Gooday, afternoon. This is Josh Arnold. This or 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 and four oh one K. Don't hesitate to give us a call nine to five two at nine two five five six o eight. That's nine to five two nine two five five six o eight. We always get straight talk, not sugar coded advice before we begin. The opinions that we share are hours and hours alone. We
do talk about individual companies. Many of these companies may or may not be suitable for you, so please none of this is investment advice. Please consult up an advisor before making any investment decisions. All investments contain risk, including risk of loss. We are just having a discussion. Please refer to the additional disclaimers on the website as well. And with that, let's get into
it. Nine five two nine two five five six oh eight. Jud We're going to get get into it because this has been one of the better weeks on Wall Street, even with a lot of FED talk and FED talk saying rates have got to go higher and higher for longer. Last year I want to say this year rates are last year inflation is two years ago. There's no more inflation rates. What do you mean there's no more inflation? The Fed is talk that inflation is endemic, is not going to go away,
and the inflation is still significantly above there. They're two percent argym. Now. I have talked to Transition on this show and others that the inflation is transitory. That says, no, well, it's calmed down. I think what eight nine quarters in a row or eight nine months in a row. We're now at I think three percent annualizes. They're a little bit above that. Encore, it's coming down. They're gonna win the battle on inflation. Now. The pooh pooers would say, well, most of that's energy cost
deflation. Well, okay, but I mean energy cost inflation during your cream is real right in, The energy cost of inflation was a big chunk of the inflation going numbers going up. The super barcase risk of stagflation has certainly gone in the treasury market is saying that the treasury market is now responding quite frankly. The Defense saying they're going to raise rates, which I think at this point would be a mistake. There's no difference between here, you know
about five percent and you know five fifty six. You just leave it for a while. So but they're going to raise rates and they get August off because they're bankers, and bankers take August off, So we get another twenty five basis point. The ten year treasuries actually rallied the bunch. It's a very big difference between the front of the curve and the back of the curve. And I'm talking in front of the curve just means one month, two
months, six months, twelve month, pond I forgot three months. Sorry, okay, in front of the curve is still a lot higher than than the back of the curve. Is inverted, inverted, inverted For all you top Gun original movie fans, it is inverted. That means upside down. Upside down. That means if you borrow short and then long, you're you are losing money in a very big way. So look, the ten year looks has looked for a while that there's gonna be a lot of buyers ten
year treasuries to add a four percent yield. So we've seen that the dollars also weakening a little bit, which is generally good, and what's the rest of the world catch up? But going back to the point we're making, las is not the scare certainly that the super bear case has gone for now. On inflation, inflation all the sequels gonna be higher for the next ten years than it was over the past ten years. But whatever on inflation,
we had corporate, big corporate earnings. This week has earnings. Weeks started United Healthcare, which had really been under pressure because of rising pickaball injury race, which I like, that is that is pretty pretty good. Know that's kind of fake news too, which is United Healthcare and the entire health insurance complex has been under a lot of pressure for a few months on comments from the insurers that the long awaited catch up of elective surgeries or surgeries certainly that
you can delay during COVID is catching up. So senior citizens who needed surgery but didn't really didn't need it tomorrow and could delay all those surgeries that we're delayed during COVID are catching up, which is raising that at the loss ratios anyway, as usual, the fears of fears were way worse than the reality. And yeah, yeah, Care I think was up sevent eighty percent today. That was a nice little you know, things weren't bad, but not
as bad as people thought. Banking earnings and a JP Morgan and a few others were all let's equal better generally speaking, better Q two earnings are. We had more pre announcements, positive pre announcements in the Q two earnings than we've had since I believed twenty yeah, twenty twenty. So the pre announcements have been pretty pretty good on the positive side. And that's kind of so.
