1/13/26 What Market Corrections, AI & Earnings Season Mean for Your Money

The Moneywise Radio Show and Podcast Tuesday, January 13th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield. Call or text in at 661-396-1000.

• 0:37Speaker 00

  Now, let's start the Money Wise Show.

• 0:40Speaker 01

  And welcome to the Money Wise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you're on KGO Money Talk, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. We are your hosts. I'm Sharad Waite and?

• 1:05Speaker 02

  Dustin Weaver.

• 1:06Speaker 01

  Hey Dustin Weaver, D-Dub. Good having you here.

• 1:08Speaker 02

  Oh, it's good to be here.

• 1:10Speaker 01

  We, uh, this is our sophomore session down here in the basement.

• 1:15Speaker 02

  Sophomore session.

• 1:17Speaker 01

  Our second day.

• 1:17Speaker 02

  Second day.

• 1:18Speaker 01

  Uh, what do you think?

• 1:19Speaker 02

  I think it sounds great.

• 1:21Speaker 01

  It sounds so good. I mean, just like naturally in here, our old office, I probably repeated, I'm repeating myself, but our old office was a echo chamber, basically. It was right, it was just covered in glass and the HVAC system, you could hear, you know, through it. It was just, just kind of a mess. But this has been really, really fun to be in here. Thanks to our, our producer extraordinaire, Stephen Nicholas.

• 1:46Speaker 02

  That's right. Thank you, Stephen.

• 1:47Speaker 00

  Best team, great team. And, uh, I was, I'm waiting on Frank because he's, he's used to the water dripping on him here and there. So we're, we're moving on up.

• 1:57Speaker 01

  Uh, we sure are. Uh, Stephen Nicholas, producer extraordinaire, best producer in town, hands down. Uh, great job, Stephen.

• 2:05Speaker 02

  Absolutely.

• 2:06Speaker 01

  So let's get right to the show, Dustin. We have a few comments and questions.

• 2:11Speaker 02

  Yeah, I saw one come through here from Mr. Marky Mark with a C. He says, "Hey, guys, congrats on the new studio. My money question of the day is, when the market starts dropping or swinging a lot, how do I know if I should stay put or make changes to my account?"

• 2:26Speaker 01

  I love this question. It's like so smart because it's not saying, when should I get out? It's saying, how do I know like what's, what's, what's gonna happen? You know, like it, it's so, I mean, this is, this has been the money wise way of investing since day one. Now, over 20 years, almost 25 years, we have been preaching this concept at the top of our lungs. How important it is that once you have a good investment strategy, just stick to that strategy.

• 2:59Speaker 02

  That's right.

• 2:59Speaker 01

  There, I have, you have to say a good investment strategy.

• 3:03Speaker 02

  Right.

• 3:03Speaker 01

  So you have to feel confident that you're somewhat in the ballpark of being good. But the, uh, the, the, you know, obviously if you've got, if you've got a stinker of a portfolio or you've got some strange, like a fad, you know, that you, that you set up your, your stock portfolio 10 years ago and you've never even looked at it, that's not good. But there, you know, there's, there's some really general principles, I think, that are relevant and can help our listeners.

• 3:38Speaker 02

  Yeah, I think that's great. And, you know, volatility is normal, but the panic that goes with it, that's optional.

• 3:45Speaker 01

  Yes.

• 3:46Speaker 02

  Right?

• 3:46Speaker 01

  Yeah, yeah.

• 3:47Speaker 02

  So we expect volatility. So when we're setting up portfolios for clients, especially as advisors, we're taking into account, okay, what are the goals for this person and have their goals changed? So Mark, you might ask yourself, have my goals changed, right? Am I retiring any sooner or do I need money in the next one to three years? If the answer is no, the market moving shouldn't change the plan. If, to your point, Sherrod, the plan as a foundation was a good portfolio to start with. It was a good long-term portfolio with a long-term mindset.

• 4:19Speaker 01

  Yeah. So I always like to point people to some evidence, um, you know, like back, like good data that can help people stay in the seat, you know, their, whatever their financial investment plan is. The Dalbar study is something I know you and I are familiar with, talked about. About this study many times it's Dalbar if anybody's interested essentially shows that the average investor is underperforming the market from anywhere between three and five percent a year and the gap isn't fees like some people say oh that's because they're you know they're paying a financial advisor they're paying high commissions or whatever no it actually has nothing to do with that it has to do with the fact that many times investors the average investor is trying to get in and out they're trying to get cute with

• 5:04Speaker 01

  their portfolio instead of just sticking with it or they're pulling out of the market altogether even if it's just for a few days or a few weeks and then they're going back in missing just the 10 best days in the stock market over 20 years can cut the total return roughly in half

• 5:22Speaker 02

  Right

• 5:23Speaker 01

  And we're talking about 10 days over a 20 year trade of of trading days I did the math before but I mean it's thousands and thousands of days of market days and just missing some of those days which means it's counterintuitive because when the market is crashing when the market goes down and down down maybe goes you know it's going down over the period of several months people really definitely they definitely start to panic and I think I'm watching my portfolio get cut in half you know and they they start to panic and they they start to worry and they think well maybe this is it and they start conjuring up worst case scenarios oftentimes

• 6:04Speaker 01

  they get out and they're only out for a little while until they feel by the time they feel confident enough to get back in the market you've missed some of those pivotal times which is when the market makes that shift from that bear to the bull

• 6:18Speaker 02

  That's right

• 6:19Speaker 01

  And you never know when it's going to be until you're already in the bull

• 6:22Speaker 02

  You hit the nail on the head with with that confidence you have to ask well where where would the confidence come from well it's because things are looking better again right

• 6:31Speaker 01

  Yeah

• 6:31Speaker 02

  Things have bounced back they're appreciating they're they're upward swinging but a lot of times people don't have a a plan for okay well when do I get back in and nobody can time it if somebody tells you they can time the market that should be a red flag right there

• 6:47Speaker 01

  Yeah, it keep, you know, let it, history isn't perfect. You can't totally rely on past performance to look at what the future is going to lie. What what's going to come in the future. However, it does give us some indication that at least it can give you some guidance of how long corrections last. So a correction is a drop between 10 and 20%. On average, over the last roughly 40 years, they last three to eight months. A bear market, which is, you know, considered a drop of 20% in the market, on average, lasts a year, 12 months to 24 months.

