Mr. Money Talk

Good afternoon. This is Josh Arnold missed your 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 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 oh week. You always get straight talk, not sugar coded advice before we hop in. Everything

we discussed in this show is for discussion purposes only. Nothing should be conscued as investment advice. Some are All of the investments we discussed in the show may not be suitable for all. Some are all Investors do not make any investment decision before consulting with an investment advisor. Investing contains risk, including risk of loss. I'm gonna say, speaking of losses, this is a brutal

week. I mean, it's ugly out there. Well well, well we'll say that this is the market has just had their worst week I think since March of this year. Just dreadful. I mean September is usually dreadful, but this is especially dreadful. Well, I mean it's people is it is awful out there. I mean there's a lot of worry. I mean, you've got the Federal Reserve meeting this week and Federal Reserve talking heads higher for longer, higher for longer. We see inflation under every rock, and we're

prepared to raise rates again. You've got them. I'm gonna push back on what you just said before. The market is selling off because they're being extra careful about defeating inflation. They've acknowledged that it's coming down, but they want to be extra careful, which means they're going to hold rates up higher for longer. The market was pricing in fifty base or one hundred basis points of cuts next year, so a reduction of rates by a one percent next year.

Powell and the Dot plot said, no, you're only going to get half of that. I think people are reading too much into that. But nonetheless, you have a on balance, more hawk ish fed than people were expecting, although certainly not what we were expecting. We thought we've been saying

higher for longer for a while. Then you got the UAW strike, which and again we'll just say, we hope everybody goes out and gets what they deserve, and hopes everybody gets paid and we have a potential government shutdown. We've had a big I think the biggest thing is we've had a big run this year. Now text up about forty percent. Well now the less now about thirty six percent? Well, yeah, I think it is up thirty

percent. You've had you've had a pullback of the SMP since the high of about six percent, which a night we knew about thirty nineteen to a twelve thirteen. Yeah. We we have said typically in any any year, that you're going to get three to four, five to ten percent pullbacks caused by any number of issues. And this is normal, you know, for any year. Anytime that there's a pullback, it does scare a lot of investors, and a lot of investors start seeing this pullback and it's, oh,

my goodness, woe is us? Sell sell sell sell everything. And when the market reverses there a lot of investors say no, it's we're going to wait. We're going to wait. And then they come in as a market proceeds to well new high and now they breathe a sigh and say, oh, well now we can get in. Things are much better. So they end up selling high or should be selling low or selling high and by no,

it's the other way. They sell low and by high there it is look turn up, look turnover is most of the time, and we stress this on the show. We talk a lot about macro. We very rarely actually do anything. We young companies we really believe in. You've been a holder of Apple and Amazon going back to about two thousand and four. So the way to make a lot of money in the stock market is to find good businesses and hold them for a long time. We do do what.

We have a tactical trading allocation, and we are looking for new ideas. But all eut sequel. You should not be running for the hills and selling because markets do go up over time. Seven out of ten years are typically positive. And you think about what the stock markets do. It should track GDP growth. We're better than that track corporate propers growth. So most times

people shouldn't do anything. And I would for the bears and the warriors out there, I would just point out the credit spreads, which is the amount of additional interest demanded by bond investors and companies over treasuries. Credit spreads is particularly for junk rated companies or high yield companies are not blowing out at all. So that's typically where you see stress. We're also seeing a lot of IPOs. Now we're going to come back to the IPOs. We talked about

that a little bit last week. The IPOs are happening, but they're not performing well. But one of the things we have been calling for an m and A wave started this week with splunk twenty eight billion dollars deal from Cisco. So, you know, the markets up a lot. I think I would just be calm about this. I mean, can I go down more? Of course it can. Markets go off, Markets go down, but you own good companies, you should do okay, And we're not saying that's

true all the time, but this just feels. Can I say garden varieties sell off in September? Can I say you can say garden garden variety, garden variety pullback. But you've got a lot of consternation about this particular pullback, you know, due to some of the things that I've you know, brought up, the FED, the FED and rates, the UAW strike, the price of oil is up, and you have the potential government shutdown, and well, well, markets don't go down on nothing, and they don't

go go up on nothing. I mean, there's always stuff to worry about, and you just let's just take those one at a time. The UAW isn't gonna strike forever, the government, if it shuts down, isn't going to shut down forever. And the price of oil. Look, I think MBAs Mohammad Ben Salman, the de facto ruler of Saudi, the Kingdom of Saudi Arabia, he's the crown prince. His dad is i'll say retired or incapacity, We're not sure, but he wants to do what Ali Naimi did.

