TRANSCRIPT
hello sense of things it’s Jeff and Ron
once again for another episode of the
sense of things podcast welcome to the
show today we’ve got a lot going on but
first thing we want to say is today
there was a big tragedy in Washington DC
um plane
crash collided with a military
helicopter um I just heard just as I was
listening to the news um apparently the
there was like like 14 members of the US
skating team that were on the plane so
it’s just really going to be tragic to
hear what’s going on with all that so
our hearts and prayers go out to their
families and everybody involved um on
today’s show we’re gonna cover a little
bit of the earnings season Ron’s got a
couple of interesting indicators like he
always comes up with so we’ll see where
that uh where that comes in and we will
be right back with you in just a second
all right folks welcome to the show it’s
Jeff and Ron here Mr Ron how you doing
buddy we are doing good Jeff yeah
burning season’s on its way I know you
got a few good things um you know uh the
FED came out yesterday uh kept things
unchanged I think that was almost like
100% certainty I know people are looking
at uh you know two or three rate Cuts
this year I love where the market makes
a big move when yeah it’s like there was
not a chance on the earth that they were
gonna make any change to it and there
was a huge selloff in the first hour
after the announcement and then it came
back uh you know I just think it’s just
the computers I mean 70 over say over
70% of the Market moves is just computer
algorithms but uh who knows I mean just
crazy it it drives me crazy because it
just makes no sense um I’ve started to
really look into who makes Prozac and uh
and invest in them because I think but
unfortunately there’s no proac for the
computers that’s that’s the challenge I
find they’re making money and sometimes
they’re just scraping off cents not
necessarily dollars yeah it’s uh it’s
good all right so what I got is I I saw
this picture because I had that funny
picture I think it was two weeks ago of
um the guy sitting with a flat tire with
a pickup full of about 50 tires that he
was hauling so I saw this picture and
I’m like you know what this is a pretty
good picture because back in the day now
I know if you go to a concert you could
see a lot of this but you know what what
happens if you got to plug in a guitar
here or the guitar plug pulls out who
knows with all this spaghetti which one
is your actual guitar
cable well and the worst part is when
something’s not working how do you how
do you diagnose the problem my my whole
point is look I know the Ro’s do an
unbelievable job to set up these things
but how long does it take to break this
down sort it put it away go to the next
city and redo it again and make it look
almost the exact same thing now
obviously this this picture is a bit
dated um I know there’s you know less
let’s just say uh there’s probably about
the same equipment but less cables but I
just think this is a fantastic picture
um just kind of looking at
chaos it’s awesome I I love recently I
heard something from Jean Simmons um and
he’s so funny because he’s doing this
thing right now where he’s like well hey
I’ll just go play in like a little small
venue with his new band that he’s got he
did and he’s like
man this is so much better you know
because I can go do this and I don’t
have to pay for all these Ries and all
this stuff and it’s like well it’s okay
if you’re Jean Simmons uh everybody else
is called a garage ban and they’re just
barely making enough money to
survive well la last quick thing I know
we’re taking a little bit of a right
turn here but I was never a Grateful
Dead Guy not that I can’t appreciate
them but from what I understand they
used to have there touring in the 60s
and early mid 70s the The
Towering uh speakers and what they did
was when new technology came out they
donated all of their equipment when they
brought in the new equipment to all of
the you know this the small upand
cominging bands around the country so
this way they didn’t have to go out and
buy stuff I I know that’s a true story
I’m probably screwing up some of the
details now that but I I think that and
that was pretty much them I mean as it
was so yeah so I I was kind of looking
at some bookmarks and I came across an
old bookmark of mine from a great
website called Guru focus and you could
do hundreds of charts and adding things
to charts and uh there was two charts
that stood out to me one was the buffet
indicator that I’ve heard about for a
long time and I decided to put up the
chart and the explanation because this
goes back to the early 70s and anytime
the buffet indicator has truly spiked
typically a recession or a significant
pullback has followed because it’s a
valuation indicator and it’s some crazy
fock the formula of the ratio of the
Willshire 5000 oh by the way there’s
only a little over 3,000 stocks today um
