1/29/25 AI Breakthroughs, Wildfire Readiness, and Garro Ellis’ Recovery Update

The Moneywise Radio Show and Podcast Wednesday, January 29th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management instagram: MoneywiseWealthManagement Guest: Lois Henry, CEO/Editor for SJVWater.org website: www.sjvwater.orh

• 0:00Speaker 00

  From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.

• 0:09Speaker 01

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• 0:30Speaker 01

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• 0:40Speaker 00

  Now, let's start the Money Wise Show.

• 0:42Speaker 02

  Welcome to the Money Wise Show. We are live from the Garro Ellis padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text, text preferably, into the show 24 hours a day at 661-396-1000. Today, we're your hosts, Sharad Waite and?

• 1:06Speaker 03

  Latroy Dinkins.

• 1:07Speaker 02

  Latroy Dinkins, we've got a lot to cover today.

• 1:09Speaker 03

  Yes, sir.

• 1:09Speaker 02

  We've been getting so many great questions and comments from our listeners, and we want to thank them for that, and get right to it.

• 1:18Speaker 02

  Some of the big headlines that have been happening, at least the last few days, have been revolving around the tech sector, specifically DeepSeek and this new AI. Yeah, so let's read the listener question here and get right to it. It says, "How much did Nvidia lose due to DeepSeek? And is it a good time to buy in with AI sell-off? Also, how did it bounce back today?" So let's address this right now, Latroy.

• 1:50Speaker 02

  First, to give our listeners some idea... If you're wondering what DeepSeek is, it's a company that has only been around for a couple of years. It's a Chinese company. It's a very small, private company that has specialized in developing an open source, large language model. These are the chatbots, like chat GPT type model. It's an AI, advanced AI model. This is a small company. There are just a small group of researchers and would appear to be researchers and grad students, university professors that have created this

• 2:31Speaker 02

  a large language model or this sort of version of chat GPT. And it kind of came out of nowhere here just a couple of days ago on the

• 2:43Speaker 03

  Apple.

• 2:44Speaker 02

  On the, on, on what came available in the United States, but it kind of became public. And the, the big news about this company isn't so much about the technology that it's providing. It's the fact that this company is developing this, this model using only a few thousand of the, of Nvidia's GPUs costing about $5 million to create. Now you contrast that with the hundreds of millions or even billions of dollars that Western companies are using like Nvidia. And now all of a sudden you, you start, you know, it's a wake up call.

• 3:26Speaker 02

  And Wall Street saw this right away because they are starting to do the math. And they're saying, oh, boy, if a company can come out and, and create this, this model at that cost, it literally like five, five cents on the dollar compared to what it costs American companies.

• 3:47Speaker 03

  We must be doing something wrong.

• 3:48Speaker 02

  We're doing something wrong. And then Nvidia and investors in Nvidia freaked out. One of the largest Single day market capitalization losses in the history of our country. Nearly $500 billion was wiped out on paper alone in market cap. I mean, the value of Nvidia.

• 4:06Speaker 03

  Yeah.

• 4:06Speaker 02

  Because Nvidia is the big, they're the, they're the big giant gorilla in the room that creates these GPUs that you need to have these, this sort of technology. So Nvidia saw a huge drop in their share price when the-

• 4:22Speaker 03

  About two days ago?

• 4:23Speaker 02

  Two days ago on, on January 27th. Nvidia's stock price dropped by about 17%. It was a loss of nearly 600, I said 500 billion, 600 billion.

• 4:34Speaker 03

  It didn't rebound it too.

• 4:35Speaker 02

  Then it did. So then Nvidia's had some recovery the next day on January 28th. Rebounded about 8.9%. So it offset some of the previous day losses.

• 4:45Speaker 03

  But then it dropped again.

• 4:46Speaker 02

  Then dropped again. 4% today. So we're seeing sort of a whipsaw in Nvidia. Currently Nvidia is trading at $123 a share. And this is a unbelievable move for, for a stock this size. But it, the, the, what's fascinating to me about this is this, this reminds me very much of the dot com bubble that we experienced in the late 90s.

• 5:14Speaker 03

  I was super ignorant back then. I'm in a dot com bubble, so. 2002, right?

• 5:19Speaker 02

  Yeah, I mean, that's, things really blew up there because at the time, websites and the internet, this was, this was the new economy. And it was until it wasn't. And this brings to light the inherent risks of investing in technology stocks. Their tech, if you look at the NASDAQ, for example, or just a group of tech stocks, it's much more volatile, volatile, goes up and down than the general market because- You are, these companies by design are finding value in innovation. And there's a, if there's a competitor that comes out, that's better than, that's creating a widget better than them, then they're, they lag, they sink and, and you have an issue.

• 6:05Speaker 03

  Yep.

• 6:05Speaker 02

  It's similar to the biomedical world or pharmaceutical stocks.

• 6:11Speaker 03

  Oh, those are very volatile.

• 6:13Speaker 02

  Very volatile, right? Cause you have this promise of some drug that's gonna cure some illness. Until it gets to a certain point in the trials where it doesn't.

• 6:22Speaker 03

  Doesn't, and then it just drops.

• 6:23Speaker 02

  Right.

• 6:23Speaker 03

  Yeah.

• 6:24Speaker 02

  Or perhaps the company creates a, a drug that can treat an illness, but it's a thousand dollars a pill. If you have another company come out that can treat the same illness for a dollar a pill.

• 6:37Speaker 03

  Yep.

• 6:38Speaker 02

  What's gonna happen to the first company? It's gonna, the stock's gonna take a hit.

• 6:41Speaker 03

  Yep.

