Mr. Money Talk

This is Josh Arnold mist or Money Talk with Judd Arnold here to answer your questions on stocks, bonds, mutual funds, that you should position your investment dollars including your IRA and four oh one K. But you do have to give us a call nine five two nine two five five six o eight. That's nine five two nine two five five six o eight to always get straight

talk, not sugarcoated advice. Now we're coming to the end of the quarter, in the end of the first six months, there is plenty of positioning to show show in the market over the next next few days, both on the on the ownership stake and on the non ownership stake. We could see a lot more action in market leaders over the course of the next week. As we record this. On Friday, the DAL finished down for the day, the NASDAK finished down for the for the day, and the S ANDP

finished down for the day and and for the and for the week. We had a big Russell one thousand and Russell two thousand, so the large companies measured by Russell one thousand, the small to mid sized companies in the Russell two thousand. Was a big rebalancing day for that for them that added to some of the volatility, not to mention it's a Friday at the start of this summer and many people are starting to leave early for the weekend, and

many investors want to keep a lot more cash on the sideline. And speaking of cash on the sidelines, there are many people that could be wrong on the direction of the market, or there are many people that have so much

cash on the sidelines they're waiting for a pullback to get back in. I saw some commentary by Mark Chakin, any money manager, letter writer, author of The Power Gage, talking of his view of people missing the ball market and many people are positioned off sides, as he noted that there is in excess of five point seven trillion dollars sitting sitting in cash or shorter term investments waiting to get into the market, and that cash pile has been moving up.

A friend and market technician Chris Devorak of the Technical Research says that the number of bears seems to be increasing in the number and he bases that on commentators that show up on as letter writers. I'll say on the internet and definitely on financial television. More a lot more bearish sentiment than bullish sentiment and taken as a contrary indicator that could indicate that the upward trend in the market

could resume. And as a market technician, he sees the current back as quite normal, not abnormal, and then we can throw in into that mix. This week, we had, of course, a lot of Fed speak, and in particular Fed Chairman Pal speaking before both the House and the Senate, maybe part of the Humphrey Hawkins testimony, indicating the Fed still has a long ways to go, and what was seen as a pause really wasn't a pause when the Fed did not do anything to raise nor lower interest rates the

week before after their their meeting. It was more of now, we've got to see what the effect is of our raising interest rates so high and so fast, So we want to take skip a month or maybe a few months before we resume the rate raising, and Pal indicated that there could be at least two more moves up of interest rates as the FED tries to stem inflation.

Now, of course, the Fed continues to say that inflation is sticky, primarily because of wage inflation and also housing house prices are still still high, and they're looking at the core CPI housing, which represents about a third of that is still moving up and not moving down. Now. Of course, mister market does not agree with the Fed comments this week, but we

need to point that out. The one year treasury yield decline this week, despite Powell attempting to say that two more rate increases are coming, the ten year decline, although that's more calling a recession and it wasn't a big decline. The peak in the interest rate curve remains the six month treasury so the one months at five point one, the six months at five point four,

so five point four. What does that mean. It means that the market kind of believes that we're going to have one and a half more hikes, not two. How do you get one and a half more hikes? Well, part of it is obviously over more time you need more rate. So there's a duration aspect to six months from now versa one month rate. I'm going to get more rate now. The curve is backward dated, meaning the

ten year rate is three point seven percent. Now that's saying we're going to enter a recession and on average over ten years rates are gonna be three seven when you look out just to the sixth month you see in a five four verse the one month at five one some of that time. Okay, okay, So the way that you get there is twenty five basis points on top of the roughly five percent range right now, that's five to twenty five. Add a little time value and maybe a little bit more than one rate increase.

There you go. You're at five point four. Well, in any case, I am not of the belief that the FIT is going to start cutting interest rates this year. So they say, now, hold on, there's two aspects of this. A year and a half ago, people were looking for cuts, and I think looking for cuts. We've talked about this

in the last few weeks. This isn't about cutting. If you are long equities right now, you want interest rates two years from now to be over four percent, because the world that interest rates are over four two years from now means we didn't have a recession. Well, I definitely don't want a recession. And I think the FIT is trying to engineer things, so we don't have don't have an engineer. What are you good? They're not engineer?

