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