• 7:28Speaker 01

  So, you know, it's, I think what's hard is to write it out when there are geopolitical events, when there are, you know, elections, when there are wars, when there are, when there's something going on, or there's a multitude of of issues going on, that people, all of a sudden, their worldview becomes almost apocalyptic.

• 7:57Speaker 02

  Right.

• 7:58Speaker 01

  And they think, well, this might be the end of like our, our country's financial system as we know it, you know, it's time, it's, this is it, you know, and.

• 8:09Speaker 02

  So, Sher, do you remember what went on November 15th in 1896?

• 8:13Speaker 01

  Uh, no. Oh, let's see. I got married. I got married just about a month after that.

• 8:20Speaker 02

  I just picked a random date to say, if we were to look at the news articles from that day, it's likely there's some bad news there.

• 8:29Speaker 01

  Yes, oh, for sure.

• 8:30Speaker 02

  And so, we have to keep that in mind, right? Every day, there's going to be reasons not to invest or not to stay invested. I mentioned one of the questions Mark should ask himself, right? Has his goals changed? But also, has my time horizon changed?

• 8:44Speaker 01

  Yeah.

• 8:45Speaker 02

  Because if you have a long-term portfolio or long-term money, which, when we say long-term, we're thinking 10 years out, you know, most of the time, a portfolio that's designed appropriately can ride out that volatility, right? And your short-term money should not be heavily exposed to the markets anyway.

• 9:04Speaker 01

  Right.

• 9:04Speaker 02

  Right? So. It's more of a foundational question of what's the right portfolio for me and for my long-term goals.

• 9:12Speaker 01

  Yeah, and fortunately, it's when you and I just got into this business, it was much more common to see a 401k or somebody's retirement invested in like one-off, one-off stocks or all the company's stock, or it wasn't, it wasn't diversified in any way. And there's been a big improvement from those types of financial providers, say like 401ks,

• 9:50Speaker 01

  where they will put you in either indexed or index fund or a target date retirement.

• 9:59Speaker 02

  That's right.

• 9:59Speaker 01

  Or a portfolio, like just a, like a, an allocated portfolio that a portfolio manager has created.

• 10:07Speaker 02

  Yeah, there's these qualified default investments, they call them, that with the 401k plans in particular.

• 10:13Speaker 01

  Yeah.

• 10:14Speaker 02

  They've gotten more strict on and, which is a good thing to have a qualified default for somebody that, that says, well, hey, I'm not comfortable picking my own investments. They have to have some kind of starting point, you know, for the mass, for the masses out there that aren't financial experts, right?

• 10:31Speaker 01

  Yeah.

• 10:31Speaker 02

  They say, well, here's a decent portfolio for you as a qualified default, meaning while we're figuring out if you want to do something different, we're going to start you off somewhere more appropriate than maybe just sitting in cash.

• 10:45Speaker 01

  Yeah, yeah, good stuff. I think, I think we answered it. Feel pretty good about that.

• 10:50Speaker 02

  Yeah.

• 10:51Speaker 01

  You got anything else to add there, Dustin?

• 10:53Speaker 02

  So we talked about two questions, right? Has, have your goals changed? Have your time horizon changed? The other one is, can I still sleep at night? And if the answer to that question is no, maybe you didn't have the right portfolio to match your risk tolerance to begin with.

• 11:07Speaker 01

  Yeah, right.

• 11:09Speaker 02

  Right?

• 11:09Speaker 01

  Yeah.

• 11:10Speaker 02

  So I think answering those three questions for yourself is, could be helpful.

• 11:16Speaker 01

  Yeah, good stuff. Another message here. Says, you got it?

• 11:21Speaker 02

  Yeah, great insights. It's fascinating to see the education, or excuse me, evolution of AI stocks and how major players like Anthropic are pushing boundaries. Looking forward to hearing your thoughts on this.

• 11:31Speaker 01

  I mean, this AI, this whole AI stuff is just fascinating to me. It just seems like it's ever evolving. Today, for example, news came out that Apple is going to be adopting Google's AI infrastructure. Essentially, Apple is going to use Google's Gemini as their foundation for their artificial intelligence models that's going to power Siri.

• 12:01Speaker 02

  Wow.

• 12:01Speaker 01

  And, yeah, this is a big deal.

• 12:03Speaker 02

  Instead of bringing it in-house or doing your own?

• 12:05Speaker 01

  Yeah, or using, you know, Anthropic or OpenAI, which, which is part of ChatGPT.

• 12:13Speaker 02

  Right.

• 12:14Speaker 01

  And this is, you know, what we saw is Google essentially becoming the fourth member of the four trillion dollar club.

• 12:26Speaker 02

  Four trillion with a T.

• 12:27Speaker 01

  Four trillion with a T. And every time I, I, I hear about a company that is worth a trillion dollars, I have to like, I have to read it again and be like, is that really a, because it's been fairly recently that companies have broken that barrier of a trillion dollars. Apple was the first company to have, to hit that trillion dollar market cap for the first time. It happened in August 2nd of 2018. So it's just seven years ago, eight years ago, seven and a half years ago that Apple did that. And then it essentially like, once it crossed that threshold,

• 13:06Speaker 01

  we saw the, the gates sort of open up. And not long after that, it was about, uh, but just over a year after that, Saudis Aramco reached that trillion dollar market cap. Remember when they went public with their, with the Saudi Aramco. And then you had Microsoft in 2020, followed by Amazon about a

• 13:29Speaker 01

  Month about about four months after Microsoft did in 2020 Alphabet, who we just talked about was just Google. It hit that trillion dollar mark in January of 2020. Tesla hit it in 2021. And then we have Nvidia, Meta, Berkshire Hathaway. And the latest in 2024 was Taiwan Semiconductor Manufacturing Company. That hit it in July of 2024. Currently, there are about 12 publicly traded companies that have a market capitalization over a trillion dollars.

