securities increases demand which lowers the interest rates borrowers get on mortgages. For those with higher mortgage rates, this could be an opportunity to cut that down. I don’t think we are yet at a point where it makes sense to buy down the rates further, but there is no limit to the number of refinances someone can do. It may be best to refinance now and then again in another year or so.
Companies Discussed: Tyson Foods, Inc. (TSN), Lockheed Martin Corporation (LMT), Generac Holdings Inc. (GNRC) & Seagate Technology Holdings plc (STX)
Wednesday Dec 31, 2025
Wednesday Dec 31, 2025
- Financial Outlook for 2026
- Companies Discussed: Marriott Vacations Worldwide Corporation (VAC), NIKE, Inc. (NKE), Micron Technology, Inc. (MU), Lennar Corporation (LEN)
Friday Dec 19, 2025
Friday Dec 19, 2025
How did China’s trade surplus hit $1.1 trillion this year?
The United States purchased around $450 billion of manufactured goods from China in 2024, but trade has dropped between the two countries so how did China have a record surplus of $1.1 trillion through November 2025? The current tariff on goods imported from China is around 37% according to the Tax Policy Center and imported goods from China have dropped dramatically. China has been able to increase their exports to other countries to more than compensate for the loss of exports to the United States which are down roughly 19%. China has seen an increase of exports to Southeast Asia of 14%, the European Union has increased 8%, and Latin America saw a 7% increase in exports from China. A big increase of 25% in exports to Africa was also very helpful to China’s manufacturing surplus. Even though they’re turning out more cars, manufacturing products and chemicals than ever before, it has created a very heavy competition in China which is pushing down prices, profits, and income for the Chinese manufacturing companies. There will not be another round of talks between the US and Chins until next year. At the last set of trade talks the US did lower our tariffs and China promised to buy American soy beans and end a plan to tighten the export of rare earths, which are critical and found in many products from jet engines to cars and many other electronics as well. We will continue to follow the developments of these trade talks as there should be more news coming next year!
Finally some data on the labor market!
With the government shutdown, a lot of the data for the labor market was delayed. We finally got employment figures for October and November, and they were interesting to say the least! To start, the October numbers looked horrific considering payrolls declined by 105,000 in the month. While this sounds troubling, it's important to remember all of those government workers on severance were still counted as employed until the severance ended. This led to a decline in government payrolls of 162,000 in the month of October. Losses in government payrolls continued in November, but at a much slower rate as they tallied 6,000 in the month. Since reaching a peak in January, government employment has seen a decline of 271,000 jobs. Looking at November, payrolls increased by 64,000, but healthcare continued to carry most of the weight as the sector accounted for more than 70% of the total net increase and added 46,000 jobs. Construction was also strong in the month as the sector added 28,000 jobs, but many other areas saw little change and transportation and warehousing was weak as payrolls declined by 18,000. Another concern in the report was the unemployment rate ticked up to 4.6%, which was above the 4.4% level in September and marked the highest reading since September 2021. Overall, when I look at the labor market it is definitely slowing, but I wouldn't say I'm overly concerned at this point in time. While it is concerning to see declines in the payroll level in three of the last six months, for the most part the private market has done a good job picking up the large declines in the government sector, which I view as healthy. I don't want to say our labor market is booming at this point in time, but I would still classify as relatively healthy.
Inflation report shows great progress, can it be trusted?
Headline November CPI came in at 2.7% compared to last November, which was well below the estimate of 3.1% and core CPI, which excludes food and energy, showed an increase of just 2.6%. This was the lowest reading for core CPI since March 2021 when the increase was just 1.6% and it also came in well below the estimate of 3.0%. Some areas in the report remained challenging particularly in food, where we saw uncooked beef roast climb 21.2% and coffee increase by 18.8%. Beef prices have struggled as cattle supply touched its lowest point in 2025 since the early 1950s and coffee prices have been hit by extreme weather in major coffee-producing countries as well as the tariffs levied on Brazil. Shelter inflation was positive in the report as the annual increase was just 3% and it's believed there is more relief coming for the largest weight in the CPI, which generally occupies around 1/3 of the headline number. If the inflation for shelter slows further, it would be very beneficial for the inflation rate as we progress through 2026. The big problem with this report is there are questions about how accurate the data is. Due to the shutdown, there was no data collected for the month of October, and the BLS was only able to collect data for about half the month of November as the shutdown did not end until November 12th. For the time being we are pleased with the results from this CPI report, but I do believe there will now be even more emphasis on the December CPI as that will be the first full month of data following the record-breaking government shutdown.
Want to become a millionaire? Invest in your 401(k)!
There are more and more people with $1 million or more in a 401(k) as companies like Fidelity and Vanguard are seeing record numbers of people with accounts of more than $1 million. Fidelity said they hit the highest level ever when it comes to 401k millionaires with about 3.2% of their 401k’s or 654,000 accounts now over $1 million. Vanguard also had similar numbers for 401k millionaires. Becoming a 401k millionaire is not a get rich quick scheme, but it's a proven way to build your wealth long-term with proper investment choices. It is estimated that roughly 86% of those with $1 million plus in their 401k are 50 or older. It is also estimated that around 1000 people per day become 401k millionaires in the US. The key to becoming a 401K millionaire is to invest wisely, which means not too aggressive, but also not too conservative. Also, when a portfolio drops, you cannot sell everything and wait for the market to get better, you or an investment professional must verify that you have good quality investments in your portfolio that can handle the financial storms and also it's important to continue adding to your portfolio during these difficult times. It is important not to pull money out from your 401(k) for any reason at all, no matter how bad you think the situation is, it will improve. It is much better to deal with problems when you’re young rather than when you're in your 60s because you did not let your 401(k) grow to over a million dollars.