over GNP compares the total market value
of all publicly traded stocks in the
Wilshire 5000 index to the GNP of the
United States whatever it is partridge
in a pear tree exactly but the idea here
is that the buffet indicator is at an
all-time high so does that means that I
mean look we’ve been talking about the
market being overvalued for 12 18 plus
months now um and the buffet indicator
look I mean the market can you know be
IR rational for a hell of a lot longer
than we could stay solvent but I just
think that this was an interesting
indicator I’m not sure if you’ve ever
followed this or have heard of it
honestly haven’t you know and I I think
the the interesting thing is I mean
value has been the problem is you have
to assume value has been
attractive you know that that investing
approach has been attractive and and it
just hasn’t been and you know I I just I
don’t want to say the words that it’s
different this time but it it is a
little bit different and I I don’t know
I mean it could happen it could continue
to go up you know it could go past
anything I could expect I mean we talked
about Lei on the last
I mean I have rarely if ever seen that
be wrong and it has been unbelievably
wrong for a long time yeah well over 34
straight declining months but you know
another interesting thing to this that I
had heard was as opposed to 20 30 or 50
years ago because of the amount of baby
boomers yeah their status quo and I
thought that was an interesting point
meaning status quo meaning they’re not
selling anything if the market goes down
10% they’re not selling anything right
because whatever they have set up for
income is not going to be changed
whatever they have set up for growth
isn’t really going to be changed until
they die right until they pass along
their assets and I thought that was a
very good uh thought process of passive
investing because what over over 50 or
60% or more of the wealth is from people
over 55 actually I heard close to 80% so
if they’re more in a status quo mode of
income and conservative uh growth uh for
their portfolios they’re not selling
yeah well and I you know I think the the
common thing that we heard I remember
you and I you know you and I are
contemporaries in this business the
common thing was well when the Baby
Boomers get there to retirement they’re
just gonna you know take everything and
put it in income stuff and they’re not
going to invest markets and the Market’s
just going to be terrible well of course
they got there and and bonds are you
know earning
1% and they just couldn’t do that so
they had to rely on growth they had to
rely on growing their assets and being
able to liquidate some of that um you
know and you look at oh the safe bonds
well you know if somebody had done that
a year or two ago they’d be down 20 30%
if you were in longer bonds
so I I just just it’s it’s an
interesting factor and I think it’s a
major factor with the amount of index
funds that control a big chunk of the
market right now you know three largest
index funds are like 30 or 40% of the
market it’s huge yeah and and then my my
other indicator I always hear people
talking about it but I had to research
it a little bit and it’s the cape ratio
so the cape ratio is more of a
cyclically cape stands for cyclically
adjusted price earnings ratio and when
you’re looking at this I mean you can
see how far back this goes obviously it
was a different scenario back there
there wasn’t electronic trading
1871 yeah follow following the Civil War
but you know I always think that right
now other than the dot we’re at like the
the second third highest Cape ratio so I
know people are say well no there’s
still value there it’s not necessarily
overpriced this is doing aggregate of
the 500 S&P stocks and it’s showing it
probably is uh overvalued if you’re
looking at a cyclically adjusted PE
ratio what are your thoughts I you know
I think it’s another one of those things
okay it’s one of those things you can
make a chart of anything and make it
look different um I think if you took
this and said all right well let’s look
at the what I would consider the Common
Era so let’s move it till let’s say 1980
and run this chart again I think you get
a completely different chart at that
point um it it looks worse than I think
it actually truly is and you know we’re
in a whole different world than we were
even pre you know I mean you really see
modern economic theory starting in the
90s um so I I think you know this is one
of those things it’s like okay I don’t
know
how interesting this is truly going to
be but I just I’ll tell you what I mean
if you take a look here this was when
Reagan took office and this was
8283 when we had the amazing Bull Run
for essentially 18 years for the do
right then we see it pull back at
meandered along right we had uh and
unfortunately 911 we had the financial
crisis right this was the financial
crisis I pull back that was also a
generational buy and even with covid