• 14:05Speaker 02

  Yeah, and one of the ones you mentioned Nvidia, they have a lot to do with this AI. Right now, because they're creating a lot of the chips. Yeah, but they so they cross that cross that one trillion. Now they're four and a half trillion. Here in the last few years.

• 14:19Speaker 01

  It seems like there's been, I'm not sure where they're at now. Maybe you have this data. Who's who's what's the most valuable company? It's either, you know, it's been like this. Back and forth race between Nvidia, Alphabet, Microsoft.

• 14:38Speaker 02

  And Amazon.

• 14:39Speaker 01

  And Amazon.

• 14:40Speaker 02

  Yeah, I think Nvidia might take the cake.

• 14:43Speaker 01

  Yeah, I know earlier last year, there was some, there was kind of some back and forth. And obviously it depends on what the current stock price is. So it's gonna, it's gonna change.

• 14:50Speaker 02

  It fluctuates.

• 14:51Speaker 01

  Fluctuates a lot, but the Apple, you know, again, it broke the seal. AI really just compressed the time that we're seeing these valuations. Nvidia went from one trillion to three trillion in about a year. Tripled in size in a year.

• 15:08Speaker 02

  Employees, because they have a stock option plan for employees. A lot of them became multimillionaires during that time, even just being an employee working.

• 15:18Speaker 01

  Man, it's crazy. I mean, that's just like what happened during the dot com.

• 15:22Speaker 02

  Oh, yeah.

• 15:23Speaker 01

  Boom, that was the same thing. You had a just regular employees that just became millionaires overnight.

• 15:28Speaker 02

  That's right.

• 15:29Speaker 01

  Super fascinating.

• 15:31Speaker 02

  But we saw a lot of stories there that drive home the point on how important diversification is. Yeah, because if you have all that wealth, we'll call it tied up in one company. You're anchoring your success to just that, just that one company. So if they do well, you're going to do well. But if they turn into another Enron,

• 15:51Speaker 01

  Right.

• 15:52Speaker 02

  You're not going to do so well.

• 15:53Speaker 01

  And I think that confuses investors. You've probably had clients or people ask you, hey, what, you know, what do you think of AI? What do you think of these AI companies? And my answer has been that I believe that this, this is very comparable to when the internet, that from the internet boom in the late 90s, where there was a lot of skepticism about, why is this really a new economy? Is this really going to take hold? Like, are we going to have internet everywhere? Like, people's PCs at home? Is everybody going to really use email? And, you know, are people going to research online? Is this really going to be a thing? And then it went to, oh, no, this is like a thing. And jobs are likely going to be lost because of this new technology.

• 16:37Speaker 01

  Store, like, brick and mortar stores will be a thing of the past. And you saw billions and billions of dollars go into these tech companies just because they had a website and they had something to do with the internet.

• 16:48Speaker 02

  Right.

• 16:49Speaker 01

  And what happened since then? Well, of course, the internet stuck around. Of course, it like changed things. But most of those companies are out of business. And so if you'd invested at that time in just internet companies, you, even if, even if some of those companies were the companies that are still around today, like Microsoft and Apple or whatever, then you, you still likely would have had a, a struggle to make money or to be ahead because you were just so concentrated in internet stocks. And I would, I would think that it's, there's similar aspects to the AI boom that's happening right now. Who's going to be around in five and 10 years?

• 17:32Speaker 01

  Who knows? Like, how do you, how do you know that? And

• 17:36Speaker 02

  That, and when it comes to trying to pick out who are the winners going to be, you know, we have to remember a lot of the big companies are going to be impacted by AI, whether they are an AI company or not.

• 17:47Speaker 01

  Yeah.

• 17:48Speaker 02

  Right? So the positive impacts are going to be seen. You know, throughout the markets.

• 17:53Speaker 01

  That it just like today, Caterpillar's got a lot of attention today. I don't know if they were reporting their earnings, but essentially Caterpillar's stock got was impacted today because of AI. And can you guess why? I'm really putting you on the spot, but I I saw the headline Caterpillar because of AI, blah, blah, blah. And I was like, what does Caterpillar have to do with AI? Is that like, does that mean Caterpillar is like hiring robots to make their thing?

• 18:21Speaker 02

  Is it going to be a self-driving tractor?

• 18:22Speaker 01

  No, that's what I thought. It's not that. It's just simply all of the tractors and machinery that's needed to make the data centers. The AI, the AI data centers require so much infrastructure that's going into that.

• 18:36Speaker 02

  Tremendous amount of energy.

• 18:38Speaker 01

  Yeah. Then now it's showing up on a construction company, essentially is, you know, profit and losses. All of these jobs just to create AI capable for AI companies. And, you know, that's, it's just, it's just super fascinating.

• 18:55Speaker 02

  It's incredible.

• 18:56Speaker 01

  I had this discussion. My kids were home for the holidays. They were up, you know, visiting from out of town. And so we had lots of time to sit around and talk. And we had so many interesting conversations I did with my kids. They're on their twenties, very concerned about AI and the future, their future. And what that means for their career. And whether or not they should even care about like saving or like building up their career because they see no, they don't see a way through this in the traditional sense over the next 10, 15 years. And so there they're going, what, you know, like, what's the point?

• 19:37Speaker 01

  Like when, when there's going to happen, in their opinion, they feel like there's going to have to be a huge shift or major reshuffling of. Economic reshuffling because of the job displacement that's going to happen. And it's just why it's white collar jobs. You know, it's not just like blue collar. It's white collar jobs. And I didn't have a great answer, you know, to that.

