The Fagan Financial Report

February 2nd, 2025

Episode Transcript

Speaker 1 (00:02):
Good morning, and welcome to the Capital District's Money an
Investment program. You're listening to the Fagan Financial Report. I'm
Dennis Fagan, sitting here with my son Aaron, as we
do every Sunday right here in news Talk K ten
and one O three one W G Y and a
lot going on this past week, Aaron. But first and foremost,
you know, with deep deep deep six and deep seek
Deep Seek Deep sex. On Monday, yeah, you know was

(00:24):
uh was was what happened to some of the technology stocks.
And it was a good day really to reflect on
your own portfolio. And we'll talk a little bit about
that talk earnings from Meta, IBM, Microsoft, Tesla, Starbucks, you know,
and and you know, I think for those of us
those out there and we have a you know, large

(00:45):
percentage of our client's money in exchange traded funds and
mutual funds, you know, what does that What do those
earnings mean for the economy in general, which then filters
down to the to the funds, some some very directly
and some indirectly. And then also, uh, you know, what
does it mean for the individual security. So we'll talk
about that, you know, how our portfolios did, and also

(01:05):
that that's that'll cover the first half hour, you know,
I would think, and then then we kind of move
on from there to broaden out the topics a little bit.
But you know, first and foremost, how how are you doing?

Speaker 2 (01:14):
Good?

Speaker 1 (01:15):
Little sickness in your family this past week, not you, not,
but the weaker ones.

Speaker 2 (01:18):
Yeah.

Speaker 3 (01:19):
Yeah, we just said, as man, Lauren, we're sick, so
you know, just kind of getting over that.

Speaker 4 (01:24):
Jude's got a bit of a cold himself.

Speaker 2 (01:26):
He does.

Speaker 4 (01:26):
Yeah, good little kid.

Speaker 2 (01:29):
Yeah, both of your.

Speaker 4 (01:30):
Kids are very, very nice. It's made How old is
she now? Six months?

Speaker 2 (01:33):
Six months? Yeah, six and a half months.

Speaker 4 (01:36):
Jude's pushing three, Jus pushing.

Speaker 2 (01:38):
Twelve right now. And yeah, yeah, so it's fun.

Speaker 1 (01:43):
Yeah, yeah, I bet that'll winter a lot of fun,
a lot of fun. It's off getting out, isn't it.
What are you doing for uh for uh for fun?

Speaker 4 (01:51):
Nowadays? Really? What do you doing?

Speaker 2 (01:52):
Timmy's am?

Speaker 3 (01:53):
We always go to New York States and they need
to upgrade it though they said they're going to upgrade it,
but I guess most of the upgrade goes into our archiving,
because you know, it's it's more important really than am aspect.
But I guess they're they're gonna up they're doing some
upgrades to it a re soon.

Speaker 2 (02:08):
But she loves it.

Speaker 3 (02:09):
He bears there's there's the mammoth that co hose mammoth,
the cost mastodon.

Speaker 4 (02:14):
Yeah that good stuff. Yeah, they do have a good
lot of good stuff. But so let's get right to it.

Speaker 1 (02:20):
So I think if we say, if you sit here,
go we could go Friday, you think to yourself, all
is right in the world really as far as AI goes.

Speaker 4 (02:30):
What do you want to start it out?

Speaker 1 (02:31):
Do you have things you wanted that are right at
the top of your mind to say you want me
to kind of you know, put it in.

Speaker 2 (02:36):
I don't.

Speaker 3 (02:36):
I don't have anything on the top of my mind
to say. But you know, I think for for technology
and you know, the evolution of technology, this is a
good thing. But you know, with the week prior, we
heard Trump come out and say, hey, we're going to
spend five hundred billion dollars on AI infrastructure. And you

(02:58):
know this deep seek R one and deep Seek.

Speaker 2 (03:01):
So they have a reasoning model and a regular model.

Speaker 3 (03:03):
One of them's open source, and you know they're letting
anyone use it for commercial purposes and that is.

Speaker 1 (03:08):
That I'm going to interrupt a little bit along the
way because I think a lot of our listeners may
have not not even heard of that story, because you know,
the market's always some some volatile. So deep seeks the
Chinese company, right, Chinese collaboration.

Speaker 3 (03:23):
Is started by a HEDGEPHNT and a kid out of
a kid at a university. And you know the differences.
They said it took six million dollars to create versus
open Ai and their fourth you know iteration of GPT.
So it was open Ai is GPT four that cost
it one hundred million dollars to make. So I think

(03:45):
that's kind of what put the markets in a little
bit of a turmoil. You saw like ge Verona Vista
down big the energy providers to these companies because hey,
maybe we're not going to need as much as much
power to to to power these model and you know,
the market was down pretty precipitously. You know, the triple
ques Monday was down you know, I don't know about

(04:08):
three percent, and you know that's kind of you know
a little bit where we are now. That said that,
you know, triple ques are still one point nine percent
year to date, you know, Meta came out with pretty
good earnings. Microsafe actually came out with pretty good earnings,
but down four percent ib and came out with good earnings.
And so I think people are just trying to digest it.

(04:28):
And you know, I think at the end of the day,
you always have to think, you know, this is coming
out of China a week after we announced a fifty
billion dollar infrastructure spending.

Speaker 2 (04:38):
And you know what does that mean?

Speaker 3 (04:40):
You know, on five hundred billions five hundred I say, yeah,
five hundred billion dollars.

Speaker 2 (04:44):
And then you know, you know, what does this mean
for just technology in general? You know, I don't know.

Speaker 3 (04:50):
You know, there's reports out that this is legit. Then
there's reports out that you know, they really were buying
about you know, we have someone come out and say,
you know, they probably used fifty thous an Nvidio GPUs
to power this, and how do they get those, you know,
because we have that restriction on in videos selling to
China and Chinese companies. So I think there's just a

(05:11):
lot to take in. I don't think we know enough
about it to really make two broad conclusions can create
conclusions with it. But you know, I think I think
it's good no matter what. At the end of the day,
it could be a little bit toppy for you know,
the large cap technology stocks and artificial intelligence stocks. But

(05:32):
you know, I think as you saw on Monday, you know,
a lot of these companies were down four, five, six percent,
But at the same time, what you saw was a
rotation into you know, I'm just trying to pop up
my charts here, you know, I just took some notes earlier.