Between the inflation print this week and confirmation that Q two earnings are at least starting pretty darn good, that's why we rallied I think three to four percent this week. What is interesting, and we have talked about this four months, the spread between the S and P five hundred, which is market cap waited. The top ten stocks are about I think thirty two percent of
the index. Now, I was just all of a sudden, I was thinking about naz Dick where the top they's not Let's just let's not distract for us. Second, Okay, SMP five hundred were the top ten market cap weights are the biggest stocks are the biggest share of the index. Top ten stocks are a little bit over thirty percent of the index is up seventeen and a half percent year today. The SMP five when you're equal weighted, so if all five hundred stocks were weighted the same is only up seven point five
percent. Is that ten point gap that's still pretty significant. Has not closed at all? And people have been debating the gap for a while. Is the top going to close to the bottom? Is the bottom going to close to the top. We actually got option three door number three. Like all good game shows, both will go higher. Both both will go higher.
The gap may not be naric now some of the gap being narrowed is mathematically impossible because banks, which are you know, the financial sector is that's a that's a pretty good sized chunk of the of the ind It's about twelve and a half thirteen percent of the index. That's not going to close the gap. And energy has also been weak on the energy is only about five percent. So it's gonna be hard, but well we'll see. Now let's talk
about some other really big spreads. The Nasdaq one hundred, the QQQ is up i want to say forty three or forty four percent this year. Um The bank index is down twenty six. You talk about a spread, I mean that is that's well, that's that's a that's the spread and spread that's the spread seventy almost seventy five points spread between tack and banks. So anyway, that's that's also why the VIX is down. As what VIX is the fear gage measure of volatility. The VIX goes lower and this is for for
non financed people. Let me give you the math lesson on it. When you have lack of correlation between components, i e. Some are up, some are down, volatility is lower because good ones offset bad ones. VIX goes higher when all sectors correlate. Oh, we definitely do not. You're
not of correlation. That's why the X and the other. The other reason I thought that the vix is has come down and come down significantly this this year comes theory here, it comes to the one day it's not it's not speak well, okay, this is just my my theory is an this year, um, the options market introduced zero dated options or zero dated zero All right, let me let me let me actually make the correct quantitative point here.
Okay, people look at the vixen next and say, there's there's complacency because the VIX is really done well, I think it's when it were thirteen fourteen. I haven't checked in a few days. Hold on, we got to get the right number here, thirteen, close it thirteen. The that's an exceedingly low note that's very The average is twenty and every standard deviation I think is eight points, so that's kind of a big deal. So twenty eight you start getting really high. The v x N, which is the
VIX on the NAS deck, is actually up of normal. Okay, and what does that tell you? We had a really big tech run And exactly what's supposed to be happening is happening, which is people are hedging out tech names and the cost to ensure the n Aztec one hundred is elevated verse where it should be an elevated verse. History. That is one of the biggest arguments for why the market can keep going, which is people say, oh, there's complacency. That there's not. There is not complacency. People are
still being good risk managers, so to speak. So so there, okay, no inflation, no complacency. Well, if you're if you're then saying that there's complacency on the overall market, but a lot of fear and i'd say appropriate, I don't know if it's fear, I would say appropriate, appropriate hedge a demand. So then that's something we can put put out of
our list of list of concerns. Well, I'd say the big thing that we've talked about for going on in the last three months is with the outside of an exogenist event, the market needs some fundamental thing to happen to make the objects and motions stop staying in motion. This is these are the laws of finance. And we thought the next opportunity would be not saying it was going to happen. It was a week Q two with guide downs. We have not seen event. We've vaccine the opposite, so by the market rally
this week. But but they're gonna have to come back. We are going to have to come back and talk more about earnings because earning season is coming up. This is Josh Arnold Missed or Money Talk with Judd Arnold here to answer your questions on invested. Do give us a call nine two nine two five five six oh eight. We're here to help you. This is Josh Arnold Missed or Money Talk with Judd Arnold here to answer your questions. Let's
