Mr. Money Talk

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Episode Transcript

(00:10):
Good afternoon. This is Josh Arnoldmissed 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 IRAand four one k. But you do
have to give us a call ninefive two nine two five five six o

(00:32):
eight. That's nine five two ninetwo five five six oh week. You
always get straight talk, not sugarcoded advice before we hop in. Everything
we discussed in this show is fordiscussion purposes only. Nothing should be conscued
as investment advice. Some are Allof the investments we discussed in the show
may not be suitable for all.Some are all Investors do not make any

(00:54):
investment decision before consulting with an investmentadvisor. Investing contains risk, including risk
of loss. I'm gonna say,speaking of losses, this is a brutal
week. I mean, it's uglyout there. Well well, well we'll

(01:17):
say that this is the market hasjust 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'sa lot of worry. I mean,
you've got the Federal Reserve meeting thisweek and Federal Reserve talking heads higher for

(01:42):
longer, higher for longer. Wesee inflation under every rock, and we're
prepared to raise rates again. You'vegot them. I'm gonna push back on
what you just said before. Themarket is selling off because they're being extra

(02:06):
careful about defeating inflation. They've acknowledgedthat it's coming down, but they want
to be extra careful, which meansthey're going to hold rates up higher for
longer. The market was pricing infifty base or one hundred basis points of
cuts next year, so a reductionof rates by a one percent next year.
Powell and the Dot plot said,no, you're only going to get

(02:27):
half of that. I think peopleare reading too much into that. But
nonetheless, you have a on balance, more hawk ish fed than people were
expecting, although certainly not what wewere 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, wehope everybody goes out and gets what they

(02:49):
deserve, and hopes everybody gets paidand we have a potential government shutdown.
We've had a big I think thebiggest thing is we've had a big run
this year. Now text up aboutforty 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 apullback of the SMP since the high of
about six percent, which a nightwe knew about thirty nineteen to a twelve

(03:15):
thirteen. Yeah. We we havesaid 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 thisis normal, you know, for any
year. Anytime that there's a pullback, it does scare a lot of investors,

(03:38):
and a lot of investors start seeingthis pullback and it's, oh,
my goodness, woe is us?Sell sell sell sell everything. And when
the market reverses there a lot ofinvestors say no, it's we're going to
wait. We're going to wait.And then they come in as a market

(03:59):
proceeds to well new high and nowthey breathe a sigh and say, oh,
well now we can get in.Things are much better. So they
end up selling high or should beselling low or selling high and by no,
it's the other way. They selllow and by high there it is
look turn up, look turnover ismost of the time, and we stress

(04:24):
this on the show. We talka lot about macro. We very rarely
actually do anything. We young companieswe really believe in. You've been a
holder of Apple and Amazon going backto about two thousand and four. So
the way to make a lot ofmoney in the stock market is to find
good businesses and hold them for along time. We do do what.
We have a tactical trading allocation,and we are looking for new ideas.

(04:46):
But all eut sequel. You shouldnot 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 whatthe stock markets do. It should track
GDP growth. We're better than thattrack corporate propers growth. So most times
people shouldn't do anything. And Iwould for the bears and the warriors out

(05:08):
there, I would just point outthe credit spreads, which is the amount
of additional interest demanded by bond investorsand companies over treasuries. Credit spreads is
particularly for junk rated companies or highyield 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 comeback to the IPOs. We talked about
that a little bit last week.The IPOs are happening, but they're not

(05:30):
performing well. But one of thethings we have been calling for an m
and A wave started this week withsplunk twenty eight billion dollars deal from Cisco.
So, you know, the marketsup a lot. I think I
would just be calm about this.I mean, can I go down more?
Of course it can. Markets gooff, Markets go down, but
you own good companies, you shoulddo okay, And we're not saying that's

(05:51):
true all the time, but thisjust feels. Can I say garden varieties
sell off in September? Can Isay you can say garden garden variety,
garden variety pullback. But you've gota lot of consternation about this particular pullback,

(06:12):
you know, due to some ofthe things that I've you know,
brought up, the FED, theFED and rates, the UAW strike,
the price of oil is up,and you have the potential government shutdown,
and well, well, markets don'tgo down on nothing, and they don't
go go up on nothing. Imean, there's always stuff to worry about,
and you just let's just take thoseone at a time. The UAW

(06:33):
isn't gonna strike forever, the government, if it shuts down, isn't going
to shut down forever. And theprice of oil. Look, I think
MBAs Mohammad Ben Salman, the defacto 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, buthe wants to do what Ali Naimi did.