Financial Planning: Taking Advantage of Itemized Deductions Before December 31st
With the repeal of the $10,000 SALT deduction limit, many taxpayers may once again benefit from itemizing deductions rather than taking the standard deduction, and there are practical steps that can be taken before year-end to further enhance that benefit. The SALT deduction includes both state income taxes and property taxes, and because individuals are cash-basis taxpayers, deductions are generally taken when expenses are paid rather than when they are due, meaning that paying certain obligations before December 31st can shift future deductions into the current tax year. In California and many other states, property taxes are paid in two installments, with the first due in December and the second due in April. If the April installment is paid by December 31st, it may be deductible in the current year instead of the following one. Similarly, the final state estimated tax payment is typically due on January 15th, but making that payment in December allows the deduction to be taken in the current year. Another significant itemized deduction is mortgage interest, and while mortgage payments are usually due on the first of the month, making the January 1st payment in December can allow the interest from that payment to be deducted in 2025 rather than 2026. In addition, charitable deduction rules are scheduled to change in 2026 and will be subject to an adjusted gross income (AGI) limitation, which means taxpayers who are charitably inclined may benefit from accelerating planned donations into the current year while the rules are more favorable. Taken together, these strategies tend to be most effective when income is higher in the current year, as accelerating deductions while in higher tax brackets results in greater overall tax savings.
Companies Discussed: Oxford Industries, Inc. (OXM), Exxon Mobil Corporation (XOM), Vail Resorts, Inc. (MTN) & Costco Wholesale Corporation (COST)
Friday Dec 12, 2025
Friday Dec 12, 2025
Another lawsuit against generative AI company Perplexity for copyright infringement
The New York Times has had enough, and they have filed a lawsuit in a New York Federal court. In October 2024, the Times sent a notice to stop accessing and using their content and then followed up with another notice this past July. Perplexity continues to ignore the warnings and a spokesperson for the company, Jesse Dwyer, said publishers have been suing new tech companies for a hundred years starting with radio, TV, the Internet and social media, but that has never worked out for them. I think this is a little bit different since AI pretty much takes the content directly from the publisher and publishes it for people to read. The Times is also including infringements for use of its videos, podcasts and images. The Times said in the lawsuit they are seeking damages, which at this point is unknown and injunctive relief which includes removing all of the Times content from Perplexity’s products. This would be a major problem for Perplexity if they were to lose this case because the whole AI system pulls information from all across the web, and this would leave a big hole in the end result of Perplexity’s information. The Times is not the only publisher suing Perplexity, other lawsuits have been filed by Dow Jones and the New York Post. If one company were to win in court that would be a major problem for AI companies like Perplexity. First it would set a precedent and other publishers would likely sue, it could also lead to less accurate information as there would be less sources to pull data from.
Just when Apple corrected their major problems, it looks like there’s a management drain
Apple did a great job handling the proposed tariffs on its products, which would have devastated the company. Also, in court they managed to keep the $20 billion a year they receive from Google. But now, they seem to be fighting a management exit by some of their top executives. Over the last couple of weeks, it was announced that both their General Council and Head of Policy will be retiring next year. Another major concern was also announced in that timeframe that their Head of Artificial Intelligence and Strategy is also going to retire. Making matters worse, their Chief Operating Officer said he’ll be retiring in July of next year. Don’t worry about CEO Tim Cook being age 65, he said he is not considering retirement, and people at the company said he is not slowing down at all. It was also recently announced that Meta has taken from Apple a top designer named Alan Dye. Also Jony Ive, who is a Steve Jobs protégé and helped build the iPhone along with the Apple Watch, is heading over to OpenAI to help Sam Altman. It’s not just the top people leaving though as apparently dozens of Apple engineers along with designers who are knowledgeable in audio, watch design, robotics, and much more are also finding a new home at OpenAI. Running a major technology company like Apple and striving for new innovation makes it difficult when a company is losing top management and star engineers and designers. I don’t think this will cause a major drop in the stock short term, but it could be difficult longer term for the company when it comes to innovation and new products, which could concern investors in the years to come!
It’s time to put some commercial property into your portfolio
You may be questioning why would I put real estate like commercial property in my portfolio that over the last five years or so has had a return of maybe 7% versus stocks that have done much better? The simple answer is the basic investing principle of buying low and selling high. Looking forward, I believe commercial real estate over the next five years should get better returns than artificial intelligence considering the fact that it is very pricey. Data from MSCI revealed that year to date large investors have purchased $4.6 billion more US commercial property than they sold. That is the first time that has happened in three years, and deal activity is still low compared to history. US commercial real estate values are off from the peak in 2022 and are now down on average around 17%. Looking just at commercial offices, there is a better discount considering there are down around 36% from their peak. History shows this could be a very good opportunity. There’s only been two times over the last roughly 50 years or so when commercial property prices were down more than 10%. You have to go back to the early 1990s, which was about 35 years ago, and who could forget the 2008 great recession. How should you invest in office buildings and commercial property? The best and the easiest way is to use public real estate investment trusts, which are known as REITs. Please do not let your broker sell you private real estate of any sort so they can get paid a big commission. REITs that trade on the market are commission free and completely liquid unlike private real estate deals. With public REITs you can many times receive good investment yields between 4% and 6%. However, make sure to understand the fundamentals to insurethat dividend yield is safe. A history lesson shows that commercial property under performed from 1997 to 2000 when the tech boom was happening, but when the tech boom ended and went bust, commercial real estate did very well. Could the same thing happen now as there are signs that the AI rally could end? If you do invest in a good quality public real estate investment trust, you should have at least a 4 to 5 year time horizon to hold that investment.