stop spawns mutual funds. You should position your invest dollars, including your IRA, in four one day. Don't hesitate to give us a call nine five two nine two five five six zero eight. You always get straight talk about sugar coated advice when I'll say now that we're starting into earnings. Uh this this past week. We started the earning season, first with Delta Delta Airlines
beating on the top, top and bottom. Then we had United United Health beating beating and they provided probably the biggest kick to the doubt Dalt Jones on on Friday. As a matter of fact, without without United's move up significantly, the dal Jones would have been uh down. I hate talking about the down because it's a ridiculous indext. I know bloomers like the doo the SMP five hundreds of the market, but go on, okay, but we're gonna
say for the SB five hundred. Don't get me wrong. United Healthcare is a top fifteen, one of the fifteen largest stocks in the market. It comes in and out of the top ten all the time. It had a wet blanket because the fears of MLR. We talked about this earlier. Higher surgeries that have been delayed during COVID. They're doing better than we thought, so yeah, they're and healthcare has lagged a lot this year. And just
going back to just setting the table for people who just started listening. The S and P five hundred is up seventeen and a half percent for the year. That's a market cap weighting index. The biggest stocks are the biggest weights in the index. The equal weighted SMP five hundred is only up seven and a half, so ten points spread. The NASDAC one hundreds up over forty
and banks are down twenty six. The Russell one thousand value index, so everything that is in growth at the top one thousand stocks, it's only up four point eight. That's kind of I mean, you know, and a lot of that banks obviously, banks and energy energy is about flat. Banks are down the ton. If you weren't in the right places this year, you are not up well that that would if that would serve you know, I'll say, putt put out a point because a lot of mutual funds or
value or the mutual funds are not are not up for the year. If you have to be in order to be up, you have to be overweight technology and then not at banks and not have banks and not event And I think where this opens up, and this is something I'm going to keep saying
it because I believe it and I think it's true. The risk of FOMO, fear of missing outs and performance chasing only increases because the average active manager doesn't have the amount attack that the index has, and you just can't underperform the index this much. The average active managed fund has more banks, less
tech. They are lacking. If you start listening to will say Thin TV, uh, they have been, They have been in the past, and they seem to continue to be, at least as we report fort this today Friday, after bank earnings start at JP Morgan City and Wills Fargo. Finn TV has been pounding the table. We got to invest in banks, got
to invest in banks. We'll have more bank earnings next week. One of the biggest bank shorts ever and I mean he's known as a bank short, but he's really one of the just a great bank investor, Steve Eisman, who is memorial memorialized the guys still alive, they'll be big short. He was Steve Carell's character. He was actually had a fun that I was at, my last one I was at. He did an interview this Week's saying
he wouldn't known any bank. Maybe if you put a gun to his head and he said he had to pick one, he said, maybe JP working. He said, estimates haven't haven't bottom yet, lost is are only increasing. These guys, you know, basically my bear thesis, which is cost of regulatory capital's going up and they have hoarding capital means row He's come down, and Arnie's come down. Credit titans and you're gonna have credit losses. What are you? What are you doing? And you look at the KRI.
You're kind of a one time's book on the KRI and buying a bank above book is just insanity. Now, just for the for the late people, we throw out a lot of terms. Let me just unpack real quick. When I say buying something a book, all right, I am an accounting major in a finance mature But for book, what we're going to talk as a finance major or sorry, an accounting major. Okay, okay. A lot of value investors fixate on book value of companies. Accounting is a
record of accounts. Shockingly, Okay, there's huge assumptions in there about depreciate the appreciable life of equipment, for example, and whatnot. And what I'm going with this is with let's just say an industrial company. If you decide to depreciate your equipment over ten years, your equipment may or may not be worth It can be worth more or than what you carry for your books.