• 6:42Speaker 02

  And so the same thing happens in the tech world. And I, I believe that's what, that's what we're seeing right now is, is exposed Nvidia's, not just Nvidia's, but all of the Western, you know, when United States tech companies, you know, you're, you're dealing with, they have tens of thousands of employees, which is a blessing and a curse because the company can't pivot and change and adapt as much as a small company can. Like, like we see at DeepSeek.

• 7:09Speaker 03

  Yeah.

• 7:10Speaker 02

  So, I, I don't know, what, what are your thoughts, Latroy?

• 7:12Speaker 03

  Hey, you know, my thoughts is, I actually tried to jump on board and, and tried to ride that bandwagon here, uh, just a couple of minutes ago. Um, like everything that you saying, aesthetically, you know, with just the fundamentals of, you know, DeepSeek, of how, the biggest catalyst of how cheap it was just to produce something like this, uh, that's what made things, uh, go crazy.

• 7:36Speaker 02

  Yeah.

• 7:36Speaker 03

  But, you know, like, like just playing around with it, I, I still think that ChatGPT is, is, is a lot more, um, in-depth, a lot more robust than, than, um, uh, DeepSeek or whatnot. So, you know, aesthetically, yeah, it looks good. It looks like a, a pretty woman in a dress right now. But, you know, it's just.

• 7:57Speaker 02

  Yeah, yeah, once that you keep going on that date and that that dress gets not not as attractive. Right?

• 8:04Speaker 03

  Yeah, I think it's just over exaggerated. I think it's very over exaggerated.

• 8:09Speaker 02

  Well, we're talking about, you know, you just signed up for it and use the app, use the deep sea.

• 8:13Speaker 03

  Yeah, we're talking about just the functionality of that, but it is it is impactful. And let me not undermine that. It is impactful that you that they were able to produce something like this so cheap.

• 8:24Speaker 02

  That's it.

• 8:25Speaker 03

  And it begs to to think like, okay, what have we been doing with with, you know, the investors? They've been spending all this money on AI research, chips and all this stuff. And, you know, how can we, you know, you already got Trump, you know, Trump is very stingy. And he wants to like, you know, just, you know, put a cap on this stuff.

• 8:45Speaker 02

  Yeah, especially the chips.

• 8:47Speaker 03

  Trade with China and all that stuff. He wants to like, kind of, you know, focus more domestically when it comes to the production of that and keep it domestic and.

• 8:54Speaker 02

  Well, we have, we have to, yeah, both you and I before the show gave Deep Seek a run and and tested it. And and and we're trying to use it and it's definitely not anywhere close to chat GPT. But they're not coming out saying that they're better than chat GPT. In fact, the audits, the independent audits, so there's companies that can go and they can test the accuracy of these large language models. NewsGuard is one of them and they revealed that Deep Seek's chatbot achieved a seventeen percent accuracy rate. That puts it in tenth out of eleven place. So out of the eleven large language models companies out there, it's second to last. So it's not doing well, like the audit noted that Deep Seek's chatbot repeated false information thirty percent of the time.

• 9:39Speaker 02

  And provided vague or unhelpful responses just over half of the time.

• 9:43Speaker 03

  You get what you pay for.

• 9:45Speaker 02

  Yeah, it's free, but that's investors don't care about that. What they care about is, hey, they got they they got pretty close. They're at least in the top ten and they did it for a fraction of the cost.

• 9:57Speaker 03

  That's it.

• 9:58Speaker 02

  That's what's scary because now they can just keep improving. If they can keep improving, then maybe they could get it better. And now you're running. You know, they're running their models, just a few, a few million dollars to, to, you know, you get, you get a 2,000 of these GPUs.

• 10:13Speaker 03

  Yeah.

• 10:14Speaker 02

  You know, you have, now you have very small businesses that can get in, get in on that.

• 10:18Speaker 03

  So that Mount Rushmore is, is, is probably, I'm talking about Nvidia.

• 10:23Speaker 02

  Yeah.

• 10:24Speaker 03

  Rushmore is probably coming to an end?

• 10:26Speaker 02

  I don't know. It's, it's hard to say what will happen to Nvidia because of this long-term. It's kind of our listener question, is it a good time to buy? Who knows?

• 10:34Speaker 03

  Who knows?

• 10:34Speaker 02

  I mean, you have a dip like this. If you're a, if you're a trader, I mean, that's a whole nother game that you're, that you're playing, that go beyond just what the headlines, just what the fundamentals are. Now you're playing with, you're playing with institutional money and it's, it's really a hard game. It's hard to know whether or not it would make sense to buy the stock now because of the latest news or not.

• 10:57Speaker 03

  Yeah.

• 10:57Speaker 02

  It's, it's, it's just all the risk that comes with any sort of tech stock.

• 11:02Speaker 03

  Yeah.

• 11:02Speaker 02

  So.

• 11:03Speaker 03

  Absolutely.

• 11:03Speaker 02

  That's a great, great question. I want to thank our listeners for that. Again, if you've got a question, send them our way, 661-396-1000. I want to go to the next message and we can address this before we take our break. How's that sound?

• 11:15Speaker 03

  It sounds good.

• 11:15Speaker 02

  All right. So how should people plan for funeral and end of life costs if the social security death benefit increases? I love this question, Latroy.

• 11:25Speaker 03

  Life insurance?

• 11:26Speaker 02

  Yeah. I, I love this because I was, I was scratching my head about social security death benefit increase. I, I was unaware of this. So if you don't know right now, if you are an American citizen and, or your parents, you know, participated and worked and contributed to social security in any way, we get a death benefit from social security and that goes, that goes to everybody when you die. That amount is a whopping $255.

• 11:57Speaker 03

  Ooh.