Financial Planning: The Benefits of Capital Gain Harvesting
While many investors focus on tax-loss harvesting, harvesting capital gains can be just as valuable especially when you fall into the 0% long-term capital gains bracket. For example, in 2025 a married couple filing jointly can have taxable income up to $96,700 and still pay 0% on long-term gains. Because the standard deduction ranges from $31,500 to $46,700, and itemized deductions can be even larger, a household’s total gross income can potentially exceed $150,000 while still remaining in the 0% capital gains bracket. If an investor wants to keep the same investment, they can immediately repurchase it, since wash-sale rules do not apply to gains. However, even though the gain itself is taxed at 0%, the added income may increase the taxation of Social Security benefits, pulling more of those benefits into taxable income. For those who don’t face that issue, gain harvesting resets their cost basis and reduces the taxes they will owe later if they sell in a higher-income year when their capital gains rate jumps to 15% or even 20%. This strategy can also make sense for those currently in the 15% capital gains bracket who expect to be pushed into the 20% bracket later. Overall, capital-gain harvesting can be a powerful tool in years of temporarily low income.
Companies Discussed: The Brink's Company (BCO), PVH Corp. (PVH), Pure Storage, Inc. (PSTG) & The Kroger Co. (KR)
Friday Dec 05, 2025
Friday Dec 05, 2025
We have gone through four industrial revolutions in the US, why does the AI revolution scare us the most?
Industrial revolutions are nothing new in the United States as we have had four including the current one we are in. The first one came in the mid-18th century when changes came for waterpower, steam engines, and textile manufacturing. The second industrial revolution was in the mid-19th century when steel became a big factor along with electricity and mass production. We also saw transportation by railroads and automobiles during this revolution. The third industrial revolution came around the mid-1990s. Some of us who are 50 years or older may remember the effects. Electronics including personal computers, information technologies, and this scary thing called the World Wide Web were developed during this revolution. The fourth industrial revolution is happening now and it’s scary because we don’t know what the future holds. This revolution includes digital, physical, and biological technologies. This includes AI, the Internet of Things, and robotics as well. The reason this is scarier than the third revolution with personal computers was that people could see how they could benefit and get more done and maybe use that computer to start a web-based business. Currently with AI, people are not seeing how it will benefit or improve their lives but only how it could take away their livelihood by making their job obsolete. There could be a slowdown in the advancement of AI similar to what happened in the late 70s with nuclear power. People as a whole rejected nuclear power, and it has taken almost 50 years to be accepted as we can see in today’s newspapers. Based on history, it looks like the acceptance of AI may slow down because polls show that just 40% of people said the AI industry could be trusted to do the right thing, and 57% say the government needs more regulation on tech and AI. Maybe your job is safe for longer than you thought.
Bitcoin holder Strategy should be getting nervous about the price of Bitcoin
The public company Strategy, which used to be known as MicroStrategy and trades under the symbol MSTR, should be getting nervous about its 650,000 Bitcoins that are worth around $56 billion depending on the day. The problem is the company has about $8 billion of convertible bonds outstanding that require interest payments and about $7.6 billion of perpetual preferred stock that also pays dividends. The cost to pay the interest and these dividends is about $780 million annually and since all the company’s assets are essentially in Bitcoin, they don’t receive any interest or profits from that asset. The CEO, Michael Slayer, is saying if they must, they will sell Bitcoin to raise the cash to pay the dividends and interest payments. The convertible bonds could also be problematic down the road as they are due in about 4.4 years on average and come with a combined interest rate of 0.421%. The stock itself has been pulverized, and its market cap has been as low as $49 billion from a high of $128 billion in July. MSCI has proposed cutting digital asset treasury companies from its indexes if crypto tokens make up a major part of the assets. This decision will come in a little over a month on January 15th and if this happens, Strategy could see $2.8 billion in passive outflows. JPMorgan estimates that about $9 billion of the company's market cap is tied to passive and index ETFs and mutual funds. This could put more pressure on the stock if more indexes also decide to remove these treasury companies. You won’t believe how the company makes their profit and loss statement. When the price of Bitcoin rises, the company books a paper profit even if it did not sell any Bitcoin. Obviously, if Bitcoin goes down in value, they must book the losses as well. One must love the estimates for the earnings of Strategy for 2025. Strategy is expected to report a loss of $5.5 billion or a profit of $6.3 billion or something in between. That is some great guidance! I don’t know where Bitcoin is going today, tomorrow or anytime in the future, but I would be sweating bullets if I held Bitcoin or Strategy in my clients’ portfolios or my portfolio!
Holiday shopping hits record levels!
We continue to see conflicting data when it comes to the health of the consumer. They continue to say they don't feel good, but the hard data and the actual numbers remain quite strong. In a positive note from the National Retail Federation (NRF), an estimated 202.9 million consumers shopped during the five-day stretch from Thanksgiving Day through Cyber Monday. That is the largest turnout since data for the five-day period started being collected in 2017, and it easily tops last year's level of 197 million shoppers. Expectations for the period were also quite low considering the estimate was for just 186.9 million shoppers. While online shoppers increased 9% year over year to 134.9 million people, in-store shoppers still saw a nice increase of 3% to 129.5 million people. Adobe also provided sales data for the five-day period that indicated consumers spent $44.2 billion online, which was a 7.7% year-over-year jump. Black Friday in particular saw strong online sales as they totaled $11.8 billion and grew by 9.1% year over year. A big question here is if the shopping was done to capitalize on deals in an attempt to save money. That could be an indicator of a weaker economy, but I don't believe that's the full story as shoppers told NRF at the end of Cyber Monday that they had about 53% of their holiday shopping remaining, which was similar to a year ago. For the full holiday season, the NRF expects record sales of between $1.1 trillion and $1.2 trillion from Nov. 1 through Dec. 31. This would be the first time sales would top $1 trillion, and it would represent a 3.7% to 4.2% increase from the year-ago holiday period.
