Pod Insights The Moneywise Guys 2/9/26 The Dumb Dow, Smart Moves: Stress-Testing Property and the Future of Wealth About this episode The Moneywise Radio Show and Podcast Monday, February 9th 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.
Transcript 0:00 Speaker 00 Live from the basement inside the historic Woolworths Building in downtown Bakersfield. Call or text in at 661-396-1000.
0:29 Speaker 01 Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.
0:37 Speaker 00 Now, let's start the Money Wise Show.
0:40 Speaker 02 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 are on KGO Money Talk, 1230 AM, 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're your hosts. I'm Sharad Wait and?
1:02 Speaker 03 Sammy Abiyawi.
1:03 Speaker 02 Hey Sammy, great seeing you.
1:04 Speaker 03 Good seeing you too. Happy Monday.
1:06 Speaker 02 Happy Monday. We made it through the weekend and?
1:10 Speaker 03 Eventful weekend.
1:11 Speaker 02 Eventful. It was eventful. Olympics? You watching the Olympics?
1:15 Speaker 03 A little bit. I watched some of the comments that athletes did when they asked questions about what's going on in America.
1:21 Speaker 02 Oh, okay. So you're not actually watching like the?
1:25 Speaker 03 No. I watched, I watched Vaughn. I mean, I feel bad for her.
1:29 Speaker 00 Oh my gosh.
1:30 Speaker 02 It was gnarly.
1:31 Speaker 00 That one was, yeah, gnarly is.
1:33 Speaker 02 It could have been worse. It could have been worse.
1:35 Speaker 03 I was just telling the financial advisor in our meeting this morning, just since she's dated Tiger Woods, man, it's been downhill. Like literally downhill, Stephen.
1:45 Speaker 00 I didn't even think about that.
1:47 Speaker 03 I'm just saying.
1:49 Speaker 00 Is that who he was dating?
1:50 Speaker 03 She dated him at one time. When she got hurt, last time she got hurt, he sent her his private plane to pick her up and take her, take her to his own doctors.
2:00 Speaker 02 Well, it was, it was quite a weekend.
2:04 Speaker 03 Yes.
2:04 Speaker 02 Besides the Olympics, we also had the Super Bowl. That's, that's the, the Super Bowl of Super Bowls.
2:10 Speaker 03 60th, right?
2:11 Speaker 02 Is it the 60th?
2:12 Speaker 00 60th.
2:13 Speaker 02 Wow. I, I forgot how to read Roman numerals.
2:17 Speaker 00 I do too.
2:18 Speaker 03 I stop at five.
2:19 Speaker 02 Yeah.
2:23 Speaker 00 I I had to to retract something. Me and Sammy were talking last week. He was he was telling me, you know, the the soccer audience is way bigger than the Super Bowl. Well, the the stats that we were looking at was just for the the US.
2:41 Speaker 03 That's correct.
2:42 Speaker 00 And if you looked at the at the worldwide for the Super Bowl, they do hit a billion, just not as many billions as as soccer.
2:52 Speaker 03 Yeah, that's amazing.
2:53 Speaker 02 Because what do you say? I I'm not sure I understand. So you're saying that there like more people watch a soccer game?
2:59 Speaker 00 Yes.
3:00 Speaker 02 Than the Super Bowl?
3:01 Speaker 00 Worldwide, yes.
3:02 Speaker 02 Well, I mean, you're saying worldwide, like soccer in general?
3:05 Speaker 03 No, like the the final of the finals, the World Cup.
3:07 Speaker 02 Oh, World Cup.
3:08 Speaker 03 The World Cup final draws more viewers than the actual Super Bowl. But we were last week, we talked about 127 million people, but that's only the US. But if you count other countries, Stephen says it's close to a billion.
3:24 Speaker 00 Yeah, ESPN reported after the game, it hit close to 1.2 billion viewers worldwide.
3:31 Speaker 03 Wow.
3:32 Speaker 00 But yeah, when it comes to the the soccer finals, it blows it away.
3:37 Speaker 03 Yeah, yeah.
3:39 Speaker 02 Um, the the World Cup finals blow out, blow the Super Bowl out of the way. I wonder about advertising. I wonder, you would think that that would follow suit, like there would be globe larger global advertising dollars.
3:53 Speaker 00 You would think, right? Probably cheaper, though, because I think we talked, it was $8 million for a 30 second commercial.
4:00 Speaker 03 32 ads, yes.
4:01 Speaker 02 That's it?
4:02 Speaker 00 That's it, right?
4:03 Speaker 02 Some of them did not get their money's worth.
4:05 Speaker 00 No.
4:05 Speaker 02 I was kind of disappointed.
4:06 Speaker 03 Ben Affleck's thing was just not.
4:08 Speaker 02 Oh, you didn't, that didn't do it for you? Yeah, that's pretty, that was decent.
4:11 Speaker 00 The Dunkin' Donuts one?
4:13 Speaker 03 Yeah.
4:13 Speaker 02 It was like a Good Will Hunting playoff of Good Will Hunting. I thought it was pretty clever.
4:17 Speaker 00 Oh, then they had the Dunkin' Donuts with Urkel and Carlton from Fresh Prince. I think that was one of the better ones.
4:24 Speaker 02 It it'll take a little while, I think, for the numbers to come in. Last year's Super Bowl was the was the most watched telecast.
4:32 Speaker 02 in US history up to that point 123.7 million viewers. The preliminary numbers for yesterday was over 130 million. People watched the Super Bowl yesterday. Uh, but I, I think they have to, um, it takes a little time, maybe for the numbers to come in. I don't know.
4:52 Speaker 03 I don't know.
4:53 Speaker 02 Uh, either way, uh, we made it through it, made it through the sports weekend. Congratulations, Stephen. You can get some rest now. No more, no more sports to report on.
5:02 Speaker 00 No more Patriot football talk for a while.
5:04 Speaker 02 That's right. That's right.
5:06 Speaker 03 Yeah.
5:06 Speaker 02 We do have some listener questions, though. You got that, Sammy?
5:09 Speaker 03 Yeah, I do. Uh, the first one, if I put money into a CD, what happens if I need that cash early? For an emergency or something, are the penalties usually worth the risk?
5:21 Speaker 02 Uh, yeah, question, good, good question for you, Sammy, because you've got some banking experience. Uh, over the years, my experience with CDs has been that generally speaking, when you buy a, when you buy a CD, a certificate of deposit at a bank, you are, you are committing that money to whatever that term is. Let's say it's three months or six months, a year. Sometimes it can be more or less than that. And what that entitles you to is, is, is a declared interest rate. And you get that interest rate during that period. Generally what happens, if you withdraw your money, you pull money out of that CD before that end of the term, you forfeit the interest that you were given.
