COT 149 === Jeff Kikel: [00:00:00] Here we go. Good  morning, folks. Welcome to The Cents of  

Things. We are one day out from the largest  IPO in history. So a lot of the discussion  

today is gonna be about IPOs. Ron’s got  some great stuff on that. I’ve got some   good stuff. Not necessarily good stuff, but  stuff, on what’s going on in the economy.

We, of course, have been ramping things up  in the Middle East again, so that’s caused   some crazy little volatility here and there, but  today’s looking pretty good. So we’ll see where we  

go. Hang in there. We’ll be right back in just  a second Hey, everybody. Welcome to the show.

Jeff Kikel: Ron, how are you, my friend? Ron Lang: Good. I’m strapped in, and  I’m ready to light that bottle rocket.

Jeff Kikel: Man. It’s taking off tomorrow, so  it’s gonna be [00:01:00] an interesting day Ron Lang: with the- you know what  it is, I’ve seen some of the big   popular IPOs go public in the last 10  years, and we’ll go over some of them.

And I don’t know when they’re gonna start, but  it probably will not trade its first public share  

till between 11:00 and 12:00 Eastern Time. Yeah.  Yeah, they’re just gonna have to… Yeah, ’cause   there’s so much demand from the institutional  side and all that. They gotta do all the matching.

Jeff Kikel: Yeah.

Ron Lang: So- Yeah, it takes forever it’s gonna take two or three. And I remember,   like, when Lyft and… Or Uber and some of  these other… it took an hour and a half   before they matched everything up. Yeah. So  this could take two or three hours minimum.

Jeff Kikel: Yeah. And with the cult of E-  Elon, and especially the fact that it’s…

he also had a big, allocation to the public, Ron Lang: 30%.

Jeff Kikel: Yeah. I think it’s gonna be really  super complicated to get this thing going and- Ron Lang: Oh, it’s gonna look like  an EKG chart, no doubt about it.

Jeff Kikel: Just in the first day  it’s gonna look like an EKG chart, Ron Lang: oh. I- I have a feeling there’s  gonna be an underlying bid where the inve-   where he had to make a [00:02:00] deal with  the investment houses it wouldn’t go below.

Maybe- … it’s the IPO price. I have  no idea. Yeah. I have no knowledge.   But I have a feeling that’s the case. But  after the first day, first week, look out.

Jeff Kikel: Yep. Yeah. It’s anybody’s game,   and Elon doesn’t have enough  money to prop the stock up. Ron Lang: No. No, not yet. All right. So  let’s start out with this week in history.

1752, Ben Flan- Franklin flies kite  during thunderstorm. Thank God he  

didn’t electrocute himself. Actually,  I always say, being from Philadelphia,   I always said Ben Franklin, if you ever saw  documentaries on him, by far a man way ahead  

of its time. Absolutely. All the inventions and  what he did, and he never ran for public office.

Jeff Kikel: Yeah. Yeah. About the only  thing he ever did was he was part of   the Constitutional Conventions, and that was it,

Ron Lang: he’s amazing. 1913, first ascent  on Mount McKinley, which was renamed and   then renamed back again. Yeah. 1934, [00:03:00]  Donald Duck waddles into pop culture by Disney.

Jeff Kikel: Okay, cool Ron Lang: 1942, one of my favorite original  movies, not the remake, Battle of Midway ends.

I gotta tell you- … if you think about all  the different… d-Day, and we just passed   the, the anniversary of that. I mean- Yeah  … Battle of Midway, if we didn’t win that-

Jeff Kikel: We Ron Lang: were done … the West Coast  would be speaking a different language.

Jeff Kikel: Yeah. Yeah. We would’ve. But  when you look at the strategic decisions   that were made during that battle, it was genius.

Ron Lang: A lot of luck too.