Financial Planning: When Tax-Loss Harvesting Makes Sense and When It Doesn’t
Tax-loss harvesting is often promoted as a smart tax-saving strategy, but investors should understand its pitfalls before hitting the sell button. Selling a position at a loss may reduce taxes today, but it could also mean missing a rebound in that investment potentially costing more in lost gains than the tax benefit received. For example, if an investor buys a stock for $50,000 and harvests a $5,000 loss when the investment drops to $45,000, and they are in a 24.3% combined tax bracket (15% federal + 9.3% state), the tax savings is just over $1,200. That means the investment only needs to rise 2.7% to wipe out the benefit of harvesting, something that could easily occur during the required 30-day wash-sale waiting period. Even if the position doesn’t rebound, repurchasing after 31 days locks in a lower cost basis, potentially increasing future taxable gains possibly in a higher tax bracket. Many investors, especially retirees with lower taxable income, are already in the 0% long-term capital gains bracket, meaning losses may not even be needed; a married couple in retirement could have income near $150,000 and still realize long-term gains tax-free. Tax-loss harvesting can still be valuable when losses are large in percentage terms, when it helps avoid a higher tax bracket or IRMAA surcharges, when offsetting short-term gains (which long-term losses can do), or when exiting a position you don’t plan to repurchase.
Companies Discussed: Weyerhaeuser Company (WY), Netflix, Inc. (NFLX), Energizer Holdings, Inc. (ENR) & Valvoline Inc. (VVV)
Friday Nov 21, 2025
Friday Nov 21, 2025
Fast food restaurants like Wendy’s are experiencing a slowdown in business
The fast-food restaurant Wendy’s is planning on closing hundreds of locations throughout next year because they continue to see a slowdown in spending from their customers. They said most of their low-income consumers are cutting spending and making fewer trips with smaller purchases at the restaurants. Wendy’s increased prices after the pandemic at a higher rate than grocery stores and now other fast-food restaurants have begun to add value menus to keep customers coming back, but Wendy’s has held firm and not created any values for their customers. Because of this they have seen their net income decline to $44.3 million from a year ago when it was $50.2 million. Over the past year the stock has declined from around $18 a share down to under $9 a share, which is a decline of 53%. With the reduction in the stock price, the dividend yield is now 6.5% and the company trades at 10 times earnings on a forward basis. This company may be worth looking into as an investment as within in the next 6 to 12 months we could see lower end consumers stabilize.
The affordability index for people buying a home is the worst in 50 years
People may be excited about buying a home because mortgage rates are around the lowest they’ve been in over a year, but the affordability of a home is still far out of reach for many. The reason for this, and we have talked about this for the last few years, is that the increase in the price of homes has far outpaced the increase in people’s income. The 50-year average for a price-to-income ratio is around four times, and it reached a low in 1999 of around 3.6 times. But with the rapid increase of homes over the last few years, the price to income ratio has climbed to slightly over five times. Also not helping are the increases in home insurance costs and property taxes. Back in the summer of 2019, when looking at households earning $75,000, nearly 50% of those people could afford to buy a home. Today, when looking at those same households earning $75,000, only 21% would be able to afford a home. Back in 2012, the home affordability index was over 200, but it has now been cut in half to just about 100 with no signs of improving any time soon. I believe it will probably take 3 to 5 years to correct itself. If you look back in history, the affordability index does not change overnight. What will happen is probably incomes will increase slightly over the next 3 to 5 years and maybe the price of homes will either stay the same or decline slightly, which would increase the affordability index. What this means for people buying a home today is you should not have any aspirations of a rapid increase in the value of your home. What caused the problem was during the pandemic mortgage rates dropped to lows not seen in 50 years and that pushed up demand and the prices for homes climbed at a rapid rate. I believe this scenario is extremely unlikely to play out again!
The brokerage firm Robinhood looks more like a gambling platform than a brokerage firm
Robinhood initially went public at $38 a share in 2023 and the stock then fell to under $10 a share. It has recovered nicely since then as it’s now trading around $110 a share. What has caused this shift and the huge increase in the stock price? One big reason is that the company has really allowed major speculation for their investors. Starting off with crypto, they have allowed people to buy coins like BONK, Dogwifhat and Pudgy Penguins. Just when you think there’s no way they could come up with anything more speculative, surprise; they have come up with an investment known as prediction markets and event trading. Somehow the regulators have let this slide or maybe since government agencies don’t move that quickly, it just has not been addressed yet. It appears for investors on their app that you can predict what the outcome will be of a football game, politics, contracts over economics, even if aliens will exist on earth this year. Chief Brokerage Officer, Steve Quirk, says this is the fastest growing business we have ever had. Robinhood stock trades over 50 times projected earnings and is looking for about $4.5 billion in revenue, which is an increase of 53% over last year. The growth appears to be there for the company, but there is so much speculation and insane crazy things there is no doubt in my mind that in the future many people will lose more money than they ever thought was possible by speculating on crazy things rather than investing into good quality businesses. A fallout in those risky "investments" could hurt Robinhood's reputation, which I believe would be bad for long term growth.
Financial Planning: The Real Cost of Employer Coverage vs. Medicare
When reaching age 65, sometimes there is the option to join Medicare or stay with an employer health insurance plan. This is most common when a spouse retires after age 65 and they have the ability to join their spouse’s work plan. When comparing the cost of coverage, there is a key difference in how each affects your tax bill. Premiums paid through payroll for employer-sponsored health insurance are pre-tax, meaning you avoid federal, state, and payroll taxes such as the 6.2% Social Security, 1.45% Medicare, and 1.2% CA SDI tax in California. This is different from a 401(k) for example where contributions are only pre-tax from federal and state taxes. For someone in the 22% tax bracket, a $500 premium would be around $300 after the tax savings. Medicare premiums on the other hand are paid with after-tax dollars and are only tax-deductible for people who itemize and have total medical expenses exceeding 7.5% of AGI, which means very few retirees actually receive any tax benefit. Additionally, Medicare Part B and D premiums may be elevated due to higher levels of income because of IRMAA. Employer health insurance can vary in coverage and cost so at times Medicare may be a more comprehensive and cost-effective option, but it is necessary to compare the after-tax costs to be sure.