Naimi being the famous Saudio minister for about thirty years, who just wanted to keep oil roughly, you know, between eighty and ninety. Maybe maybe Ben Salmon wants to go eighty five ninety five. But the Saudis are smart enough to know that they don't want oil at one hundred. They wanted at the maximum price without impacting demand. So yeah, I'm a little circumspect.

I just I don't see a big sell off now. Granted, how much cash you you usually hold a lot of cash, how much cash you hold, but you usually you know, I'll say, in most most cases, I hold ten to twenty percent cash. Part of the asset allocation is keeping up to thirty percent in cash, So we're slightly above I'll say my normal h ten to twenty percent in cash right right now. But man, I see a lot of potential. Well, I gotta I gotta plow up.

I gotta something out right now. We've got to be fair and balance. If you if you haven't, if long time listeners of the show, you know we keep adding disclaimers because people telling us we have to add disclaimers. We have to be fair and balance. The fair and balance thing I have to say right now, which even if it wasn't you know, is our portfolios are all equity. Even though we use cash, they're typically gonna outperform

and up markets, they're gonna underperform. A typical sixty forty portfolio that sixty percent equity forty percent bonds in a down market. We gotta make that caveat multiple times. People who've listened to the show a lot no no our feelings on bonds, but some people like bonds and a sixty forty portfolio in a down market should do better. Although to be fair and balanced, to the

fair and balanced statement. I would have to point out, as would you, that bond investors are getting obliterated right now because we're having we're having the we're gonna believable moment. Oh, let me finish. Well, we're doing

this remotely. That's why it's a little uncoordinated. But for those listeners, I am down in sunny Florida. But the ten year and thirty year yields had new highs since two thousand and five, since two thousand and five, meaning if you own bonds as they adge against equity risk, you are losing money on your hedge i e. Your bonds and your equities. You're doing horrifically. And the nightmare scenario is happening, which is bonds go down in

price, oil goes up, and stocks go down. That's what's playing out. I don't know why don't you get a word in it, because I don't know how to be fair and balanced with that statement, which is a true statement. It's a it's a very true statement. So that the statement alone is true, I think you can't you can't argue here are the numbers, then you can't argue it. I mean, it's it's like, okay, this year the Long Bond Index t LT is down in value eight and

a half percent. That's that's pretty simple. Go back three years, three three years, and you've lost money every year, three years in a row, three years in a row, you've lost money flt LT Heck, at the beginning of twenty twenty two, TLT was trading at one hundred and fifty dollars a share. You've lost money three years in a row and bonds. But we're gonna have to come back after this. We'll come back with more money talk with Judd Arnold and Josh Arnold. That's me, mister money talk.

Do give us a call nine to five two nine two five five six oh eight. We're here to help you position your money, whether it's inside or outside a retirement account. This is Josh Arnold, mister money Talk with Judd and 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 five two nine two five five six oh eight. That's nine five two nine two five five six

oh eight. You always get straight talk, not sure coded advice. We're talking about bonds, and in the sixteen forty portfolio, we've happened to focus on what has been happening in the government bonds or government bonds. Indussees it's very interesting, Judd. In listening to we'll say market strategists or some fun fund managers or other portfolio managers talking about bonds. The talking heads keep talking

about yields going up, yields going up, yields going up. Nobody bothers to talk about what's happening to the value of the bonds to keep going down, to keep hearing man, bonds are great. You've got to lock in that yield now because should there be a recession, then the Fed is going to be cutting rates and then you're going to be look looking real good with

that, you know, much higher higher yield. All this shoulders, Yeah, well shrug your shoulders is right because the description that you just laid out, which is the one that we hear you and I said, I don't understand you, sir, because you're telling me to buy bonds because it's protection. If I'm buying protection, why do I want to lose money, you know, and base it all on a macro economic call. I want certainty and you can't give me certainly. Are still interest rate bets and there's no

guarantee in a recession that you're gonna make money on bonds. And the problem is, you know, I'll point out the Ken Griffin interview again, you know, ahead of one of the biggest hedge funds in the world two weeks ago said, look, the Fed, it doesn't matter when the fiscal policy side is spent. Is spending six percent as deficits of six percent of GDP.