here right I mean it it was even though
those were great buying opportunities
also um you know we’re looking at
generational buys and generational highs
so I I don’t know look I think it’s
something to keep an eye on but I’ve
heard this being more and more talked
about with a lot of Market strategist
Yeah well yeah like I said once again I
it’s interesting you know I think one of
the big things I’m seeing is you know
people oh you know things are so
overvalued and then you look at let’s
say an Nvidia that’s a massively
profitable company after the little
pullback in it this week it’s 30 times
you know 30 times forward earnings at
this point I mean a company that makes
Buu tons of money and it’s still only 30
times forward earnings at this point so
well I’ll tell you what one point I’ll
make about Nvidia and then I know you
got some stuff you want to show the way
I look at it is I understand people are
paying up for the future of Nvidia
y but it’s got to pull back another 20
25% for me to say hey you know what this
is a great buy I mean it’s got to get
down into the 90s again where it was you
know on that quick pullback in early
August for me to say hey you know what
this is a great buying opportunity but
people are like hey don’t worry about
where it is keep buying it it’s going to
200 I can’t go by that investment
philosophy well um on that point well
here’s what I’ve got on that point so I
think one of the uh one of the biggest
things that I got lots of questions this
week from clients was what on Earth
happened to my account this week and
this wildly
obscure AI stock or AI company out of
China deep seek claims that they were
able to create this incredible AI tool
um last
claims yeah claims over the last you
know few months they created this now
the company that created this is a hedge
fund in China um largely supported by
the Chinese government and they claim to
have been able to create this thing
for five 5.6 million so of course all
well especially Nvidia stock got
clobbered this week and the reason for
that is well if they can do it for five
bill you know five million why are we
spending billions of dollars on all this
well you know as you start to unravel
the onion a little bit with this thing
out of China um you know China is
looking at losing their their source of
uh of information in the form of Tik
Tock and amazingly this thing pops out
right about this time but the other
piece of it is um
you know I I listened to an interview
with the the chat GPT or or open AI CEO
and he’s like yeah these guys were
hitting chat like just boom boom boom
boom boom hitting it hard and it was ba
basically gathering information so yeah
it didn’t take them much to develop it
so I see the equivalent of if you look
back in history you know the damler
Brothers created a car and then other
people created cars after that and said
well you know I created a different car
okay well that doesn’t mean you created
the car and it doesn’t mean you have
that great you know of ability so let’s
see what this company can do going
forward on being Innovative they took
other people’s work and then they added
a little bit of their own tweak on top
of it the in the end I will I know how
this is going to sound yeah you know I I
mean I was in the tech World a long time
it doesn’t matter if you’re five or 10
or 15% faster if
what are you doing with the information
what is the information you’re getting
back so if I get it back 5% faster what
does that mean am I gonna am I gonna
solve cancer faster I think this was all
hype and
BS BS Beyond and I understand too the
last Quick point is is that they were
talking about well if it’s faster that
means it’ll use less energy so the
energy things like give me a break this
is 5 10 years away from a reality it’s
ridiculous the machine no pun intended
but the machines took over that day on
the selling yeah yeah oh I think so too
but I you know I mean I think it was
just other stupidity and you know I I
looked at what went down in the market
and there were so many things that are
completely unrelated to AI that were
down I think the market was just looking
for an excuse to sell down you know and
and I I don’t want to say manipulation
but there’s some manipulation going on
but it like I said once again it’s just
you know don’t believe anything you hear
from the Chinese because they lie and
they steal um and it’s just I will not
invest a dime in anything from that
country at all because I do not trust
the financials to you know to shake a
stick at I got you what else you got
exposure okay well let’s get
into The Good the Bad and the ugly by
the way you know the uh that movie theme
has been the text notification on my
phone for like 15 years that is awesome
that is absolutely awesome now I’m gonna
get a bunch of text for you Ron The Good
the Bad and the Ugly we are in the
middle of earning season and I just kind
of went through especially for this week