You give I give them too much credit. You're you're calling a pace free Chief of Scientists Okay, you're like, get the engineer, get serious. We don't have to tell all the economy. You know, guy walks into a room with five economists, walks out with ten different opinions. We don't have to tell. We don't. We don't even talk about Okay, it's the dismal science. We don't want to talk about rabbis, rabbi is economists. It's all the same. And I mean that not I mean that

specifically. And it's very mushy. It's very mushy. It's a dismal science. There's no answers you want to you want answers, you have to go with the monotheistic religion that's less than two thousand years old. There you go, who it's it's it's okay. Well you've been you've been on way too many uh talk talk shows. I'll say, in the in the last last week with all this this stuff, heck, we could almost start a we can start a cage match here. Get serious, there is probably a cage

match. Speaking of that, they're yeah, Mark Zuckerberg, just remember it. There's gonna be in the octagon in Las Vegas. We'll site right in the arena the UFC is going to make big money on that on that match. We'll see. But look, the invest thing, I'll say it once, I'll say it a million times. Invest thing is about strong opinions help loosely there there there you go. Well, I don't know, I have some pretty strong opinions about a few a few companies h and I don't think

they're they're loosely held. But we we we we digress on that cage match, Zuckerberg and and Musk, and that dominated I'm not gonna say dominated the news, but that was part of the news for well, look for two days, a big news. We had to pull back this week. Interestingly, that what we've been tracking, that gap between the equal weighted versus the

market cap weighted SMP five hundred. Market cap weighted's what people report. SMP five hundred was off about two percent this week, the equal weight off about two and a half, and that gap between the two SMP five hundreds top over thirteen percent. The equal weights only up two point five. Now that gap got bigger. So we really the strength and resiliency of this rally is really going to be about the equal weight the takers RSP holding in there.

But we'll hold in there. We got to come back right after the break. That sweet will. This is Josh Arnold missed their Money Talk with Judd Arnold here to answer your questions on stocks, bonds, mutual funds that you should position your investment dollars. Don't hesitate to give us a call nine five

two nine two five five six zero eight. We do have an inion and we can help you, it says Josh Arnold, mister money Talk with Judd Arnold here to answer your questions on stocks, bonds, mutual funds, how you should position your investment dollars, including your IRA in four oh one k. Don't hesitate to give us a call at nine to five two nine two five five six o eight. That's nine to five two nine two five five six o eight. You'll always get straight talk, not sure coded advice.

Well and well, Judd, I did listen, I'll say to a few positive strategists this week, Bank of America's equity strategist said that she is the most bullish that she has been in ten years. She said, where have you where? I mean, you can give the full summary of where all these strategies are. Where were they for the last one or we were the S and P five hundred. Now it's up thirteen, was up fifteen at

the peak. They all come out this week because they missed it. We've been saying for well, first off, there forget about what we're saying. Let's look at how we're invested. Okay, you have to stay invested, generally speaking, and if you're gonna flex up and down with your cash bounce, and we like to hold about a thirty percent cash balance for clients at maximum. At maximum, that's for safety, for hedging and whatnot. We can deploy that occasionally, you lose, you use more than that, you're

gonna just put yourself in a very difficult position. So you always want to stay invested because even if you get out right or you're gonna get back in at the same time. So just always remember. You watch people on TV. Most professionals stay about ninety five percent invested and they just talk. Okay, So well, you're you're the one that worked in the hedge fund industry.

You worked on Wall Street, and you've seen how the hedge fund people and mutual fund people are just about fully invested, but they're never overweight anything that they really like they're pretty much underweight most of most of their big i'll say, the big things that they really like or limit themselves to, you know, less than five percent of a portfolio in any major position. Yeah, there's a lot of that going on. Most mutual funds never have more

than five percent. Typically they're at their biggest positions about two and a half. And when you're in a world where the SMP five hundred, the top companies Apple and Microsoft for seven percent waitings each, there's a lot of other big waitings, you're really making a bet against those companies in the market. And for the last twelve thirteen years, the biggest companies have outperformed specifically the

top ten companies. And that is a unique phenomenon. And we can go into why that exists and all the other reasons, i mean, quality and durability of these these businesses, many of which we own. Apple and Amazon are two biggest positions, been been your two biggest for almost twenty years. That's correct. Actually, Apple has been for a little longer than that.