(06:57):
Naimi being the famous Saudio minister forabout thirty years, who just wanted
to keep oil roughly, you know, between eighty and ninety. Maybe maybe
Ben Salmon wants to go eighty fiveninety five. But the Saudis are smart
enough to know that they don't wantoil at one hundred. They wanted at
the maximum price without impacting demand.So yeah, I'm a little circumspect.

(07:19):
I just I don't see a bigsell off now. Granted, how much
cash you you usually hold a lotof cash, how much cash you hold,
but you usually you know, I'llsay, 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

(07:46):
h ten to twenty percent in cashright 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, iflong time listeners of the show, you
know we keep adding disclaimers because peopletelling us we have to add disclaimers.

(08:07):
We have to be fair and balance. The fair and balance thing I have
to say right now, which evenif it wasn't you know, is our
portfolios are all equity. Even thoughwe 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 adown market. We gotta make that caveat

(08:28):
multiple times. People who've listened tothe show a lot no no our feelings
on bonds, but some people likebonds and a sixty forty portfolio in a
down market should do better. Althoughto be fair and balanced, to the
fair and balanced statement. I wouldhave to point out, as would you,
that bond investors are getting obliterated rightnow because we're having we're having the

(08:48):
we're gonna believable moment. Oh,let me finish. Well, we're doing
this remotely. That's why it's alittle 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 andfive, since two thousand and five,
meaning if you own bonds as theyadge against equity risk, you are losing

(09:09):
money on your hedge i e.Your bonds and your equities. You're doing
horrifically. And the nightmare scenario ishappening, which is bonds go down in
price, oil goes up, andstocks go down. That's what's playing out.
I don't know why don't you geta word in it, because I
don't know how to be fair andbalanced with that statement, which is a
true statement. It's a it's avery true statement. So that the statement

(09:33):
alone is true, I think youcan't you can't argue here are the numbers,
then you can't argue it. Imean, it's it's like, okay,
this year the Long Bond Index tLT is down in value eight and

(09:54):
a half percent. That's that's prettysimple. Go back three years, three
three years, and you've lost moneyevery year, three years in a row,
three years in a row, you'velost money flt LT Heck, at

(10:16):
the beginning of twenty twenty two,TLT was trading at one hundred and fifty
dollars a share. You've lost moneythree years in a row and bonds.
But we're gonna have to come backafter this. We'll come back with more

(10:39):
money talk with Judd Arnold and JoshArnold. That's me, mister money talk.
Do give us a call nine tofive two nine two five five six
oh eight. We're here to helpyou position your money, whether it's inside
or outside a retirement account. Thisis Josh Arnold, mister money Talk with

(11:03):
Judd and Arnold here to answer yourquestions on stocks, bonds, mutual funds,
how you should position your investment dollarsincluding your IRA in four oh one
K. Don't hesitate to give usa call at nine five two nine two
five five six oh eight. That'snine five two nine two five five six
oh eight. You always get straighttalk, not sure coded advice. We're

(11:26):
talking about bonds, and in thesixteen forty portfolio, we've happened to focus
on what has been happening in thegovernment bonds or government bonds. Indussees it's
very interesting, Judd. In listeningto we'll say market strategists or some fun

(11:50):
fund managers or other portfolio managers talkingabout bonds. The talking heads keep talking
about yields going up, yields goingup, yields going up. Nobody bothers
to talk about what's happening to thevalue of the bonds to keep going down,
to keep hearing man, bonds aregreat. You've got to lock in

(12:13):
that yield now because should there bea recession, then the Fed is going
to be cutting rates and then you'regoing to be look looking real good with
that, you know, much higherhigher yield. All this shoulders, Yeah,

(12:35):
well shrug your shoulders is right becausethe description that you just laid out,
which is the one that we hearyou and I said, I don't
understand you, sir, because you'retelling me to buy bonds because it's protection.
If I'm buying protection, why doI want to lose money, you
know, and base it all ona macro economic call. I want certainty

(12:58):
and you can't give me certainly.Are still interest rate bets and there's no
guarantee in a recession that you're gonnamake money on bonds. And the problem
is, you know, I'll pointout the Ken Griffin interview again, you
know, ahead of one of thebiggest 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 sixpercent as deficits of six percent of GDP.