because this we’re getting into the meat
and potatoes um we saw some really good
numbers out of the financials over the
first because they usually hit right at
the beginning of earning season so we
had a lot of the financials a lot of the
big Banks looked really good um some of
the Regionals were a bit ugly and
they’re continuing to be ugly uh but if
you if you look at some good ones that
as I started looking it this week uh
caterpillar MasterCard actually Visa I
just noticed when I when we were looking
for something before this Visa uh yeah
MasterCard and Visa just fantastic just
a lot of transactions happening Royal
Caribbean was outstanding um and it’s
been a stock that’s gone up quite a bit
since the pandemic they’ve spent
billions of dollars on new ships and
they are just firing on all cylinders at
this point and it’s not necessarily true
of the other um the other Cruise
companies but Royal Caribbean has been
just on fire and they continue to be on
fire um you know and it’s been
interesting watching because the market
will listen to their conference call and
I can pretty much guarantee you the
stock will pull back here for a while
because the market listens to the
conference call the same one I listen to
and somehow they pull out of it after
Royal Caribbean says yeah we’re
basically booked for the next two and a
half years full you know every cruise is
booked for the next two and a half years
full and somehow the market goes yeah
but you know what if they don’t make as
much revenue as they made
they’re booked for the next two
years right uh Brinker International
which is uh I’m a I’m a Dallas guy grew
up in Dallas um Brinker International
founded in the Dallas area has been a
just ungodly mess they’re they own
restaurants I don’t know what happened
but all of a sudden they have taken off
like a a rocket ship U both earnings and
revenu is just off the charts up like
26% so I don’t know what’s happened I
have to look into it more I think the
biggest coolest thing in the good side
was IBM Old Blue uh was really in a big
comeback mode and it they their biggest
Revenue came from their uh AI Consulting
I mean they you know with Watson they
were kind of early on in the whole AI
world and their AI Consulting is just
taken off like a rocket ship so well
worth taking a look again at at Old Blue
as it’s uh as it’s g off and and gone um
the bad Tesla boom missed on both sides
and you know another another just
interesting look at the cult of Elon
they can miss Revenue numbers they can
miss earnings numbers they can be down
on the number of cars they sold stock
went down and then the stock was up 4%
at the close today don’t get it
Whirlpool packar packar is a Peterbuilt
trucks and I think Kenworth they own now
really down quite a bit they’ve
struggled for the last several years
because there was a major upcycle at the
end of the Obama Administration where
they had to they basically took all the
old trucks off the road and said they
have to meet certain admission standards
so there was a massive shift and and a
massive purchase and now now they’re
just kind of getting sucked up a little
bit um I think the most notable was
Lockheed Martin uh which is interesting
for me because there’s got to be a lot
of replacement because we gave a lot of
our old stuff to Israel and to u to
Ukraine and we’ve got to replace that
but it doesn’t seem to be rolling
through uh the the money from the
government doesn’t seem to be rolling
through lockie Martin very much because
uh they were down both on revenues and
earnings and you know with with the Doge
and and you know possibly cuts and and
spending and things like that that does
not bode well for for the investors of
locked
Martin uh the
ugly it continues to be ugly Boeing I
think leads the ugly um over this last
you know God I mean two three years that
they’ve been having issues uh the the
strike that they had that just was
settled a few weeks ago had a massive
impact on them and all the people around
them all the other uh the suppliers had
a massive impact uh 1 800 Flowers Ethan
Allen Murphy Oil all down pretty
massively uh for this quarter so you
know it’s
interesting we Ron and I have talked
about this you know Ron you you have
said this over and over with oil you
know you think maybe there’s a there’s
some hope for the oil industry and it’s
a lot of
manipulation well I mean if you look at
it oil was is uh uh about
$81 January 15th it’s now down to 73
yeah you know that’s you know less than
two weeks later two weeks later so yeah
I mean I just think oil is just a no
touch yeah well and I mean it’s just
been one of those things that I I can’t
figure it out a lot of times and and
when we looked at you know I think
you’ve done such a great job with the
your research and and showing the you
know the annual charts of the different
sectors in the market that we did a
couple shows back so if you if you miss
that one go back about two shows and Ron