6:01 Speaker 02 That's it. That's, that's the only, usually the only cost. I know maybe some banks are a little different, but that's what I've always seen.
6:09 Speaker 03 You, you, you might, some banks might charge you a little bit of the principal because here, here's why. So you have to remember that any penny that you deposit into a bank, the bank utilizes that, especially if they have, they are a good bank, they utilize that towards loans. CDs are really good for bank managing their asset liability on, on the balance sheet. Cause now you, let's say you give them a CD or you open a CD for three years. Now the bank can do the matching principle and go out and lend that CD for three years. Then you come back and you say, well, I want my CD back on year, at the end of year one. Now the bank has already committed a loan to someone else for three years. While you want to break your CD, that's where the penalty comes in.
6:52 Speaker 02 Yeah.
6:52 Speaker 03 Right? Um, if you have a relationship with the bank, a lot of the time, um, they'll, they'll break the CD and they might. Not even charge you, especially if you have a good relationship with your bank.
7:03 Speaker 02 Yeah, or maybe there's some special circumstance like why you needed the money before you thought you would.
7:08 Speaker 03 Correct.
7:09 Speaker 02 Maybe there's some, some gives there.
7:10 Speaker 03 Yeah, and that's, that's where the relationship, bank relationship comes in. And, and, and I would say a lot of the banks will probably accommodate. Especially local, regional banks. A lot of the time they'll do things like this and they'll, they'll step up and help the client.
7:24 Speaker 02 Yeah.
7:25 Speaker 03 Now, the, the, the thing I want to say, a CD is a good investment vehicle, not an investment vehicle, but like to save money and get some interest. There are other vehicles that allow you to earn interest, but still be liquid. A money market is one of them.
7:41 Speaker 02 Yes.
7:41 Speaker 03 And a lot of the times you'll actually get potentially the same interest on a, on a money market as the CD. Uh, and, and you can, you can just, uh, you know, break, not break it, just collect your money anytime you want without, without any penalties.
7:58 Speaker 02 Right. And the downside there is if you, if you have a money market versus a CD is that there's no, there's no guarantee on what that rate is going to be on money market. Not saying you would lose in the money market. I'm just saying that that, that return can fluctuate.
8:13 Speaker 03 That's correct.
8:14 Speaker 02 Whereas with the CD, it's, it's a declared rate. You know what you're going to get. And so there's, there's pros and cons to both of those scenarios.
8:22 Speaker 03 Yes.
8:23 Speaker 02 Depending on what you're looking for, but whether it's a money market account or a CD, that's usually what, what we consider cash, even though it may not be totally liquid. But in an investment world, that's your cash. That's money that you, you have there for an emergency. And even if it's in a one year or two year CD, it's still liquid. It's, it's accessible. You can get it. You might forfeit some of that interest.
8:46 Speaker 03 Some of that interest, that's correct.
8:47 Speaker 02 But overall, it's, it's, it's a good vehicle for that, for that, um, uh, short-term cash needs. And it's, it's generally better to have, if you've got a lot of money sitting in the bank, you don't want it all not getting any interest.
9:01 Speaker 03 Yes, you don't want it to just be sitting there. You want it, you want, you want that to, uh, Earn you some interest.
9:09 Speaker 02 Yeah.
9:09 Speaker 03 Some income.
9:10 Speaker 02 Yeah.
9:10 Speaker 03 I agree with you 100%.
9:11 Speaker 02 So, you know, CDs are great. And one thing that we've also talked about in terms of CDs that can help people with the, I guess you'd call it duration risk, is that how long that money would be tied up before you can access it without forfeiting some of that interest, is that you can ladder those CDs. If you're not familiar with what laddering is, think of, you know, a ladder has different steps. And so you have, as you go up the ladder, you have different terms on that CD. So this really mattered back in the day when we actually, when CDs were actually paying a decent rate of return. You could get, you know, you could get a five-year CD, let's say it's 6%.
9:53 Speaker 02 And then you could get, you know, a four, three, two-year CDs that all had interest rates or just less than that. But what that allowed you to do is every time a CD renewed, you could, you could renew it and put it into that higher interest rate and...
10:10 Speaker 03 Yes. You avoid interest rate risk by doing the laddering system, in my opinion, because as they mature, the rates might be in a different position than when you opened the CD, either up, down, whatever.
10:22 Speaker 02 Right.
10:22 Speaker 03 So you're always taking away the risk, the interest rate risk, by laddering your, your, your CDs.
10:28 Speaker 02 Yeah.
10:28 Speaker 03 I think that's a very, very good tool for people to, to, to look into.
10:32 Speaker 02 Yeah. Good stuff. Great question.
10:33 Speaker 03 Yep.
10:34 Speaker 02 Got another one here.
10:35 Speaker 03 Yep. With home prices and rates where they are right now, does buying a rental property here in town still make financial sense? Or do you guys think that the window has passed? Love the show and still need to come down for a burger. Did I hear something about happy hour? LOL.
10:52 Speaker 02 Yeah, baby. Coming down for the happy hour.
10:54 Speaker 03 Yes. Really, really good stuff on the happy hour. Our menu, prices are really good as well, but the taste of the food is, is phenomenal. Not because I'm biased.
11:03 Speaker 02 Yeah.
11:03 Speaker 03 But, but going back to the investment, so, I love real estate and I love real estate investment. What this, what this listener is asking for, does it make sense to still invest in a rental property? And the answer, it, it depends. It depends on the purchase price, depends on the rental income, and it depends on the amount of expenses you have on that property. Rental properties have what we call an NOI, a net operating income. That net operating income needs to cover, if you have debt on that property, needs to cover the debt at a certain ratio. Banks typically look at a 1.35 times to 1.5 times, depending on the bank, depending on how the bank looks at if they're conservative or not conservative.
11:48 Speaker 03 But if you're buying it cash, right? And the return on that property is a lot better than what you're getting in CD, for instance, right? Then it might make sense because investing on cash, on cash type of return, you might be getting maybe 9%, 10%, depending on the income that you're getting on that property.
12:11 Speaker 02 Yeah.
12:11 Speaker 03 That might be appealing to some, might not be appealing to some.