And the bigger you get as a company, the larger potential the deviation between what your stuff's actually worth versus what you're accounting books or your book value says it's worth okay, certainly with tech companies where most of the value isn't in financial statements, meaning it's not like Apple has to invest one hundred and fifty billion dollars to create the iPhone asset most of its intellectual property. The book
value tells you almost nothing about the value of the company. Banks, book value tells you almost everything about the company, right, because what are banks? We make a loan, We record the loan at cost, we estimate where where it is. Usually when we're wrong about book, it's usually worth less, let less than book, it's rarely worth more. Okay, we're making loans and we're buying bonds, and so with a bank. The point I'm making is one, book value is incredibly relevant. Two, when you're
buying stuff at book there's a lot of bad stuff going on. That's what's scary. And the times that Warren Buffett, who's a probably the best bank investor there will ever be, really bought a lot of banks, and Peter Lynch as well, and all those big games. Is one day you could buy really good banks at point two point three point four times a book. We're not there. We're not even close to there were the people, we were way above there. Now we have not been bank investors ever. What
a terrible business. Can I just say, hey, this is the people forget the banks go busts Now they're remembering again because we've lost a bunch of banks. They are nine to ten times lever, nine to ten parts dead. For every dollar of equity, if the assets are worth ten percent less, you get zero. If the impositors leave, you get zero. People are waking up to this. You can't have a bank run on Apple, No, you cannot. So if you're invested in a bank, whatever probability
you want to assign, the number is greater than zero. That you could just wake up and as worth zero. Even if the assets are greater than the liveabilities, you can have a lookuidity crisis. So if you are going to be in banks, I would recommend only really being in JP Morgan because it's the biggest bank. If they ever go under, the corollary has that has to be true as the world economy is over and it doesn't matter the JP Morgan went under. I'll I'll continue with my we we don't buy banks.
We don't buy a bank, don't buy bank. I know, but I'm doing what you do with Coca cola. If you wanted to do this, there you here. Here's something very interesting. Now this is we'll say a semire corollary to banks that there are we'll call it non bank banks. So we could call that or companies like uh Square, PayPal, or there are some series that cash app or Venmo where you have a company like Sofi. Um that one analyst this week said, Sofi which does does a lot
of student loan lending. Uh is it should be valued not as a technology company, should be valued as a bank. Well, it is a bank. So I know that so Far had jumped up in value because of the potential for student loan payments resuming. Look, it's a high growth financial institution. When it was a twenty five or thirty pree, you know, during this back ball it was absolutely ridiculous. It's more more reasonable now they got a great CEO. I'm in other things that are related PGY. We we've
talked about a bunch that's pagaya. Um, it had a good it had had a good week. It had a great week as of this morning it's Friday. More it was up, it was up ninety six, close closed unfortunately one sixty five. We're in it about one tenth. So everything's a good week. And the guy, well, well we're going to take to go back and say we avoid avoid banks. Um, yeah, we don't tell as as it's just a matter matter of principle and as a matter of
matter of of how we construct portfolios. But bank earnings are coming in and that the banks that did report did better than expected. More banks are going to be reporting next week. Before before you get numbers from companies like uh, Netflix, American Express, AT and th Verizon. Um. But the bank earnings will be a focus next week. This is Josh Arnold missed or money Talk with Judd Arnold here to have to help you with your investing. Give us a call nine five two nine two five five six o eight.
This is Josh Arnold, Minister 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 nine five two nine two five five six o eight. That's nine five two nine two five five six o eight. You'll always get straight talk, not sure coded advice. A few very interesting things this week, Judd.
That happened. We had Amazon's Prime Day, which was when better better than expected sales were at as Amazon and Adobe, which tracks sales for for Prime Day, they were up better better than expected. Walmart and Target did schedule sales days to compete with Amazon's Prime Day, and I'm making a presumption that they got additional business from that, So that would indicate that the consumer will looking for bargains, there's still still spending money, so that that could
go against any recession or thesis that I'll say. We continue to hear about from numerous investment strategists who are still talking a recession is coming. If not this week, then or next week, then sometime by the end of the year or early next year. There's a lot there. So we've been the part of the reason the market is rattling so much is we've been pricing in the recession tomorrow for the last eighteen months, and people are waking up to
or I mean, I don't know if they're they're awake. Now, let's just say, given the market move the last couple of weeks, they are awake. The recession isn't coming in this earning cycle, or certainly not. I would say I would I would go on and say, I don't think that the recession is coming a lot longer than that, primarily because statistically we already had a recession recession. But before you make that point, let me
finish my pel. Part of the reason we have this large gap between the SMP five hundred, which is market cap weighted and the equal weight SMP five hundred is exactly this debate. We're having a recession, and the tech big tech outperforms into recessions because it has no leverage and it maintains growth, so it's defensive and that's where you want to be. Why the gap of ten
points. Now we had to adjust this ten point gap between the SMP five hundred market cap weighted and equal cap equal weighted for banks because we had a bank run and that that the step function hit to financials. So at the bank run and the Silicon Valley bank stuff, it's probably a seven point gap, not ten. Okay. Now, in most years tech is supposed to outperform the market and average because it's growth, So it's not like that spread is going to go to zero. But what people are saying is more.