(13:22):
That's what the bond markets freaking outabout. And the nightmare scenario is
that we have an equity market pullbackcontemporaneously with a rise in bond price,
rise in yields, which would bea falling bond price. And then that's
what you had three years in arow. Three Yeah, you've had bond

(13:43):
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 themath is quite straightforward. If you buy
the S and P fifty, notthe 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 saferthing. And that's what we allocate,

(14:05):
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 theyare, bonds are a very risky proposition
because I'll tell you what. Youlose thirty percent on a growth stock,

(14:26):
you hold that thing. If you'reright, you can make back that thirty
percent. You lose thirty percent inbonds. God help you, God help
you, you know, every everyday, just as a little in aside.
At the low point in real inyields during COVID, Argentina or Austria,
I should say not Argentina Austria.Austria issued a one hundred year bond

(14:50):
with I believe a one, oneor two percent interest rate. Do you
imagine buying that bond at par youknow, 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 onehundred year bond you thought you were all
straight? Austria shouldn't really default.Yeah, that wouldn't be feeling feeling right

(15:11):
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 grandkidsand say sorry, I really screwed
up. I lost I lost thehouse, I lost your college fund.
But if you just hold hold thisbond for ninety eight years, you're gonna

(15:33):
get your money back. See Ilook at I'll look at it a different
different way. Now, this wouldbe 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

(15:58):
today. You gave Apple some veryvery 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 corporationsto to accumulate debt at those very low

(16:22):
interest rates several years ago. Now, let's let's give in a siture for
the people who really do want tobuy bonds and your your your heart set
eye, and you know, ifthere's nothing that you and I can say
to them, if you're gonna buybonds, 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 thatlong to hold it. But man,

(16:42):
I gotta tell you this is nowalk in the park at all at all.
Well here a lot of people arebuying 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 highYield Bond Index h y G, which

(17:07):
you know for a high yield indexthat has held in pretty pretty well.
Hold on, hold on, Igot 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 lendto investment investment grade companies for longer terms.

(17:30):
So the duration which is the averagematurity 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 noninvestment grade companies, people don't want to
lend to them that long because toomany things can go wrong, and so
in a rising interest rate environment.Because the high ye of Bond Index,

(17:51):
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. Andthat's the real way. You have two
aspects of the difference between LQD andHyG, with HyGG more duration but presumably
less default risk, meaning the companiesyou went to are presumptively because their investgreator

(18:15):
are going to pay you back.With high yield, you get less duration,
more coupon, and that coupon isto offset the potential for defaults and
material impairments. There really hasn't beendefaults yet, so that's the issue.
I like, we would not berecommending high yield bonds today into a distress
cycle potentially with credit spreads, whichis the intremental yield you get on high

(18:38):
yield bonds over treasuries at their tights, we would not be recommended. But
the reason why it's outperforming HyG isoutperforming LQUD, and it did the same
thing during COVID as well. Duringthe COVID fall, was is all this
duration issue, which is it's justless sensitive interest rates because the maturities are
shorter. It's a technical point.We can get technical. You know,

(19:00):
people think we're I think we're justsleepy guys in Minnesota. I can get
super technical for you. Oh weknow that. You know that you can
get very very technical, you knowwith that. But I was just looking
at, you know, some bondbond alternative. Yeah, we don't like

(19:21):
buying bonds, but some people do. If you're gonna buy bonds, buy
short term bonds. But all it'sequal. What the regulator would tell you,
what the academic would tell you isa portfolio that includes bonds. So
a typical sixty forty portfolio is goingto outperform in a down market. We
would caution that that has not beentrue recently, and you're making an interest
rate bed however, so you know, we can't convince everybody, but we

(19:44):
digress. So the story, ifwe do the bed was the story this
week for those just joining. Theycame out more hawkish, meaning it sounded
like they were going to keep rateshigher for longer. Verse expectations, not
our expectation, you would. Iwere a little bit surprised. I don't
think I thought he was duffy Well, I thought that I thought that he

(20:06):
was just speaking what he's been speakingbefore. Higher for longer. We're data
dependent. There's a likelihood we couldraise interest rates once more this year.
Okay, Well, the Fed hasbeen saying that for a lot of months
now, and I was quite quitesurprised that the market sold off when the

(20:32):
Fed, you know, indicated thatthey 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'vegot plenty of issues. You've got the
price of oilers is up, sothat's going to keep inflation up. Oil

(20:53):
runs through just about everything in theeconomy. If the price of oil is
up, prices are going to stayup. Then you've got all of all
of the unions that continue to negotiatefor higher, higher wages. As we
speak, I just saw a blurbthat Wriggley and that's not the gum.