Jeff Kikel: Oh, a hell of a lot of luck.  Strawberry five. Yeah. Yeah, a hell of a lot   of luck. That just… Luckily, a PBY just happened  to catch where the Japanese were, and, the rest is Ron Lang: history. Yeah, Strawberry five found it.  I’ve seen that movie- Yep … so many damn times.

Jeff Kikel: Oh, I know. I love that movie. Absolutely love it. Ron Lang: That and Tora! Jeff Kikel: Tora! Ron Lang: Tora! But- Tora! Tora! Tora! Yeah …  Battle- Battle of Midway has the better ending.

Jeff Kikel: The two… Yeah, the two best,   I- I think older movies on that I  think were just absolutely genius.

Ron Lang: Great. [00:04:00] 1948,  first Porsche was completed. Jeff Kikel: Interesting. Okay.

Ron Lang: 1949, George Orwell’s 1984 is published,   pretty much predicting  exactly where we are today by- Jeff Kikel: I just…

Yeah, I just recently finished reading that one  again. I was taking- Wow … a class through,   I was taking a class through Hillsdale College,  and it was on all those totalitarian novels.  

And so I, I just reread 1984, and it scares the  living crap out of me, quite frankly, ’cause…

Ron Lang: Yeah. 1963, University  of Alabama desegregated.

And to those that believe that Forrest  Gump was there, no, he was not.

Jeff Kikel: He was… Yeah,  unfortunately for him. But   Forrest Gump was everyplace else.  He just wasn’t at that place, Ron Lang: no, they showed him actually- Oh,  I know … marching to desegregate. Oh, yeah.  

1965, Supreme Court strikes down  Connecticut law banning contraception.

Interesting. This shocked me. I thought  it would’ve been one of the Bible Belt,   Yep … states, but [00:05:00]  Connecticut? Connecticut, baby. 1965.

Jeff Kikel: Yeah Ron Lang: All right. 1966, NFL and AFL Announce Jeff Kikel: merger, yep. 1968- ‘Cause Ron Lang: AFL was failing Jeff Kikel: miserably.

Ron Lang: James Earl Ray suspect  in MLK assassination, is arrested Jeff Kikel: Which I wasn’t aware of.

He was arrested in England.  I just heard that the other   day. He was actually arrested in England. I didn’t Ron Lang: read the whole article. It’s a-  In London … when you think about it he   killed him in April. Yeah. So it took two months.

Jeff Kikel: Yeah.

Ron Lang: Yeah, Jeff Kikel: but- Yeah, but he went to… Yeah,  he went to London. I which I did not know at all.

It was my Alexa- Ron Lang: Oh, you thought they got him- … in the  morning popped up … within a couple of days or   a week. That’ll I never really kept up with that  part of history, but- Yeah … that’s interesting.

Jeff Kikel: Yeah. That- I was  like, I never had heard that,   and I’ve heard it for years. Never had heard that.

Ron Lang: 1974, under pressure, Little  League baseball allows girls to play.

And now it’s no longer called Boy  Scouts, it’s just called Scouts. Yeah,   I don’t know. They keep going back and  forth. They’re waffling a little bit. ‘ Cause [00:06:00] they’re like- I- if they’re  putting them together, they call them just Scouts.

Jeff Kikel: Yeah. Oh, I know. But yeah, I’m like,   okay, that… I did a lot of  work with Scouts with, Yeah, I Ron Lang: loved it when I was a kid

Jeff Kikel: I on the 43B side I did a lot  of work with them. So I’m like, I know the   people that run the organization, and it just,  it breaks my heart to, to see what they’ve done,

Ron Lang: the kids wanna be on their tablets and  not doing that stuff. I know. All right. 1976,   New York Magazine publishes  the story that becomes-

Saturday Night Fever. I watched that movie-  I did not know that … so many times. You   can’t watch the non-rated version. It is so bad.  Yeah. But you know what? It’s not a great movie,  

but it was an unbelievable soundtrack. It’s really   a crappy movie. The music’s great. It’s  remember we talked about Purple Rain. Yeah. Not a great movie, but- Horrible  movie … an unbelievable soundtrack.