Let's take energy as an example. Energy was down at one point this year, down eleven percent year to day. Now it had outperformed the last two years. The spread between tech and energy is still fifty percent, and that's almost one hundred percent recession, which is a you know recession. There's a double loop there with the price of the commodity oil is just down this year.
So m as we get less recessionary fears, look obviously A benefits tech two if there's no recession, because that means AD spending is going higher and capital investment, which goes into tech is higher, and that benefits all the tech guys. But it should also really help industrials a lot of the cyclical names, which some of them are industrials, so get me wrong, okay. And obviously energy and materials and all the other stuff. So that's the
recession debate. And just to frame this, a lot of people said we would see Q two earnings roll over. When they said we see Q one earnings roll over, they said we'd see Q four I mean for the last eight two months before earnings are rolling over, and they haven't. And indeed, into this Q two earnings we had more pre announcements than we've had since mid twenty twenty. And it looks like this is gonna be a strong earning. So the recession bears are gonna have to wait for confirmation for Q three
earnings. Well they and they may and they may never get it. Well, I would just look at the number of strategists who continue to be barished and say we're underweight or we want people, we want our clients to be underweight equities and overweight bonds or and or fixed income. You know, continue continues to grow, and they the strategists justify that based on where they see corporate earnings. This year this year where they say companies are overvalued on a
price earnings earnings basis, particularly the growth companies are over or overvalued. They have said that the earnings yield is you know, is two. He is not equivalent to investing in short term bonds, and they said you got to own bonds because because I make more money if you buy bonds and my client, that's what they don't They don't say how much money they're going to make creating bonds. Listen, I'm gonna lock you in at six percent pre tax
yields, which after tax is what three and a half. Okay, I'm gonna lock you in. I got a deal for you. You got no upside, your best cases you make three and a half percent a year, and your downside as you get your face ripped off. That's what bonds are. So oh whoa sorry, h Well, there there's something else that we are not invested in his bonds. Um, but that's that's that in my case goes back a very very well. Let's take both sides of this.
Because you laid out the bear case here, here is the pull case, which is we have no landing, no recession rates, day elevated for a period of time, we firmly defeat inflation. China recovers, re accelerating the economy India which isn't the China. China is not accelerating. It's not accelerating. And China's definitely it was going to have to stimulate to get their economy
moving right moving again. Yes, And that's part of what I was getting at, which is India's rapidly growing China zing thing has only one choice, which is to throw the kitchen sink at this because they can have social unrest over there. So um, earnings, all else equal should go up. Oh then in the US, the dead ceiling deal allows for four trillion dollars of deafst spending the next two years. They moved the dead ceiling cap from thirty one to thirty five. Okay, and you're in the third year of
a presidential election. You've got divided government, so Biden really can't do anything this year, next year and all equal. What the what the market's really saying, if you're bullish, is they're not expensive. We're going to have earnings growth next year. That's what the bulls are saying. Well, I
would go go along more with the bulls than than with the Bears. So but that's just that's just me. That is that's just me, and I do believe that earnings for the most part will come in at least a little bit better than expected overall. Now that's not going to be every every company, for sure, We've got a lot more. We're a week one of Q two earnings. We got a lot more earnings to come. This was
a huge week though, especially I think the banks. Where we do like looking at banks is for a nice time on the economy, and the banks sounded pretty dark good well. The bank sounded good. Delta Airlines sounded sounded pretty good. Well. Travel has been You've had the COVID lag and people like to spend money now and get out of the house. So people people had enough house time for two and a half three years. But there is one place that is having some difficulty in terms of travel. But that goes
beyond just travel, It goes into all sectors of their business. And we saw an interview this week with Bob Eiger. Oh my god, we have done I begin him on media for a long time and let me just say the bear Bob Iger, who's the CEO of Disney could not have just laid out a worst case for his business, which is what we've been saying. And the near TV that's just normal cable is in deep trouble. He's going to exit some of those assets. Pray he gets some money. The direct
consumer business, the Disney plus is burning money like a furnace. He said, they got to fix that. He's got to pay up a ton for sports rights. Oh, he wants to find a strategic partner for that. And I've heard a few people bring up a comment that I've brought up over a decade ago that Apple should buy Disney, or at least now now an Apple should should at least part of ESPN. Now part of the Apple Disney thing is also the Steve jobs now. His wife is the largest outside shareholder
of Disney. I think she's got seven percent of the stock. So, um, why would Apple ruin a great business with the terrible I mean Disney. They don't have one business that looks good right now and the stock's still at what eighteen times earnings? Yes, well, I don't get you got no growth, You got an activist that can't win. You got a CEO,
now, you got the writer's strike and the actors strike. And let me just say, there is nothing more sympathetic to me than when I see a Hollywood actor on the picket line, Right, I just might my heart. Just why are these these you know Tom Cruise needs another five million?