Companies Discussed: Cisco Systems, Inc. (CSCO), The Walt Disney Company (DIS), Spectrum Brands Holdings, Inc. (SPB), Maplebear Inc. (CART)
Friday Nov 14, 2025
Friday Nov 14, 2025
No surprise to me that there’s a glut of apartments on the market
I saw the potential for this oversupply happening in San Diego a couple of years ago. It seemed anywhere you drove within a short distance you would see the construction of new apartment buildings. It is not just here in San Diego though as the glut of apartments is happening around the country. With the dynamics of supply and demand, if you’re looking for an apartment today, you’re in for a treat. In September rental rates had the steepest drop in more than 15 years. Landlords are now offering months of free rent, gift cards, free parking and some are even paying for your moving expenses just to get you to sign a lease. You may want to play hardball because in some areas they’ll even cut the rent on top of all those incentives. In September, 37% of rentals agreed to concessions like months of free rent. What caused the problem for landlords is during the early years of the pandemic, developers could not begin building apartments fast enough, especially in the Sunbelt area where there was a major population migration. It became the biggest apartment construction boom in 40 years, but because of the delay of construction permits and labor shortages, development took much longer than they had hoped. It seemed no one looked around to see all the apartments going up, and now they’re all competing with each other for renters. The landlords are hoping they can raise rents by the end of 2026 or at least sometime in 2027, but I don’t think they are factoring in how many apartments are online with more still to come. Based on the current apartment inventory and new apartments coming online, renters could be in for lower rent maybe perhaps until 2028. This will not be good for the housing market because rent for houses will be the next to fall and then people will have to factor in the affordability of renting vs buying a home. This would also likely hurt the demand for buying rental properties as an investment if you can't get as much rent as you thought.
Are the large hyperscale companies like Meta, Microsoft, and Alphabet inflating earnings?
Michael Burry, who was made famous by "The Big Short", made the claim that some of America's largest tech companies are using aggressive accounting to pad their profits. He believes they are understating depreciation expenses by estimating that chips will have a longer life cycle than is realistic. Investors are likely aware of the huge investment these companies are making in AI, but they likely don't understand how the accounting of the investments work. If a business makes an investment in these semiconductors/servers of let's say $100 B, that doesn't hit earnings when the money is spent as under generally accepted accounting principles, or GAAP, they are instead able to spread out the cost of that asset as a yearly expense that is based on the company’s estimate of how rapidly that asset depreciates in value. From what I've seen, these companies are generally depreciating their Nvidia chips for over 5 to 6 years. This seems to be a stretch considering Nvidia is on a 1-year chip production cycle, and the technology is changing quite rapidly. Burry estimated that from 2026 through 2028, the accounting maneuver would understate depreciation by about $176 billion and if Burry is correct, hyperscale's will have to write off AI capex as a bad investment, due to depreciation-useful life mismatch. This would then produce a major hit on earnings. While I remain a believer that AI is here to stay, I do believe there will be some big-time losers in this space given all the money that is being spent. Be careful chasing the hype as I do worry the fallout for some of these companies could be larger than many things possible. Burry has also warned this year that AI enthusiasm resembles the late-1990s tech bubble and recently disclosed put options betting against Nvidia and Palantir. He also stated that "more detail" was coming November 25th, and that readers should "stay tuned." I know I'm definitely curious what other information he has!
China is no longer just manufacturing; they are also beginning to innovate.
For many years innovation was generally done here in the US, and we would have the products manufactured in China. China is no longer happy with this arrangement, and its research and development spending is up nearly 9% a year well above the 1.7% here in United States. In 2024, China filed 70,160 international patents which was about 16,000 more than the 54,087 patents the US filed. China also seems to be more advanced in robotics installing 300,000 industrial robots in 2024 compared with roughly 30,000 industrial robots in the US. It also has been noted that when it comes to worldwide sales of electric vehicles, 66% came from China. While these developments seem positive for China, the country is still experiencing problems with a slowing economy as they have seen fixed asset investment decline and a slowdown in retail sales. The population of China has also declined over the last three years, and the real estate market after four years has really taken away a lot of household wealth. China’s public and private debt continue to climb rapidly, which is becoming a problem for them as well. It is estimated that China is spending around $85-$95 billion on AI capital spending yet their economy is struggling as noted by the China Merchants Bank which talked about a 11% decline in consumption among customers and retail loans are now under pressure. China’s exports to the US are down 27% because of the tariffs, but worldwide their exports are up 8%. It was recently reported that Beijing banned foreign AI chips from Nvidia, Advanced Micro Devices and Intel from government funding data center buildouts. Currently, China cannot pass the US and its allies in producing the most advance semiconductors, but they’re making very good progress in developing mid-level chips and parts of the AI ecosystem. The US must continue to forge ahead because if we rest, China will be the world dominant power
Financial Planning: 50-year Mortgage: Helpful or Hurtful?
A 50-year mortgage is being discussed as a way to reduce monthly payments and help with affordability, offering borrowers slightly lower costs that could help them qualify for homes otherwise out of reach. Critics argue that these loans would saddle buyers with far more interest paid to banks and that many borrowers would never pay off such a long mortgage, but those arguments often miss the bigger picture. Paying a low rate of interest to a bank is not inherently bad if it allows someone to invest money elsewhere at higher returns, just as today’s homeowners with 30-year mortgages at 2% benefit greatly from not paying them off early. Also, most mortgages today are never fully paid off anyway because homes are sold, or loans are refinanced long before they reach maturity. A 50-year loan would be no different, especially since borrowers could always pay more than the minimum if they wanted to accelerate payoff. In practice, savvy investors would likely use the freed-up cash flow from 50-year mortgages to invest in higher-return opportunities, but most borrowers probably wouldn’t resulting in slower wealth accumulation for the masses without addressing the root cause of housing affordability. If used correctly, this loan could be a useful tool, but I fear the overall impact could be damaging.