Power of compounding, power of compounding. Yeah, there was there was another guy down in Omaha, Yeah, who keeps saying saying that, Yeah, find find good businesses, hold on to them, ride up, ride down. We like to find a few other good ones too. But I just want to give that cat that caveat with the strategists saying keeping my strategists aren't investors. They they're they're they're paid to talk. But yes, they're all

suddenly bullish. And the reason why listen, No, I wouldn't say, because I just said in the first first part that they're not all all bullish. They're more bullish than they were. Okay, there you go. They

were all and we were, you know, very collegio. I think, speaking for myself personally, I really pivoted about a month and a half two months ago, where I just said, there was this FED day on Tuesday at some piece of economic data, the markets hold off two hundred because inflation was higher, and I just don't we can't, we can't keep playing this game. And the market is really bad at discounting inflection points and changes in

the short run. It's really good in the long term. So inflation was a new stimuli or stimulists for the market starting in twenty twenty one and early on the market's really bad at figuring stuff like that out. Now I'm not going to say it's priced in, but you need you need reality to diverge materially from expectations for you to base an investment decision off of that. And what we The second piece of that is all the bare arguments for the market.

Number one, SMP five hundred. Earnings are going to decline from somewhere around two forty two under two hundred. That matters because the market at the bottom tipically is fifteen to sixteen times earnings. We bottomed last October. Say

this past active. We're not like you know recently. I should say recently eight nine months ago if I do my seasonal map correctly at about thirty four fifties, So we never actually hit That makes sense that we didn't, and now people are starting to look to twenty twenty four, when earnings likely are going to be higher than they were in twenty twenty three. Additionally, it's a good bear argument to have on most stocks to say I think estimates are

wrong and they will come down. It is typically a bad argument once they've already moved, to say that the market is mispricing them. Okay, and so when we hear this bear refrain of well, sixteen times or fifteen times two hundred, Okay, that you've been saying that for a year and a half. We are where we are, estimates already moved, and then incremental moving estimates if it goes to one ninety or one eighty five. I just

don't think it's material. We talked about inflation. I think we're sort of were towards the end of a fat tightening cycle, the war with Ukraine and commod Commodity prices are actually kind of an equity tailwind at this price because they it's just oil is just can't rally well, I mean to me, and I've covered this, you know, on this program and other programs for very

long one period of time. You know, the price of oil is the primary driver of inflation, and oil you know gone under it's under seventy bucks, Well you're paying a foot. Look, you're paying four bucks at the pump, depending on what kind of car you got, which is still high. Don't get me wrong, but it's not there. Streeen four and five is actually from the consumer ray or standpoint, it's actually pretty big. If you live in California, you're playing seven. But that's your own fault because

you live in California and they have the terrible public policy. California is also in oil island. They have to import from Asia. They're not connected in all their wisdoms of the US oil pipeline system. Don't you I could do. Oh you don't have to have to have to get me started either. They're still they still have an awful lot of oil. They have to look, they shut down their oil. That's the thing. They're shut down all the oil. And then you got Newsom complaining. And I don't mean to

pick on Newsom if you're a Democrat for specifically for this. I know all politicians lie, cheat, and steal and steal lollipops. That was the I like that hunt for Red October, right, I'm not. I'm a politician, Jack Ryan. So when I'm not kissing babies, I'm stealing their lollipops. True words have not been spoken since a lot of big he had a big candy dish on his But excluding regional specific issues, I would say oil

is generally contained, and that's a tailor for the marketing. So the bare leg what we keep looking for is what is going to drive the bare leg Because the existing bear cases have been there for six to months to eighteen months. They're not new and without traumatic changes in them, I would say in my experience, and you would say, as well, that's not enough to drive a material sell off. Are we going to get a five to ten percent sell off in the market this year? Of course we are. We're

gonna have a few more than every year. Typically in a given year you get three to four or five percent sell ups at least. Okay, we've had we've had one or two, we've had almost two almost Yeah, all right, we'll go almost it's gonna go. But in terms of a real what's going on with the strategists just to frame this is there still is this camp of people effectively saying it's not going to be a normal year with a few five to ten percent sell off, but the big one is coming,

the big one. We still haven't seen the lows for this cycle, and that the October low of thirty four fifty, the S and P five hundred, and we're I think we're forty three fifty right now. We're gonna break that low as time goes on. Keep in mind, hitting lower than thirty four fifty in twenty twenty four is a lower valuation price than it is hitting

in in October twenty twenty two. Why because every year companies compound their balance sheets with earnings, they pay down debt, earnings go up, earnings power goes up, and so it's not just price, it's the multiple of earnings that you're paying and the value of those balance sheets and cash blow return. And so it just seems today and it continues to see him and we'll see what happens. Two thousand to two thousand and ten was a lost decade.