Speaker 2 (05:48):
At the beginning of the week.

Speaker 3 (05:49):
Apple was up I think eight percent over over two days.
You know, Vertex is one of our holding, was up,
you know, almost two percent. Regeneral is up two percent,
un H was up two percent, Johnson and Johnson was
four percent. Brister myas Pfizer, Adobe was up, you know, Uber,
all the banks were up. So you know, on one hand,
it's it's obviously not good for for technology in large

(06:10):
cap tech.

Speaker 2 (06:11):
That's really you know, kind of uh.

Speaker 3 (06:15):
This bull market has been on the back of artificial intelligence.
At the same time, you're seeing a rotation to other companies,
which means that people really want to uh.

Speaker 2 (06:24):
To to participate.

Speaker 3 (06:25):
And I don't know who said it, but you know,
it was a rotation, not capitulation. I think that that's
really if you said that. No, I took it from
someone at c NBC, right.

Speaker 4 (06:35):
So let's I mean, there's a you said a lot.

Speaker 1 (06:37):
You covered a lot of areas that we we we
were gonna we're gonna cover over the entire first half
rather than the first eight minutes.

Speaker 4 (06:44):
So uh, let's let's take a little bit.

Speaker 1 (06:46):
Let's dig into each one of those kind of statements
or kind of queries or questions.

Speaker 4 (06:52):
In your mind.

Speaker 1 (06:53):
So this deep seek one of the things that you
were just talking about. First of all, you know, here
we are kind of looking at and actually executing restrictions
of some of our higher end technology to China, especially
the artificial intelligence, because China could use that information gathered

(07:16):
against us in either a militarily way, a military way,
or in a way of you know, just a data
that that they capture about you know, our citizens and
where we're going and what we're doing. Hey, we're looking
to ban TikTok, you know, and you know so so
so we're also looking to kind of not not give

(07:36):
data to China. So there's there's a question out there,
and this deep seek was artificial intelligence uses a lot
of energy and we'll get into that vistor energy which
you talk about in Jievranova uses a ton of energy.

Speaker 4 (07:49):
Uranium was down.

Speaker 1 (07:50):
Because there's there's these small scale uh nuclear plants that
have been you know, either going potentially going up or
bought bought by private enterprises. The Gambaz put in a
bid for one. So are we going to need that?

Speaker 2 (08:03):
Uh?

Speaker 1 (08:03):
There's also the question of open AI versus proprietary artificial intelligence. Uh,
you know open ai, the actual company somewhat proprietary Microsoft
Chat GPT and here comes deep seek and all of
a sudden they say, hey, for six million bucks and
some cheap in vidio chips, not not the real, the
real in video chips, the one that are in demand

(08:25):
in driving the stock price of Nvidia and driving capital expenditures.
Are you know we used all those and here you go,
and it's open infrastructure, open architecture. Uh, just like who
is what was the company back in the Internet that
that did that? There was a Netscape I don't know,
I think so was Netscape that did the same thing

(08:46):
and it revolutionized the industry. So one of the things
that I would say is that, first of all, there's
more questions than answers.

Speaker 3 (08:53):
And I don't think this is you know, what deep
Seek did wasn't revolutionary and it didn't really advance artificial
intelligence technology, but it just did it for cheaper and
I think that's the that's the you know, I guess
the big question and how cheap how honest are they?
But you know, at the end of the day, you know,

(09:13):
hopefully we'll be onto the next stage of artificial intelligence
sooner than later, which will also spark spending as well.
So I think that's that's kind of important as well
as you know, although even if everything they said is true,
I do think companies will just move on to the
next phase. And I think that next phase, you know,

(09:34):
although I think deep Seek and you know, chat GPT
four is great, but it's essentially just an enhanced Google.

Speaker 2 (09:40):
It can't reason, it can't do things like that.

Speaker 3 (09:42):
You know, Once once these companies start to work on
models that can reason, I think that that's where you'll
start to see them get revenue and in profit from
so you know, it could just get us to that
profit in revenue phase quicker than quicker than before with
this with this implementation. So you know, I think I

(10:03):
think the market's kind of taking it pretty well. Although
you know, you did see in video down fourteen percent
on Monday. It snapped back a little bit Tuesday, down
a little bit Wednesday, and you know, we'll we'll kind
of see what happens happens there. But it did at
six hundred billion dollars in market cap in one day,
the largest I think in video has like the two

(10:23):
of the three largest a single day market cap.

Speaker 2 (10:28):
You know, destructions of wealth.

Speaker 1 (10:29):
Well, they're riding the crest of really AI, I mean
they are well then that there's so there's so many
questions and I think one of the things is that
and I forget it wasn't me that that thought it,
but you know, someone called about it.

Speaker 4 (10:41):
Should I buy? Should they buy? Sometimes you just don't know.

Speaker 1 (10:44):
You got to sit back and be patient, and you
might miss an opportunity in.

Speaker 4 (10:47):
Video might snap back.

Speaker 1 (10:48):
You know, if you don't have in video, buy a
couple percent in the video, if you don't have any vista,
buy a couple percent.

Speaker 4 (10:53):
Yeah.

Speaker 2 (10:53):
Uh, that's what I you know.

Speaker 3 (10:54):
And I had one of my friends who's who's also
a client, text me and said, hey, he's just a
buying opportunity for in video like I don't know, and
I think sometimes it's important to say I don't know.
And if you know, if you own in video or
you don't own in video, and you'll want to yeah,
you know, if you want four percent of in video
by two percent now right in wait because you know
they do have earnings in the next few weeks. In March,

(11:15):
there's a big it's a third week of March is
a big artificial intelligence event with Jensen Wang is a
keynote speaker. So I think, so, I don't I think
that puts a floor in the market. I think people
will wait to hear what he says. And I don't
think people from here, you know, from here, I know
it's down fourteen percent. I don't think people will really,
you know, run for the doors on a company like

(11:37):
in Video yet until they see some signs of trouble
you know, on their on their on their quarter.