Companies Discussed: Axon Enterprise (AXON), Zoetis Inc. (ZTS), Elf Beauty Inc. (ELF),Sweetgreen Inc. (SG)
Friday Nov 07, 2025
Friday Nov 07, 2025
Apple CEO Tim Cook pulled three rabbits out of a hat
Pulling a rabbit out of a hat is a pretty good trick, but pulling three out of a hat is nothing short of a miracle. In the spring of this year, Apple stock fell below $170 a share as it was faced with enormous tariffs on iPhones, the potential loss of a $20 billion per year payment from Google, and sales for iPhones seemed to be stuck in the mud. To handle the tariff situation, Tim Cook promised US investments of $600 billion over four years. This was not bringing iPhone production back to the US, but it was an investment of making AI servers in Texas and offering manufacturing training for US businesses in Detroit. Apple also announced a $2.5 billion commitment to make iPhone cover glass in Kentucky with Corning and a $500 million partnership to produce rare earth magnets in the United States. After this investment pledge, the President said Apple would be exempt from tariffs on imported electronics. To save the $20 billion yearly payment from Google, Mr. Cook sent Apple’s senior vice president in charge of services Eddie Cue to testify. He convinced the judge that technology shifts are so powerful that they can take down even the most massive companies. In other words, the judge didn’t need to impose harsh penalties, and the market would essentially take care of itself. And somehow consumers have been convinced that the new thinner smart phone called the iPhone Air is a must for any consumer. The marketing on this must be phenomenal because the iPhone Air has a weaker camera, a single speaker, a smaller battery with a shorter life and a higher price tag. Apple also convinced consumers that the rest of the iPhone 17 lineup was worth an upgrade. Apple is predicting up to12% revenue growth in the holiday quarter, twice what Wall Street estimated. So, in roughly 6 months the stock, after dropping to a low around $169 a share, it is up roughly $100 and somehow supports a price earnings ratio of 36. Congratulations to Tim Cook and shareholders of Apple stock. If anyone said they knew Apple would be fine either they have a crystal that really works, or they didn’t understand the problems Apple was facing. Going forward the road is still bumpy with operating expenses coming in slightly over $18 billion for the December quarter, a 19% increase year over a year and well above the 10 to 12% revenue increase that Apple's projecting. We don’t see any big drops in the stock coming up, but I still can’t justify the share price or see any reason why the stock will continue to climb going forward.
In 2026 you could be buying stocks on the Texas Stock Exchange
Businesses and CEOs are getting tired of the high taxes in New York City and the regulations that are costing them billions of dollars. Texas, which is known as a pro business state will be opening in Dallas the Texas Stock Exchange (TXSE). This has already been approved by the Security Exchange Commission (SEC). It is expected to see operations open for trading in the first quarter of 2026. The Texas stock exchange has the backing of JPMorgan Chase, who just invested $90 million into the new exchange. Large companies like BlackRock and Charles Schwab are also on board. It is backed by many businesspeople including billionaire Kelcy Warren, cofounder of Energy Transfer Partners, and billionaire Paul Foster, who founded the investment firm Franklin Mountain Investments. This could be a heavy blow to New York and New York City, who have been unfriendly to business because they felt like they have the only place in the country to trade. Now that New York City has elected Zohran Mamdani for mayor, it will be interesting to see how businesses respond since he says he will go after business and the wealthy to pay more taxes. The state of Texas has no income tax, but if you live in New York City you could pay a state tax of 10.9% plus a city tax of 3.9% and it doesn’t take long to get to those levels based on your income.
Public companies that bought Bitcoin are getting worried
The craziness of public companies riding the Bitcoin wave as it increased in value caused many of their stocks to jump even more than the increase in Bitcoin or other cryptocurrencies. But now that Bitcoin has pulled back from its all-time high slightly over $126,000 and has dropped about 20%, those public companies that bought Bitcoin are seeing their stocks drop far greater than the decline in Bitcoin. Roughly 25% of the public companies that bought Bitcoin as a treasury strategy now have a market cap valuation below the total value of their Bitcoin value. What companies were doing was they would invest in Bitcoin then sell their shares at a premium as their stock increased in value and then used those proceeds to turn around and buy more Bitcoin. Now that Bitcoin has declined, there’s no reason for crypto buyers or traders to buy those stocks and instead it looks like they have been selling them. As an example, CleanCore Solutions is now down over 80% since investing in Dogecoin and even a larger player like Japan’s Metaplanet, which is a top five publicly listed Bitcoin holder, has seen its stock decline around 60% over the last 3 months. If Bitcoin were to continue its decline, the company could be forced to sell assets, which could cause Bitcoin to fall even further. So far, this has not affected the company who started this craziness of buying Bitcoin in their treasury. I'm referring to MicroStrategy, which has changed its name just to Strategy and still trades under the symbol MSTR. Really all this company does is buy Bitcoin. Strategy owns roughly 640,000 Bitcoin and at today’s price it is worth roughly $70 billion. It is estimated that Strategy's average purchase price for Bitcoin is $74,000, so they seem to be safe for a while. However, stock investors in Strategy are probably crying the blues since in July the stock was around $450 and as of today it trades around $240, close to a 50% decline. As we have said for years, no one really knows what direction Bitcoin is going, it could be up or it could be down. But one thing is for certain, if those companies that bought Bitcoin and pushed the price higher, now need to sell it that will probably cause Bitcoin to fall further.