SMP by one hundred did nothing, tech tech boom, bottom, global financial crisis, and we had no equity return. Now that's if you held full size and at the start of two thousand right right, which most people I think realized it was a little bit of a menius. So anyway, long way of saying, we'll see we're going to continue owning what we own, we don't see a near term oh my goodness moment. So we're skewing bullish,

but we're going to talk very conservatively. If you want to come in, if you want us to scare you like other people will, I'll come up with a lot of ways to scare you. But we're still but if you give us your money to manage, we're still going to invest it. But we'll sound smart, right well, bears, as you've said, bears always sells, sounds smart than bulls, but the bulls make more money.

Stay invested. We'll be right back. This is Josh Arnold. Missed or money talk with Judd Arnold here to answer your questions on stocks, bonds, mutual funds, how you should position your investment dollars. Don't hesitate to give us a call at nine to five two nine two five five six o eight. That's ninety five two nine two five five six o eight. We're here to help you because we always have an opinion. This is Josh Arnold.

Missed your money Talk with Judd Arnold here to answer your questions of stocks, bonds, mutual funds, how you should position your investment dollars including your IRA in four oh one K. Don't hesitate, give us a call at nine five two nine two five five six oh eight. That's nine to five two nine two five five six oh eight. You always get straight talk, not sugarcoded advice. Oh we paught pregnant pause. There is a little pregnant pause.

Because I was I was just thinking about an interview that I saw saw this morning of one of the top investors over a very long period of time, Ron Barren of the Barren Barren Mutual Mutual Funds. Always very very interesting to hear his views on the market, and he was interviewed this morning on CNBC. We do record the show on Friday, even though it airs on Saturday, So just a heads off. If there's new news Saturday, we're

not gonna have it anyway. Go on. Okay, So Ron Barren, few of his comments is and he's had a very good track record through up and down down markets. He is partner's fund is very very concentrated. Eighty five percent of the fund is in ten names, and half the money's in one, and the money is in one. Now he's got embedded. This is what happens when you own stocks for a long period of time and you

and you pick winners. His cost basis in Tesla's very low. He's got I think he's got a twenty bagger as twenty times his money in Tesla. Ron does not turn over the portfolio, very very low turnover in his portfolio, and he sticks with his The thing about Ron. That's also if you want to really understand Ron's views, and he said this publicly, but he says it's sort of underhandedly. Okay, he really only believes in the top

five. And he said he worries that his clients couldn't handle the volatility of his top five, so he had the investment six through fifteen are to diversify the portfolio and reduce volatility and make it look like he's more you know, is concentrated than he wants to be. But if you want to know what Ron really likes, it's the top five. And he's He's held on to those top five for a long while. He learned because he started the start

to his career. I think he hit a one hundred and fifty x return on manner Care, which was the healthcare services roll up, and that was at a young age, and that look, everybody deserves one hundred and fifty X in an investment. Anyway, go on, So Ron, talk to me about Ron? Well, the thing the things I liked about him one is he says, I don't think he does not worry about what's going on with the stock market. He does not worry about what's going on with interest

rates. He doesn't worry about the volatility. He's concentrating on what each one of the companies in their management is doing, and he buys and buys and holds for for a long Number one the number one takeaway with Ron and this is something that you believed in for your I'd say the second half of your investment awakening, okay, because you had a multi part investment career and you settled I'll say in about ninety six or ninety seven on growth wins, correct,

And that is really if you want to sell up Ron baron growth wins. And what he's really saying and what you're really saying is and this is something I saw on Wall Street a lot, which is, yeah, people working for you and they come. And I was guilty of this when I was a young kid of hey, here's this really complicated thing. It's thirty

percent cheap versus the other ones. And what Ron would say and what you would say, and what I will now say to myself and other people pitch stocks to me like that is, after it rallies thirty percent, do you want to own that stock? Correct? And when the answer is no, And then you asked the follow up question, which is is this a company

you want to own for five years? And the answer invariably is no, And then you say, Okay, you may or may not be right on that thirty percent move, and odds are you're not going to get the Even if you are right, you're not going to get the full thirty because somebody has to buy it from you, and if it's not attractive to you on exit, it's not going to be attractive to somebody else buying it from you.