Jeff Kikel: Yeah. It’s great. Grease,  the same way. I… Great soundtrack,   movie kinda sucka-doodle. But but yeah,  it was that time period of movies.

Ron Lang: I work a long  time, and you touch the hair. Yeah. You touch the hair [00:07:00] All right,  1982, E.T. the Extra-Terrestrial is released.  

And the funny s- my funny story about this  was I did see this in the theater. Okay. I  

really liked it. People said it was one  of the greatest movies of all time. You   know I’m a movie guy. Yep. And I hand  out my movie bucket list to people.

E.T. is number one. It’s not only not on  it- Never made the list. Yeah … I’ve   never seen it twice. I’ve never seen it-  I have never seen it once. Oh, r- okay.  

It’s worth a watch. I- never once have  I seen it. It ’cause Spielberg- It might be a little outdated today- Yeah …

Jeff Kikel: but it was worth it.  Spielberg held it back for so long,   where it wasn’t on any of the movie services and  stuff like that, that it just for me, it went by  

the wayside. It’s the Shawshank Redemption  for me, too. I never saw it. I just haven’t  

had the great need to go- You still haven’t seen  Shawshank? I need to watch it. No, have not seen Ron Lang: it. 1994, my man. You gotta watch   that. I know. Shame on you. Everybody said  that- More shame on you for Shawshank than E.T.

Jeff Kikel: Yep. Ron Lang: [00:08:00] All right,  1984, Ghostbusters is released. Jeff Kikel: There we go.

Ron Lang: That was a good  movie, and I gotta tell you, Jeff Kikel: I cannot- Had they stopped  at one, life would’ve been good …

Ron Lang: I cannot stand to  listen to the theme song,   the theme music to that- Oh … anymore.  Just, it just, it was so bad back then. It’s Jeff Kikel: terrible.

Ron Lang: I just… Yeah, they just overplayed it. Yeah. And 2007, sadly- Ah …  last episode of The Soprano airs. Jeff Kikel: Great series.

Ron Lang: Yeah. I, I- Loved it …  you know what? I gotta tell you,   I d- I also am a critic of the last  episode. … But I get it. Yeah, it was Jeff Kikel: very strange.

Ron Lang: Yeah. Yeah. Tony  Soprano did have to survive. Jeff Kikel: Yeah. Yeah, it was just  a, it was a very strange ending, yeah. Ron Lang: Yeah.

Jeff Kikel: All Ron Lang: right. All right, so let-  let’s talk about this ridiculous   IPO that’s coming out tomorrow.  So I thought it was important,  

and I copied this off of… Somebody had posted  this on LinkedIn. You could look at all the   names on the left. The, for the majority  of the people, they’re all recognizable.

Many of them obviously had a tremendous [00:09:00]  amount of hype. But I just wanna point out select  

ones. I remember when Facebook came out.  This thing- … had a one-year drawdown  

of 54%. I think it went down as much as  80%- … before the hype got yanked out,   then they started making money, and then all of  a sudden, obviously we see where it’s at today.

It’s an- Yeah … it’s at an absurd  valuation. If I remember correctly,   Zuckerberg, being the control freak that he  was and is, only I think released at the time  

only 20… He owned 80%. He only released- …  20% of the shares out of the public. Twitter,   I knew that was gonna fail. I hate to say  it. Yeah. That was one, I absolutely…

I was wrong about Facebook, I was right about  Twitter. Again- … 58%. We could go down.   I mean- Yeah … Robinhood, I’ve never been  a big fan, 90%. CoreWeave, that’s something  

recent that had an unbelievable amount of hype  going into it. You could see- … where it was   after three months, up- Oh, yeah  … 300%. And that thing- Yeah, and

Jeff Kikel: then the earnings reports- it went out of [00:10:00] fashion …  start coming out, and it’s boom. Yeah.