• 11:58Speaker 02

  That's not going to pay for much of a funeral when the average funeral costs in America right now are between $7,000 and $12,000, depending on how fancy you want that casket.

• 12:12Speaker 02

  So 255 bucks isn't going to go far, but there has been talk in Congress about increasing that death benefit. This happened in September of 2024. There was a bill that was proposed. It's called the Social Security Survivors Benefit Equity Act, and this bill proposes raising the lump sum benefit from 255 bucks to 2,900 bucks.

• 12:38Speaker 03

  Now we're talking.

• 12:38Speaker 02

  Yeah. Now we can pay for half of the funeral, or whatever. You know, maybe a cremation. So that's, I think, an interesting development. It's not passed yet. There's still a lot of consideration that has to be taken before it can be enacted into law, and the legislative process has lots of steps to go through, and so it's still in that phase. But it does lead to a question that I think we should address, which is, how should people, how should you prepare for funeral costs?

• 13:15Speaker 03

  Life insurance.

• 13:17Speaker 02

  I, life, it's the easiest way.

• 13:19Speaker 03

  It's the easiest way. I mean, you got life insurance. Some people are fortunate enough to be self-insured through savings.

• 13:27Speaker 02

  Yep. Because if you can, so that's another way, you know, just you could save up and have that as part of your emergency savings, you know, seven, seven to 10 grand and is part of your emergency savings that you're gonna, you know, use for potential medical costs. But how much do you think, I don't know the answer to this, but I'm asking you, how much do you think a, let's call it a, a, I don't know, a $10,000 life insurance policy would cost for somebody that's maybe in their 30s or 40s?

• 13:58Speaker 03

  Oh, man, that's like only like $30 a month.

• 14:00Speaker 02

  I would say, yeah. I would say 30 bucks a month.

• 14:02Speaker 03

  Probably less than 25.

• 14:03Speaker 02

  Yeah, it's very inexpensive, even less if you're willing to go with term.

• 14:09Speaker 03

  Yeah.

• 14:09Speaker 02

  Term is a little tricky to pay for a funeral because... You're gonna be old.

• 14:13Speaker 03

  Yeah, you're gonna be old and it expires.

• 14:15Speaker 02

  And it'll expire, yeah.

• 14:16Speaker 03

  Every time you renew a term life insurance, it's a different premium.

• 14:20Speaker 02

  But even, even if you did get a term life, let's say you got a 30-year term life and you're, you're in your 60s.

• 14:27Speaker 03

  Yeah.

• 14:27Speaker 02

  And you got 30 years. So as long as you die within that 30-year period, you'll be alright.

• 14:31Speaker 03

  You probably will, so.

• 14:32Speaker 02

  But even get permanent, okay? So this may be a case where if you're really concerned about it, where a permanent life insurance would be, would be helpful because you just are really concerned about paying for that.

• 14:42Speaker 03

  Yeah.

• 14:42Speaker 02

  Funeral. There are a lot of insurance companies, they used to advertise on TV, I haven't seen them a lot lately where they're, you know, they're just, they're essentially.

• 14:51Speaker 03

  Yeah.

• 14:52Speaker 02

  You know, they're, they're guaranteed issue life insurance policies that you can receive it if you're in your 70s or 80s. And so it's not a burden. It is always, I'm sure heartbreaking for anybody to see the, the car washes that are all the time that we have.

• 15:11Speaker 03

  Yeah.

• 15:12Speaker 02

  To, you know, for people to raise money for a funeral.

• 15:14Speaker 03

  Oh, yeah.

• 15:15Speaker 02

  That would be like the worst thing you'd have to do. You know, you're trying to bury your mom and you, and you're out there, you know, yeah, soliciting funds. You don't want to have to do that. If you can, prepare. I think the best way is to, you know, save up and build up your emergency fund.

• 15:30Speaker 03

  Yeah.

• 15:30Speaker 02

  Look into life insurance. You should probably have life insurance anyways if you have other liabilities, like a mortgage, or you've got kids and, and.

• 15:36Speaker 03

  Yeah, debt. If you've got some sort of debt, you know, that's how you just do the math, do the math and that's, that's your policy right there.

• 15:43Speaker 02

  One thing I'm not a big fan of are, are the prepaid funeral expenses. Again, I guess this could work for somebody who is older or, you know, close to passing away.

• 15:55Speaker 03

  Like just putting down, like paying.

• 15:57Speaker 02

  Yeah, which, they're, they're, they're, they sell a lot of those and, you know, they're, they're sold usually at funeral homes.

• 16:03Speaker 03

  Yeah.

• 16:03Speaker 02

  Where, where the benefit is you're prepaying it, so as costs go up, it doesn't matter, you're gonna get your funeral, you're gonna get it all done. But, but there are some downsides to that because you could probably do it for a lot cheaper if you just had life insurance.

• 16:17Speaker 03

  Yeah.

• 16:18Speaker 02

  And you also could have some issues with not being, it may not being transferable, so you might have to use a different funeral home or not be able to use the specific funeral provider that you were hoping life changes and, you know, there, there can be some other issues. I've just never been, been a big fan of those prepaid policies.

• 16:37Speaker 03

  Mm-hmm.

• 16:38Speaker 02

  But.

• 16:38Speaker 03

  I don't even think, I don't even. Knock on wood, but I don't even think about all this.

• 16:42Speaker 02

  Ah, you're too young.

• 16:44Speaker 03

  Yeah.

• 16:44Speaker 02

  You're too young. All right, final, let's take a break right now. We come back, we're gonna have a guest. We're really excited about it. We're Money Wise. Don't go anywhere.