• 19:58Speaker 02

  I'm sitting here thinking.

• 20:00Speaker 01

  Yeah.

• 20:00Speaker 02

  Myself, I'm curious. What did they have answers for each other?

• 20:04Speaker 01

  Yeah, they did, which was basically try just do your best and try not to focus on it. And just try not to worry like almost deny it. Like openly, just deny the their, the what is happening because they just felt so powerless and what they could do about it. And it just, you know, kind of breaks my heart. There's just we're, we'll be in trouble economically as a country if we lose the faith of our youth. You know, and, and the, the young people's at least desire to like invest in themselves, go to college or go to, go get training for something that they feel like isn't even going to be around.

• 20:48Speaker 01

  Like, how many people right now are getting into like long haul trucking? You know, young people, you, you look at some of these careers, for example, like, like trucking where it's like so obvious that it's, it's going to be one of the first likely to be displaced by AI and auto, you know, automated driving.

• 21:04Speaker 02

  Automated driving.

• 21:06Speaker 01

  And, and yeah, I've heard this with accounting in the accounting world. I've heard in our industry, I, we, we see it, you know, I don't know if I want to get into financial advising like it's, it's just going to be, you know, like.

• 21:19Speaker 02

  We hear about those potential threats, don't we?

• 21:21Speaker 01

  All the time.

• 21:22Speaker 02

  Yeah.

• 21:22Speaker 01

  And.

• 21:23Speaker 02

  I, I think right now in the short run, who's going to be winning? I mean, just giving an example of the financial advisory field that we're experienced with. I think advisors that get around AI and use it as a tool. Are still going to be doing better than those that don't, at least initially.

• 21:41Speaker 01

  Yeah.

• 21:41Speaker 02

  Before being completely outsourced if it, if it goes that way.

• 21:45Speaker 01

  Well, hang on, hang in there. I think I, I, I tend to believe in, I mean, I'm, I'm an optimist. I tend to believe that our challenges that we face right now in our society are, are different. They're, they're, they're vast, but they're, they're not insurmountable. Like, and they're, I would prefer, I think, to be in this situation that we're at now, where we have the potential displacement of jobs by technology. Then if we were living in the early 40s where we had the potential of just being annihilated off the planet by another country, you know, that's, that's attacking the world. There were a couple of countries, you know, like World War II that was on the, on our doorsteps, you know, and then once we got pulled into war, our country got pulled into World War II.

• 22:30Speaker 01

  Just how daunting and like scary that would be like our, our, our existence could, could go away and then the cold, which ushered in the Cold War. So like we went, you're close enough to my age, like where we were like thinking Russia could bomb us and kill us and like any second, you know, I'm going to hide under my desk and it's, it's over.

• 22:52Speaker 02

  Speaking of hiding on your desk, it's a good time to take a break.

• 22:55Speaker 01

  Let's do it. We're going to take a break right now. We're Money Wise. We'll be right back.

• 22:59Speaker 00

  Are you an employee with a company sponsored retirement plan? Do you fully understand how you're invested and whether or not you are maximizing your retirement plan's options? For more information on a free assessment, contact Money Wise's 401k specialist, Justin Leland at 661-847-1000. That's 661-847-1000.

• 23:28Speaker 01

  Welcome back. We're Money Wise. I'm Sherrod. That's Dustin. I can finally hear the intro music.

• 23:33Speaker 02

  And it sounds good. These headphones are really good.

• 23:36Speaker 01

  I know. It's awesome.

• 23:38Speaker 02

  Well done, Stephen.

• 23:40Speaker 01

  Got a big old smile on my face. Got another listener question or comment here. You got that, Dustin?

• 23:45Speaker 02

  Is that why GameStop just laid off another big chunk of employees to pay the owner? To be the honest, to be honest, I can't believe this business is still alive.

• 23:54Speaker 01

  I cannot either.

• 23:57Speaker 01

  I can't either. GameStop is a fascinating case study. It's part of the meme stock craze. GameStop is like, it's just, it's a head scratcher. And, and the CEO, Ryan Cohen, is doing some weird things, for sure.

• 24:14Speaker 02

  I didn't see it. What'd you?

• 24:15Speaker 01

  He's got his, well, part of the problem is his compensation is tied to a huge performance, performance goal. So, you know, getting to a, you know, a certain market capitalization or a certain amount of, of income. It's, it's essentially impossible for, for these goals to be achieved under its current structure. It, it encourages sort of aspirational stock price dreams more than like operational execution. And the company has also toyed with Bitcoin on its balance sheet, alternative investments. It's just kind of like off the wall, like revenue sources. Believe it or not, GameStop is still like what, have you ever been to a GameStop?

• 24:58Speaker 02

  I've been to a GameStop.

• 24:59Speaker 01

  When was the last time you went?

• 25:01Speaker 02

  You know, I've got teenagers.

• 25:02Speaker 01

  Okay.

• 25:03Speaker 02

  It's been a couple of years, probably.

• 25:04Speaker 01

  Okay, not too far.

• 25:05Speaker 02

  No.

• 25:05Speaker 01

  It's, it's a, you know, obviously retail store that has the, you know, focus and, and games. And trade, and now, collectibles and trading cards.

• 25:20Speaker 02

  They're getting into cards, too.

• 25:21Speaker 01

  They're getting into cards.

• 25:22Speaker 02

  Yeah.

• 25:22Speaker 01

  And that-

• 25:23Speaker 02

  And they sell the consoles and the games, both.

• 25:25Speaker 01

  Yeah, but they've got to do these other things. They, they have improved their online presence a little bit. And, uh, but, but these, you know, collectibles and trading cards, they haven't replaced the sales of, of video games. And that's in large part because my, most video games now are just, you just, you buy them online. Like you, you're streaming-

• 25:47Speaker 02

  It's more digital than it is like the physical disc or cassette, too.