Ron Lang: Yep. Uber. Uber was one. I remember  when that became, that came public. Oh, my  

God. And I’m a Lyft person I refuse to use Uber.  But- … even with Uber, down 68%. So I thought   it was interesting, and I saw this quote, ’cause  everybody’s talking about bubbles and whatever.

So I have a quote. Some people may remember  the dot-com era. We lived through it,  

the late ’90s. Sun Microsystems CEO- Sun  who? … scott McNealy. The stock rose from  

$5 to $64, representing 10 times sales  revenue. Please remember that, folks, 10  

times sales revenue. So eventually Oracle bought  them in 2010 for basically pennies on the dollar.

But in a March 31st, 2- 2002 interview, Scott  McNealy said one of the most famous quotes, which  

I’m gonna read, because then I’m gonna compare  Scott [00:11:00] McNealy’s Sun Microsystems at  

10 times sales to where the S&P is today,  and where Tesla is based on its anticipated  

IPO opening price. This was his quote At 10  times revenues to give you a 10-year payback,  

I have to pay you 100% of revenue  for 10 straight years in dividends.

That assumes that I get that by my  shareholders. That assumes I have zero   cost of goods sold- Cost of goods … which is  very hard for a computer company. It’s hard for  

any company That assumes zero expenses, which is  really hard with 39,000 employees. That assumes  

I pay no taxes, which is very hard. That also  assumes you pay no taxes on your dividends, which  

is illegal, and that assumes with zero R&D for the  next 10 years, I can maintain- I can maintain this

the current revenue run rate. Now, having  done that, would any of you like to buy  

my stock at $64? Do [00:12:00] you realize how  ridiculous those assumptions are? You don’t need  

any transparency. You don’t need any footnotes.  What were you thinking? Again, folks, 10 times  

earnings. So just to give you an idea of where  we are, the S&P is at three times earnings today.

And a lot of people think we are  overvalued. And- If SpaceX comes  

out at 135, forget about if it goes up and  down, at 135, SpaceX is 90 times earnings.

Jeff Kikel: So if Elon pays  you all of his earnings for   the next 90 years, and has no costs and  expenses, you’ll get your money back.

Ron Lang: And because they have to, all the  index funds have to put SpaceX in there in  

the first month or two- or at the end of  the quarter when they rebalance because   of the [00:13:00] market cap- Yeah … that it’s  gonna be, not because of earnings or the quality-

Jeff Kikel: Yeah … of the company. ‘Cause it’s   gonna, yeah, it’s gonna slam into  the S&P 500 in the first month.

Ron Lang: Yep. And then I did a  quick screenshot of this off of   Charles Payne’s show about  E- Elon Musk compensation.

So if he hits certain milestones, he’s gonna get  66 and change million shares at each tranche. Now,  

in order for that to happen, it has to hit  capitalization, and he has to basically  

put a million people on Mars. In order for  him, it has to be both capitalization and a  

million people on Mars for him to get each of  these tranches of his compensation package.

Yeah I don’t know what to say  about this. I don’t see that Jeff Kikel: happening anytime s- Ron Lang: It’s a great story. I don’t- It’s a  wonderful- I can’t say whether it is or is not  

a good investment. I think people gotta make  up their own [00:14:00] mind. And based on,   I’m just gonna go back, and based on this chart,  folks, if you’re gonna buy into it now- History- you better hold for the nose for a period of time.

Jeff Kikel: History does not, yeah. Or wait 18 Ron Lang: to 24 months.

Jeff Kikel: Yeah. History does not does not favor  this at all. So yeah, I, I’ve told clients if they  

wanna buy it I will not participate in that  process, ’cause I think I just think it is It’s a challenge. If you wanna put a little small,  

little bit in your portfolio, or  if you want me to buy it for you,   I’ll buy it, but I am not … That’s not  part of the stuff that I manage for you.