Speaker 1 (11:42):
Of the Microsoft earnet that came out with their earnings yesterday. Uh,
still expending a great deal of money towards capital expenditures.

Speaker 4 (11:51):
Uh you know, I think so you know, to kind of.

Speaker 1 (11:53):
Like you know, continue to kind of uh kind of
ferret outs. What's what's going on with these and how
are the listeners should respond? Is that I think, you know,
it is a Chinese company. They did some back testing.
Jensen Huang said it was a great first step, and
I'm paraphrasing, uh, there are some restrictions. Now it would

(12:14):
be open architecture, so evidently all the algorithms will be
released or released.

Speaker 4 (12:19):
To the public.

Speaker 1 (12:20):
And in the Western world that means that certainly we're
not wary of them, but in the Eastern world we've
got to be wary of the response. Is that specifically China,
that that deep Seek gives to two queries, you know,
and what the Chinese government limits.

Speaker 3 (12:39):
And we were so quick to ban TikTok and put
it in American hands as as and that kind of
seems like it was put on pause all the talk
behind that. So I don't know why everyone's jumping to
the conclusion that everyone's gonna download deep Seek and there's
not gonna be any government intervention there either. So but
I think that's kind of, you know, a bit of
a moot point. I think that big the big deal

(13:01):
is the cost that it was to create this. But
I don't think we should trust China and everything that
they said yet oh really, I know, so, you know,
it's hard to believe that they did it for that amount,
but you know, we'll say, I think if they did,
it's good.

Speaker 2 (13:15):
If they didn't, it's good to be honest.

Speaker 4 (13:17):
Yeah either way.

Speaker 1 (13:18):
Yeah, so uh uh in video, Jensen y Wang called
the R one model, which is Deep Seek's uh initial
platform and excellent AI advancement. And and we'll see, uh
you know, really what what transpires after that. A SML
lithography had good earnings and as you know, they produce
a lot of chips uh for for the industry, and

(13:44):
and that was a good sign.

Speaker 4 (13:46):
Uh.

Speaker 1 (13:47):
So we had that going on this past week, all
surrounding uh, this whole Deep Seek and and and then
I also think that there's a couple of things that
I think we have to address too regarding regarding this
whole issue still in a wait and see attitude. One
is the accuracy of it. Two is more questions and answered.
Did they actually have in Vidio chips. It's hard to

(14:08):
believe that China has no Invidia chips, so maybe they
just used the Nvidia chips two to accomplish this task.
The other thing too, is that mean heard you know,
and I use this an example for the listeners out there.
The final thing really to talk about this and maybe
somewhat at length, and then we could talk about how
our portfolios did during that same timeframe. But I will

(14:31):
say that when you know, to make a car, when
when the car was first invented, one at a time,
one at a time, one at a time, Henry Ford
invents the assembly line or designs the assembly line, so
the cost of producing a car.

Speaker 4 (14:46):
Comes way down.

Speaker 1 (14:48):
And I guess that was good for for Ford because it,
you know, it reduced their costs and increased their margins,
but it also allowed a lot of other competition who.

Speaker 4 (15:01):
Also have assembly lines.

Speaker 1 (15:03):
And what I'm trying to explain is that there's this thing,
and I never heard of it, called the Jevins paradox,
which is, you know, it's a kind of principle that
that basically that increased technological efficiency leads to lower costs,
inducing a rise in demand and overall greater use of
the resource. So if Deep six Deep Seek is legit,

(15:27):
then it could you know, result in this Jevins paradox
being you know, being executed, which means all this open
architecture leads to a widespread adoption. I think you've kind
of mentioned that earlier there, and that that leads to
really a quicker a move to the second and third
phase of artificial intelligence, which is the reasoning phase as

(15:49):
opposed to just the the the enhanced type of a
Google search. And I think that's kind of you know
where where you're headed. So either way, I think it's
a win win for the economy. Well, one thing I'll say, though,
ware and I don't know how I feel about it,
but and I think I wanted to talk about this
in the second half. But one of the things that
we do have to watch you do have to watch

(16:10):
out for, is that sometimes the bloom comes off the
rows on something and it's hard to get that that
bloom back, meaning that sometimes the like if you think
about like I can't wait to do this, I can't
wait to do this, and then when you're finally there,
it's like, oh, this isn't as great as I thought,
be a vacation or a picnic or this or that.
Sometimes that happens to stocks too. Some of the biggest

(16:33):
movements in a stock price comes before they actually have
any earnings. You know, think of a biotech company all
the hype, all the speculation, all the promise is now
out of the stock now and if you and if
you broaden that out, it gets maybe out of AI.
And that's my biggest fear is that even if AI
is is ends up all that it's cracked up to be,

(16:58):
perhaps uh, it's not going to live up to expectations.
And that's kind of my biggest fear for AI really
at this point is that.

Speaker 4 (17:07):
Will the will wire reality exceed the expectation?

Speaker 2 (17:11):
Always does it?

Speaker 4 (17:13):
Always would? You know?

Speaker 2 (17:14):
I think there will be and you know, and am
my way to work today, I was thinking, maybe it's
a good thing.

Speaker 3 (17:19):
Maybe this is a good thing for the market in general,
Like maybe this is the thing that will not have
this melt up.

Speaker 2 (17:24):
In this euphoria. That's a great artificial intelligence. Maybe this,
you know.

Speaker 3 (17:28):
But at the same time, how many clients did we
have that said, oh everything, I got three messages that
use the word sale in it.

Speaker 2 (17:35):
Everything's on sale. Now.

Speaker 3 (17:36):
It's like that makes me a little bit nervous as well.
But you know, hopefully maybe this is the thing that hey,
everyone takes a step back and says, maybe, uh, maybe
we should take a little pause and wait till we
see some earnings, uh maybe some revenue from from these
technologies that that everyone's talking about.