• 25:51Speaker 01

  Right.

• 25:52Speaker 02

  I did a quick search here in light of their comment. It looks like, I see what they're saying. There's a potential for a $35 billion performance bonus if, if the company reaches certain milestones. But $35 billion.

• 26:06Speaker 01

  Yeah, I mean, come on.

• 26:07Speaker 02

  That's a bonus, for sure.

• 26:08Speaker 01

  Yeah, I mean, and, but it's like, it, it just, it's so much of the company has been based off of hype. And-

• 26:17Speaker 01

  You know, that based on selling new and used games, discs and consoles and accessories. The reality is that it's those are going down like those those revenue sources are just not what they used to be. And so.

• 26:35Speaker 02

  I know with that a couple of years ago with the Reddit and Wall Street Bets and all that, they were really pumping and dumping this thing up and down.

• 26:42Speaker 01

  Big time.

• 26:42Speaker 02

  Yeah.

• 26:43Speaker 01

  Big time. And there was that one, there was a movie. I don't know if you saw it. There was a movie about this, about this guy that that was pumping it up. Can't remember his name. Kitty. Steven might remember.

• 26:57Speaker 02

  Was it exotic Kitty, something like that?

• 26:59Speaker 01

  Yeah.

• 26:59Speaker 02

  It's a good movie.

• 27:00Speaker 01

  Yeah, it was. It was really, it was entertaining. That, you know, that wasn't alone. There are other meme stock in its in its group AMC, which was another big meme favorite historically. It actually has performed worse than GameStop's share prices, uh, which are now below the pre meme lows with, you know, very, very weak indicators. There's others and there's a kind of a growing theme here. BlackBerry, Bed Bath and Beyond. These are other meme stocks that have kind of like hung on, but like.

• 27:37Speaker 02

  Yeah, Beyond Meat, I think, had something.

• 27:39Speaker 01

  Oh, yeah.

• 27:40Speaker 02

  With Beyond Meat, too.

• 27:41Speaker 01

  Yeah, there was something there. I forgot about that. Beyond Meat.

• 27:44Speaker 02

  Mm hmm.

• 27:44Speaker 01

  Meat. It's just, uh, you know, um, it's just, I, I, I feel that I don't, I feel like people just get taken advantage of for not really understanding it, getting caught up emotionally in a stock. I'm just not a fan of it. I just don't like it.

• 28:01Speaker 02

  Yeah, even if things look good, right?

• 28:04Speaker 01

  Yeah.

• 28:04Speaker 02

  I mean, you can, you can anchor. Really, it comes back to diversification, right? Most of the time, most of us need to have a highly diversified portfolio, not leaning into any one category.

• 28:14Speaker 01

  Yes. And I guess we have to, we have to say that we are not making a recommendation to buy or sell or do anything with meme stock or any stock that we talk about on this show. Don't take our advice for that. That's not what we're not saying that this is, this is recommended or not recommended. We're just, we're just giving commentary on, on, you know, what we're, what we observe about, about this phenomenon of meme, of meme stocks.

• 28:40Speaker 02

  And they, they call it meme stock mostly because it's social media driven, right?

• 28:46Speaker 01

  Yes.

• 28:46Speaker 02

  It's online buzz.

• 28:48Speaker 01

  Yeah.

• 28:48Speaker 02

  It's not like a traditional analyst or looking at company earnings so much. It's.

• 28:53Speaker 01

  Yeah, it's getting the retail investor involved, engaged. And one thing that added so much to these meme stocks were the emergence of platforms, no trade platforms like Robinhood. Where you can easily buy and trade a stock.

• 29:14Speaker 02

  Well, and like partial shares too, right?

• 29:16Speaker 01

  And partial shares.

• 29:17Speaker 02

  Yeah, it doesn't have to be the whole share. So if something costs like, let's say $400 a share. Well, you can get into it and some of these apps and things.

• 29:26Speaker 01

  Right.

• 29:27Speaker 02

  Doing a partial share where 50 bucks you can get, you know, you have one eighth of the stock instead of a whole share.

• 29:33Speaker 01

  Right.

• 29:34Speaker 02

  But it's, yeah. And to your point, you know, the technology and ability to do that has had influence on the smaller dollar amounts going into these things.

• 29:42Speaker 01

  Yeah. And so who are you attracting? Those smaller dollar amounts are people that are actually watching and care about memes. Like the youth and young kids. And then they think, well, how could this possibly go bad if there's a, you know, a couple million of us that are, that are putting our money into this. Something's going to save us or will save the company. And that's, I don't know. I don't, I don't.

• 30:06Speaker 02

  Got a listener out there and said, I loved Toys R Us, but I don't understand why they aren't around anymore. Shock that GameStop is surviving.

• 30:15Speaker 01

  Yeah, I'm shocked too. I'm shocked. And the, the platforms, like I mentioned, that are, I think, adding to this craziness is oftentimes driven by cryptocurrency trading too. So you could, you know, you can get, you can get this trading platform. And of course, most of what they're trying to push is some, some sort of cryptocurrency or NFT. And then, you know, they're offering incentives for you to, you know, put, you know, a few dollars into these types of investments with the hope that this thing could go up a thousand percent overnight. And you're going to become a millionaire overnight. It's.

• 31:01Speaker 01

  I think it's unfair.

• 31:04Speaker 02

  Oftentimes a pipe dream.

• 31:06Speaker 01

  Total pipe dream, total pipe dream.

• 31:08Speaker 02

  You mentioned something about Powell. What did you see happening?