12:15 Speaker 02 Right, and it's also tricky because an investment property is a different risk profile than your cash that's sitting in the bank. So if you're sitting, you know, I want to remind everybody of this law of risk and reward, and that is the more risk that you take with your investments, the higher the reward should be required. It's just kind of a standard practice. And so if you have money that's just sitting in cash, let's say it's just in a CD or money market, and you're getting, you know, whatever, between 0 and 5% on that money, well, that's
12:56 Speaker 02 the appropriate amount of reward that you get based on how little risk that you're taking.
13:03 Speaker 03 Correct.
13:04 Speaker 02 But there are, it's a different, it's a different set of risks that are involved with an investment property.
13:10 Speaker 03 That's correct.
13:11 Speaker 02 If you're going in, you're going to pay cash for that investment property, you would expect that you would at least, it would at least replace what you could get if you were just having it, you know, sitting at a bank in cash. And of course, you're taking on a lot more risk because the renters could fail, the renters could stop paying, it could destroy the property, you have other costs that are involved with that. And so anytime anybody is thinking about going into an investment property, they definitely need to know the numbers. They need to know what it's going to cost them, not only to buy that property, but what are they giving up in other returns? What's the cost of that capital? What's the cost of using that money for that investment property?
13:54 Speaker 03 That's correct. And I think that's where that net operating income, that NOI comes in, because that NOI is calculated after all the expenses that you have on that rental property. So you have your income and then you start deducting your management fees, if you have depreciation, if you have interest expense, if you have just maintenance. Okay? And to your point, if you have a bad renter, then the maintenance is going to be high. If you're buying an old property, the maintenance is going to be higher. Right? So you have to pay attention to all of that in making that investment decision. Because you are taking in more risk than your cash being at the bank.
14:32 Speaker 02 So back to the listener's question, has the listener missed the opportunity to buy an investment property where it would make sense?
14:41 Speaker 03 Depends.
14:42 Speaker 02 Depends, right? There are still opportunities that come up that you can, let's say, positively cash flow on an investment property. But those are always going to be rare. They're always going to be rare because there are thousands of people out there that are scouring the listings, they're scouring neighborhoods, and they're out there looking for...
15:07 Speaker 03 They're making offers on things that are not even on the market.
15:09 Speaker 02 Exactly.
15:10 Speaker 03 They knock on doors.
15:11 Speaker 02 Because they know that if they can get a property below a certain level, that allows them to make it profitable. But those are usually rare circumstances. There's something going on. There's either something wrong with the property, or it's a misinformed seller, and so they don't, you know, they don't know what's going on. Or maybe somebody inherited a property. And so there are lots of different scenarios where it would potentially make sense to buy that property. But generally speaking, I think the average Joe... It's just out there just gonna, you know, look for the right opportunity and come up. It's a very, very tough market.
15:48 Speaker 03 It is.
15:48 Speaker 02 It's hard to make it work because you have to, you have to know where those deals are. You, your costs are everything. You know, these shows Sammy that, um, I don't remember the name of them, but that they're all on TV still.
16:00 Speaker 03 HGTV stuff?
16:01 Speaker 02 HGTV stuff where they're like renovate this thing. And they show, you know, this crew coming in and they renovate the property in a week. And then they turn around and they flip it for all this profit. It's so misleading.
16:12 Speaker 03 It is because I'll, I'll tell you, my brother's couple of friends, they did a show on HGTV because they were flipping a lot of houses. But the cost going into a flip depends if you have your own crew. If you have the volume with the general contractors, then your cost is going to be a much lower cost than you and I going into a rental property. Because we don't have the crew.
16:31 Speaker 02 That's right.
16:32 Speaker 03 So we're going to have to call the plumber, we're going to have to go. And then the plumber is going to have to give up a job that's paying him a really good money on a reoccurring basis versus you and I having this just one time. Hey, can you come in and fix these toilets in my rental?
16:45 Speaker 02 Right.
16:45 Speaker 03 Forget you, man. I got thousands of dollars with this other person that has multiple doors to, to manage. I'm not interested in you.
16:53 Speaker 02 Right.
16:54 Speaker 03 So your cost goes up.
16:55 Speaker 02 Right.
16:56 Speaker 03 At that point.
16:56 Speaker 02 Yeah.
16:57 Speaker 03 All those need to be part of your analysis before you make that decision. And more importantly, as, as a landlord,
17:07 Speaker 03 your renter, your renter can come in and just destroy that property, which happens to me in the past.
17:12 Speaker 02 Yep. Yeah.
17:13 Speaker 03 And then all of a sudden, yes, I'm making a little bit extra cash on a monthly basis, but thank God I saved it. Because if I didn't, when that renter left, I was left with a huge bill to fix the house before I put it back on the market and just get rid of it.
17:25 Speaker 02 Yeah. And you're talking about, I know you're, I know your situation and mine too. Both of us have investment properties and rentals that we rent out. These were homes that we bought, that we lived in for a while. And instead of selling the home, we kept it.
17:39 Speaker 03 That's right.
17:40 Speaker 02 Bought a new house, but kept it and now we're renting it out. So both you and I have low cost basis on these properties. We were familiar with the homes, it's not required a bunch of renovation. And so, and, and, and, and that's what I've seen work out for people like if you can buy a new house and keep your old one where you got that low cost basis and and you can rent it out and and positively cash flow on it, there's opportunities there. But again, you got to run the numbers.
18:06 Speaker 03 You have to run the numbers.
18:07 Speaker 02 Yeah, and run them with somebody who's done it before.
18:11 Speaker 03 And be conservative.
18:12 Speaker 02 Yeah.
18:13 Speaker 03 That's the major thing of investment. Sometimes we fall in love with the properties like, well, now I'm going to make it work. Guess what? You've got to be conservative and stress, stress your investment.
18:22 Speaker 02 Yes.
18:22 Speaker 03 What I mean by stressing it is start working on those variables. How about if the maintenance goes up? How about if this goes up and stress it? We used to do that in banking. You stress test the investment properties to make sure that if interest rates go up or interest rates go down or this changes.
18:39 Speaker 02 Yeah.
18:39 Speaker 03 Is the property going to be able to service?
18:41 Speaker 02 Yeah.
18:41 Speaker 03 Itself or not, because if it doesn't, that means that more money coming out of your own pocket.
18:45 Speaker 02 Yeah, and then you should stress your own pocket too, like what happens if the renters split and it takes me six months to fill that spot? You know, what does that mean for me now that I have to pay my rent and my investment properties rent for six months? How is that gonna?