Speaker 4 (17:57):
You know, and then you know, and then I'll take
the other side of that.

Speaker 1 (18:01):
Argument for a minute or point for a minute and say, look,
this is not this is not nineteen ninety nine. Okay,
I was there in nineteen ninety nine, and you know
it was just pure, pure speculation. There's some there's some
speculative tendencies for sure, but this is not nineteen ninetyne
NAZK went down eighty percent. Could the nas that go
down twenty percent, thirty percent? Yes, But there's a big

(18:21):
difference between the companies that we talk about today in
nineteen ninety nine. The other thing I want to talk about,
AI is that you mentioned Apple went up. Apple is
not the first adopter to new technology, and I think
that really benefited in this past week. They've been kind
of you know, they never have been, they never have
been right.

Speaker 3 (18:41):
In that multiple times on the show, they kind of
perfect things, they perfect technologies.

Speaker 4 (18:46):
But there's a kind of put on the back burner
a little bit.

Speaker 1 (18:49):
You know, while people were racing towards the Nvidia and
the energy companies like the Vistras and geev Vernova, and
then all of a sudden, because their capitalks been, they
didn't they don't have a lot of money out going
towards ai uh TO as a percentage of their revenue
compared to other companies, and they're certainly buying back shares,

(19:10):
and all of a sudden that people said, whoa geez,
Apple's not dead in the order. So as you just mentioned,
Apple was up on Monday. The other thing, too is
if you know so on Monday, I'm just have the
results in front of us on Monday. Then they as
that Composite was down three point oh seven percent. Now
our stocks were down on Monday, one let me see

(19:30):
here one point two five percent, and the S and
P five hundred was down one point four to six percent.
By no indication are we saying, oh my god, that's great,
that we're gloating. But what I am saying is that
you look at you You need to look at your
portfolio and see where you know, how you did, you
know how you've done this past week, and if you're

(19:51):
down three, four or five percent uh or you know
so thus far this week. And then we're sitting here
a Thursday morning through Wednesday, the twenty ninth. Uh, this week,
the Nasdex down one point six percent, the S and
P's down one. So if you're down two or three
or four percent, you might be overweighted in the stocks

(20:14):
that really did well, you know, and maybe you want
to just get a little bit more diversified at you know,
with your portfolio. The other thing I would say is
that really what's taken a lead this year is the Dow.
The Dow's up five percent through through Wednesday, the twenty ninth.

Speaker 2 (20:32):
Point. I wouldn't you know the TAO is thirty companies.

Speaker 4 (20:37):
You know, I agree, S and P's up two point
six eight. I guess it's.

Speaker 1 (20:41):
Point of references with the S and P of two
point six. My point is that more cyclicals are out
performing the stocks that did really well last year. So
then and I also look there at our performance from
because Tuesday, the S, the S and P five hundred
snapped back. So if you look at so you want
to look at if you look at your performance from
last Friday through Tuesday, you know, that's good indication as well.

(21:05):
And our portfolio is up about up, actually up through
those two two volatile days. Point oh, eight percent, the
NAZEK was down about one And this is just our
managed common stocks, mutual funds or whatever. So just it
gives us a feel and should give you a feel
for how your portfolio. You know, where where is the
risk in your portfolio? Are you too skewed towards AI

(21:26):
or too skewed towards you know, mutual funds or ETFs
the deal in AI, And if so, you might want
to get off the edge a little bit.

Speaker 2 (21:33):
And I think you say this a lot.

Speaker 3 (21:35):
Is you know, even when you when you go through
things like Monday, I think you really need to take
a step back and almost like tell yourself that you're
not going to do anything. The same thing happened with
the carryover trade in Japan when they started raising rates
at the end of last year. Is the market was
down pretty significantly that Monday, and then I think it.

Speaker 2 (21:53):
Was up by Friday.

Speaker 3 (21:55):
So I think a lot of times when you see
you see a lot of people run to the exits
Monday day morning, when you really where it's it's kind
of the worst.

Speaker 2 (22:03):
Thing you really should do.

Speaker 3 (22:04):
Should take a step back and say, hey, you know what,
you know what really will come of this? And and
how big of a deal is it? You know, I
still and I still think we're in that let's wait
and see mode with something like deep Seek. But I
think people are becoming a little bit more optimistic on Okay,
maybe it's not great for Nvidia, but it's still good
for technology. And I think like this revolution evolution of

(22:24):
technology as a whole, that there might be more players
in it. And I think, you know, Apple has done
a good job because you know, Chat, GPT and even
this deep Seek first model, it really is just an
enhanced Google. It's great, it's fun, but it doesn't have
that much application yet for for the masses. So I think,
you know, I think that Apple was smart to let

(22:45):
everyone fight for that, you know, glorified Google Search. And
and now I think we're going to see where where
the next phase of this artificial intelligence leads us.

Speaker 4 (22:55):
Yeah, I would agree.

Speaker 1 (22:56):
I would agree with all that, you know, and I
think what we have to do now is just take
a step back. And we did, I don't think we
we you know, we didn't purchase anything, and the other
thing is.

Speaker 3 (23:05):
Purchased some Oracle. I think Oracle is a nice bridge
between today and tomorrow. I think Oracle could still do well.
It's not too heavy, it's not too highly valued, so.

Speaker 4 (23:17):
And IBM esque type of a situation. I think that's
a benefit there.

Speaker 1 (23:21):
IBM came out with earnings, earnings, and then the IBM says, look,
this kind of justifies or verifies our open architecture.

Speaker 4 (23:28):
They bought red Hat a while ago.

Speaker 1 (23:30):
We close the year of double digit growth, revenue growth
and software for the quarterlived by further acceleration in red Hat,
their CEO said Arvin Krishna. And I think that we'll
see what happens from there. So after the break, we're
going to talk a little about so more of the earnings,
then broaden the conversation out a little bit. But right
now it's ten thirty on the station, depend upon the news,
weather and information. News took a ten and one O

(23:52):
three one w g Y deep sexing, deep seek, that's
what I'll call it. First the first half we certainly
covered that to the to the great extent.

