hello everybody it’s Jeff and Ron here  once again with another episode of the  

sense of things and today we’re going to kick  things off by talking a little bit about sector  

performance in 2024 uh we’re going to talk  a little bit about uh the next seven after  

the the the mag seven um who who’s the  next ones behind there that could kind  

of potentially take leadership uh we’re going  to talk about some PE Trends today and we’re  

also going to talk about some Revenue supp  Rises so stay tuned we’ll be right back in a

second hey everybody welcome to the show Ron  how are you doing buddy good morning Jeff good  

good good we are definitely in the heart of the  winter that is for sure yeah I I was going to  

say man you’re wearing a sweater it looks like so  uh it’s it’s in the 30s here most of the mornings  

and then by mid late uh morning uh it it starts  to warm up but uh I was up in Sedona last weekend  

and I think the wind chill the first night we were  there was in the teens yeah yeah it felt like when  

it’s warmer in Texas than Arizona this is not a  good thing well don’t forget sedona’s up in the  

mountains too but you know it’s kind of like uh  ice needles going through your skin like you know  

what I haven’t had that in three years I don’t  miss it hey it’s a dry cold Ron come on I think  

I know I said this in a podcast about a year ago  people don’t understand that actually Phoenix has  

Surfing ski shops nobody understands that they  have lakes you could do a lot of water sports a  

lot of people have pontoon boats and if you want  skiing you just go two two and a half hours North  

to the north yeah it’s not Colorado Utah skiing  but you could go skiing it’s skiing and there’s  

snow yeah and Flagstaff and stuff like that so  I Flagstaff gets about 120 inches of snow a year  

that’s two hours for me yeah we have no spot  in Texas that has consistent snow I will tell  

you that Dallas had some two weeks ago oh yeah I’m  saying consistent snow I you know where you could  

actually ski um skiing down a hill that’s full of  rocks and stuff is not what I consider skiing so  

well considering where you are in Texas because  Texas is its own country on its own isn’t like  

some kind of a rivalry do you guys even consider  yourself in the same state it’s like LA and San  

Francisco one is SoCal one is northcal they don’t  even recognize each other yeah pretty much I mean  

you know you have Texas you basically have four  regions you have Dallas Fort Worth you have  

Houston you have San Antonio and then you have  Austin in the middle and the the scary thing is  

over the years since I’ve lived here which is now  going on 14 years San Antonio and Austin just keep  

getting closer together and at some point in time  I would expect that we become like this gigantic  

super Metroplex area U because they’re they’re  just getting closer on either side interesting  

yeah you know the geographies around the US are  pretty interesting yeah well and I mean you know  

Texas I could drive from here in any direction  and it would take me a minimum of seven hours to  

get out of the state yeah well when I drove across  country I didn’t get out of Texas one day I went  

T Paso yeah that’s hilarious I know I hear you all  right so let’s kick it off here uh you know I was  

rooting around and kind of doing some things and  and uh this is a picture that I got to remember  

2530 years ago I think this may be from the 30s or  the 40s yep and this well actually you know what  

it’s a little yeah it’s a little bit later that’s  actually a 1967 Chevy pickup truck so it’s after  

67 well I’m impressed that you would know that  C10 baby okay all right maybe okay all right uh  

but you know what it’s interesting I thought  about this obviously whoever this person was  

or whoever he works for um and I always love to  look at things like this obviously if transported  

tires before look at how these tires are stacked  in the truck almost like a web yep so this way  

you know these tires are going to fall out even  probably the ones on the end there maybe a big  

bump I don’t know but look how these things are  stacked in there this has been done once or twice  

before absolutely with no rope or anything like  that to hold them in but here’s the crazy thing  

uh you’re not lifting that car up on a jack until  these tires come off that’s precisely correct so  

I just gota feel like because on pickup trucks the  spare tire is right under where he’s sitting there  

and he ain’t getting that out which is GNA be a  problem no and I just kind of feel like there are  

some days you just kind of feel like this where  you think you got everything managed you think  

you got everything stacked up you think that you  got everything organized and then all of a sudden  

out of the blue you hit a nail you know just I  had a feeling like this about a week ago and I  

saw this picture and I don’t know why it’s kind  of like going to the museum not I’m like I’m an AR  

guy but you just stare at a picture and you’re  just like yeah I I feel you brother I get it I  

feel you I feel you so anyway I thought I’d  share it I didn’t have any fun pop culture I  

don’t think I could one up the pillow fighting  championship from last no dude that was that’s  

awesome I went and watched a couple of those  and I still don’t get it but okay so you saw  

so so you saw what the ferocity of fluff was all  about yeah the the the master of disastrous pillow  

fluff whatever yeah all right so did he go through  those taglines again on some of the videos you saw  

actually I watched the the championship and that’s  where all like three of those ones you shared were  

in there unbelievable all right well pharaoh of  fluff the I hear you all right moving on to some  

good St serious stuff here so this was actually  end of year we’ve shown this chart handful of  

times throughout the 12 18 months this is as of  the year end and I bring this up as part of my  

thesis for 2025 and Beyond at least 2026 too you  know you’re always looking for lagging uh sectors  

and one of the amazing things is is that you know  it’s been 14 years since utilities actually led  

the way and typically if you take a look at really  bad years right utilities may do well because  

people are looking for safety here it is last year  the S&P even though the majority of the move was  

still by 10 stocks utilities outperform barely  the tech sector and I think this is interesting  

because you don’t see health care which is really  my number one sector going into the next 18 to 24  

months um you know it’s just underperformed um you  know really uh three four times out of The Last  