19:02 Speaker 03 Yeah, that's occupancy. So you stress it for occupancy. Is the occupancy level at 100% or is it at 50%? Right? So as as you're playing with all these numbers, it's going to help you make that decision.
19:14 Speaker 02 Yeah, great question.
19:15 Speaker 03 Very good question.
19:16 Speaker 02 Getting that question. Why don't we take our first break of the day? We come back, we got a few more questions. Want to encourage anybody who's listening. Please send your questions and comments our way, 661-396-1000. We're going to cover that when we come back. Don't go anywhere.
19:28 Speaker 00 Are you curious to learn more about how you can be money wise? Check out the Money Wise website at MoneyWiseGuys.com to get more info about what we do.
19:43 Speaker 02 Thanks for tuning in. We're Money Wise. We're your hosts today. I'm Sharad Wait here with Sammy Abi Awie. Taking your questions and comments, keep them coming our way, 661-396-1000. Sam, we got another comment here.
19:54 Speaker 03 Yes, we do. How did the Dow do after Friday's big day?
19:58 Speaker 02 Well, good question. For those who weren't aware, what happened on Friday, last Friday, the Dow hit an all-time high of 50,000. I think it closed just above 50,000. That's just a head scratcher for me. I always have to look at these numbers. Really 50,000? Yeah, that's it. The Dow is up above 50,000. So you would think, well, that could be messy, opening up the markets on Monday. Is that going to continue? Well, it did. It did continue just slightly. The Dow ended up 20 points, which is 0.04%. It's barely, basically
20:43 Speaker 02 flat for the Dow, but still an all-time high, an all-time record high for the Dow Jones Industrial Average.
20:52 Speaker 03 That's crazy.
20:53 Speaker 02 It is crazy.
20:54 Speaker 03 Slightly more than that book, the Dow 10,000 factor. Just a little bit higher than that.
21:01 Speaker 02 A little bit higher. Took a little bit longer, but that's definitely there. There's really, what we're seeing in terms of Wall Street is a lot of focus on the AI disruption risks. That's what drove a lot of the movement last week and the last few weeks. And still to this day is how much is AI going to disrupt the markets? How much is it going to disrupt certain companies? How are certain tech companies investing or not investing in AI? And what does that mean for companies that are behind? So you're just going to see a lot of shifts while we continue to try to figure out, well, what is ultimately what
21:44 Speaker 02 will happen with AI? How will this impact the world and jobs and the economy and all of that? There goes a ton of unknowns, but there's a lot of parallels to when the dot com, when the internet and dot com boom began.
22:03 Speaker 02 And it was, I see a lot of similarities in terms of people projecting a new economy and a new this and new that, which all ended up to be true. It just wasn't as people were expecting it to be. That's because it's very complex. The markets are super complex. The economies are, global economies are complex. And so it's, it's very difficult to try to project and, and anticipate exactly how this is all gonna pan out.
22:34 Speaker 03 Two facets of my own life and AI. So I use AI a lot in my daily activities. I've been watching, I watch a lot of soccer or football, real football from Europe. And I'll tell you, one of, like when you watch La Liga, for instance, the Spanish league, and it's one of the top leagues in the world, it used to take you a couple of days to get the statistics of the game. You know, the passes and how many miles did this person run and all. Now, while the game is going, you get these pop-ups coming up. The, the percentage of the ball possession, that, like all sort of stuff that just makes the game a lot enjoyable actually to watch, along with the statistics for a nerd like me.
23:18 Speaker 02 Yeah.
23:19 Speaker 03 And, and, and we couldn't do that before without AI. Now it's just like.
23:23 Speaker 02 Instant.
23:24 Speaker 03 Instant.
23:24 Speaker 02 Yeah.
23:25 Speaker 03 Like, like instant. Before you have to wait for the halftime show to get some of the statistics and experts to talk about. Now it's like live, like as you're watching the game, it's so much more fun. And, and, and I cannot wait for the World Cup to come to show that, showcase that.
23:41 Speaker 02 Me too. I'm so excited. I'm on the waiting list, you know, and I don't know if it's a waiting list, but the lottery.
23:45 Speaker 03 Yeah.
23:46 Speaker 02 Um, I'd love to see a game. I'd love to see a World Cup game. Have you ever seen one? You ever seen a game in person? No, me neither. It'd be awesome. Uh, like getting back to the, uh, the, the Dow and, um, you know, how it's performing. We, we call the Dow dumb for a reason. It, it really does have some flaws. Uh, I call them flaws. And that is in a few reasons. One, it's just, it's only 30 companies. So it's, it's, it's trying to track, you know, a variety of different industries, but still within 30 companies. And then the, the other biggest factor in terms of the Dow is, which makes it.
24:27 Speaker 02 A little problematic is that it's price weighted. That means a company's share price or the price of their stock is what is, is how it was, is weighed within the index. That means you could have a company in the Dow that is a very, very small sized company. It could be extremely small, but it could have a very high share price. And if that share price fluctuates one way or another, it's now impacting the rest of the index just off of, off of what that price is on its share rather than the impact that, that price has on the, compared to the size of that company.
25:11 Speaker 03 I see.
25:12 Speaker 02 And that's why the S and P 500, in my opinion, has a little bit of an edge over the Dow in terms of an index. And if you're trying to get a feel for how the markets are doing, because a S and P 500 is market cap weighted. That means it's looking at the 500 companies within this index, roughly 500 companies. And the stock price alone doesn't matter. What matters is the price compared to the size of the company. And so then you, then you have a better picture. You don't have, you, you avoid the risk, and this happens frequently where the S and P 500 is up, but the Dow is down. And it may, the Dow may be down because there was just one company that has a high share
25:53 Speaker 02 price that happened to impact the returns on the, on the, on the overall index just because it has a, a very high price for its share, not because it has, it's a big company that has a, an impact on the economy. It's just the share price is, is fluctuated.
26:10 Speaker 03 Would that be the same for the, the S and P 500? If you take out the seven magnificent seven? And you just focus on the rest, the 493 companies shared that are maybe, maybe there's other tech companies within that 493, but not as big as the magnificent seven.
26:34 Speaker 02 Yeah, what you're bringing up is also that what you're bringing up is a problem with not just the S and P 500, but almost any index where you could have a certain sector within that index that is disproportionately having an impact on the rest of the of the market. So AI is the perfect example. You have magnificent seven. You have this handful of companies that are investing billions of dollars into AI. And so they're now those companies have gotten so big and that the returns have been not so much the company's gotten so big, but the returns have been so high in that sector that it's it's bringing the whole
27:19 Speaker 02 rest of the index up. And that's, that's, that's just a problem with, you know, with sort of market cycles and the, the, the natural cycle where certain sectors, you know, do well for a period of time and then they fall out and then they come back and that kind of thing. And so it's.