Speaker 4 (24:03):
You know. Bottom line is let's just kind of be.

Speaker 1 (24:05):
Patient, let's just hang in there, let's just not go
overboard either way.

Speaker 3 (24:08):
You know, I think what I think, you know, I
think with this, just be on the lookout for like
a melt up and like euphouriate.

Speaker 4 (24:15):
Yeah, you've been saying that a lot lately. What what
you know, why melt up?

Speaker 2 (24:18):
Like why because we haven't seen any revenue but.

Speaker 3 (24:23):
Products from these from not yet, from these companies, not
from these applications yet. So that's that's the only reason
why I'm a little skeptical, is you have not seen
the revenue from.

Speaker 2 (24:33):
From these things yet.

Speaker 4 (24:34):
You know.

Speaker 3 (24:35):
Yeah, I know you have to build them up and
that that will there will revenue be there for you know,
the picks and shovels, But you know, I don't think
you've seen, uh, you know, the revenue from the companies
that hopefully we'll get revenue from it one day that
said a lot of the things, a lot of the
companies like Meta, Microsoft, the Google, Oracle, they have revenue
in other areas.

Speaker 2 (24:55):
So I think that's that's great too.

Speaker 3 (24:58):
What I'm saying is, you know, I would kind of
stick a away from the speculative AI companies until you
see them produce some revenue from the products that they
talk about.

Speaker 1 (25:07):
Well in that in that same vein, I think, and
that's that that's the difference between this bull market and
if you want to call it.

Speaker 4 (25:14):
A bubble esque bull market and the bull market of
the second half of the nineties.

Speaker 1 (25:19):
The the collapse of those stocks then back then were
existential threats to their to their companies. There are a
ton of companies and you know, I can't vertical net, CMG,
I Commerce, One, Pets, Doc, fog Dog, pet Stock, they
all went out of business. You know, there may be
valuation questions here, and even there were valuation questions back

(25:41):
with with the companies that are still around, the intels
and Cisco's and.

Speaker 2 (25:43):
Microsoft sixteen years.

Speaker 3 (25:45):
Yeah, exactly though, And I think that that's kind of
what I'm nervous about a little bit, I guess is
not like the eighty percent drawback of the dot com bubble,
just the stagnation of a lot of you know what
ten means the of the SMP is what forty percent
of it. So that's what I'm worried about, is you know,
if you're a passive investor, if you think you're a

(26:08):
passive investor and you're in the SMP, when when in reality,
you know, forty percent of your portfolio is ten stocks,
and you know seven of those are technology stocks, And
I don't have that right up in front of me.
I think it's important to diversify outside of the smp
uh with with some of your portfolio in case there

(26:28):
is a stagnation.

Speaker 1 (26:29):
It's hard to do, like I don't know, but as
an individual, as an individual investor, it's it's hard to do.
As a professional investor, it's even harder because some signs
and I often say this is that I remember back
in two thousand and I go to this place and
it's guy's got great food. It's got great wings. I
don't any wings anymore, but eat the good sandwich and stuff.

(26:51):
I go to the Ouhouse and you go down there,
it's like any other bar restaurants. You go intil you
walk in. They got ESPN on, right?

Speaker 4 (26:57):
Is that not right?

Speaker 1 (26:58):
See the Food Network once while I see, uh, you
know whatever, if there's a if there's a person working
at the bar that you know, kind of calls the shots.

Speaker 4 (27:07):
They might have their own thing on there.

Speaker 1 (27:09):
But when you go in there and see CNBC, that's
kind of like, Okay, this is a little too much here,
and I think we're and I kind of I was
getting that feeling. I'm getting that feeling that you know,
and look, it may turn out to be. But I'm
getting that feeling is from more calls than we usually get.
That every pullback is a buying opportunity, and in you know.

Speaker 4 (27:31):
This is a sale, that's a sale we should buy.

Speaker 1 (27:33):
This is this is the well things pull back lots
of times for a valid reason. And I think right
now you just kind of take a take a little
bit of a breather, and and and and you know, you.

Speaker 4 (27:45):
Know, kind of you know, take take a take a
little bit of time the other thing, you know, and
and and it's it was, you know, let's get we
can get to the earnings. But I think this is
somewhat more important for the for the uh, for the
for the people out there.

Speaker 1 (28:00):
And here's here's what here's what we were talking about.
It's has zero trading costs. And the Internet caused investors, okay,
cause caused in the Internet investors and I did not
I printed this up for you harmed. Well it has
It caused the investors to emphasize emotions over intellect, emphasize

(28:21):
impatience over patients, emphasized gamification over the discipline investing, emphasize
scrolling over conscious decissioning, making scrolling on your on your
on your investment app emphasized. You know, I used to
take a break from work by going to the water cooler,
and now I look at my stocks.

Speaker 4 (28:40):
You know what I mean? You know the screens, the
color is the arrows.

Speaker 3 (28:44):
Dopamine nation reading called domination constant. You know you need
you need, you don't. It's not just watching movie. You
need to watch a movie and have a phone right
in your face. You know, all the colors, you know,
writing people's face.

Speaker 2 (28:58):
It's really, it's really, you.

Speaker 3 (29:00):
Know, and I think everyone sees it. You know, it's
it's pretty distracting.

Speaker 1 (29:05):
Someone was on John Stewart and he said, if they
banned TikTok, what am I going to do when I'm
watching movies?

Speaker 4 (29:11):
It's like, is that the truth? The movies?

Speaker 2 (29:13):
The other you're looking for your phone? You can't go
that's your phone. It's it's it's.

Speaker 4 (29:18):
Your phones in the other room. You'll go to does
it well?

Speaker 2 (29:22):
Mom? Because she can never find her, He's great, So
she's always present.

Speaker 1 (29:25):
Phones in her glasses. Yeah, you know, she is always present.
Now sometimes that causes a little stress in our household.
You know, if I'm looking for as I'm driving in
the car, you often say that I call you what.

Speaker 2 (29:34):
I'm just an alarm goes off.

Speaker 4 (29:35):
When the alarm, right, when the alarm goes off.