• 16:52Speaker 00

  If you're a business owner who provides a retirement plan for your employees, contact Money Wise Wealth Management to see if you're maximizing your options and minimizing your liabilities. Money Wise 401K plans are customized to you and your company's needs. 661-847-1000.

• 17:14Speaker 02

  Welcome to Money Wise. I'm Sherid Wade. Latroy Dinkins is joining me today. We have our guest right now, Lois Henry. She is CEO and editor of S J V Water. Hey, Lois.

• 17:25Speaker 04

  Hello.

• 17:26Speaker 02

  I just mentioned, we must live in Rosedale as I do because we run into each other at the grocery store, it seems like. Pretty regularly.

• 17:34Speaker 04

  Are you gonna tell your listeners what we talk about?

• 17:35Speaker 02

  Yeah, I think I did.

• 17:37Speaker 03

  I heard a little bit.

• 17:38Speaker 02

  I did talk about it on the air, my colonoscopy. Now I'm an advocate for it. Now that I've been through it, I'm telling everybody over 45, go get your colonoscopy. The worst part is just the prep. The actual procedure is nothing. Like you said, when I ran into you there, you saw me buying Clear Jell-O and Gatorade or whatever it was, I was allowed to eat and I said, oh yeah, I'm just getting ready for my colonoscopy. He said, oh, I just had mine.

• 18:05Speaker 04

  Everyone in line is like, can these two be separated, please?

• 18:09Speaker 02

  So you've been really busy over there at S J V. How are things going?

• 18:12Speaker 04

  Good. Sorry, I'm trying to figure out this contraption Stephen gave me and I'm like having some problems.

• 18:16Speaker 02

  Oh, is it the bottle?

• 18:17Speaker 04

  Well, I'm very remedial. Sorry.

• 18:20Speaker 02

  Yeah, that's okay.

• 18:21Speaker 04

  How's it going? It's busy. It's just busy, busy, busy. I, you know, what do you want to know about water? It's like every time you turn around, something's happening.

• 18:28Speaker 02

  Well, you wrote a great article. I'm sure this is on a lot of our listeners' minds. With LA fires, there was some shock when there's reports of fire hydrants running dry. And so I don't know if that prompted you to do some investigating into our issues in Bakersfield? Or what, how would Bakersfield do if we had a fire?

• 18:51Speaker 04

  Well, that exactly prompted me to start asking some questions about like, oh, okay, well.

• 18:57Speaker 04

  What is the, you know, fire hydrants run it on PSI, pounds per square inch of pressure, right? And so the state minimum is 20 PSI. And so I just kind of started asking the water systems here in town, and we have five main water systems that service Metro Bakersfield. The city of Bakersfield, Cal Water, which actually runs the city of Bakersfield's System.

• 19:22Speaker 02

  System.

• 19:23Speaker 04

  System. Oildale Mutual Water Company, Vaughn Mutual Water Company, and East Niles Community Services District. And I was particularly interested in how this would work because these are five very different organizations. And as I just mentioned, one's a mutual, one's a municipal, one's a utility, one's a CSD. They're governed in different ways, and that is why people have wildly, I've done stories on this before, wildly different fees that they pay for water. So I was like, well, how's this going to work? You know, I mean, LADWP was the one system for all of that stuff that happened in LA down there. And so they have one system. In fact, the LA Times did this amazing story, basically sort

• 20:06Speaker 04

  of, you know, hour by hour, minute by minute, what was happening inside LADWP as everybody was like, looking at the pressure dropping, and oh my God, where are we going to get water? And if we switch this one, it's a very compelling story. But anyway, so I was like, well, how's that going to work when you have five

• 20:22Speaker 02

  Right.

• 20:23Speaker 04

  different systems?

• 20:24Speaker 02

  So they all have five, according to your article, they all kind of gave vastly different answers to what they would do if we had a fire, LA-sized fire. First of all, according to the article, Bakersfield ranks among the top 16% of US communities at risk for wildfire, according to the National Parks or Forest Service.

• 20:45Speaker 04

  Yeah, I did not know that.

• 20:46Speaker 02

  Me neither, because I'm thinking, we're in a valley.

• 20:48Speaker 04

  I know.

• 20:49Speaker 02

  Like, how is that possible? But I guess

• 20:52Speaker 04

  To tell you the honest truth, to tell you the honest truth, one of my board members, Jennifer Self, suggested this story, and I almost rolled my eyes, like, oh, come on, it's Bakersfield, right? And then I started looking into it, I'm like, oh my God.

• 21:02Speaker 02

  Yeah.

• 21:03Speaker 04

  I don't know. I want to buy a sump pump for my pool with a pressure hose. I want it.

• 21:07Speaker 02

  Right.

• 21:08Speaker 04

  So anyway, so yeah, I mean, the each and each individual one of these systems is good. They're great. I mean, and and to a certain degree, you can't prepare for what happened in LA. You just can't. I mean, it was a wildfire, every house on fire. What are you going to do? Right? And so, you know, these water systems here are in the same boat. They're like, you know, we're designed as an urban system. You know, you want to keep your fire flows and your pressures up above like the minimum. Like I said, was 20 PSI. Every single one of our systems keeps their PSI above 40, at 40 or above, then that's their standard. Um, and so it's not like they're just sort of whistling past the graveyard. They're concerned about this and they they are prepared to a certain extent.

• 21:49Speaker 04

  But as you'll notice in the story, you know, Vaughn Mutual Water Company was like, look, you've got, say, 12 fire engines, they're pulling 1,500 gallons a minute. You're not going to last very long. Say if there are 12 of them pulling on our system only for that long. Um, I think he gave me the time limit of a half an hour before the pressures, before the pressure starts dropping and, you know, they potentially could go dry. And that's with all their systems working now. Almost every single one of these water systems has multiple wells and they're always down for maintenance. You know, as you put one down for maintenance, you rely on the other ones, blah, blah, blah. Now, they also all are interconnected. That's the other good thing, you know. Cal Water is has a connection to Vaughn Water.