(21:18):
That's Wrigley Field where the Chicago Cubsplay. 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 comeback for seventh inning strikes stretch. And
I'm just very excited that the Twinsare just one game removed from clinching a

(21:41):
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'rehere to help you. Nine five two
nine two five five six oh eight. This is Josh Arnold or money Talk

(22:03):
with Judd Arnold here to answer yourquestions on stop sponds, mutual funds,
How you should dision your investment dollarsincluding your IRA in four oh one K.
Don't hesitate to give us a callnine five two nine two five five
six zero eight. You always getstraight talk, not sure coded advice.
All investments discussing the show are fordiscussion purposes only. Nothing in the show

(22:26):
should be considered investment advice. Someor all of the investments we discussed on
this show may not be suitable forsome are all investors, Please consult a
financial advisor before making any investment decision. Investing contains risk, including risk of
loss. Cool. There you goback to it, back to the strikes.

(22:48):
So the Wrigley Field concession operators arestriking, maybe they should just tell
the team, hey, fill thestands 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 tohave a walk out of seventy five
thousand nurses and other hospital staff,non doctors next month because they said the

(23:11):
hospital, which I would point outis not for profit, because the hospital
eighty five for me to learn knowthe hospital industry, by the way,
just asn't a side. Eighty fivepercent of the hospitals in this country are
not for profit. They're funded largelyby endowments and then they have ready two
percent operating margin. The for profithospitals are unbelievable businesses. And if you

(23:33):
don't hear my sarcasm, I'll sayit explicitly. I'm being sarcastic. Hospitals
are a terrible business. They havetons of capex. They make an after
capex margin of about two and ahalf 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

(23:56):
the streat. I have to makeit. You know, a hospital grocery
store, they are in small margins, and you want to turn your inventory
as much as possible. With ahospital, 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.

(24:18):
I have a drum here, andyou 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

(24:40):
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 mystupidity and selling. No. I think
I think when you when you soldyou made a nice profit. Thank you
very much, and I would havetold you back then. I would have

(25:00):
tell you today, Uh, investingin bitcoin, of the cryptocurrencies is stupid.
But that is not fair and balancedtelling investing in that that stuff is
is stupid. There is nothing there. There is no there there. That's

(25:22):
end the end of the story withthat. Well, let's just to recap
for those joining late. We've hadone of the toughest weeks in the market
this year. We've given the SPfive hundred from the highs this year,
which was about nineteen a half percentup for the year. We are we
have given back six to seven points. The NAZAC, which was up more
than forties, only up at lowthirties. Now. It's the tip of

(25:45):
September is the worst month seasonally inthe SMP. In the market, typically
you lose money that month, andit is living up to it. We've
got a FED that came out andsounded more hawkish, and it keep rates
higher for longer than expectations, althoughwe would point out not our expectations,
but certainly the market doesn't like itand we must accept reality. We thought

(26:06):
he was bullish, but anyway,we got a UAW strike, They're gonna
shoot. They're oh man, thisis the spokesperson for the UAW. Their
text messages got leaked said we're gonnastrike. 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

(26:27):
want to hurt the employee or inan in a market environment where the government
has said we want to get ridof what you guys are making. Well,
look it's you know, it's theold Vegas saying, you gotta the
casinos have to win twice from thehigh rolling. They gotta beat him at

(26:49):
the game, and they got tocollect and at some point, you know,
if the employees of the the bigthree carmakers, I think what's curious
to me, I'll say is thishas a lot of parallels to Bowing and

(27:10):
the end of Boeing. In WashingtonState where Boeing is largely left. Washington
State, there was a strike atthe very end that was the straw that
broke the camel's back, and alot of them Machina said, well,
if we don't strike, you know, they're just going to kind us to
the ground. Well, Boeing wokeup and said, guys, we can't
make money here, and if wedon't make money, there's no money for
you. The company's got to makemoney and they left. And I think

(27:33):
it was a horrific miscalculation. Andhearing a union say they want to punish
the company that will pay them whenthat company is under massive pressure, it
doesn't make a lot of sense tome. I get that you would want
that, you want more money.I mean inflations crushed the middle class,
that certainly crushed them. And theylook at this executive comp which I will
freely say is absolutely ridiculous, howmuch Mary Bara, the CEO of General

(27:57):
Motors has made that being said,you strike for five months, you're going
to be out of a job becausethe 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 allin versus Tesla at fifty in Toyota I
think is at forty seven. Andthe unions want to make it one ten,
one twenty. You know, Toyota'sjumping up and down, Tesla's jumping

(28:22):
up and down. And it's justa failure to see the big picture.
But now look, people people dowith 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 largesthealthcare chain dominantly in California, likely to
strike. And all of this isa symptom of failed fiscal and monetary policy