27:40 Speaker 03 It's interesting what's, what's, what's happening in light of what you told me earlier off, of when we were offline about the alphabet.
27:49 Speaker 02 Yes. Yeah, I wanted to mention that today alphabet is in the news because they're offering 100 year bonds and not the first company to do this has happened, it happens, you know, fairly regularly. It's kind of a gimmick because it's a hundred year bonds, but I guarantee that these, these bonds are for the most part going to be callable. That means that the that the company could could call them back after a certain period of time. Maybe it's 10 years or 20 years, but after a while, the company can go, okay, we know you bought this bond, but we're we're we're time, we're gonna pay you off, we're gonna give you your money back, and then we're gonna go somewhere else. And so you
28:31 Speaker 02 just you just get your money back, and then that's it. And that that's a risk, you know, that you run with bonds that are callable. Not all bonds are callable, but generally, when you see 100 year bond, it's generally going to be callable because they don't want to be on the hook for that long. And so I think a lot of companies use this as like a marketing tool, like, oh, wow, yeah, I'm gonna lock in my, I'm gonna, I'm gonna lend Google money for 100 years.
28:54 Speaker 03 Yeah, none of us is gonna live that long.
28:57 Speaker 02 That's right.
28:58 Speaker 03 But also, I was just curious, when you said that, when you mentioned that earlier, I'm like, well, they have cash and cash equivalent to the tune of about 130 billion on their balance sheet.
29:08 Speaker 02 Yes. Yeah, they do.
29:09 Speaker 03 Right? With about $39 billion of actual cash. Why do they need an additional $20 billion?
29:15 Speaker 02 Well, Google's spending a lot of money. Last year, they spent 52 billion, 52 billion, I mean, in 2024, rather, they spent 52 billion in in in capital expenditures.
29:25 Speaker 03 And they're gonna continue doing that with all this AI infrastructure they're building. So I was curious, why, yes, they need the cash, but here's me, here's the theory in my head, I was like, are they passing this risk, AI risk, on to these bondholders versus carrying that on their with with their own shareholders?
29:47 Speaker 02 Well, they'd be limited to carry it with this just their own shareholders, because they're, they don't want to eat up all that cash.
29:54 Speaker 03 Yeah, that's true.
29:55 Speaker 02 They can eat up some of it, but now they're they're expected to spend 175 to 185 billion dollars in this year. So, you know, so that would eat up all of their cash that they have there. The company can't do that. So they've got to raise money somehow. If they're going to be spending money and investing massively in AI and data centers and custom chips and networking and all the cloud infrastructure that's needed that Google is anticipating, they're going to have to raise money. And this brings me back to my finance course, one of my finance courses that I took in college, which I remember very clearly our professor explaining how companies can print their own money. I'm like, what? How is that, sir? How do companies print their own money? Well, it's pretty easy.
30:40 Speaker 02 They can print it by creating bonds. It's like this is, they got their own, there's two different ways that companies can print their money. The two primary ways that they do it is they either borrow money from people or they get, they have equity that they sell. They sell a part of their, of what the company, the company's ownership. And so they can raise money by simply having a stock out there and then marketing the stock and go, look, buy, buy a small percentage of our company. You can buy it in this form of this share. And when the person does that, then the company takes that money and they put it in their bank and then they go and they spend it and they, they do it to hopefully bring back some of that money back to that shareholder that bought that share.
31:22 Speaker 02 But there's this whole other area that companies make money to, and that's by borrowing. And they're, they can borrow from anybody, from individuals, they don't have to borrow from the bank, when they can just borrow themselves. And they're just, we're going to create a bond.
31:35 Speaker 03 Yeah.
31:36 Speaker 02 We're going to put a term on it. We're going to declare an interest rate. Whoever wants it, they can come buy it and, you know, then we'll, so now we have our bondholders.
31:43 Speaker 03 And if your performance has been good for the last 20 years, guess what? The chances of you selling that bond, I would say, is pretty high.
31:50 Speaker 02 Right. Yeah, potentially. But, but more importantly, what it does is it allows the, it allows a company to raise funds without giving up their equity. And it allows individuals also to invest in companies in a different way than, than your standard share price or, or stock purchase. And why, why then would somebody want to have a bond, you know, own a bond on a company rather than a, a stock? Well, bondholders get paid.
32:24 Speaker 03 Guaranteed.
32:25 Speaker 02 Yeah. It's no, well, you can't say guaranteed, but they, they are up on the list of creditors. Way before a shareholder.
32:32 Speaker 03 It's an obligation.
32:33 Speaker 02 It's an obligation, exactly. It's an obligation that that the the bondholders will be paid out before shareholders.
32:41 Speaker 03 Correct.
32:41 Speaker 02 So there's this hierarchy of who's paid in the event that the company goes bankrupt or has financial problems. There there it's harder for them to get out of their bond agreements than it is to get out of their shareholder agreements. Because when somebody buys a share, they say, I understand the risk here. I could lose it all. And you could also lose it all with a bond, but it's less likely. Because it is backed by the assets of the company. And so if the company goes bankrupt, well, they're going to total up all the assets. And and they're going to pay off their debtors and and including their bondholders. So that means bonds are generally speaking, a little safer than stock. Which means, what for the return for bonds?
33:26 Speaker 02 It's less. It's less return generally speaking.
33:28 Speaker 03 Risk was what you talked about.
33:29 Speaker 02 Yeah, risk reward. Again, come back to the risk reward. You're taking less risk, so you're not getting as much of the high fly, high dollar amounts that you can get for a stock. But you that's because you're not taking as much risk as a bondholder. But there are other, there are bonds that are risky. There are bonds like, um, um, um, gosh, it just escaped me. But, um, you know, they like junk bonds.
33:54 Speaker 03 Junk bonds.
33:54 Speaker 02 Um, they're not called junk bonds anymore. But, um, the these are, these are bonds that are are can pay a very, very high rate. And sometimes people get enticed by the by the yield on a bond that's, you know, that's paying really high amount. And they don't realize that, well, it's paying a higher amount because it's risky.
34:15 Speaker 03 Yeah.
34:15 Speaker 02 Right.
34:16 Speaker 03 It's maybe a risky industry or just a risky company that got into a certain financial situation where they need the cash bad.
34:24 Speaker 02 Yes.