• 22:32Speaker 04

  So they can trade water if one system starts getting into trouble.

• 22:35Speaker 02

  Uh huh.

• 22:36Speaker 04

  Um.

• 22:37Speaker 02

  So then you you East Niles Community Service District says they can handle a large fire, but 20 engines would overwhelm it.

• 22:45Speaker 04

  Yeah. So, um, yeah, so there, I mean, there's, there's tipping points. You cannot, I mean, East Niles has like 20 million gallons in tanks above ground. Plus they have backup wells. That's a lot of water, right? For the the small area, relatively speaking, that they cover. It would still be overwhelmed if we if we if you had 20 engines. So I mean, it's no skin against them or no, no slight against these water systems. They're preparing for what they can prepare for, but you can only prepare for so much.

• 23:16Speaker 02

  Yeah.

• 23:16Speaker 04

  The bigger concern I started to have, and it's kind of at the end of the article, but I didn't really know. I mean, there's so many different angles to this. Is that in Kern County, um,

• 23:27Speaker 04

  And Bakersfield, not Bakersfield proper really anymore because you know, they do their will serve letters and the development has to be annexed and they have to have sewer and they have to have water, you know, blah, blah, blah, that kind of stuff. But, but prior to Bakersfield growing, Kern County was in charge of just approving developments. And let me tell you, if you had an ag well and you were going to sell your 400 acre ranch and put houses on it, they would go, go ahead. Great. Good for you. So we have all of these little tiny mutual water companies, community systems, or just, you know, Joe Schmo owns the well and serves, you know, his buddies with 15 houses. They're all over the place

• 24:08Speaker 04

  because they are legacy built. The city has grown up around them. There's like, everybody knows like old Stockdale annex, right? They're not on the, they're not on the Cal water or the city system. They're on their own system. And Casa Loma, I think most people know that that's out there. Those are nothing. There's like, I counted 40 right in and around Bakersfield.

• 24:28Speaker 02

  That's about 8,000 people are serviced by these community water systems?

• 24:32Speaker 04

  Yeah. So they don't have inerties. They don't have generator backups. They don't have inerties. The, the county fire department told me that they go out and they, they, the crews that are in charge of that area, they go out and they check the fire hydrants. But I can tell you right now, some of those places do not have fire hydrants. I live in a mutual water company area that you look at those, those fire hydrants and they're from the 1970s. I don't know what their PSI is.

• 24:57Speaker 02

  Right. So you're scared. This, this frightened you?

• 25:02Speaker 04

  It's a little bit of like a, oh yeah, infrastructure matters. Kind of a reminder.

• 25:07Speaker 02

  Is there anything you see that would maybe, that we will change because of what happened down in LA here in Bakersfield?

• 25:14Speaker 04

  Well, I kept asking everybody that, you know, are you guys going to do this after? This is the other thing that kind of concerned me. Are you guys going to do an after action review together, all of you? And they're like, well, you know, we, we run a training op. And it's like, but do you include the other water purveyors? Do you reach out to these little tiny mutuals? Is there a plan for who does what with these little tiny mutuals? Well, no. You know, so Cal water is running training ops once a year, which is great with the FBI and the hospital systems and all that kind of stuff. But the other water systems are just on their own. So.

• 25:47Speaker 04

  You know, what I discovered during the floods is that infrastructure matters and communications, protocols, and training are infrastructure. And if you don't have that, and if some horrible disaster happens, people are literally just running around like, we don't know what to do, we don't know what to do, we don't know what to do. I saw it happen during the floods because we don't have any kind of overarching system to deal with floods in a very flood-prone area.

• 26:12Speaker 02

  Right. Yeah, you're talking about the floods when a couple of years ago, right here, when we just had all the rain. That leads me to the next question. We're going to take a break. When we come back, you got to give us an update on what's going on with the water districts and their compliance or non-compliance with SIGMA. I guess just SIGMA in general, right? The Groundwater Sustainability Act that is really changing a lot of things here in the valley. So maybe you can give us an update on that. We're joined by Lois Henry, CEO and editor at SJV, SJV Water. We're Money Wise. We'll be right back.

• 26:49Speaker 00

  Have you been putting off your finances? Seize the day. Call the Money Wise office at 661-847-1000, or email [email protected] for more information.

• 27:06Speaker 02

  Well, Money Wise, thanks for tuning in. I'm Sharad Waite here with Latroy Dinkins. We're joined by Lois Henry, reporter, editor, CEO of SJV Water. As I just said off the break, Lois, I feel like you're the only person that really can understand the complexities of our of our water situation here in California. It's so complicated. You've got sub-basins, districts, agencies, all these different entities. It's super confusing. But underneath it all is SIGMA, Sustainable Groundwater Management Act. I don't remember when it was passed, but it's been probably 10 years or so.

• 27:41Speaker 04

  2014.

• 27:42Speaker 02

  Okay, yeah, look at that. Nailed it. 11 years. And then we have till 2040, I believe, before we actually have to like be in a sustainable situation.

• 27:52Speaker 04

  Right. I mean, the concept is to bring your aquifers into, quote, balance, meaning And you're not overdrafting them.

• 27:58Speaker 02

  Because you overdraft and you get something that's called subsidence. Subsidence. Subsidence?

• 28:05Speaker 04

  Subsidence.

• 28:06Speaker 02

  Subsidence. Oh, my gosh.

• 28:08Speaker 04

  Think the ground subsides.