Oh, you're just talking talking about the highest paid actors that are on the picket line, not the lowest pot you mean of Right, So somebody who is chasing their dream to beat to make twenty million a year takes a low peg job and they're upset that the job's super low peg, even though there's tens of thousands of people, maybe hundreds or millions that would take their place, and they think they have they have leveraged you at a higher price.
That's funny, That's really funny. You're a funny guy. All right, we can get you're a funny guy. All right. We'll be back to the last segments. This is Josh Arnold missed or money Talk with Judd Arnold here to answer your questions on stocks, bonds, mutual funds that you should position your investment dollars. Give us a call nine to five two nine two five five six o eight. You always get straight talk, not sure coded
advice, and do remember these are our opinions on and hours alone. Nine five two nine two five five six o eight is it Josh Arnold miss 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. Nine five two nine two five five six oh eight. That's nine five two nine two five five six
o eight. Well. In addition, this past week of Amazon having a record prime Prime day, Bob Eiger saying that his business is very difficult, and having the Sun Sun Valley media conference and media assets have not done especially well this year, and probably you are going to be facing some continued continued fallout and concerns. We had Microsoft getting the getting a court approval to complete their deal with Activision, So M and A I, let let's just touch
this for a little bit. So we bottomed in October that this is the market now, okay about thirty four hundred or what are we forty five? Now? Yes, for you, we rallied a bunch off the X overload. That's one that's on the SMP five market. Okay, the ip There's three key markets to track along with the equity market, and they're all related. One is the IPO market. The IPO market is just our companies going public or are they not right? When markets get tough, companies stopped going
public and that slows down the financial ecosystem. Number two is the credit market. Now the credit markets bifurcated. We'll trifurcated, I should say, there's the sovereign or treasury market, which is governments. There's the investment grade market, which is really good companies. And then there's the high yield or junk bond market. Okay, the junk bond market does close where investors just say we're not buying any The investment grade market has never closed. People can always
issue paper. The junk bond market did close for a while. The MNA market also slows down considerably as as as markets decline, and in a healthy time you have all three the junk bond market, the IPO market, and the m and A market humming. And one of the things to track as you start to recovery that I've always taken keys, that I've keyed off on a lot. One of the things we talked about on the show about why we were getting increasingly bullish a couple of months ago is we started to see
the ipo market open up after the junk bond market opened up. And once you see that, you typically the first things that come through the door after those markets are closed typically our high quality and they typically work. We had a huge IPO a few weeks ago Coba, like a Mediterranean past casual restaurant that did up over one hundred percent. That was about the fifth big IPO of the year, and that was big enough to really blow open the doors.