And so with growth stocks, the nice thing is is even when they tend to get more expensive than they should be in the moment, somebody can say, well, I'm taking a five year view the Tesla. Tesla's being run's biggest stock is gonna sell. I forget if the Tesla sells at one point five million cars or two million, So they're gonna keep selling a lot of cars. But I don't think many people would push back on the idea that ten years from now Tesla is going to sell ten million cars. And

so different people are gonna have different time horizons. So if it's expensive today on conventional valuation measures like PE, there's going to be something that says, I still this is a growing company, and I want a piece of that. There's more buyers for those companies, and revenue growth and absolute sense is the number one driver of stock returns on a ten year basis. On a one year basis, the number one driver is changing pe multiple, meaning something

that was valued five times all of a sudden it's worth ten. But on a long term basis, you have to have the company grow to make money. And this is also a transition that Warren Buffett really made. He started his career, his career buying what he liked to call cigar buds, which is really really really cheap stocks that he was trying to buy below liquidation value, hoping they trade a little bit above liquidation value, he'd sell them and

find more cheap Graham. And that was buffett concept, and that's wrote He wrote several books on that, and Buffett emulated that. And then Buffett had an awakening when he met Monger and the two of them they woke up one day they had a lot of money to manage, and Buffett and Monger just said, we can't play that game anymore. There aren't enough things to do, and they gravitated on paying that of really great prices for bad businesses,

okay, prices for good businesses. And what they meant is if we buy good stuff that keeps growing. American EXPRESSI Perry productypical example in a nice entry on that I think thirty years ago, and he's continued to hold it because it's like, Okay, I'm up a bunch, but this is going to keep, at worst growing with the economy. I think he's made twenty five times his money in American Express in you know, about the same number of

years. Okay, So I know one of his big holdings was Coca Cola, which he still still owns Coke. He's only up I think fifteen or sixteen times his money on a thirty year old Now that's misleading because that excludes the dividends. And with the dividends, He'll think about it this way, on his cost basis, he makes a seven I think it's a seventy percent annual dividend field on his cost basis. How many people would like that? And that is the power of buying growing it as stocks. So anyway,

that was a huge tangent. Go back to your Ron Barron's story. Well, you just you just you just took all the wind out of my sails with that, but that was behind your sails. You to be positive the wind behind you had the point I was, I was elusive, illuminating it. Well, Ron Barron says that he sees the market up. He doesn't worry about what's going on in the market. He doesn't worry about what's going on with interest rates, doesn't he see He's only looking at the companies and

and the economic growth there they're in. He is still uh Ron Barren's always bullish though, That's fine. Uh I think underneath you know, I'm primarily bullish. Bullish as well bush Um. Yeah, there there are times when you get disappointed and you can be bearish on a particular company and and or what's happening with that company with this last year and we talked about it, how frustrated I was disappointed over a five year basis, you're beating the market

by over one hundred points. Well, I was just going to talk about Amazon, and Amazon has been really frustate. But this is again the power. If you're in the game of long term, you're gonna have to deal with an Amazon situation. The stock was so disappointing for two years and then in a span of six months it's rallied what's seventy percent off the low. Yeah, and now we're sort of back to where we were two years ago. And okay, and it people talk about in Nvidia the new market Darla.

I mean it's been a market Darling for a long time. Since twenty fifteen, when Nvidia started its run, it has had three fifty percent retracements Buffett and I think it was the two thousand annual letter that he wrote forgetting what year we talked about, and it may be more than just this that him and Charlie have absorbed. I think four fifty percent retracements in Berkshire Hathaway stocks since they started back then that was about thirty years after they started.