Speaker 1 (29:37):
That's somewhat of an issue, but I think that's what
we've got to and so we lost our patience to
be good investors. So that's one of the things that
that's an introspective question that we ask ourselves all the time.
CNBC is on here, not twenty four to seven, but
it's here we get home. Meta announces earnings, Tesla announces earnings, Microsoft,

(29:57):
and that's our job. So don't get me wrong, but
you've got to be you got to be careful that
you're not breathing this in all the time. So so
so which which perhaps prevents you from seeing the forest
through the trees, and and and so that that's one
of my concerns really right now with the average investor,
that they don't have the ability to uh emotionally detach

(30:22):
themselves from their accounts. Uh that that then that then
gets them so, you know, caught up, and you know
it's it's difficult. You know, we own three MS and
three m's done great. We own Pfizer and find Pfizer's
kind of languished. We had a client call the other day.
I want to sell Starbucks. I want to sell Boeing,
I want to sell uh. I think it was Nike
and and and maybe Disney and granted they haven't really

(30:44):
gone gone anywhere. I mean, you know, uh so, but
you got to be careful that you know, you're you're
not selling many times a sector isn't going anywhere, but
you want to buy low and sell high. A lot
of people are buying high, trying to buy high and
selling higher. And I think David Einhorn was saying that

(31:06):
a little bit. He says, you know, you've you you
He's worried about the market in that respect, these green lights, CEO,
is it famed investor, He's worried that the market is
is you know, well you were you were talking about
the S and P five hundred. You know, if you're
a passive investor, you don't care about valuation, right, yeah,
you know so so I don't know.

Speaker 4 (31:26):
So where do you go? Now? What do you do now?

Speaker 1 (31:27):
I mean we're looking at some inverse uh inverse ETFs.

Speaker 4 (31:32):
A little bit for clients at v x Y.

Speaker 3 (31:34):
You know, you know vic CTFs and you know I'm
not positive or negative on the economy, but I think,
you know, with Trump taking over, uh, you know, even
you know, we can talk about the FED a little bit,
But after the FAG came out, he said, you know,
because Jay Powell and the FED failed to stop and
the problem that they created with inflation, I will do
it by unleashing American energy production, slashing regulation, rebalancing international trade,

(31:59):
and re igniting a manu in, reigniting American manufacturing. So
what I think is, you know, the more Trump comes
into power and has these uh you know, programs and objectives,
uh that we've never seen before, you know, slashing regulation,
you know, I think there's just you open up the

(32:21):
door for the chance of let's say, like a black
Swan event or something like that, because you know, this
is kind of an experiment what he's doing, and we
don't know if it's gonna work or not work out yet.

Speaker 2 (32:31):
And I think, you know, the risk and the risk
reward in the market.

Speaker 3 (32:35):
Just isn't isn't there where it used to be, because
you know, the more unknown variables that we put into
the market, the more the more things that the more
things can happen, like the butterfly effect. You know, it
changed a little bit of things close to the wing,
and who knows what happens a little bit farther out.
You know.

Speaker 1 (32:53):
The thing, the thing that I would say is that,
like you know, President Biden, I think is lack of action.

Speaker 4 (33:00):
You know, probably you know, and look, people.

Speaker 1 (33:02):
Are going to disagree on no political analysts, okay, but
in my opinion and talking to a lot of people,
I think his lack of action and perhaps courses of
some courses of action he took, uh was the reason
he was defeated. So people want change, they want something different.
They want and almost like almost like a we were
talking about before the break, the hope, the dream, the promise.

(33:25):
That is something that President Trump provides, and I think
too many middle income Americans have not benefited. They have
not realized that they've they've they've been told when they
were ten, fifteen, twenty, the hope, the dream, the promise,
and now they're forty five or fifty like I've been,
I've been, I've been, I've been kind of you know,
waiting for that and it hasn't come. So I'm looking
for something different. That said, You're right, I mean, you

(33:48):
know when you use the butterfly example. I use the
bar fight, you know, I use the a house early
use the bar fight. When that first punch is thrown,
who knows where it goes. I think President Trump's got
to be a little bit careful that everybody wants depending
upon you know your stance, and you know, I'm not
saying everybody, but you know, look, I mean, I would
think the vast majority of Americans want criminal immigrants just
like they out of the country, just like they want

(34:11):
criminal Americans in jail, if the if, the if, the
sentence warrants it. That said, after you get down past
those people, then the debate comes in. And I'm not
here to debate that or to give you my personal opinion.
All I'm saying is you got to be careful that
we're not, you know, you know, deporting you know, the
people who work on our farms and people work on
our lower paying jobs. They're looking for that to fulfill

(34:34):
the American dream, and that drives up inflation.

Speaker 4 (34:37):
You know, you just gotta be careful.

Speaker 3 (34:38):
And you know it's a lot of the policies Trump
is putting into place is inflationary.

Speaker 2 (34:44):
It's it's just a fact. So Yeah.

Speaker 3 (34:47):
I think that's the biggest problem now is you know,
I don't think it's the Fed's fault that inflation has
been so high. You know, maybe it had to do
with all the PPP and stimulus checks that we handed out.
I would, I would they were probably they were a
little bit too late to hike. But again we were
going through COVID, you know, I think it was kind
of unprecedented times. I don't think Jay Powell has done

(35:09):
a bad job. I think he started to hike rates
a little bit too late. He said inflation inflation was transitory,
when when it wasn't. But you know, I think they
have done a good job overall getting inflation down to
you know, to the mid two percent. That said, I
think that that to get it down. Like I just
don't know what Trump's tweeting or whatever you call it

(35:30):
on truth social I don't know how he thinks that
these things can be deflationary so he wants to Fed
to cut rates. That's obviously inflationary, right I think.

Speaker 4 (35:40):
At this point in the cycle.