really walk through the the market and
if you look at oil I mean it pretty well
consistently runs towards the bottom of
the chart it’s usually most of the time
in the the 20% so and it’ll Spike like
every four to six years yeah that’s it
it’s spikes up and then it’s down you
know back in the same area again so you
can’t really tell when it’s going to
happen and you know I think there’s a
lot of other areas that are a little bit
more consistent as it as it goes at that
point so you know that said um I think
we’re we’re in an interesting time um
it’s interesting to see that the techs
are still continuing to do well uh right
before I got on this call uh meta and
Ron and I were commenting on this meta
actually came in like 20% year-over-year
higher in revenues which we’re still
trying to figure out where all that’s
coming from at this point but I think
you know once again it is the um out of
all the advertising platforms and and I
say this from being a digital marketing
person coming from a digital marketing
World utilizing you know that platform
to
advertise it is probably the best
advertising platform that exists out
there um and their work in AI has been
you know pretty exceptional as far as
being able to really you know get your
audience right when it comes to that so
I I I assume that’s it I haven’t looked
into the numbers I will do that um as we
go um Ron I mean they may have great
numbers and they may be great with AI
but I don’t know anybody that really
uses it uh on a regular B they’re using
Instagram um we I post our podcast on
there right so my whole point is what
data are they Gathering because I pulled
off all my personal information on there
10 years ago I’m not saying you know I’m
ahead of the curve or whatever but I
talk to other people I don’t know really
too many people that are using Facebook
for communication I know some people are
using it for business but for just
personal in you know uh information like
hey let’s take a picture of my dinner
when I go out you know I know there are
some people that still do that but how
often so I don’t know the data they’re
accumulating maybe they’re just scouring
the internet for stuff I have no idea
you know the interesting part is during
the pandemic so I I did this I I taught
a a course on digital marketing for
realtors and I we were I did some of the
the data the largest and fastest growing
segment of people on Facebook is age 65
and and over that’s the fastest growing
so you know it’s the it’s the baby boom
gener a that kind of got pushed on to it
during that during the pandemic era and
they’re the ones that are using it and
so they’re the ones who have the money
to spend um it’s interesting that you
know you figure a lot of the
advertisers um that are on there you you
figure they’re looking to to grab the
younger crowd and the younger crowds you
know going off to other places you know
Tik Tok Tik tok’s just getting their
advertising system right and it it’s
pretty good it’s basically the Wild Wild
West at this point when it comes to Tik
Tock um you know so that’s that’s a big
problem for a lot of these people that
use Tik Tok as a as a major vehicle if
it gets pulled out I mean it’s it’s an
issue big time um you know and and I I
personally from an Advertiser
perspective Instagram is a pile of
garbage it’s just it doesn’t work right
um you know you you have to really
gather a lot lot of people watching for
it to work exceptionally well and you
know I personally just am not a big fan
of the platform I have to see how that
Tik talk soap opera ends uh yeah I think
I think we’ll see something here by the
end of q1 but uh yeah I I I think it’s a
possibility that somebody like a
Microsoft picks it up and you know
they’ll destroy it when they do it
because they’re they just are really
terrible I don’t think it’s going to go
to Microsoft I don’t know I mean I I I
just think somebody somebody Go’s the
one that should them but I don’t think
that’s going to happen yeah and I mean
Google really doesn’t have a social
aspect besides YouTube at this point so
it it would be interesting I I could see
Google buying it kind of on the same
lines as YouTube but I think they see
them as a major competitor um you know
and they’ve quite frankly been getting
their butt kicked by Tik Tock so that I
could see them just picking it up just
to take out a major competitor or do
something with it at that point but uh I
don’t know I think it’s going to be a
big company that picks it up and you
know like I said if it’s a Microsoft
they’ll completely destroy it like
they’ve done with anything else you know
in that world that’s just not what they
do all we shall see absolutely well
folks thank you for joining us again uh
we are here for you we do these shows
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because we do these shows every week for
you so thanks a lot and we will see you
guys back here the very next time