• 28:09Speaker 02

  Subsides.

• 28:10Speaker 04

  And it sinks.

• 28:11Speaker 02

  A shocking, he wrote an article here, SJV Water, and the Friant Current Canal repair alone, which was from subsidence damage, $326 million.

• 28:24Speaker 04

  And it's still sinking.

• 28:25Speaker 02

  And it's still sinking.

• 28:26Speaker 04

  That was only 10 miles of a 33-mile stretch that has sunk so badly that it has cut the ability of the canal's movement of water by 60%. So, we're only getting 40% of what the canal could. Yeah, and that's a 33-mile stretch. So, they rebuilt 10 miles of it, and that's $326 million. And it's still sinking.

• 28:46Speaker 02

  And the new rebuilt section is still sinking. Is this because there's still subsidence happening, which means we're still overdrafting?

• 28:52Speaker 04

  Yes.

• 28:53Speaker 02

  And so, the state has come down and said, "Listen, you agencies or you districts, you need to get, you need to come up with a plan that how you're gonna, you're gonna, you're gonna set a baseline for the water table and how you're gonna, how you're not gonna overdraft."

• 29:09Speaker 04

  Yeah, there's, there's a lot of requirements under Sigma. I won't get into them, but one of them is that you, it's called, you know, you need to avoid undesirable results. I don't know who came up with these things, but you need to avoid undesirable results. And one of the, one of the undesirablest results is continued, what is it? Oh, God, I can't remember, but continued depletion of the aquifer.

• 29:37Speaker 02

  Like chronic depletion of groundwater.

• 29:40Speaker 04

  So, that's, that's the, and of course, everything else rides on that, because if you fix that, then maybe subsidence doesn't happen and, you know, water quality improves because you're not taking out, you know, a ton of water. Anyway, so, so that's the undesirablest is, you know, quit, quit overdrafting. So, what the state has said is that they have to, they want to know all of these water districts, water agencies, like, what is your minimum threshold? And that is just the red. Line, that is, you draw a red line at some level, you know, below ground, which you will not go. You will not allow the groundwater to go below that level. And if you do, then you have to take all these various actions. Stop pumping or, you know, buy water from Mars. I don't know.

• 30:23Speaker 02

  Easy.

• 30:24Speaker 04

  Turn on that spigot in the great Northwest, the Pacific Northwest. Anyway, so the beef that the state, so, and I've been writing about this for five years. So in 2020, I wrote, when they first created their first groundwater sustainability plan here in Kern County, I looked at it and was like, this is ridiculous. Now, this is not going to fly because every single agency had its own minimum threshold. So you had wells in Semitropic, which was the one that was setting its groundwater levels. Let's all be honest about it, folks. Everyone gets mad at me in Semitropic when I talk about it. But they set their groundwater levels at like 400 feet below, below ground.

• 31:05Speaker 04

  And right next door to them over in Buena Vista or Rosedale, Rio Bravo, their groundwater levels were at like 100. So obviously, there's going to be a problem.

• 31:15Speaker 02

  Right.

• 31:15Speaker 04

  And so that was a problem. They said, look, you have to get coordinated and da, da, da, da. And then, so they did get coordinated and they did raise their minimum thresholds in the second and third plans. And the state was basically like, not enough. And now this fourth plan, they've raised it again and it's not enough. Because the state says, we don't want you to go below 60 feet below historic lows. And so that's going to be a huge problem for some of these districts like Semitropic, which is what they call, and I hate to use these terms on you guys, but conjunctive use. So.

• 31:45Speaker 02

  That sounds like a disease.

• 31:46Speaker 04

  It's not. Pink eye.

• 31:49Speaker 03

  Subsidy sounds like a disease.

• 31:50Speaker 04

  I know, maybe it all is. So in some areas, the districts build canals and they deliver, you know, here, you get some water, here, you get some water, blah, blah, little canals, right? And so in other areas, they go, okay, you go ahead and pump how much you want to pump for your ranch and we'll bring in water and we'll put it in these, we'll put it in these recharged basins and it will, you know, raise the water table all over the place. So you don't have to go out to a canal and get your water. You can just use pumping, right? So, so that's really kind of a lot of Semitropic. And it's like, well, I mean, what are they going to do? You know, they, they are kind of, they are kind of in a situation that they're in.

• 32:31Speaker 04

  And, and also geography, underground geography plays a huge role in it because. The gradient for groundwater all goes to the west.

• 32:40Speaker 02

  I see. So these are reasons why Kern Sub Basin, all the agencies can't coordinate and get together on...

• 32:49Speaker 04

  There is, actually I've talked to some of the different water agency guys here and a lot of them feel like, you know, that the state doesn't really understand. Like, there may not be the ability to coordinate as a sub basin because there are so many different aspects to the underground strata. And, you know, it may not be, like, south of the Kern River, completely different from north of the Kern River. And, you know, I mean, that's because over the millennia, you know, you've had alluvial sands coming down and washing in and you have different water quality issues, like Arvin has a big arsenic problem. That's like actually naturally occurring from being so close to the mountains and the granite comes down. Anyway, so there's so many different pieces that are, and it's so big.

• 33:33Speaker 04

  It's like the biggest sub basin that, well, I mean, there's the West Side Sub Basin, which is Westland's Water District, but that is a little bit more uniform.

• 33:41Speaker 02

  Well, now, this is the fourth time that groundwater plan has failed to meet the state requirements. And now the state is recommending putting the sub basin on probation. Which means probation would require farmers to meter and register their wells at 300 bucks a well, report all extractions and pay an additional $20 per acre foot pumped on top of existing water district and groundwater sustainability fees. So this is what's going to happen now?