Speaker 1 (35:41):
Yeah, I think at this point in the cycle, it
would if the economy is running at five percent nomenal
GDP growth in three percent real growth, like post inflation growth.
Then yeah, I think and I think even Chared Powell
yesterday or you know it was yesterday because we're recording
this on Thursday, podcasting this on Thursday, I think I

(36:02):
think he is saying, look, I want to see how
these one offs play out there. And there are there
are those on both sides that say, you know, tariffs
are are a one time hit that will then bring
costs down, and then DOS will help bring costs down.
He offered retirement packages. Now again he doesn't have the
money to kind of fulfill those promise or offers to
federal employees. Congress appropriates money and they haven't done that.

(36:23):
But so so maybe that will bring costs down if
you you know, for for for most of private industry,
or place a fifty five or sixty year old with
a twenty or twenty five year old, you know, help
healthcare costs are cheaper and salaries are cheaper or lower,
So rather than that step up, especially through the through
the public employees.

Speaker 4 (36:43):
So you've got some things in there.

Speaker 1 (36:45):
But also pal chair Palell was saying, you know, you know,
part of the statement and also part of the press
conference was hey, you know the economy's going okay, inflation's
coming down. Before we cut, we want to see what
the impact of present and the Trump's policies are going
to be. And also we want to get more economic
data in. So economic data is coming in. President Trump

(37:07):
is implementing his policies. Let's see where that goes, and
and and you take it from there, and they they
the Fed's policy statement came out. The unemployment rate is
stabilized at a low level in recent months, and labor
conditions remained solid. Inflation remains somewhat elevated. Elevated that replaces
inflation has made progress towards the committee's two percent objective.

(37:30):
So inflation has made it remains elevated, has replaced that
has made progress towards the two percent objective.

Speaker 4 (37:37):
I think that's big.

Speaker 1 (37:38):
They maintained their target range at four and a quarter
to four and a half. They were they cut by
a quarter last time, and I think Wall Street was
fine with that. And those were really the two big
components of the Fed's policy statement. And candidly, I see
I see nothing wrong with that at all. Aaron Fagan,
I don't know how you how you feel about that.

(37:58):
I think we've kind of you know, gone going through that.
So we talked a little bit about IBM's earnings. Uh
red hat open source. It's open source kind of lends
itself towards the the deep seek type of platform as
opposed to the propriatory pre platform earnings. Like, we want

(38:20):
to touch on some other earnings area. I know you're
kind of what do you think about Tesla at this point?

Speaker 4 (38:26):
Like Tesla was up a little bit.

Speaker 3 (38:28):
Yeah, Tesla was up pretty disappointing earnings. Disappointing earnings. You know,
automotive revenue fell eight percent from earlier, they sold less cars.
Earnings came in week, revenue came in week. A lot
of their revenue accounted for appreciation in bitcoin, and it's
gone up. But you know, I don't know, we owned
some Tesla. I think we have to make a decision

(38:50):
on what to do with it for multiple reasons, right, But.

Speaker 2 (38:59):
Yeah, I don't know. What do you think?

Speaker 4 (39:00):
Well, I think that I think the promise.

Speaker 1 (39:04):
So that's one of the stocks that I think and
it's fulfilled a lot of its promises along the way,
you know, much later than Elon Musk has initially projected.
But he's saying there's gonna be uh, driverless cars in Austin,
you know, within with within twenty twenty five, I think
gets Austin, Texas.

Speaker 2 (39:22):
Yeah, he also said, you know, then created a car
that was thirty grand.

Speaker 1 (39:25):
He also said that, yeah, but this is like five
or six ro but this is like right right, this
is not like over the next three four five years.
So you know, it's gonna it's gonna be here. You know,
he's also got SpaceX. He's also got you know, other
other other ventures that are going on right now, and
so I think we'll see how that plays out. My
concern about Tesla eventually is what my concern about was

(39:48):
there's so much promise in Tesla that without that promise,
the valuation comes down. Still a great company, but the
valuation comes down. So so so we'll see.

Speaker 4 (40:00):
You know where that came.

Speaker 3 (40:01):
You know, they've they've they're selling less cars year over year.
You know, I don't know, with with with Elon Musk
coming out and doing some pretty I don't know, pretty
well jarring things. Uh you know, will he lose some
some Tesla sales?

Speaker 4 (40:19):
Yeah?

Speaker 2 (40:20):
So you know, we'll see what's polarizing Testa's polarizing.

Speaker 4 (40:26):
Yeah.

Speaker 1 (40:27):
Yeah, So you know, he is polar He's a polarizing individual.
I think he's you know, evolved into somewhat of a
polarizing individual.

Speaker 4 (40:35):
And we'll see kind of, you know, how how that
plays out as well.

Speaker 1 (40:41):
Yeah, it's tough because he's polarizing against stereotypically the dB buyers.

Speaker 4 (40:49):
You know.

Speaker 1 (40:49):
You know, I did say I see Norway's like ninety
five percent electrical, did you you know that?

Speaker 4 (40:54):
Yeah? And all the new And there's a.

Speaker 2 (40:56):
B y D.

Speaker 3 (40:57):
B y D is a Chinese EV manufacturer. They're building
plants in Mexico. They have a car for ten thousand dollars. So,
you know, yeah, I think EV fits in. I think
people were sick of getting EV shoved down their their throat.

Speaker 2 (41:10):
But you know, EV's do have a place. I had
a Tesla for a while.

Speaker 3 (41:15):
It was great, you know, I plugged it in at
home and you know, I drove to work and never
had to worry about it.

Speaker 1 (41:19):
But well, but we'll see where where where that goes,
you know, and and and then then then there's also
the competition between the US and China. You know, how
does the US feel about importing cars from China through
Mexico into the US. Are there going to be tariffs,
what will those tariffs be? You know, how do we
protect their car industry? And so there's there's all those

(41:41):
questions there. I was going to say something else about
about Oh I remember back at you know, probably twenty five, thirty,
maybe even forty years ago.

Speaker 4 (41:49):
And for those of you that are fifty, you know,
will remember that.