That's what the bond markets freaking out about. And the nightmare scenario is that we have an equity market pullback contemporaneously with a rise in bond price, rise in yields, which would be a falling bond price. And then that's what you had three years in a row. Three Yeah, you've had bond prices fall three years in a row. And last year stocks went down, bonds went down. They said, oh my god, it's one hundred years

storm. And the problem is the math is quite straightforward. If you buy the S and P fifty, not the S and P five SP fifty, the fifty biggest companies on average, you will make eight and a half percent a year. That's a much safer thing. And that's what we allocate, you know, talk to people about, which is if you have any type of long term nature in you, you're gonna make you're gonna do far better

in stocks than you are in bonds. And that makes sense. And at these with interest rates moving where they are, bonds are a very risky proposition because I'll tell you what. You lose thirty percent on a growth stock, you hold that thing. If you're right, you can make back that thirty percent. You lose thirty percent in bonds. God help you, God help you, you know, every every day, just as a little in aside.

At the low point in real in yields during COVID, Argentina or Austria, I should say not Argentina Austria. Austria issued a one hundred year bond with I believe a one, one or two percent interest rate. Do you imagine buying that bond at par you know, one hundred cents of the dollar, because right now it's thirty seven cents. How how would you feel you bought government paper two years ago one hundred year bond you thought you were all

straight? Austria shouldn't really default. Yeah, that wouldn't be feeling feeling right now because you're you're too weight, way under water. You're down two thirds on your money. And yeah, you can hold the maturity for another ninety eight years to get your money back. You're really gonna wait ninety eight years. You're gonna give that to your grandkids and say sorry, I really screwed up. I lost I lost the house, I lost your college fund.

But if you just hold hold this bond for ninety eight years, you're gonna get your money back. See I look at I'll look at it a different different way. Now, this would be a company issuing bonds during that period of time or before. You know, my my favorite Apple has issued bonds at some very very low rates, and those those bonds well underwater in value today. You gave Apple some very very cheap financing for both expansion and the

buyback stock and the payout dividends. I thought that would be very smart on the part of a lot of corporations to to accumulate debt at those very low interest rates several years ago. Now, let's let's give in a siture for the people who really do want to buy bonds and your your your heart set eye, and you know, if there's nothing that you and I can say to them, if you're gonna buy bonds, don't go out more than two years. Just don't do it, because two years if you're wrong in the

interest rate, two years isn't that long to hold it. But man, I gotta tell you this is no walk in the park at all at all. Well here a lot of people are buying going out and buying bonds jud because they have great, great yields. Now I don't know what they I'm just check real quick on the high Yield Bond Index h y G, which you know for a high yield index that has held in pretty pretty well. Hold on, hold on, I got to put a caveat with high ye

of bonds for you. Okay. Investment grade investment grade bonds have longer term maturities because people are going to lend to investment investment grade companies for longer terms. So the duration which is the average maturity of the investment grade bond in next which is LQD Larry Quintin, David is, I think it's twenty five years. High yield companies that's non investment grade companies, people don't want to lend to them that long because too many things can go wrong, and so

in a rising interest rate environment. Because the high ye of Bond Index, which is the HyG etf Harry yesterday, George and I think it only has a duration of about six years. So part of the reason why it's outperforming is we haven't had defaults. And that's the real way. You have two aspects of the difference between LQD and HyG, with HyGG more duration but presumably less default risk, meaning the companies you went to are presumptively because their investgreator

are going to pay you back. With high yield, you get less duration, more coupon, and that coupon is to offset the potential for defaults and material impairments. There really hasn't been defaults yet, so that's the issue. I like, we would not be recommending high yield bonds today into a distress cycle potentially with credit spreads, which is the intremental yield you get on high

yield bonds over treasuries at their tights, we would not be recommended. But the reason why it's outperforming HyG is outperforming LQUD, and it did the same thing during COVID as well. During the COVID fall, was is all this duration issue, which is it's just less sensitive interest rates because the maturities are shorter. It's a technical point. We can get technical. You know, people think we're I think we're just sleepy guys in Minnesota. I can get