5 Years and I think we’re good to go there but  but energy you know other than two two two good  

years in a row energy is still in the bottom four  for basically the last 15 years I don’t know if  

anything stands out to you or what you’re you know  and I think that’s interesting because everybody  

thinks oh my God you know with President Trump  coming in they’re going to reduce regulations and  

drill baby drill and all that well look at like  when he was in office the last time I mean it was  

the worst performing sector and I think largely  because we did so much to reduce uh the cost of  

oil that it gets to the point where profitability  goes away yeah yeah well not only that but um you  

know with the recent sanctions to Russia oil  has spiked in the last week correct but again  

at the end of the day uh why I I have always  had a tough time and I really don’t recommend  

it for clients you invest in companies that are  pegged to a commodity yeah you know it’s you know  

Exon Chevron kico Phillips go oxidal P go right  down the line of all those companies they may  

have Rock Solid balance sheets but if oil goes  down 10 bucks a barrel doesn’t matter how good  

their balance sheets are yeah yeah well and I  mean you know the other part of it is the way  

I look at it and the way I’m playing the oil thing  is okay what industries are going to benefit from  

reduced oil you know industrial companies are  going to do that I mean you know anything in  

that world that makes that uses oil it’s going to  go down you know cost of input’s going to go down  

significantly um the scary thing is even in the  health care sector it’s gonna help out immensely  

so I I would be looking to the industries  that could really benefit from all of this  

and I don’t think utilities are going to benefit  quite frankly I mean maybe lower cost input on  

the the NAT gas side of it but you know Nat gas  is only like 25% of our production or the our  

uh electricity production in the utility space  well don’t forget with the utilities a lot of  

that is driven by the data centers and the AI  or the anticipation of it so maybe they’re a  

little ahead of their skis too but yeah kind of  talking about market performance um you know we  

were talking about the top seven stocks because in  2023 the top 10 stocks were responsible for 70% of  

the S&P move you know here we are on the next  seven and these are all recognizable companies  

as far as how well they’ve done obviously broadcom  was the tremendous winner last year following the  

AI and everything else and even broadcom has been  an aggregation of several chip companies over the  

last I don’t know 10 years or so but you got Exon  Mobile in there they’re the biggest in the world  

and uh look at their performance they were only up  6.7% so you know I think this is just interesting  

to look at it I quote unquote borrowed uh  the this slide uh you he’s got to site your  

sources but you know I think these type of this  type of information is important for people to  

understand well and interesting that yeah it it’s  interesting I I didn’t think Burke B was anywhere  

close to that Burkshire hathway was anywhere close  to that size and it’s amazing how that company has  

grown but also with h birkshire it’s also a litmus  test the canary in the cold mine for the consumer  

because of the aggregation of all those companies  and who theyve and it actually has done pretty  

good and one of the main reasons why as we’ve  talked about dadum the consumer still spending  

yeah absolutely gotcha okay so uh kind of going  from one end to the other I I saw this and again  

I’m borrowing this slide and uh I thought this was  interesting for uh this was the highest level last  

year in 15 years highest amount of bankruptcies  filed and I remember doing it in midye 2024 and in  

midy year we were talking about the highest amount  so far uh for six months in almost 20 years so it  

slowed down a little bit in the second half but  also 2010 that was coming out of the 2008 um and  

2009 debacle yeah look we went through bankrupt  big you know name bankruptcies last week and uh  

this is something to keep an eye eye on no doubt  about it uh you know nobody wishes or hopes for  

this but you know what is this telling us yeah  we’ll have to kind of keep an eye on it well  

and I mean you saw Big Lots go out I mean which  I I always considered kind of a crappy play I  

mean honestly I’m not a big fan of it U every time  we’ve gone in there we just kind of went in went  

yeah and walked away but I mean I think that’s  telling and if you look at the stock performance  

of like the dollar stores and everything else um  I think it’s telling that the bottom end of the  

economy is just stressed beyond belief at this  point you know it I don’t think it’s rolled up  

yet into the middle class but certainly the the  bottom end of the you know the earnings economy  

is getting stressed massively and even dollar  stores it’s not you know I think their margins  

are getting compressed because of costs but uh you  know I think their consumer it’s they’re getting  

stretched too yeah absolutely so kind of looking  at earnings I wanted to start with PE and I I  

love this chart that I borrowed again uh fa set  always does a great job at you know consolidating  

a lot of really good uh earnings information and  we’re going to go through some of their slides but  