Speaker 1 (41:51):
You go and I think that was a Russian car
company and it you know, it was dirt cheap, but
it just didn't have all the bells and whistles that
the US wanted. And also there were a lot of
safety concerns. I don't know anything, you know about the
specifications of the by D automobiles, but I do know,
and you know, I was in Norway a couple of
years ago. My wife Carolyn said, hey, you know, you're

(42:12):
sixty two, when I was sixty two at the time.
We've got to start doing a little bit of traveling.
So was there once a year. We tried to do
something with the Norway and then we went to Scotland
last year. Both were great if you have the opportunity
to ever do that, you know, And we also go
you know, travel in the United States have been to
a lot of the national parks, and we're going to
some over the.

Speaker 4 (42:32):
Next month or so. But that said tell you too
much about my private life. But you know, just kind
of line of I don't know, I don't know what
I went off on that board, but I will say
that Norway, Norway, I saw by D cars there there there,
you know, we rented an electric valve O and it
was it was nice and it's a pretty decent sized country.

(42:54):
So and they look look high quality.

Speaker 1 (42:56):
They have the showrooms just like uh Tesla would have
a showroom. But we'll see, you know, one of the
companies that's really look at earnings per share for meta platforms,
and we do own some meta not as much as
we would like. Earnings per share eight dollars and two
cents versus six seventy seven. Expen expected revenue forty eight
point three nine billion versus forty seven point oh four billion.

(43:19):
First quarter revenue expected to be in the range of
thirty nine and a half billion to forty one point eight.
Analysts expectations are forty one point seven to three and
metas ai chatbott has seven hundred million monthly active users,
up from six hundred million just in December. Uh, you know,
Mark Zuckerberg, we now have a US administration that is

(43:40):
proud of our leading companies, prioritize this American technology winning
great company.

Speaker 2 (43:45):
We own a lot of Meta.

Speaker 3 (43:46):
We will continue to you know, they went through their
whole Meta metaverse debac a little bit, but you know
they really got got on track sales and fourth quarter
jump twenty one percent. They have the glasses they have
of the Lama brand and large language models. That's that
is open source, unlike open AI and Google. Now, so

(44:08):
you know, I think Meta will continue to be a leader,
one of the largest companies in the world.

Speaker 2 (44:12):
And you know we like the company.

Speaker 4 (44:14):
Daily Active people keeping just a great job too, yes,
you know, I.

Speaker 1 (44:18):
Know, yeah, and he has kind of morphed into what
he is now.

Speaker 4 (44:23):
That happens a lot. I mean, look at you know this.
I don't know.

Speaker 1 (44:26):
I think it's hard to maintain your humility when you're
you know, you're a you have a net worth of
five hundred billion, I guess.

Speaker 4 (44:33):
And I respect the people that do, uh, people that
have humility in general.

Speaker 1 (44:40):
Daily active people, you know, daily active users three point
three five billion. There's I don't think there's seven that
have billion people in the world, so probably forty percent
of the world's population, you know, use Facebook, Facebook, Instagram
threads on a daily basis, and that actually rose a
little bit, so you're talking about a.

Speaker 2 (45:03):
Lot of people in three five billions.

Speaker 1 (45:04):
They're still expenditures a twenty five billion, five percent a
year over year, so they're you know, they're still having
problem with their augmented reality technologies five billion dollar loss
in the fourth quarter sales of only one point one billion.

Speaker 3 (45:20):
You know, they started to monetize WhatsApp, which is you know,
a messenger service that's used mostly internationally, so you know,
they've done a very very good job of expanding their
their areas of revenue. I know, most of it still
does come from advertising. I don't see that going away.
I think they've done a really great job expanding into

(45:44):
other things, like you know, like the large language models,
even like the like the the the ray bands that
they have, so you know, I think they'll continue to
uh to do well.

Speaker 1 (45:56):
So the other and then probably the final earnings report
that we can get to is Microsoft, which you know
it's in our top five holdings. Earnings per share three
twenty three versus three eleven revenue came in at about
a billion above zero eight hundred and fifty million above
expectations of sixty nine points sixty three billion dollars. I
think the concern over over Microsoft, at least for now

(46:18):
was revenue was from Azure up. That's their cloud services
up thirty one percent, down from thirty three percent.

Speaker 4 (46:27):
The prior quarter. So maybe a little bit slowing in
Azure Azure.

Speaker 1 (46:32):
You know, I've heard a lot of people say call
it that, So I think that is what's going on.
And also their capital expenditures are not expected to you know.

Speaker 2 (46:40):
They beat on, beat on earnings, be on revenue.

Speaker 3 (46:44):
I think people just want a little bit more out
of you know, the is your right.

Speaker 1 (46:48):
And also then they have a partnership with open Ai
and Satnadella. You know basically that open Ai is a
lot more coming soon, so stay tuned. And I think
that's the other thing too, is that with with deep Seek.
You know, Okay, this is the initial model for deep Seek.
You know, where does that go from that?

Speaker 2 (47:06):
Yeah?

Speaker 3 (47:06):
And I think people will eventually realize that this initial
model wasn't the one that they were going to monetize anyway,
It wasn't the one that was going to increase margins
for their companies as well as other companies. And I
think once we get to that second phase of artificial intelligence,
where you know, companies can start to increase their margins
by laying people off essentially, I think that in becoming

(47:27):
more cost efficient, I think that's when you'll start to
see these companies, you know, kind of really.

Speaker 4 (47:35):
Particip participating in this.

Speaker 3 (47:37):
You know, not to say that they won't they won't
do well in the meantime, but you know, we'll have
have the artificial intelligence aspect of their companies help them.

Speaker 1 (47:46):
So I think the so yeah, So at this point
in time, market on solid footing, we were kind of,
you know, thinking about, okay, where do we go from here?
What are some of the issues you mentioned black swan events.
You know, President Trump is a wider range of potential
out comes because of his policies as compared to a
women saying it forever, as compared to a traditional politician.

Speaker 2 (48:05):
I think, like like usual, we're cautiously optimistic.

Speaker 1 (48:07):
Yes, exactly, always watching our backside. Give us a call
during the week five on four, check us out on
the web. Butit Fagan ask that dot com or like
us on Facebook, Have a great day.

Speaker 4 (48:16):
See