super technical for you. Oh we know that. You know that you can get very very technical, you know with that. But I was just looking at, you know, some bond bond alternative. Yeah, we don't like buying bonds, but some people do. If you're gonna buy bonds, buy short term bonds. But all it's equal. What the regulator would tell you, what the academic would tell you is a portfolio that includes bonds. So

a typical sixty forty portfolio is going to outperform in a down market. We would caution that that has not been true recently, and you're making an interest rate bed however, so you know, we can't convince everybody, but we digress. So the story, if we do the bed was the story this week for those just joining. They came out more hawkish, meaning it sounded like they were going to keep rates higher for longer. Verse expectations, not

our expectation, you would. I were a little bit surprised. I don't think I thought he was duffy Well, I thought that I thought that he was just speaking what he's been speaking before. Higher for longer. We're data dependent. There's a likelihood we could raise interest rates once more this year. Okay, Well, the Fed has been saying that for a lot of months now, and I was quite quite surprised that the market sold off when the Fed, you know, indicated that they were only going to cut or could

cut twice next year. I said, who would even think that when they kept saying higher for longer. You've got plenty of issues. You've got the price of oilers is up, so that's going to keep inflation up. Oil runs through just about everything in the economy. If the price of oil is up, prices are going to stay up. Then you've got all of all of the unions that continue to negotiate for higher, higher wages. As we speak, I just saw a blurb that Wriggley and that's not the gum.

That's Wrigley Field where the Chicago Cubs play. Yeah they're they're striking, but hold on, we're going to Drake. We gotta, we gotta take a break right here. We gotta, we gotta take a seventh inning stretch, so we'll come back. We'll come back for seventh inning strikes stretch. And I'm just very excited that the Twins are just one game removed from clinching a playoff spot. This is Josh Arnold, mister money Talk with Judd Arnold,

here to answer your question on stocks, bonds, mutual funds. How you should position your investment dollars. We're here to help you. Nine five two nine two five five six oh eight. This is Josh Arnold or money Talk with Judd Arnold here to answer your questions on stop sponds, mutual funds, How you should dision 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 zero eight. You always get straight talk, not sure coded advice. All investments discussing the show are for discussion purposes only. Nothing in the show should be considered investment advice. Some or all of the investments we discussed on this show may not be suitable for some are all investors, Please consult a financial advisor before making any investment decision. Investing contains risk, including risk of loss. Cool. There you go back to it, back to the strikes.

So the Wrigley Field concession operators are striking, maybe they should just tell the team, hey, fill the stands and I'll make more money. But

we digress there. Kaiser Permanent, which is the largest hospital chain out there, huge in California, They're going to have a walk out of seventy five thousand nurses and other hospital staff, non doctors next month because they said the hospital, which I would point out is not for profit, because the hospital eighty five for me to learn know the hospital industry, by the way, just asn't a side. Eighty five percent of the hospitals in this country are

not for profit. They're funded largely by endowments and then they have ready two percent operating margin. The for profit hospitals are unbelievable businesses. And if you don't hear my sarcasm, I'll say it explicitly. I'm being sarcastic. Hospitals are a terrible business. They have tons of capex. They make an after capex margin of about two and a half to three percent. It's a terrible. They're slightly better than a supermarket. It's a little bit worse because at

least you know to be oh man, it's well. Now I'm going down the streat. I have to make it. You know, a hospital grocery store, they are in small margins, and you want to turn your inventory as much as possible. With a hospital, you're in small margins, and if you're turning your inventory too much, you get in trouble. If people don't get the morbidity of that joke, so little I had little drum here. I have a drum here, and you used to be able to do

that with your drum set. Judd, little little little little joke. You know there, by the way, what happened here your drum set? Jud what happened to your drum set? Uh? It happened same thing that happened in my Berkshire Hathaway stack. Okay, you sold it. It's in my bitcoint it got I got hacked. I got hacked. You got you had bitcoin and you got hacked. No, I didn't get hacked. I sold it. I'm blaming hackers for my stupidity and selling. No. I think