basically there’s always a reversion to the mean  yeah you take a look at where it was uh 10 years  

ago and uh the PE Ratio uh basically uh was you  can see the market was undervalued and eventually  

the market came up to the PE through quote unquote  multiple expansion then we hit covid and then you  

know people didn’t believe that the market was  undervalued the market just took off and pees  

have constantly been on a chase ever since until  2022 and then at that point what we saw was the  

market just took off after there so one of two  things is going to happen or maybe one of maybe  

both either the Market’s going to come down to  the PE the PE is going to come up to the market  

or they’re going to meet somewhere in the middle  yeah obviously if you just take a look at history  

there’s no way things can continue at the pace  they are yeah and I mean I I think it’s I don’t  

think the the Market’s going to come down to the  PE I think there will be that blend in between but  

you know I I the way I’m looking at things right  now I mean you know everybody has this Rosy view  

I I think we’re going to struggle a little bit in  the beginnings of this year you know we got a lot  

of we got a lot of you know excitement after the  election but you know now reality hits a little  

bit and the market has run so much that I think  it’s going to be a bit of a struggle the beginning  

of this year yeah I’ll try to find the chart  but it was interesting kind of looking at stock  

Almanac which always has you know great analytics  for both of us they were talking about the first  

quarter of a new presidential Administration is  typically a down quarter yeah and we were looking  

for a rocky first half anyway so we could stumble  out of the gate and I think we’re going to know  

more day one next week after the inauguration we  shall see yeah and and on our next show that we do  

actually I’m gonna talk about that a little bit of  some of what I consider the market moving events  

going into the inauguration so stay tuned for that  next show yep and this is also a fact set Source  

here I’m not going to go through all of this but I  thought it was interesting if we just take a look  

at the following revenue is growing slower than  earnings and typically it’s the other way around  

and this just stood out to me because everybody  wants Topline growth but the most important thing  

is earnings growth because that’s how you invest  you’re not investing on on money that Revenue  

you spend earnings that you make after it after  expenses I I gotta I got to watch this because  

this is a bit of a conundrum to me it doesn’t  really connect the dots and make much sense  

but you know already the you know the financials  came out pretty good uh already this week we’ll  

have to see where Tech and Manufacturing is  but just thought I’d bring this up and then  

that again riding the coiles of that this these  are the revenue Surprises by sector and then I’m  

going to do earnings and we just take a look here  you know uh Consumer Staples this is interesting  

again people people are spending they’re consuming  in technology yeah but I mean you know Staples  

okay you got to have toilet paper you got to have  toothpaste and stuff like that so I mean it’s not  

like discretionary they’re going out and buying  just crazy stuff I mean this is stuff that you  

have to have yeah and look and if you take a look  right we were just talking about it energy you  

know doesn’t show any type of potential Revenue  surprise I know my health care is in there but  

I’m looking at a second half of the year on Health  Care utilities wait a minute wasn’t utilities the  

number one sector last year and they’re showing  a 0% chance of a revenue uh surprise I don’t know  

just some of these things I really want to look  at here I mean because even if you just kind of  

take a look at um you know even on this side  too uh they’re looking at a negative it just  

doesn’t make much sense uh but then we just for  our last slide here kind of on earning surprises  

again you know we had the revenue and now we have  the earnings and I just think this is just very  

interesting you know over here on the right hand  side you know look at that droing energy yeah well  

I mean once again I mean you know everybody thinks  oh well this is going to be a boon for the energy  

business it will in some aspects but you know  initially what you’re going to see and I think  

some of the some of the stuff that going to happen  on Monday I mean the president’s going to sign a  

bunch of executive orders which I’m not a big  fan of but I mean yes that’ll happen where it  

kind of unleashes the energy sector but you know  in the end that ends up pushing the price down and  

that’s the part that they get to spend you know  if you if you drop Revenue your earnings are going  

to go down and and I I totally agree with that  expectation and I know your gas prices in Texas  

are pretty cheap it’s come down here is next to  California Arizona is one of the highest in the  

country and our gas has been down steadily over  the last year so we’ll have to see what happens  

but again energy also we have to see how the  winter is because it’s not just gas it’s natural  

gas it’s natural gas and everything else yeah and  it seems like this year was a it it’s turning out  

to be a much colder winter across the country I  mean we’ve been pretty temperate here in Texas I  

mean we’ve had you know it’s it’s cold it’s cool  for us but I mean for the rest of the country they  

probably be wearing shorts you know walking around  because I mean we started the day at 37 we’ll be  

at 68 I think by the end of the day so you know  it’s it’s not been horrible this winter is what  

I would say right next week supposed to be I  gotcha well cool well thank you for all that  

Ron thanks for putting that together and folks  we do these shows for you so if you uh want to  

make sure that you don’t miss any of them make  sure you subscribe to the channel and hit that  

little button wherever you’re at and you will  not miss any of these as they come out because  

I’m guessing we’re probably going to be putting  out a few more this year as we pivot around what’s  

going on in the market so thanks a lot and we  will see you guys back here the very next time