• 31:12Speaker 01

  Oh, yeah. So we talked about this yesterday because it came out that Jerome Powell, who is our Fed President right now, was that the Justice Department initiated a criminal probe into him saying that he lied to Congress about the budget and spending of the Federal Reserve into some of its buildings that he was doing, like retrofitting or building new building for the Federal Reserve office space, that kind of thing. And Jerome Powell spoke back and came back against that from President Trump and on

• 31:54Speaker 01

  Sunday night left a, you know, published a video that he basically said, I'll read a direct quote, he said, "This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the President." Essentially, the Fed is independent. It should remain independent. I believe that strongly. I think, I don't know any economist that is worth anything that says the Fed should

• 32:34Speaker 01

  not be independent. Yesterday, we gave examples of several countries where the central bank became a political arm of the government and how that turned out, not good, because now you have the government using the Fed as a piggy bank.

• 32:49Speaker 02

  Right.

• 32:50Speaker 01

  And rather than focusing on where interest rates should be, which is something that takes long term, like you have to rely on a lot of solid data to know what interest rates should be set at, whereas it's easy for a president to say, "We should put this interest rate as low." Low as possible because they don't have to worry about the inflation, not during their time potentially.

• 33:16Speaker 02

  Because the more immediate effect of a rate drop is businesses and you and I can borrow money cheaper.

• 33:23Speaker 01

  It's great. It's like all of a sudden, what, what do you mean I can get a loan for, for that much less? That's fantastic. Like what's wrong with that? Well, there's, there's nothing wrong with it until, until it becomes a problem where there's so much free money that you have, you have assets that are overvalued and, and it just creates problems.

• 33:45Speaker 02

  Often more dollars floating around wherever they come from do lead to inflation, right?

• 33:50Speaker 01

  Yeah.

• 33:51Speaker 02

  So bringing it back to Powell, he, he's saying, hey, it's because I'm not playing ball on moving rates low enough, fast enough, that I'm being targeted. Is that what he's saying?

• 33:59Speaker 01

  Yeah, that's what he's saying. He's like, we're not, we're not making our Fed, the Fed isn't making its decision off of what the president says. It's making off of what we think is best for the, for the economy. And that's what they're focusing on is interest rates and, and employment. I have to say that it is not, President Trump isn't the only president in our history, in our country with a history of meddling or pressuring the Federal Reserve. It's actually much more common than you may think. FDR was, I think so far, takes the prize in what he did and, and effectively subordinated the Fed to the Treasury during the Great Depression and World War II.

• 34:38Speaker 01

  He was forcing artificially low interest rates to finance his New Deal and spending for the war, for war debt. The Fed at that time essentially became a financing arm of the executive branch. And it's, it set the stage for post-war inflation. And the Fed's independence, independence wasn't really meaningfully restored until the 1951 Treasury Fed Accord. So we went, we went years, almost a decade where the Fed was not independent as it should have been. Now you may argue, well, FDR had to do that because we were on the brink of destruction, you know, like it was all, you know, it was all hands on.

• 35:20Speaker 01

  What we can do. Well, Lyndon Johnson did something very similar. He physically summoned and berated the Fed chair at the time, who was William Martin. He did this at his Texas ranch. He pressured the Fed to keep rates low to fund the Vietnam War and the Great Society programs. So this helped fuel inflation that spiraled in the late 60s and 70s. And of course, Johnson's out of office by this time. And so that's why a president can fall prey to making these, these, these pushes for short-term, short-term relief. I worry about the long-term. I'll be long out of office by the time that happens.

• 36:02Speaker 02

  Right.

• 36:03Speaker 01

  Richard Nixon did the same thing. The Fed chair was Arthur Burns at the time. Nixon explicitly demanded easy money ahead of the 1972 election. And the White House tapes actually show that Nixon was telling Burns to quote, "We'll take inflation if necessary." Like, again, Nixon proving that the president didn't really care about it. We'll take inflation, whatever. I'll deal with inflation.

• 36:26Speaker 02

  So to your point, the long-term position of the Fed should be, okay, what, what's best for the market, not necessarily what's, what does the White House want?

• 36:35Speaker 01

  That's right. That's what my opinion would be. And I, I mean, you see Jamie Dimon today came and said the same thing. Anybody who's, you know, has got any knowledge or understanding of, of the central bank and, and the Fed's role and, and how other countries, the history of it and how other countries it's impacted them, none of them are going, yeah, well, we don't want the Fed to be independent. The Fed should answer to the government. You know, like what, where on the political spectrum are you for that? You know, it just doesn't make any sense. So, which tells me, maybe there's something else going on here. It's, it's to make something else move for some other benefit or against somebody else. I don't, I don't know.

• 37:17Speaker 01

  It's likely though, that Powell's not gonna, I don't know what's gonna happen with this indictment, but it's likely that, that Powell's not gonna be reappointed when his term is up here in a few months.

• 37:28Speaker 02

  Is it a few months away?

• 37:29Speaker 01

  Yeah, I think it's in May. I think it's in May. And so

• 37:33Speaker 02

  So the markets are pricing in two to three rate drops this year is what I'm seeing.

• 37:38Speaker 01

  Yeah.

• 37:39Speaker 02

  Are you seeing anything different?

• 37:40Speaker 01

  Well, it does change a little bit today. Why don't we take a break? When we come back, I want to talk about some news that came out today that could have impacted interest rates. Earning seasons came out today, plus inflation numbers came out today. So we'll talk you and I about what that means for all of us. We're Money Wise. We'll be right back.

• 37:56Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned, local wealth management firm with 60-plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 38:19Speaker 01

  Thanks for tuning in. We're Money Wise. That's Dustin and I'm Sharad. Thanks for sending your comments and questions our way. Love it. Keep them, keep them coming. 661-396-1000. That's the phone number that you can call or text. We have another comment here. Dustin?

• 38:35Speaker 02

  What about the new added tariffs on countries that do business with Iran? Trump adding an additional 25% with these countries. Will we see even higher cost on certain items?