34:25 Speaker 03 So you need to do your research.
34:26 Speaker 02 Exactly. And those are, those are high yield. That's what the high yield bonds. So high yield bonds is just the nice word for junk bonds.
34:33 Speaker 03 Maybe slash high risk, high yield, high risk.
34:35 Speaker 02 Yes, yeah. Anytime there's, anytime there's a high, high reward.
34:38 Speaker 03 Yeah.
34:39 Speaker 02 You're you're taking a risk. And if somebody's telling you, oh, no, this is guaranteed. You got this. You know, there's nothing that can go on and you're and they're promising this, these huge returns, I'd turn and run. There's no, there's no such thing in this world.
34:51 Speaker 03 Guaranteed.
34:52 Speaker 02 That's guaranteed like that. There's, there's that that risk reward relationship has has rung true. Forever.
34:59 Speaker 03 Yeah.
35:00 Speaker 02 It's always been the case and there are suckers that get taken advantage of it all the time. But you know, just, just be careful. You should really know the amount of risk that you're taking based on the kind of the reward that you're, that you're getting. Good questions. Good stuff.
35:16 Speaker 03 Very good questions. We have more questions, Sher.
35:19 Speaker 02 Okay.
35:21 Speaker 03 Well, this one is, commercials were pretty bad this year, but I did see a lot of AI ones. I didn't know there was so many different AI companies. I think I saw five different ones. Which ones do you guys use or prefer? Thank you. And my favorite was the Ben Stiller one where he fell off the stage.
35:38 Speaker 02 I missed that.
35:39 Speaker 03 Yeah, it was, I saw that one. That was funny.
35:42 Speaker 02 Yeah.
35:43 Speaker 03 Yeah, that was, that was funny. I think that was funny.
35:45 Speaker 02 Well, I missed it. Sounds funny. I like Ben Stiller.
35:47 Speaker 03 YouTube has a video where you can see all of them all at once.
35:50 Speaker 02 Oh, there you go.
35:51 Speaker 03 Yeah. So you just sit there and watch all the 2026 Super Bowl commercials.
35:54 Speaker 02 All, all just one after another. Go ahead and watch it.
35:57 Speaker 03 About 26 or 30 minutes almost of just ads. And we laugh out, Gabe and I would just sit there and laugh.
36:04 Speaker 02 Yeah, there's definitely some good ones. Listeners though, asking about what kind of artificial intelligence that we use. And right now it's, it's mostly LLMs, large language models, that, that is in the form of ChatGPT or Claude. I, I personally prefer ChatGPT.
36:25 Speaker 02 But the, the AI is now embedded in so many different facets of our job, right, Sammy? We have, we have a fantastic note taking program.
36:36 Speaker 03 Yeah.
36:37 Speaker 02 And it's, it's designed specifically for financial advisors. And it is essentially a, a, a note taker that can, can take out all of the important elements of, of a, let's call it an hour or two hour long conversation with anybody and break it down into action items and, and it integrates.
36:57 Speaker 03 To do lists, creating tasks, follow ups.
37:00 Speaker 02 Workflows with our CRM.
37:02 Speaker 03 Yeah.
37:02 Speaker 02 It's really phenomenal. When this came out, Sammy, maybe you were there, we were at a conference. This was, it's probably been a couple of years now, but when it, when it came out.
37:12 Speaker 03 You came back very excited.
37:14 Speaker 02 I was so excited, but I was excited because of the other advisors that were using it and just their testimonials. They were like, this is, they were all convinced that this was the biggest game changer that they'd seen in their life, in their career as a financial advisor. And it all came down because of the amount of time that it takes for us to document everything that we're doing.
37:34 Speaker 03 Yeah, because we're fiduciary, I mean, not me personally, but we have fiduciary responsibility towards the client, especially during the review process, to make good notes and follow up and create tasks. And this tool just made it a lot easier. I can, I remember when you came back and you were like, oh, you know what? We need this.
37:52 Speaker 02 Yeah, this is a no brainer. I mean, you can, you can spend a half an hour after a meeting putting in your notes, or you can spend five minutes.
38:00 Speaker 03 I still negotiated and got a better deal too.
38:02 Speaker 02 Yeah, you did. I'm glad you did that. You're a great negotiator on that. But that, so that's, that's kind of what we use. We use it for, you know, a lot of just making some of our daily tasks much more manageable. And it's, you know, I'm, I'm really excited to see where, where it goes.
38:23 Speaker 03 How about a hundred year bank loan? I take that joke. I don't want my great grandkids taking over my debt after I'm buried. They want, they'll sell the asset.
38:35 Speaker 02 Yeah, right. That's right. Your, your great grandkids won't know you.
38:39 Speaker 03 Yeah.
38:39 Speaker 02 Unfortunately.
38:40 Speaker 03 A hundred year old bank loan. I mean, we did talk for a second there about 50 year old, 50 year mortgage.
38:47 Speaker 02 Oh, yeah. Yeah. I mean, it was, it was brought up for a minute, right? Which I think was, it's just terrible idea.
38:54 Speaker 03 It is. I mean, even big, look, I, like, and, and World Bank lends money to, to poor countries for infrastructure financing.
39:03 Speaker 02 Yeah.
39:03 Speaker 03 They don't exceed 50 years. These, I'm, we're talking about large infrastructure projects. We're building dams, roads, freeways, whatever, airports.
39:12 Speaker 02 Yeah.
39:13 Speaker 03 They don't exceed 50 years. For the most part, we're talking about fifty or less.
39:17 Speaker 02 Right, the lifespan, you're saying, how long that project will live.
39:21 Speaker 03 Correct, before it gets depreciated, or maybe you need to redo it, or whatever.
39:26 Speaker 02 Which brings me back to this Google's, you know, hundred-year bonds that they're offering, or Alphabet's hundred-year bonds. So that's why I think a lot of this is gimmicky. It's like, it's Alphabet's way of going, AI is the future, like, the long-term future. Now, it's true, they're putting their money where their mouth is. They're gonna spend a hundred and eighty billion dollars in this year in infrastructure, AI infrastructure and data centers and that. Like, they're they're not doing that because they don't think it's gonna be the future.
39:55 Speaker 03 I mean, have you seen the talk about how, like, the poaching that's happening right now?
40:00 Speaker 02 Yeah, engineers and that.
40:02 Speaker 03 Engineers and stuff, I mean, signing bonuses of a hundred, hundred fifty million dollars?
40:06 Speaker 02 Yeah.
40:06 Speaker 03 For these engineers to join the AI companies?