• 34:08Speaker 04

  This is the stick, yes. This is the stick that the state has held ever since 2014. Like, you better get in line or you're going to have to deal with this. That's wildly expensive. It is, I'm sorry, it's going to be very expensive for a lot of people.

• 34:24Speaker 04

  And you layer on top of that the fact that Sigma and everybody looking at like, well, where is the water coming from? How is the water, you know? Being handled, blah, blah, blah. It's become a huge issue in valuation, land valuation. And loans are being called by banks.

• 34:43Speaker 02

  Right.

• 34:43Speaker 04

  I mean, this is a big, big deal. So if you're in probation, it's just far worse for your farmers. So that's the stick that, you know, the state has been chasing these water districts around with. And now I think the rubber is meeting the road. And so the, the hearing is going to be on February 20th. And I so look forward to going and covering it.

• 35:01Speaker 02

  Yeah, go ahead.

• 35:02Speaker 03

  You got two questions here. Lois says, oh, great to hear, Lois. My question is, what role do power outages play in water shortages during wildfires?

• 35:10Speaker 04

  Huge, huge role.

• 35:14Speaker 04

  That's why a lot of these bigger organizations have, and Cal Water has, they have standard, they have stationary generators at well sites and they have mobile generators. They have a whole fleet of mobile generators. Because yeah, you can't fight fire if you can't get the wells to work and the wells work on electricity.

• 35:34Speaker 02

  Right. And this is, they would use this in the event of a power outage as well to continue to supply water to the public, to the citizens. They have to have these backup systems.

• 35:43Speaker 04

  Right.

• 35:43Speaker 02

  Because we're so reliant on the power to get us the water.

• 35:47Speaker 04

  Right.

• 35:47Speaker 02

  Right? We're not like, I'm really ignorant of this, but in the Midwest, other parts of the country, they have these big water towers. I don't know if that's how they use to pump, you know, water.

• 35:57Speaker 04

  Well, East Niles, East Niles does use a lot of gravity. They, they're giant tanks, which are 20 million gallons of tanks and stuff. They're all up in the foothills or in the higher, you know, elevations. And they can use gravity, but we can't here in the valley.

• 36:10Speaker 02

  Yeah.

• 36:12Speaker 03

  Another, another question that says, what policy changes or investments could be made to better protect Kern County from fire-related water shortages?

• 36:20Speaker 04

  Fire-related water shortages. Well, I would say that, I think that the city and the county and all of these water systems need to get together. They need to understand, you know, like what's out there. I'm just an inventory of what's out there and what is, what is up to code and what isn't up to code? And how they can bring them up to code. I mean, there's like all these little islands, like I said, of these, you know, small water systems that I don't even think that they, they're, they're run by volunteers, by the neighbors in the organi, in the, in the, in the neighborhood. They're not run by. Water experts or companies or all that kind of stuff. So I would think that, and Manpreet Cor, I'm going to say her name wrong, sorry.

• 37:03Speaker 04

  City Councilwoman has asked for a master plan for fires from the city fire department. And I think that needs to be expanded.

• 37:09Speaker 02

  Yeah.

• 37:09Speaker 04

  I think it needs to be the entire metro area. And, you know, I think that the Kern County Fire Department has a really great handle on what's happening with a lot of these smaller areas, especially in the rural areas, and how to best fight them, even without water. Like Andrew Freeborn was telling me, they were down at Eaton and they ran out of water or they, you know, went low on pressure. But they do that all the time in the middle of nowhere. So they kind of know how to do it. They have a real water discipline and, you know, anyway. So there's a lot that could be done, I think, but they have to kind of get their arms around, what do we know and what do we not know?

• 37:44Speaker 02

  Yeah, getting a plan sounds like a good start. Going back to the Kern sub basin groundwater plan that's now going to go through, it looks like a probation, there's a hearing that you're going to go to in Sacramento, February 20th. So what are they saying? Have you talked to them or what do they think of this latest? Are they like, ah, we're going to be fine? Or, I mean, are they just going to...

• 38:03Speaker 04

  No, they're very nervous, all the water guys are extremely nervous because the Water Resources Control Board, which is the one that's conducting the hearing, has already found two areas on probation and that's our neighbors to the north, Tulare and Kings County are both on probation.

• 38:19Speaker 02

  So they're, these same types of fines that we're talking about, the per well and the per acre foot charges, they're paying those now?

• 38:24Speaker 04

  They have not been implemented yet in Kings County. There's a lawsuit that the Kings County Farm Bureau filed against the state. So that's kind of stayed right there. And then they're giving the Tulare County farmers and water districts a little bit of time to come up with, you know, some, because they were sort of like, okay, well, some of you are really good and some of you are close and others of you are really not close. So, you know, we're going to give you a little bit of time. I think it was 180 days. So they're nearing the end of that.

• 38:50Speaker 02

  In your opinion, is the state, is this an overreach by the state? Is this, is this, is it too much that they're requiring from, from us in terms of sustainability of the groundwater?

• 39:03Speaker 04

  I, I'm going to... And all these water folks that I talk to a lot are going to really mad at me, but I don't think so because when you have entire communities that go dry, like East Porter Ville did for months, there's a major problem. And it's not just the communities and the small homesteads and stuff that went dry. I mean, you have a lot of other farmers who are, you know, having to deepen their wells. And they don't, you know, if they're not, say, Stuart Resnick, you know, wonderful, they don't have the money to deepen a well is like wildly expensive.

• 39:35Speaker 02

  Right.

• 39:35Speaker 04

  So it's not like anybody didn't know that this was coming and yet, nobody was willing to say, okay, you know, let's, let's fix it in-house first. So the state had to step in and it's not, this is a long time coming. The drought of 1977, Jerry, Governor, then Governor Jerry Brown was very, he was being lobbied very hard to come up with a groundwater law. And we're the last western state to have a groundwater law.