Financial Planning: The Conflict of Interest around Universal Life Insurance
Universal life insurance is often presented as a hybrid policy that combines features of term life and whole life, marketed for its perceived benefits of tax-deferred cash value growth and the potential for tax-free income through policy loans in addition to a permanent death benefit. However, realizing these benefits typically requires significant overfunding, meaning the policyholder must pay premiums well above the minimum needed to keep the policy in force. Universal life offers flexible premiums, but there are ongoing fees and costs of insurance, which increase with age, required to maintain coverage. Only premiums paid beyond those costs build cash value that can be invested. The problem is that agent commissions are usually based on the “target premium”—the minimum amount needed to keep the policy active, not the funding level required for it to perform as illustrated. This creates a conflict of interest, where many agents are incentivized to sell the policy but not to ensure it’s structured or funded properly. As a result, many universal life policies become underfunded, fail to accumulate meaningful cash value, and ultimately function as expensive term insurance. While some advisors structure these policies correctly, they are the exception rather than the rule. Because the life insurance industry is easy to enter and highly lucrative, it attracts many underqualified or self-interested salespeople. For most people, term life insurance combined with disciplined investing remains a more transparent and cost-effective approach that will outperform even the most efficiently structured life insurance, especially since the need for a death benefit typically declines by retirement. It’s important to regularly review existing life insurance policies to ensure they’re performing as intended and not quietly eroding in value over time.
Companies Discussed: Alexandria Real Estate Equities, Inc. (ARE), Kimberly-Clark Corporation (KMB), Chipotle Mexican Grill, Inc. (CMG) & Newell Brands Inc. (NWL)
Friday Oct 31, 2025
Friday Oct 31, 2025
The big brokerage firms are fighting for your investment accounts
Our investment advisory firm over the years has never been a favorite of the big brokerage firms because we generally only do three, maybe four trades on average per year. But the big brokerage firms are now acting like the casinos in Las Vegas and are doing everything they can to get you on their platform. They will give you all kinds of tools and seminars, so you’ll take higher risk and do more trading. In the meantime, they're downplaying the risk of trading. You see also like the casinos in Las Vegas, there are now stories of them giving away free rooms for the big players and they are giving you free software and free education on how to trade. Robinhood even invited 1000 people to Las Vegas and took them go kart racing and provided classes with their new trade platform. Schwab and Fidelity are doing similar types of events to get you to use more of their services. Once they get you in the door, they can show you how to use margin debt, which by the way hit a new record of $1.13 trillion in September, along with option trading and other exciting ways to make you think you can make a lot of money. Doesn't that sound like the casinos in Las Vegas that try and get you to hit the gambling tables? Unfortunately, it seems to be working somewhat because the percentage of investors who now have self-directed accounts is 33%, which is a big increase from 24% just five years ago. My problem with this, as you can tell, is I don’t believe they’re teaching people how to invest but more on how to gamble and how exciting it can be. Going back 100 years it's still the same with Wall Street, they will make some big profits, and the small investors will lose most if not all of their nest egg.
Can Travis Kelce turn around Six Flags?
If you’re not sure who Travis Kelce is, he is a tight end for the Kansas City Chiefs and engaged to the well-known singer Taylor Swift. Six Flags, which is a public company that trades under the symbol FUN, has received an investment of $200 million from the activist investment company JANA Partners. It was not disclosed how much investment Travis has of the $200 million, but he does like to invest in companies both public and private. He has investments in over 30 companies that include manufacturing, distribution, consumer goods, entertainment, and a beer company. He is pretty excited about his investment because as a kid he used to love the roller coasters, Dippin' Dots and him and his brother have great memories at Six Flags. He has suggested that they do a roller coaster with a 300 foot drop where riders feet dangle from beneath. Investing in Six Flags seems to be an uphill battle. Year to date the stock is down roughly 45%, the company is losing money and has a market capitalization of $2.6 billion. Travis does have a long-term perspective on all his investments likes we do. He is OK investing in a company losing money in hopes it could be turned around. Our philosophy at our firm is we will not invest in companies that do not have earnings. One benefit he does have is obviously his name and I’m sure if him and his fiancé, Taylor Swift, would start showing up at Six Flags, you can bet that they will be all over the news giving the company some nice free advertising.
Markets actually declined after the Fed rate cut
On Wednesday, the Fed announced they would lower their benchmark overnight borrowing rate by 0.25% to a range of 3.75%-4%. This marked the second consecutive cut of 0.25% and there is still one meeting left this year where we could see another rate cut. The keyword here is could and the lack of conviction around another cut is likely what spooked the market. Powell said a December rate cut isn’t a “foregone conclusion” and while recently appointed Fed Governor Stephen Miran again dissented in favor of a 0.5% cut, there was also a hawkish dissent with Kansas City Fed President Jeffrey Schmid voting for no decrease. Schmid's vote and Powell's language was likely what sent the market lower after the announcement as many essentially had the December rate cut factored in as a sure thing. Powell also added that there is “a growing chorus” among the 19 Fed officials to “at least wait a cycle” before cutting again. This resulted in traders lowering the odds for a December cut to 67% from 90% the day prior. Given the lack of data and an economy that still appears to be in an alright position, I do believe the Fed needs to be careful cutting too quickly especially since they are taking another accommodative stance with the announcement that they would be ending the reduction of its asset purchases – a process known as quantitative tightening – on Dec 1. This in theory will stimulate the Treasury and mortgage-backed securities markets, which should help with longer dated debt instruments, as the Fed was allowing these assets to just roll off the balance sheet and now will need to step in and buy new debt to replace the securities as they mature. While QT shaved off around $2.3 trillion from the Fed's balance sheet, Covid led to a major expansion from just over $4 trillion to close to $9 trillion. The question is with the rapid expansion just a few years ago, was enough removed from the balance sheet to put it at a more normalized level. Like with the Fed cuts, I do believe if monetary policy eases too much, we risk a return of inflation and a further increase in many speculative assets that could cause problems down the road.
Financial Planning: When does a Solar System Make Sense?