40:09 Speaker 02 Yeah.
40:10 Speaker 03 It's crazy.
40:11 Speaker 02 It is crazy, which reminds me of one of them is Johnny Ivey. You know, John Johnny Ivey? I think that's how you say it. The Apple designer, I think he left Apple a few years ago, but credited as being the lead design for Apple products for many, many years. I think he worked directly with Steve Jobs, designed a electric vehicle for Ferrari. Ferrari's first electric vehicle.
40:37 Speaker 03 Oh, wow.
40:37 Speaker 02 And designed, like, the interior. It just came out today. I was like, oh, this is interesting. This is a nice, nice-looking car, you know? But you see these big sports cars going electric.
40:49 Speaker 00 How much are those?
40:50 Speaker 02 I don't know. It's not available yet, but.
40:53 Speaker 00 I was just wondering.
40:54 Speaker 02 Well, Porsche has one.
40:55 Speaker 00 I'm gonna go get one.
40:56 Speaker 03 No, I'm gonna issue bonds.
41:00 Speaker 02 Got a Sammy bond.
41:01 Speaker 00 Maybe I take Sammy and make him a talking down to him.
41:04 Speaker 03 Bond, man, so I can finance one of those.
41:07 Speaker 02 Yeah.
41:07 Speaker 03 Would you buy my bonds, Jared?
41:09 Speaker 02 I'd buy your bonds. I believe in you. I think you're good for it. You're good for that. I trust, I trust your, here's, here's another thing for listeners that are thinking about or curious about bonds. The other nice thing about bonds is that they're rated. Credit agencies will come in and they'll rate them. They'll look at the companies of cash levels. They look at their income. They look at their ability to, to, to meet their obligations. And then they put a rating on that bond.
41:37 Speaker 03 Didn't the US get downgraded last time we had the shutdown?
41:43 Speaker 02 Yeah. Yeah. We've been graded, downgraded a couple of times. Yeah. And, and, and so, you know, you, you have some measure of how much risk you're taking with that bond based on what it, what its rating is. And if it has a high rating, then it's going to be, generally speaking, at a lower return.
42:02 Speaker 03 So if you're, if you're a US bondholder, shared, and there's a shutdown for eight weeks, so that means you don't collect your interest during that period?
42:11 Speaker 02 No, I think they still pay. I think they still pay out, like the treasury still runs.
42:16 Speaker 03 Okay.
42:17 Speaker 02 Certain things, you know, police departments, you know, military, like there's still certain things that happen.
42:23 Speaker 03 Okay.
42:24 Speaker 02 Good, good question, though.
42:27 Speaker 03 You wanna, ready?
42:28 Speaker 02 Yeah, go for it.
42:29 Speaker 03 Will social security run out by the time my kids retire in about 45 to 50 years?
42:35 Speaker 02 No, no. This is, this is a major misunderstanding about how social security works. A social security program, I don't know that it's ever going to run out of money. Because there's always going to be people, as long as they are taking that money out of people's paychecks, there's always going to be money in the social security account. The problem happens is it by, was 2034? Do you know what that, what the year is? I can't remember when it's.
43:02 Speaker 03 In the 30s.
43:02 Speaker 02 It's in the, yeah, so roughly in 10 years or so, what's going to happen is that there won't be enough money coming into the program through people's paychecks than going out. So now we reach this period of time where that, that it's, that it's not, it's not paying for itself. People are are living longer and they're still collecting social security benefits. And so as long as they're on the payroll and they can people continue to live longer, this is going to be a major problem. This is why it's the third rail of politics that nobody wants to touch because there's no easy solution here. There are solutions to make the social security fund more sustainable, but it all involves
43:46 Speaker 02 either, you know, a combination of some minor tweaks, which would be either raising the age of retirement or lowering the the benefit.
43:57 Speaker 03 Can we can we answer that dilemma by hiring more people or absorbing more jobs within the economy share?
44:06 Speaker 02 No. Well, yes, if there were, yeah, if there were, if there were more job creations proportionate to the population.
44:13 Speaker 03 Yes.
44:14 Speaker 02 But that but this is a demographic problem and this is a, this is a problem every country in the world is dealing with now because there is, they're shrinking populations. And now we're shrinking because of the immigration crackdown, we're seeing, we're seeing if immigration continues to be cracked down like we're seeing here in the country, we're going to have major problems because that's been a large part, especially with California, for our population growth. Population growth is one of the, if not the biggest risk coming to countries. And you see it already in Asian countries where the birth rate is is low, where there's low birth rates, which is all the developed countries. You've got this major demographic issue where now you don't have enough young people to
44:57 Speaker 02 supply their, the money into the programs that are supporting the retirees. So, and the retirees can continue to live longer and longer.
45:05 Speaker 03 And the other thing I've been seeing, and maybe this is just anecdotal for me, like, people are not taking on jobs until later in their twenties.
45:14 Speaker 02 Yeah.
45:15 Speaker 03 You know, people, we tend to start, like, I don't know, I started working when I was 16, 17, maybe earlier, but.
45:23 Speaker 03 I don't see that.
45:24 Speaker 02 Yeah, there's a name for that. I don't think they call them the boomerang or there's a name for essentially that there is an increased number of people that essentially can't afford a house. Housing has housing and costs have not kept up. Pay has not kept up with the cost of housing.
45:42 Speaker 03 This is not a US problem.
45:44 Speaker 02 No.
45:44 Speaker 03 This is a European problem as well.
45:46 Speaker 02 Yes.
45:46 Speaker 03 I was talking to my sister. She lives in Munich yesterday and she said about 50% of the German born can't afford a house.
45:54 Speaker 02 Yeah.
45:54 Speaker 03 50% can't afford to buy a house.
45:57 Speaker 02 Yeah.
45:57 Speaker 03 And they're they see that as a big problem for them as well.
46:00 Speaker 02 I think that's about where we are here in Kern County. I I think it's somewhere I have to look it up, but I think it's somewhere around 50% that can't afford to buy a house in Kern County, which is high for California, because I think California is much, much lower. Which the the percentage of people that can afford.
46:16 Speaker 03 Our median price is a lot higher than the rest of the United States.
46:19 Speaker 02 Lower, you mean? Bakersfield is Kern County is lower, but yeah, California is a lot higher. I think it's close to a million now. Almost a million dollars, the average median home price in California, close to a million dollars. So, you know, who could afford that on a median wage? You can't afford a median house.
46:37 Speaker 03 I mean, somebody making, let's say, $25 an hour. That's what 52, 53,000 dollar a year.