• 38:47Speaker 01

  I, I think that the tariff stuff that Trump has been doing since he, since he took office is, is, at least to me, it just seems like theatrics. It's all, it's all like, yeah, it's, it's happened. There's some, you know, some tariffs have gone up, some have gone down. But it seems like at the end of the day, we're pretty much like where we were, you know, like

• 39:09Speaker 02

  It has felt that way.

• 39:10Speaker 01

  It garnered, it grabbed attention by world leaders. I think there was, there's likely some things that came out of it that, that we may benefit from. At what cost? It seems like there's been a big cost there, you know, in terms of the panic that took place, right? When the, you know, at the height of the trade wars that were happening in President Trump's, you know, beginning of his term. And so it's, this is just like, he could say anything he wants. And obviously, he's trying to influence, you know, the events that are going on in other countries like Iran.

• 39:47Speaker 02

  And future negotiations.

• 39:48Speaker 01

  Yeah, it's all just sort of that kind of thing. But let's say, let's say that, you know, this, this Trump announcement that any country trading with Iran is going to face a 25% tariff on their, on their goods entering the United States effective immediately. You know, this isn't a typical negotiation, negotiated trade policy. It was declared on his social media and Truth Social. And federal agencies haven't yet really published any formal rules or specifics on implementations. So it's just that, it's just like, it's just a post, it's like a social media post.

• 40:25Speaker 02

  Yeah.

• 40:25Speaker 01

  So how do you put, you know, how do you put too much, how many you put weight into it?

• 40:29Speaker 02

  Well, right, good question. And you start thinking about, okay, so who does business with them at scale? You know, you've got China, Turkey, some of the UAE, India, Brazil, and some others. And so you look at the, the products that are going through those channels. And you think, you know, could there be some inflation maybe on consumer electronics? Clothing, things like machinery and parts, right? There, there could be.

• 40:57Speaker 01

  Yeah.

• 40:57Speaker 02

  Additional costs there.

• 40:58Speaker 01

  Yeah, and it seems like the, the greater cost could be in just escalation towards a, a military conflict. Or a war like that, that's pretty costly. You know, I'm not, I don't know what should happen there. I'm not, I'm not, I'm not gonna pretend like I know how we should deal with, with Iran and, and, you know, Venezuela and some of these other countries. But that, that kind of would, that would scare me. Anytime we're meddling in the Middle East, it scares me more than what, you know, the impact of a tariff could be. Yeah, it's also been interesting to see oil prices. Obviously, you know, back in the day, 10, 15 years ago, if there was a disruption in the Strait of Hormuz, it was like, you know,

• 41:43Speaker 01

  global oil prices just skyrocketed. Or, you know, 15 years ago, we would have read the headline that we're essentially taking over Venezuela's oil production, and you'd have saw a huge move. Instead, you're not really seeing like, you're not seeing oil.

• 42:01Speaker 02

  The big swings.

• 42:02Speaker 01

  Yeah, not seeing huge swings. Oil's trading at around 65 bucks a barrel, and it's like, it's kind of there. It's just, you know, wow, crazy world we live in. Today was the unofficial kickoff of earnings season with JP Morgan announcing its earnings. It missed its target despite the fact that it had this huge Apple Card deal. I don't know if you heard or read about that, but Apple Card is changing their service provider essentially to JP Morgan Chase.

• 42:33Speaker 02

  It's the second outsourcing we heard of today that they're doing.

• 42:36Speaker 01

  Oh, yeah?

• 42:36Speaker 02

  So they're, yeah, because you mentioned earlier that with AI, they're bringing that in. So their card is going to be run through Chase?

• 42:43Speaker 01

  Yeah, yeah. I mean, everybody wants a slice of Apple. It's a $4 trillion company. It's like, get a little piece of Apple.

• 42:51Speaker 02

  Apple wants a slice of everybody that comes to them, too.

• 42:53Speaker 01

  No kidding?

• 42:54Speaker 02

  There's big commissions on anything on their store.

• 42:56Speaker 01

  We're going to see a lot of earnings come out in the next couple of days from banks, Bank of America, Citigroup, Morgan Stanley. They're all going to be releasing their results in the coming days. But then also today, we got the big Consumer Price Index report, and no surprises there. The annual headline rate came in at 2.7%. It's a monthly increase of about 0.3%, right in line with what forecasts were. If you look at the core consumer prices, that's, you know, stripping out the volatile energy and other components. It came in below

• 43:37Speaker 01

  forecasts at 0.2% over the last month and at 2.6% over the last year, making it the lowest annual rise since early 2021.

• 43:49Speaker 01

  That is great news, but it doesn't solve the problem of the impact that we're still all feeling from the inflation that came a few years ago.

• 43:58Speaker 02

  Yeah.

• 43:59Speaker 01

  And that's why Trump is screaming about it. That's why Trump is screaming at Powell, because the pop, the population is still feeling the pain from the price increases that we, that we all experienced a few years ago. Like, it doesn't matter that it's, we're now back in line with historic norms.

• 44:15Speaker 02

  Averages, yeah.

• 44:15Speaker 01

  It's like, we're, yeah, but we're, we're still paying the price for all the increases that it took before.

• 44:20Speaker 02

  Yeah, the recent increase is, they're calling reasonable, but it's, to your point, the previous jumps that were significantly more than that, that are still being felt.

• 44:29Speaker 01

  We, what we need, well, I say we, what, what the administration was looking for in this, in this consumer price index was that it was way worse than what we had thought. He, he was looking for inflation to be, to be, uh, potentially higher than it, than it, well, maybe, you know, I take back my words. That, that's not necessarily true, is looking for a higher rate. Looking for something to give the Fed reason to continue to lower their rates more than what they're anticipating. You said three or four times is what it's expected this year?

• 45:03Speaker 02

  Mm-hmm.

• 45:04Speaker 01

  A three, three or four times?

• 45:05Speaker 02

  Yeah, two to three, I think is what I heard.