I think when you when you sold you made a nice profit. Thank you very much, and I would have told you back then. I would have tell you today, Uh, investing in bitcoin, of the cryptocurrencies is stupid. But that is not fair and balanced telling investing in that that stuff is is stupid. There is nothing there. There is no there there. That's end the end of the story with that. Well, let's just to recap for those joining late. We've had one of the toughest weeks in the market

this year. We've given the SP five hundred from the highs this year, which was about nineteen a half percent up for the year. We are we have given back six to seven points. The NAZAC, which was up more than forties, only up at low thirties. Now. It's the tip of September is the worst month seasonally in the SMP. In the market, typically

you lose money that month, and it is living up to it. We've got a FED that came out and sounded more hawkish, and it keep rates higher for longer than expectations, although we would point out not our expectations, but certainly the market doesn't like it and we must accept reality. We thought he was bullish, but anyway, we got a UAW strike, They're gonna shoot. They're oh man, this is the spokesperson for the UAW. Their

text messages got leaked said we're gonna strike. We're gonna hurt these companies. I don't understand this, well, I don't. I don't understand it at all. Why do you want why? Why is that as a employee you want to hurt the employee or in an in a market environment where the government has said we want to get rid of what you guys are making. Well, look it's you know, it's the old Vegas saying, you gotta the

casinos have to win twice from the high rolling. They gotta beat him at the game, and they got to collect and at some point, you know, if the employees of the the big three carmakers, I think what's curious to me, I'll say is this has a lot of parallels to Bowing and

the end of Boeing. In Washington State where Boeing is largely left. Washington State, there was a strike at the very end that was the straw that broke the camel's back, and a lot of them Machina said, well, if we don't strike, you know, they're just going to kind us to the ground. Well, Boeing woke up and said, guys, we can't make money here, and if we don't make money, there's no money for you. The company's got to make money and they left. And I think

it was a horrific miscalculation. And hearing a union say they want to punish the company that will pay them when that company is under massive pressure, it doesn't make a lot of sense to me. I get that you would want that, you want more money. I mean inflations crushed the middle class,

that certainly crushed them. And they look at this executive comp which I will freely say is absolutely ridiculous, how much Mary Bara, the CEO of General Motors has made that being said, you strike for five months, you're going to be out of a job because the company's not going to exist. And if you make the labor costs, the big three pay labor costs about sixty five to seventy bucks an hour all in versus Tesla at fifty in Toyota I think is at forty seven. And the unions want to make it one ten,

one twenty. You know, Toyota's jumping up and down, Tesla's jumping up and down. And it's just a failure to see the big picture. But now look, people people do with these things, get emotional. We've got the Wrigley Field concession workers striking. We've got seventy five thousand workers kuys are Permanent, which is the largest healthcare chain dominantly in California, likely to

strike. And all of this is a symptom of failed fiscal and monetary policy because these people are rightly said, my wages have not kept up with inflation. I'm getting punished, and I'm mad and I want it's somebody else's fault, and I'm going to hold somebody account. And this is the populism that largely got elected and I don't mean I mean that in a political way. And this is the populism that is leading towards these strikes, which are likely

to continue. And for many people like the pain, their feelings incredibly real. And this is a nature of the economy where Okay, the market sold off, let's make it. Let's come back to the market for a second. And I hope that wasn't too political. I was attempting to the eight political for people in this backdrop. But we have a market that's largely recovered from last year's you know, last year, which was horrific by all sense of the imjation, was one of the worst years in the market. We've

now SMP five hundred rally back nineteen percent. Now it's given it back a bunch hour only up thirteen maz deck, which was the epicenter of the pain last year, still up about thirty s and P five hundred multiple of earnings, you know, eighteen nineteen times. And the average investor is saying, there's a lot of bad stuff going on. We haven't even gotten to the government shutdown. We got oil running away, and this is a market where, you know, we may have seen the highs for the year, and

that's a fair state. There's a lot of bad stuff. And certainly we don't want price to define narrative, which is a mistake a lot of people make us included. There we go, that's fair and balance. For you, that's fair and balance. Here you go. For those just joining, we have to add more disclaimers to the show. So we're adding more disclaimers. We're being more fair and balanced. But nonetheless, we like to be

humorous about these things. But oh, it's just a tough market. Now for long term investors, which we are, there's going to be periods of time the market pulls back through you know, five to ten percent at least three to four times a year. We're in the middle of a pull back. It's not fun. But you look at the companies you own. You ask yourself, as anything changed? Do I currently like the valuation because we could sell everything, you know, about five minutes if we wanted to.