• 39:58Speaker 02

  Oh, really?

• 39:59Speaker 04

  Mm-hmm.

• 40:00Speaker 02

  So Nevada, Arizona, that, that, these...

• 40:02Speaker 04

  Yeah, Colorado, as I understand it, yeah, they all have some sort of regulatory authority over groundwater, where it's just been the wild, wild west out here.

• 40:10Speaker 02

  Yeah, that definitely feels like it's been the wild, wild west. It, you know, shocking that it wasn't, you could just pump whatever you wanted. You had a well, go for it, knock yourself out. And that's why we saw the valley sink and continues to sink.

• 40:23Speaker 04

  I mean, the only oversight was if you were pumping next to my place and you were, you know, drawing out too much water, the only oversight was me to sue. That's it.

• 40:33Speaker 02

  Yeah, right.

• 40:34Speaker 04

  Because there are rules, like you're supposed to only use so much groundwater for beneficial use on your own ground, on your property, that doesn't cause harm. That was kind of the, but who's, who decides that? It was, it was case by case.

• 40:47Speaker 02

  Lois, thank you so much for coming on the show. We really appreciate clarifying some of these complex, complex water issues. We want to encourage our listeners, sjvwater.org, there's where you can go, help, contribute, donate to great cause. Follow SJV Water, it's by far the premier source of information and reporting on water in the valley. Lois Henry, thanks so much.

• 41:12Speaker 04

  All right, thank you.

• 41:13Speaker 02

  We're going to take a break. We'll be right back.

• 41:14Speaker 00

  Wealth Management is the only locally owned independent firm that uses a comprehensive wealth tax and estate approach, working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future, call 661-847-1000.

• 41:37Speaker 02

  Welcome back to Money Wise. Appreciate you listening. Send your comments 24 hours a day to 661-396-1000. Got a message here. Latroy, you got it? You want to read it?

• 41:49Speaker 03

  Says, uh, let me clear my throat. It says, "Love the new name of the studio, right? The Gero Ellis Padaway Radio Room."

• 41:56Speaker 02

  That's it.

• 41:57Speaker 03

  So can you give any updates on Gero?

• 41:59Speaker 02

  Yes, yeah, so asking about Gero, yeah, we, in honor of Gero Ellis, one of the founders, along with myself, of Money Wise over 20 years ago, actually responsible for coming up with and patenting the name, Money Wise. Gero Ellis suffered a major stroke last year and we're just so fortunate that he's actually still with us. It was not, not just a small stroke, it was, it was quite, quite an event. And spent several months in the ER and intensive care, followed by intense physical therapy and speech therapy and you name it.

• 42:44Speaker 02

  So first of all, you know, thank you for the prayers and all of that and, you know, the update on Gero is that there's still definite limitations due to the, due to the severity of the stroke. Certainly, he's, you know, mobility is a challenge, speech is a challenge. And so, you know, it's, it's going to be a continued work for, for Gero to, um,

• 43:20Speaker 02

  Recover and to go through the different therapies that are required. You know, I haven't personally experienced a stroke. I've had some family members and I know a lot of people who've gone through strokes and there are different kinds of strokes that can have different impacts on the brain. The brain is very complicated and the recovery of those types of injuries are very, very, depending on so many different situations. So, we're just going to continue to keep Gero in our prayers and one way for us to remember Gero is naming the studio after him. When we moved to the Woolworths, we're gonna, it's gonna be the same thing.

• 44:02Speaker 02

  It'll just be the padded radio room downtown in the basement of the Woolworths. But it will always be the Gero Ellis padded radio room. And we're gonna, we're gonna keep an honor, honor that. You know, one thing we haven't really talked about much, maybe we have in the past, but Gero's cowboy ethics. He's, he's instilled this in his, part of his financial planning practice of following the ethics of what we call cowboy ethics. You know, this is the, you know, the ability to be honest and true and straightforward, treating people as you would want to be treated. And we're so grateful and will always be indebted to Gero's efforts and impact on the company.

• 44:47Speaker 03

  I wish we had a sound bite on Gero, you know, because it was very unique for him to hear him say, "Welcome to the padded radio room."

• 44:56Speaker 02

  Yeah.

• 44:57Speaker 03

  It was very unique.

• 44:57Speaker 02

  We have several. I'm working on a new intro with some, some all sorts of sound effects. Love it, love it. One minute, here we go, before we go. You know, you've seen The Price of Eggs? They've gone up. They've gone up substantially. Almost 40% increase in the price of eggs. That's because of the bird flu. 145 million birds. Hens have been cold because they've been sick. The good news is we might be seeing some stabilization. We might be seeing egg prices start to stabilize and still predicted to go up maybe 20% this year. But I was shocked to see they've had to kill 145 million.

• 45:35Speaker 03

  I gotta flip my wings.

• 45:38Speaker 02

  I was like, well, they have to kill 145 million. How many hens are there in the state or in the country?

• 45:43Speaker 03

  We used to have chicken.

• 45:44Speaker 02

  377 million egg laying hens right now in the country.

• 45:48Speaker 03

  Wow. I should have kept my chicken in the backyard.

• 45:50Speaker 02

  Yeah, you should have. We'll be back tomorrow. Don't want to miss the show. Remember these three things as we leave. Be smart, be safe, and always be money wise.

• 46:00Speaker 01

  Securities offered through SCF Securities, Inc., member FINRA/SIPC. Investment advisory services offered through SCF Investment Advisors, Inc. SCF Securities, Inc. and Money Wise Wealth Management are independently owned and operated.