Buying a solar system generally makes the most sense if you use a lot of electricity and plan to stay in your home long term. Installing by the end of 2025 allows you to capture the 30% federal tax credit, which significantly shortens the payback period. If the system is financed with a mortgage or home equity line of credit (HELOC), the interest may be tax-deductible, allowing for little or no upfront cash outlay and after-tax loan payments that can be lower than the monthly electricity savings. Owned solar panels usually increase home value, though not always enough to fully offset the system’s cost, which is why longer-term ownership is important to recoup the investment. In California, including a battery is almost always recommended so you can store power generated during the day for use at night, reducing the need to buy expensive electricity from the grid. Leasing can be attractive for shorter-term homeowners if lease payments are well below current utility costs, but leases generally don’t increase home value and don’t qualify for tax credits. The main advantage is immediate monthly savings without an upfront investment, though leased panels can complicate a future home sale. In some cases, it may be best not to install solar at all—for example, if you don’t plan to stay in the home long term, or if your electricity usage and potential savings are too low to justify the hassle and possible roof wear from installation.
Companies Discussed: The Coca-Cola Company (KO), Capital One Financial Corporation (COF), QUALCOMM Incorporated (QCOM), Knight-Swift Transportation Holdings Inc. (KNX)
Friday Oct 24, 2025
Friday Oct 24, 2025
Inflation report likely solidifies Fed rate cut this month
The September Consumer Price Index, also known as CPI, showed inflation climbed 3% year over year for both the headline and core numbers. Core CPI, which excludes food and energy, came in better than both the estimate and the previous month's reading; both stood at 3.1%. It was a surprise to get this data with the government shutdown, but since it is used as a benchmark for cost-of living adjustments in benefit checks by the Social Security Administration it was a rare economic point in an otherwise quiet period. Energy, which provided such a benefit to the headline number for many months, has started to reverse course as it climbed 2.8% compared to last year. Gasoline was a small benefit as it was down 0.5%, but energy services climbed 6.4% thanks to an increase of 5.1% for electricity and an increase of 11.7% for utility gas service. What I would look to as tariff impacted areas, has still remained quite muted considering apparel prices fell 0.1%, new vehicles were up just 0.8%, and food prices had maybe thehardest hit with an increase of 3.1%. Much of this came from food away from home, which was up 3.7%. Food at home saw a more muted increase of 2.7%. Shelter inflation remained above the headline and core numbers at 3.6%, but it is much less problematic than it was in prior periods. Another positive was owner's equivalent rent climbed 0.1% compared to the prior month, which was the smallest month over month increase since January 2021. Overall, this report likely produced enough evidence for the Fed to cut rates at this month's meeting as odds stood above 95% after the inflation annoucement. The likelihood for a December cut also initially climbed to 98.5% following the report.
The bank earnings from last week had some surprising undertones.
Overall, the third-quarter report from the big banks showed things are pretty much going along OK. But then a couple of the big banks brought up the issue of private credit and some bankruptcies that led to write-downs. Jamie Dimon, the CEO of JPMorgan Chase, pointed out that even though he said he probably should not say it that "if you see one cockroach, there are probably more." Some smaller financial institutions like Zions Bancorp and Alliance Bancorp took a $50 million charge and $100 million charge respectively due to potentially fraudulent loans. The issue here is commercial banks have been making loans to nonfinancial depository institutions or NFDIs and I point out that this type of funding is not very transparent for investors to see what is going on behind the scenes. I was surprised to learn that these NFDIs now account for roughly 1/3 of commercial and industrial loans originated by large banks. One may think if you’re invested in AI companies, you’re safe but research has shown that even your deep pocket players of AI are funding investments with these private loans. As time passes, the more I read, the more I become concerned about what we don’t know about leverage in this economy.
Risky investing behavior continues to amaze me!
Many people will point out that we have missed the boat on crypto, but I continue to worry about the space long term as there is no true way to value what these cryptocurrencies are worth. While this is a major concern for our firm, I would say leverage in the space is another major risk. A big problem is the rules and regulations and ultimately the transparency in the space is not as clear as when you invest in public equities. I was blown away reading an article on CNBC by how crazy the leverage can be, and I bet most investors have no clue about it. While there are ways to leverage crypto in the US, the offshore market is where things get wild! Offshore, decentralized exchanges Hyperliquid offer maximum leverage of 40-times for bitcoin and 25-times for ether and Binance Labs-linked Aster offers as much as 100x leverage, depending on the token. Leverage is so dangerous because if a decline comes and investors need to unwind a position it can create a cascade of selling that leads to massive losses. It is not just the crypto market where people are gambling though. We saw a return to meme craziness with Beyond Meat producing massive gains of 128% Monday and 146% Tuesday. On Wednesday, the stock at one point produced another triple-digit intraday gain, but it ended up closing down 1% on the day. I also saw a nuclear power development company by the name of Oklo have a sizeable pullback after the Financial Times noted the 500% advance in 2025 and $20 billion market value has come despite “no revenues, no license to operate reactors and no binding contracts to supply power.” These are examples of pure gambling and examples like these typically come during frothy times before reality hits and big pullback comes.
Financial Planning: The real cost of financial mistakes
When it comes to financial wellbeing, avoiding mistakes can be even more powerful than chasing great decisions. Too often, people lose ground not from lack of opportunity, but from unforced errors. Drawing retirement income without tax strategy can quietly cost thousands in extra taxes or Medicare premiums. Holding too much cash or being overly aggressive both expose you to risk, one to inflation, the other to unrecoverable losses. Maintaining investing discipline sounds simple but emotional reactions like selling when markets fall or chasing what’s hot can destroy more wealth than poor returns ever could. Many homeowners also miss out by not structuring their mortgage correctly resulting in more short-term fees, long-term interest, and missed investment returns. The key isn’t perfection; it’s recognizing that protecting yourself from big mistakes is often the best investment you can make. When making a financial decision, do your best to get your information and advice from accurate and unbiased sources so you can fully understand the impact of the decision.
Companies Discussed: The Progressive Corporation (PGR), Bank of America Corporation (BAC), ManpowerGroup, Inc. (MAN) & Snap-on Incorporated (SNA)