We have a very liquid portfolio. We like who we own. We've got to what's your cash position? Well, cash position, I think on average right now is eighteen percent, so we got I think if I look at the average, if I were to look at the average mutual fund and say, my cash position right now is on balance eighteen percent, uh, and a mutual fund would say, oh, we have a lot of cash on hand, and the typical mutual fund having four to five percent cash cash balance.

Mutual funds don't know what a lot of cash on hand is what it choked. But anyway, what's our plan? Our plans what our plan always is, which is we look to see if it's systemic. We don't think this is systemic, meaning we look at credit spreads, which typically are a leading indicator of what massive markets saws. They're just not widening and all they're they're pretty stable. We've got M and A accelerating. The IPO markets still there, although we it's been dicey a lot of these IPOs of a day

one pops and then gone straight down. And IPO investing is not for everybody, are really most people, but it's something we look at and talks about the health of the market. So no, we're gonna keep watching. I don't know what there is to do though. I like what I own. You like when you own. We got cash to buy stuff. It's kind of no man's land. If it's sold off a lot more, maybe we'd buy some stuff. So there's there's some pretty interesting there are some very interesting

companies out that you know there. There's stocks have have come down down from the high. Yeah, well, we we'll talk about those as we go on. But we've got more to talk about. In our last segment. This is Josh Arnold, Mister Money Talk with Judd Arnold here to help you with your investments, whether inside or outside your retirement account. Do give us

a call. Nine five two nine two five five six zero eight is this Josh Arnold, mister money Talk with Judd Arnold here to answer your question 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 oh eight. We always get straight talk, not

sure coded advice. Judd. There's been an old market market saying. I think it was popularized by Yale Hirsch in the Stock Traders Almanac, which was sell Russia Shanna, which was last week, and buy Young Pipoor, which is next week. That's sort of played out very well this past week as

the market market has continued to sell off, including yesterday. We record this program on Friday afternoon, yesterday being Thursday, all sectors of the SMP index were down and bond prices were down with yields up, so across the board things were down. That changed on Friday as we had several sectors were up, with the worst performing being consumer discretionary and real estate, and probably the better. The better sectors performing were energy and we'll say software and even semiconductors,

which everybody. Everybody's got to own a little energy because I own more than a little. But it is the hedge to the market because oil going up is a huge risk. I like these Osha trailers a lot. I've talked about him before. Did a nice podcast this week while I was invited to be on a podcast this week. So I had a nice stockers A huge energy conference going on in the Oslow podcast. Let's associate with that. It is on Twitter. You can look up my Twitter handle Cornelia Lake and

you can get that podcast. It is my pen tweet talking all about off short drillers that's Transocean ticker r I, G, Valaris, val Noble and E. And also the offshore boat companies Tidewater that's TEW. Those stocks are highly risky, not for everyone. Be very careful with all energy stock. Be careful with all you. I keep bringing this up, Judd to you

and you you have focused for a long time on on these. We'll say energy service companies as opposed to the energy and production companies, or we'll call it energy infrastructure companies as opposed to the energy. Yeah, I don't know. I don't like the guys who may who I hate the guys who take the oil out of the ground. It's a terrible business. It has all the merits of a terrible business, which is you drill a well, you got to spend a lot of money up front, then that well goes to

zero and you got to take that money reinvest in another well. And it's a lot of capex. It's a lot of capex. There's not a lot of free cash fload that's available to the public shareholder, and you're constantly reinvesting, which is a real, real issue. Reinvestment risk is pretty ugly. Where the energy services companies like these offshore rigs. The rigs last for thirty forty years. You buy them up front, you don't have a lot of capex. Year to year, you've got almost no capex, so you get

a lot of cash flow. That's the business. Now. With that, that also jet applied to some of the pipeline companies, Like I'll just point out one that I have a screen energy energy transfer. The problem with the pipeline companies, and we saw this twenty fifteen, twenty sixteen, they're set up in this MLP master limited partnership structure being they have to pay out all the free cash flow to shareholders. And the problem with that is it the

equity of actively becomes a form of debt. So yes, there's cash flow on those things. The capex is pretty low, but they keep these companies so cash starved because of the MLP tax advantag structure, which is just like reads. So the second there's any problem, and there always is an energy infrastructure because you're still energy, then you got to raise a lot of equity. You dilute the common shareholders. So I'm fine with you. Now.