• 45:07Speaker 01

  Two to three times. And, and this may not be enough of a news for the Fed to, you know, to actually, you know, lower rates sooner than expected. So, you know.

• 45:22Speaker 02

  What we haven't seen is deflation, right? Things reverting downward. It, it's just the rate of acceleration has slowed down.

• 45:29Speaker 01

  Yeah.

• 45:30Speaker 02

  But we're still headed upward, upward on pricing, right?

• 45:34Speaker 01

  Yes. My understanding of deflation, it's very rare. I don't know, I mean, you see some areas where you, you have deflation happening, but if we have systemic deflation happening across the country, my understanding is that's much, much more catastrophic than inflation, even hyperinflation, which is like, really counterintuitive, but you can imagine, like, why would you buy? Anything if you know it's just going to be cheaper, you know, next month.

• 46:02Speaker 02

  Right.

• 46:03Speaker 01

  Or the following month. So what happens in deflationary period, people don't spend and then it just it it it compound. The problem starts to compound because now the economy shuts down. Everybody's waiting and holding their money and waiting for prices to stabilize before they go and buy anything. You know, a loaf of bread is going to be, you know, cheaper tomorrow than it is today. I'm going to wait till tomorrow. You know, and so that you compound that by all these, you know.

• 46:29Speaker 02

  One area that we have seen prices get, we'll call them more reasonable is in some electronics. You think of like these big screen TVs.

• 46:37Speaker 01

  Yes.

• 46:38Speaker 02

  Be three, $4,000, but you walk into Costco now and for a couple, few hundred bucks, you can get.

• 46:44Speaker 01

  Big, yeah, big screen. I remember.

• 46:48Speaker 02

  I feel like it was slowly over time, though, going back to what you were saying. It's not like people were saying, oh, I'm not going to buy it today because it's going to be cheaper next month.

• 46:55Speaker 01

  Right.

• 46:55Speaker 02

  It wasn't quite like that.

• 46:56Speaker 01

  No, it I I this was probably 15 years ago, but right when they had plasma TVs. Remember when plasma TVs were really popular and then it's sort of evolved into like, what are the DLPs or deep? I can't remember the different, you know, technologies, but there were still, you know, flat screen TV was expensive, you know, for a modest sized flat screen TV. I walked into earners to get, you know, to look at the TVs or thinking about getting a TV. And they were all over, you know, 2,000, two or $3,000. And I was looking at him and and the salesperson came up to me, he says, you know, you should really consider this one over here. And he started pointing off all the things and and I said, yeah, but won't it just be cheaper as this technology gets better?

• 47:40Speaker 01

  Can it want to be cheaper like next year? And he was like, no, no, no way. You you want to buy it now. You want now's the time to buy it right now. This this thing, this thing's and I was like.

• 47:51Speaker 02

  Smells like commission breath.

• 47:52Speaker 01

  I know. In my mind, I was like, you idiot, come on, man, you're telling me this is going to get cheaper.

• 48:00Speaker 02

  Good stuff.

• 48:00Speaker 01

  Hey, Gavin Newsom, our our our governor, it looks like he's getting a little soft. All media outlets today. reporting that Governor Newsom is very much against the proposed billionaire tax in California. Have you heard about this billionaire tax?

• 48:17Speaker 02

  I didn't read too much into it yet, no.

• 48:19Speaker 01

  So this was a, an initiative that was, um, that was proposed not by Governor Newsom, but it was proposed by, um, gosh, I can't remember the union essentially to tax anybody who has a billion dollars of, of worth. They would pay a one-time tax equal to 5% of their assets. And it would apply retroactively to anyone who was living in California as of January 1st.

• 48:51Speaker 02

  Wow.

• 48:51Speaker 01

  And then tax, and taxpayers could spread their payments across a five-year, starting in 2027. This was, this was driven by the Service Employees International Union and United Healthcare Workers West through the initiative process.

• 49:08Speaker 02

  So he's not a fan?

• 49:09Speaker 01

  He's not a fan.

• 49:10Speaker 02

  Of a tax?

• 49:10Speaker 01

  Yeah.

• 49:11Speaker 02

  That's interesting.

• 49:11Speaker 01

  Yeah, and you know why? Some people have started to leave the state because of this. I mean, we don't have a ton of billionaires. I'm guessing we can't have more than a handful of billionaires in California. Well, maybe now that these are these trillion-dollar companies, you've got, you've got like janitors and Apple who are probably worth millions.

• 49:32Speaker 02

  I did see, I told you I didn't read too much into it, but I saw a headline that Jensen of Nvidia said, yeah, I'll be okay with it.

• 49:40Speaker 01

  Oh, yeah. I saw that. Well, that's because what is he worth?

• 49:44Speaker 02

  Yeah.

• 49:44Speaker 01

  Trillion or whatever.

• 49:45Speaker 02

  You know, 4.5 trillion-dollar company, so it might be a rounding error for him.

• 49:50Speaker 01

  Like, it's good to see that there is some sensible action here. Like, there has to be some limit to taxation, to taxing people. You know, you have to be careful, like, yeah, you want to. You want to bring in some revenues, but you start doing some of this kind of stuff and there's some unintended consequences.

• 50:06Speaker 02

  Certainly.

• 50:07Speaker 01

  Well, this has been a good show, Dustin.

• 50:08Speaker 02

  Yeah, definitely.

• 50:09Speaker 01

  Thanks so much.

• 50:10Speaker 02

  Thank you.

• 50:10Speaker 01

  Appreciate you being here. Want to remind all of our listeners that if you would like to listen to this show or any of our past programs, go subscribe to the Money Wise Podcast. It's commercial free and on all major podcast platforms like iTunes, Apple Podcasts, or Spotify. Of course, we'd love to hear your comments and questions. Send them our way 24 hours a day at 661-396-1000. That's the number that you can text and we'll be happy to address that on the show. Again, as we leave today, want to remind you of these three things. Be smart, be safe, and always be money wise.