Ron Lang: Agreed. Agreed. What do you got? Jeff Kikel: Okay. Just a couple quick things.  And really, I have no good to talk about today  

because we are we are certainly feeling  the effects of of the oil situation.

CPI came out I believe yesterday. We  are, we were up .5%, which is right  

on [00:15:00] consensus. We actually  were consensus with year over year,  

which is 2.9%. I would guesstimate that if we  look at the next number, this number’s probably  

gonna continue to go up unless we see some  major fixing of the, oil situation right now.

PPI came out this morning. This is the ugly one.  Up 1.1%. So PPI is producer price index, which  

affects CPI. It’s the downstream side. CPI is  downstream side of this. This is the upstream. Up  

6.5% year-over-year. Now, for once, the analysts  were actually pretty dang close on this stuff   it’s somewhat of a rarity, but that is bad because  that means we’re all gonna be paying higher costs.

Jobless claims, a little higher once again  this week. This is the second week in a row   we’ve seen the jobless claims be up there a  little bit something I think to just keep in  

mind. Now is there [00:16:00] hopefully some  kind of help on the horizon? We did hear this  

morning that actually the UAE and the, and  our military have been working together,  

and they’ve actually gotten,  over the last six weeks,   one point- or 135 million barrels of  oil through the Straits of Hormuz.

They’ve had a little quiet behind the  scenes. Nobody knew this was going on,  

which I think has had some effect on keeping  oil prices down. With all that’s gone on,  

we’re still sitting at roughly $90 West Texas  Intermediate, 93-ish with Brent Sea Crude. I   think that has been good. Us ramping things  up again today, the market seemed to like it.

Ron Lang: Next, next week we’ll see how  the, Biggest- … the SpaceX went public   and its reception. Yeah. And, The one that  intrigue- And right now in the thick of summer yeah, the one that intrigues me- We’ll  see if there’s a summer rally, right?

Jeff Kikel: Yeah.

Ron Lang: There typically is. The one that   intrigues me- But we’ve already had a  hell of an increase so far this year.

Jeff Kikel: Yep. The one that  [00:17:00] intrigues me more   is actually Anthropic ’cause  I don’t think- When did… Was Ron Lang: that an anticipated date yet? Jeff Kikel: I don’t think  they’ve got a date on it yet.

Ron Lang: OpenAI already confidentially filed.

Jeff Kikel: Yeah, which is  hilarious because I’m like,   it’s really not… OpenAI is become  the… It was the… everybody’s,   top one, and Anthropic has blown past  them so much. I’ve converted all my stuff.

But here’s the thing, Ron Lang: ChatGPT, though, still  has the largest market share.

Jeff Kikel: It does, but Anthropic has  actually got the profitable side of it   because they even got me, who is a, an  avid user of all the different ones,  

to spend 100 bucks a month versus everybody  else is charging 20 bucks a month. I’m spending  

100 bucks a month and would spend more with  Anthropic because of how- How far along they are.

And- Ron Lang: Jeff Bezos was  just on CNBC earlier. He’s   got an AI company- Yeah, whatever … Prometheus.

Jeff Kikel: Yeah, whatever. Everybody  thinks, “Oh we get…” I, like I said,   I think, when [00:18:00] we start to  see the actual numbers behind Anthropic,  

I think people are gonna be shocked  that… ’cause every single person   that I talk to that’s in business  that’s leveraging AI is using Claude.

Every single… But I… Yes, the people  that are new that really aren’t major AI  

users are using, OpenAI, but the real  hardcore users are using Claude and I   know why. It’s shocking to me  how good it is in comparison.

Ron Lang: Nice. I hear you. So- All right.  So- Till next week, we’ll do a, we’ll do a Jeff Kikel: recap.

Till next week. It’ll be fun to find out  the, if the cult of Elon can keep it rolling,   All right, guys. Thanks a lot for joining  us. Make sure you subscribe to the channel,  

and we’ll see you ba- guys back here next week