MNA is the last thing and that is really starting to accelebrate. We had one of the biggest LBOs of all time that's leveraged buyout right earlier earlier this week with a private egery firm called GTCR by spending about eleven billion dollars to buy workpay in a transaction value at seventeen point five billion dollars M and A, which was out of standstill because of what's called bidass spreads, meaning when markets go down, the reason M and A stops. And just think
about this in terms of your house. Most people, their house is a thing. The housing market sells off. If you don't have to sell, you're not selling because the buyers try to low bid you and you say, I don't have to sell. I like my house. I'll just wait. And so what do you have. You have a bidass issue, and then as the market recovers, the seller comes up to where the buyer is and then you can have transactions and things that celebrate m and a market no different.
So now that the market is rallying, you're seeing volume. You've got a lot of these steal negotiations where people want to transact. Those bidass discussions get a lot easier, and you're gonna start to see transactions and that will be a further fuel for the market. Well, we're gonna see more deals and they they're probably gonna be medial, they're probably gonna be everything. We're gonna see more deals. You invest just for the deal, or if you
hear hear about a company that might be bought, I don't. We don't do that. That's like terrible stuff. Oh I read in the paper companies for sale. Believe me, you can lose money and whatever. But oh sorry, Going back to the Lena conting, Lena content, the share of the ftc um she's been really active as trying to saying everybody's a monopoly. This is a huge defeat for her, huge defeat the judge laugh I mean
they judge's decision was just laughing at the ftc laughing. And that has been the other wet blanket on M and A. And you're going to see more companies challenge challenge her. So but but more more, more to your point, when you're making an investment decision, if you hear about a company that could be bought, you're not don't go out and buy the Yeah, you're not gonna make money doing that. There's a million people doing it, so
just be just be careful on that particular situation. If you're looking at a company that might be bought the question, or a company making an acquisition, the question you've got to ask is separate that would this be a good a good company to own in in my portfolio. If it's not a good company to own in your portfolio, regardless of the talk of a takeover activity. In our viewpoint, if that would be something something to avoid and not and
not invest in. So we tend to look for companies that will say are growing having growing sales and growing earnings. The focus that I have had has been invested in companies that are involved in the Internet, in leisure, China related businesses, and real assets, and of course doing a little bit of
trading. And as part of our asset allocation, we keep up to and I emphasize that keep up to thirty percent in cash, both for safety and to take it have cash available for the inevitable pullbacks that happen over the course of any year. Typically during the course of any year, market will have three to four, five to ten pullbacks for numerous numerous reasons. But having that cash, will say, as a security blanket to us, makes a lot of a lot of sense. And again when you're looking at if you're
hearing about something it might be up for sale or could be ought. Decide there's a company absent that make makes sense? What else has happened happened this week? Well. Continue to have some strength in semiconductors, particularly those those companies around artificial intelligence. Now, artificial intelligence has been around for a long long period of time. UH the use of use of artificial intelligence or using
artificial intelligence developing large scale models for that. It takes up a lot of storage capacity and takes up a lot of computing power to keep that, to keep that going, that is going to provide some benefits to we'll call it storage companies or cloud related companies, whether that be Amazon Web Services through Amazon, Microsoft and Microsofts, or Google in their their cloud will be beneficiaries.
I probably could go into several other related cloud companies. The use of speed to get all that information process will benefit numerous semiconductor names, the leading one being Navidia, whose stock is extremely expensive on a price to sales and price to earnings basis and has been very viola lately. And there's Advanced micro Devices AMD, again in expensive stock on a PE and price to sales basis, but not as expensive as the video. And then you could look at a
manufacturer which would definitely be in this space, that being Taiwan Semiconductor. The risk, of course, with Taiwan Semiconductor main offices in Taiwan, though they're building elsewhere. But this push in artificial intelligence was started in May with Microsoft's Developers Conference. He has helped boost technology related companies and that might be more of a temporary than a long lasting issue. But again, any companies involved
are going to get a little bit more of a look. See going to be interesting with artificial intelligence going forward, and many companies are going to benefit. Say this is Josh Arnold missed or money Talk with Judd Arnold always here to help help you. Give us a call nine to five two nine two five five six o eight. Bear in mind these our opinions. Markets do fluctuate and the usual caveats apply. 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 risk, including risk of loss. Consult your investment professional before making any decisions about your investment portfolio.