46:45 Speaker 02 Right.
46:45 Speaker 03 On a million dollar house.
46:47 Speaker 02 Right. Not not going to stretch.
46:48 Speaker 03 No, I mean, unless you do stated income like we did in 2005, 2006, 2007.
46:54 Speaker 02 Yeah, yeah, look what that did for us.
46:56 Speaker 03 Correct.
46:56 Speaker 02 It's it's it's a the housing is a major, major problem. Major problem and and it's and again, it goes to how important it is for somebody to buy a house when they can afford a house. Because it's likely not going to get better much sooner. And it's going to take a while for this to get resolved, however it might get resolved. So when you can afford a house, you should buy a house. I wouldn't wait, no matter what the interest rates are or what what's going on in the market. It's just what your where your own personal finances are, because that is that is the the the biggest step towards financial stability is is that is getting your housing. Costs under control. If you're always renting, you're at the mercy of that cost of living adjustment
47:37 Speaker 02 or that the increases in rent every year. And California, love it or hate it, we've got Prop 13, which caps that amount that you're going to be paying in property cap and property tax so that you don't see those big increases in your, in your house. And that then if you have home security, then it opens up more opportunities to be able to contribute to your retirement account, build up your emergency savings.
48:03 Speaker 03 Just life, life in general gets, gets better in my opinion. When you have that stability or home in, in, in home ownership, I can, you call it home ownership.
48:12 Speaker 02 Yeah.
48:12 Speaker 03 Good questions. Very good questions.
48:14 Speaker 02 Yeah. Message here just says, high yield? Question mark? Yeah. Oh, was that you?
48:19 Speaker 00 I think they were answering it.
48:20 Speaker 02 Oh.
48:20 Speaker 00 No, it was a listener when you, uh,
48:25 Speaker 02 Thank you, listener. Read my mind. That's exactly what it is. High yield, high yield bonds, or it used to be called junk bonds. Uh, I think there's probably still called junk bonds, but it's, it's a trap that a lot of people ran into chasing yield. When we had ultra-low interest rates here a few years ago, people are just looking at either dividends, like they're looking at stocks that are paying high dividends, or they're looking at for bonds that are paying high yields, thinking, okay, well, it's a bond, it's safe. It's like, well, but when you're high yield bonds, they fluctuate very similar to a stock. It's a, it's a lot of volatility in some of those high yield bonds because you're just taking a lot of risk there. So, good stuff, good
49:09 Speaker 02 listener there. Uh, well, uh, why don't we just keep on going? Can we power through this, Stephen?
49:14 Speaker 00 Let's do it.
49:15 Speaker 02 Um, as I mentioned before, Alphabet, um, selling 100-year debt as part of its big bond sale. This was in today's news. Um, there is, you know, today we had, as I mentioned, that the Dow had reached its all-time record last Friday. Uh, today kind of slightly continued that run in the, uh, in the, in the markets, ending closely. Just above fifty thousand for the Dow. But there's other things going on. I know people are always curious about Bitcoin, for example. It's a big focus for investors right now. Bitcoin and gold.
49:55 Speaker 02 Gold futures, for example, went back up above five thousand dollars an ounce today. Whereas Bitcoin is hovering near seventy thousand dollars.
50:06 Speaker 03 What was the all time high for Bitcoin?
50:08 Speaker 02 The all time high for Bitcoin, I just had that.
50:12 Speaker 03 Under twenty some thousand, right?
50:13 Speaker 02 Yeah, it was hundred and twenty six thousand. It last October is where is where cryptocurrency hit its all time high.
50:23 Speaker 03 I remember this vividly because that's the time I started working at MoneyWise. Bitcoin was at about twenty three, twenty five thousand dollars, three years ago.
50:30 Speaker 02 Oh, my gosh, really?
50:31 Speaker 03 Yeah.
50:32 Speaker 02 Uh, yeah, well, it's been, it's seen a forty four percent, roughly a forty four percent drop from its all time high. That was set back in October. Um, some of the selling has intensified last week. Um, it's, you know, some of the comment, some of the commentators are saying, well, it's this is, it's, it's hard for Bitcoin and gold to compete with AI and to compete with the buzz around AI.
50:59 Speaker 03 I, I, I think, I think that too, but I think I read somewhere last week that it's hard to just compete with cheap, cheap money from like
51:08 Speaker 03 the bonds coming from the US.
51:09 Speaker 02 Yeah.
51:10 Speaker 03 Too. I mean, that, that's one of the comments I read last week when it tumbled five, five days in a row.
51:17 Speaker 02 Right. They're like, well, what, you mean, they're, they're, they're comparing it to a safe, the safe return. Yeah. Yeah, it's, it's, it's going to be fascinating to see how this continues to play out. We're also still dealing with the nonsense of the semi-government shutdown. The delayed jobs numbers is going to be reported on Wednesday. We should have gotten the jobs numbers earlier, but instead we won't be getting it until this Wednesday. So why the jobs numbers matter is because this is something that the Fed is. Looking at to determine whether or not they need to continue to decrease the interest rates
51:58 Speaker 02 or not. And so we'll be looking for those numbers on Wednesday. Crude oil also fascinating world where now Brent or West Texas Intermediate is about $64 a barrel. Was Brent is about $69 a barrel. Both of those numbers pretty low. And you know, of course, we see this here locally in Kern County where you know, you've got to have above a certain number for it.
52:26 Speaker 03 Yeah, I used to be in tune with that when I was a banker because I used to finance oil fields, construction and stuff. I don't know what that number is. I think when Richard Chapman was here, he said, we are hovering around that breakeven.
52:40 Speaker 02 Yeah.
52:40 Speaker 03 Right now it's $60, $65 a barrel.
52:42 Speaker 02 Yeah. And it really depends on the operation.
52:45 Speaker 03 That's true.
52:45 Speaker 02 What they're doing, what you know, other costs and same thing with ag right now. There's some almond farmers that it can get by with today's almonds prices barely. But there's others that like if this lasts too much longer, it's just not going to work.
52:58 Speaker 03 Especially with the cost of capital.
53:00 Speaker 02 Well, you're not going to want to miss tomorrow's show. We're going to have Rachel Wainwright on from Ram Gallery. She's a fantastic business person here in town, has a lot of experience in, in dealing in arts. And, and so I'm really looking forward to talking to Rachel tomorrow. Of course, we'll remind our, our listeners, these three things, be smart, be safe and always be money wise.
53:32 Speaker 01 Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.
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