So with good company. And what allows you to hold through that one a slightly divers by portfolio to conviction and what you own that you're correct. Things are going to come in it in a favor and out of favor. Well, I've had I've had that with Apple numerous times, and I've said I'm buying Apple or I think from two thousand and seven I said, we're no longer trading this if the stock goes down, we're going to buy more and

and we've been well well rewarded with that over a period of time. And coming back to Amazon, Amazon continues to get you know, some plus news and in this past week we had a real strong move on on Thursday as Amazon Web Services said that more of their we'll say more of their their customers are talking with them about Amazon Web Services and generative artificial intelligence, which is

the will say, the current buzzword. When we come back, well, talk about what could be happening in the week ahead, and just remember growth wins. This is Josh Arnold missed or money Talk with Judd Arnold here to help you with your investments, whether it's inside or outside of retirement account. Don't hesitate to give us a call nine five two nine two five five six

eight. We do have an opinion and we can help you. This is Josh Arnold missed or money Talk with Judd Arnold here answer your questions on stocks, bonds, mutual funds, how you should position your investment dollars including your IRA in four oh one k. Don't hesitate to give us a call at nine to five two nine two five five six oh eight. That's nine two five six o eight. Always get straight talk, not suer coded advice. Well, Judd, there's plenty of I'll say, potential volatility coming coming up.

UH In the week ahead, do have some economic news plus a more fed speak. Micron reports their earnings, as does Nike at the end the end of the week. Uh Ford has said that they're going to start layoffs next next week of many of their salaried salaried workers. Um and UH You've

got banks banks coming through with some stress tests next week. And of course there there are numerous people saying that until banks rally, the market camp rally, well, banks aren't gonna Well, I shouldn't say aren't going around. That's a very strong statement. But I banks phil that you look at the KR rate, kar is the bank etf Okay, the focus is more on the regional banks. We retrace most of the cliff posted like the things sold

off bad to about you know, forty forty two. There was another move down to about thirty five after Silicon Valley Bank. The move to forty with Silicon Valley Bank, we thought strong only there were going to be a lot of quote unquote echoes and we were gonna lose a lot more banks. The FEDS moved definitively and strongly and prevented a series of bank runs. Okay, I still think we're going to have a series of bank walks. Okay, So what do you mean by that? A bank run as everybody takes their

money overnight and the thing files for bankruptcy. A bank walk is you continue to see this trend of small regional banks losing deposits and the big banks adding them. So total the po stay total deposits about seventeen point two trillion. The small banks continue to shed balance sheet size, lose a little bit of deposits, and what you're going to keep seeing is with deposits seventeen points two

trillion. If we were on the pre COVID trend COVID, there were tons of government stimulus and people save a lot of money, we'd be at about fifteen point three fifteen point four trillion of deposits right now. So we're about at one eight one nine over That should normally at the end of next year that numbers should be about sixteen point one sixteen point two. That's the pre COVID tread. I think we're going to meet there which means a trillion comes

out of the banking system. The banking system has assets of about twenty one trillion, No, twenty three trillion, sorry, twenty numbers in my head. Okay. Book equity in banks is about two point two trillion. We're gonna lose about fifty percent of book equity. Most of that's going to come from the regionals, and you're already seeing the regionals shed the set side of their balance sheet cell security, cell loans, and that is generally causing a

credit contraction. Commercial real estate is really bad. Oh goodness, I mean San Francisco. Let's have a little we can do another talk about how ridiculous California is. The mayor of San Francisco, so the main mall in downtown, it's the Westfield's Westfield. Westfield Mall was one of the or had one of the most glamorous nords from stores around with a three story circular escalator.

Yeah, believable, score, gorgeous. The lenders just defaulted last week, and the mayor comes out this week saying it's the right thing for San Francisco if they blow up the mall and replace it with a sports stadium or something. There's not going to be a sports stadium there. Meanwhile, I mean downtown San Francisco. The retail occupancy rate or vacancy rate, I believe it's

up to sixty. Look, Nordstrom's moved out. You have a lot of everything, everything, the crimes out of the crimes, out of control, so very they gotta turn restaurants moved out. The encouraging thing out in San Francisco is seventy percent of people believe the city's on the wrong track. And that's you know, I'll say a uni party state over there. So for

seventy percent to be upset actually means something. Whether they do something about it, that's another story over together altogether, but leave that as at may. The point was commercial real estate is really the only trouble in the banking system, and that's somewhat contained. So in terms of big dollar commercial real estate, San Francisco's bad, New York's bat, Chicago's bad, LA's bad.