The other the other risk I would point out, because this is one thing that has soured me on that because we lost a bunch of money, is when these companies cut their dividend and you see going half as well as the dividend be cut and right, stock prices don't come back. Nope. And that's what I was getting at, which is because they're not retaining cash flow, they have no guard rails, no protection, no margin of safety if anything goes wrong. So the second things go wrong, you're divodend goes away

and they're issuing equity and then you're just destroyed. So I don't like those guys. We Kimyer Morgan, when you and I and I still feel terrible for the clients. Oh god, that was a that was an expensive lesson that we had to learn back, very very expensive lesson. But that's why we don't want want people to expect to have have that lesson happened to them. So we do learn from our mistakes. Oh we try to. That's all you can do is put your head down and you know, trying to

learn a little bit more. So that's it. But that's why I don't like EMPs. The one EMP I've done okay on is NLG. This's Northern Oil and Gas. It's a Minnesota based company that's more of an energy private equity firm. And even that, these guys are unbelievable. They have a fifty percent five oh return on equity and the stock still wasn't traded for more than four times. He bit's up. What does that tell you? It's just a bad business. It's just a bad that's it. It's just a

bad business. So anyway, but I hear here, we'll give it, we'll We've gone over a few other bad, bad businesses, you know. I continue to see Disney, Disney get get upgrades or a reiteration to buy run run away from Nicky. Just say no to Nicky, say no to you know, you're you're, you're goofy. If you buy that stock, how about that portfolio is gonna go from a giant You're you're not gonna get seven dwarfs. Your portfolio is gonna have one dwarf in it. If you

buy that stock, there you go. Oh you are good. You're you're a heck of a sit down comedian. With that, I mean t k OH, which is the ticker for this Hollywood talent agency that just merged with the World Wrestling Fan. The chicker for that is e d R is the talent Hollywood Talent. No, no, dvor urged No, did you still have endeavor? What merged was u FC merged with w w E to form t k OH. They paid out a special dividend of four dollars a share

as part of that that merger. That contributing some of the sell off. And and now share or new shareholders are dumping the stock. They're dumping the stock because you're supposed to get the other show, SmackDown ww E. SmackDown just got a terrible content deal with NBC. Terrible carriage fees, not enough, not what was baked in. He got Disney getting the heisman from Sharter, the biggest cable company, one of the biggest cable networks out there.

These guys can't make money on content anymore. The whole ecosystems at risk. ABC, the third largest broadcaster, is gonna get sold for I think three times cash flow is my guest, maybe four times cash flow as an asset that was worth fourteen times cash flow just five years ago. This is an industry in crisis with chord cutting. It's been a race to the bottom. Stay away from media brutal business paramount, which is CBS and viacom. Oh

run the other direction. WB all these things are just terrible. The whole ecosystem they screw. Netflix made people's heads flip upside down. You gotta writer strike. These people are crazy. Just you can't make money with content right now. And I think you can just forget about media stocks in the next five years to be better off. Well, you'll have to talk to Mario Gabelli about that. Yeah, you know he can. He's loved these stocks

for too long. The game changed, and this is what happens when something that's been investable for fifty years, all of a sudden goes to garbage and that's what's happened. Stay away from media stocks. It's just it's just terrible. For now, there's no clear path. So so be it week. Well, not that you're not, but next week is going to be an interesting week. Monday is probably going to be lighter trading than usual for the

Jewish jam Key poor. Then you're still going to be worried about the potential next week of government shutdown. You'll still have the ongoing oil strike. You probably have a few more Fed governors talking, and then you have Nike reporting earnings and that's going to be very interesting indeed. But we'll be back next week. In the meantime, should you have any questions you like answered, don't hesitate to give us a call. Nine five two nine two five five

six zero eight. I am Josh Arnold, mister Money. Talk with Judd Arnold. See you next week. 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,