But the rest of it, you see cra that's commercial real estate. On a Minnesota banks balance sheet, you're talking about like four million dollar buildings, three stories. Okay, it's not like interest rates and de organization. Matter of times, so time is sort of the friend of healing this. But what I mean by bank walk, let's go back. Bank walk is a slow moving suction of deposits out of a bank and eventually they hit a tipping point where in the beginning, yes, they can sell assets and they can

sort of right size to fund these depositors. It's just a death spiral. So I think the argument for banks and the KRI specifically is the Yeah, it's just gonna be a really hard place to make money, given the deposit flight potential and just a i'll say, not a great credit environment. You probably get your money back on most of these loans, but it's not like they're looking to being expansionary now. We are not. We're not most people.

Most people will be incredibly well served to never be a bank investor. So it's a hard place to make money. Ten times levered institutions, you don't know what they own. If you're going to buy a bank by JP Morgan, because if JP Morgan ever goes, you got bigger problems than losing

JP Morgan. It means the US economy is over. So probably and you can kind of argue the global economy, um, anyway, we digress back to well, so banks are going to be in focus next week because of some of the big thank balance sheet I think I think Micron's the bigger thing because AI is the driver of the might market and you aren't going to need a lot more memory, and and Micron's big, big in memory. But Micron has has missed in terms of their earnings of the last three quarters,

and they've been very cautious. Yeah, they've missed, and the stock keeps going up. They keep missing, and no one cares because they see that the secular trend is greater than the cyclohol when people aren't going to quote unquote sell the option. Meaning yes, earnings today are terrible. When people say

one, two, three years out, this thing could earn more. I mean it is such an operationally leverage business, high fixed costs, negative changes in revenue fall a hundred sent to the bottom line, positive changes in revenue fault bottom line. It's one of those stocks that can earn ten dollars one year and can earn zero another year. And so where's where's Mike round sixty bucks sixty sixty five, sixty five bottomed? It was either last earnage of

the earnings before where they was just horrific. The stock traded under fifty for all of ten seconds and then then they moved moved. But people are thinking to think can earn ten bucks? Put a reason ten times multiple on it. Maybe that's two bid now, maybe it's twenty. I forget. I don't know. It's a low multiple stock. But that's a bell weather out there. We had bad What was the company was that ups or FedEx at FedEx reported this past week and they missed. I don't think FedEx is it

just didn't shake the market. You have all the commentators back to the talking head FedEx, this FedEx, that it's a sign of the economy. FedEx touches one third of the US economy. I just I don't think it matters nearly as much. And I don't think it was newly incremental Fenexes and sound issues. So the question is how deep of a recession do we have. We're pricing in something right now, and then what does the world look like when it gets better? And so it's not just a soft landing, hard

landing, no landing. You talked about layoffs like corporate Americas just lean mean fight Michi. It's it's the one really well, so we'll see. I'm sure we're gonna get a five to ten percent pull back in the next five months, though, don't hold me to that, and we're not going to really do anything about it. Like that's the thing. Oh, that's that's why we have cash cash in the portfolios. If you do have a full

back, we buy. That's an easy way to go about it. We're not We're not trying to get and the other the other thing is I think that there are a lot of we'll say talking heads, going back to the talking heads want to scare people out of the market so the market drops so they can they can deploy some of their cash to buy it. That's a global conspiracy. It sound like RFK Junior. RFK. He sounded really good on Rogan by the way. Anyway, maybe he's the protest about this time

like Trump was in twenty sixteen. Anyway, a different topic for a different show. It's a summer weekend. We hope everybody's enjoying the sun, staying cool, bug free, both things that aren't going to happen in Minnesota in summer. Where you bake, you bake and get eaten. But anyway, We'll just put it. Put it this way, this is part of Warren Buffett's portfolio. Have a coke and a smile and enjoy enjoy the weekend. And if you aren't buying Coca Cola, it does have a very nice dividend.

And I would say to you, rather than putting your money in treasuries, go by coke. At dividend is going to increase over the next ten years and the stock might also. This is Josh Arnold, Mister Money Talk with Judd Arnold. Do give us a call nine to five two nine two five five six oh eight. We're here to help you. Josh Arnold Investment Consultant is a registered investment advisor located in a state of Minnesota. All securities

discussed are for informational purposes only. Investing contains risks, including risk of loss. Consult your investment professional before making any decisions about your investment portfolio.