(28:44):
because these people are rightly said,my wages have not kept up with inflation.
I'm getting punished, and I'm madand 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 meanI mean that in a political way.
And this is the populism that isleading towards these strikes, which are likely

(29:06):
to continue. And for many peoplelike the pain, their feelings incredibly real.
And this is a nature of theeconomy where Okay, the market sold
off, let's make it. Let'scome 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, lastyear, which was horrific by all sense

(29:26):
of the imjation, was one ofthe worst years in the market. We've
now SMP five hundred rally back nineteenpercent. 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 thirtys and P five hundred multiple of earnings,
you know, eighteen nineteen times.And the average investor is saying,

(29:47):
there's a lot of bad stuff goingon. We haven't even gotten to the
government shutdown. We got oil runningaway, and this is a market where,
you know, we may have seenthe highs for the year, and
that's a fair state. There's alot 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,

(30:10):
that's fair and balance. Here yougo. For those just joining,
we have to add more disclaimers tothe 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 weare, there's going to be periods of

(30:30):
time the market pulls back through youknow, 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 lookat 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

(30:52):
to what's your cash position? Well, cash position, I think on average
right now is eighteen percent, sowe got I think if I look at
the average, if I were tolook at the average mutual fund and say,
my cash position right now is onbalance eighteen percent, uh, and

(31:15):
a mutual fund would say, oh, we have a lot of cash on
hand, and the typical mutual fundhaving four to five percent cash cash balance.
Mutual funds don't know what a lotof cash on hand is what it
choked. But anyway, what's ourplan? Our plans what our plan always

(31:37):
is, which is we look tosee if it's systemic. We don't think
this is systemic, meaning we lookat 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 Mand A accelerating. The IPO markets still
there, although we it's been diceya lot of these IPOs of a day
one pops and then gone straight down. And IPO investing is not for everybody,

(31:59):
are really most people, but it'ssomething we look at and talks about
the health of the market. Sono, we're gonna keep watching. I
don't know what there is to dothough. I like what I own.
You like when you own. Wegot cash to buy stuff. It's kind
of no man's land. If it'ssold off a lot more, maybe we'd
buy some stuff. So there's there'ssome pretty interesting there are some very interesting

(32:19):
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 totalk about. In our last segment.
This is Josh Arnold, Mister MoneyTalk with Judd Arnold here to help you

(32:42):
with your investments, whether inside oroutside your retirement account. Do give us
a call. Nine five two ninetwo five five six zero eight is this
Josh Arnold, mister money Talk withJudd Arnold here to answer your question on
stocks, bonds, mutual funds,how you should position your investment dollars including

(33:05):
your IRA in four oh one K, don't hesitate to give us a call
nine five two nine two five fivesix 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'sbeen an old market market saying. I
think it was popularized by Yale Hirschin the Stock Traders Almanac, which was

(33:30):
sell Russia Shanna, which was lastweek, and buy Young Pipoor, which
is next week. That's sort ofplayed out very well this past week as
the market market has continued to selloff, including yesterday. We record this

(33:51):
program on Friday afternoon, yesterday beingThursday, all sectors of the SMP index
were down and bond prices were downwith yields up, so across the board
things were down. That changed onFriday as we had several sectors were up,

(34:15):
with the worst performing being consumer discretionaryand real estate, and probably the
better. The better sectors performing wereenergy and we'll say software and even semiconductors,

(34:35):
which everybody. Everybody's got to owna little energy because I own more
than a little. But it isthe hedge to the market because oil going
up is a huge risk. Ilike these Osha trailers a lot. I've
talked about him before. Did anice 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 theOslow podcast. Let's associate with that.

(34:58):
It is on Twitter. You canlook up my Twitter handle Cornelia Lake and
you can get that podcast. Itis 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 boatcompanies Tidewater that's TEW. Those stocks are

(35:19):
highly risky, not for everyone.Be very careful with all energy stock.
Be careful with all you. Ikeep bringing this up, Judd to you
and you you have focused for along time on on these. We'll say
energy service companies as opposed to theenergy and production companies, or we'll call

(35:45):
it energy infrastructure companies as opposed tothe energy. Yeah, I don't know.
I don't like the guys who maywho 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 moneyup front, then that well goes to
zero and you got to take thatmoney reinvest in another well. And it's

(36:07):
a lot of capex. It's alot of capex. There's not a lot
of free cash fload that's available tothe public shareholder, and you're constantly reinvesting,
which is a real, real issue. Reinvestment risk is pretty ugly.
Where the energy services companies like theseoffshore rigs. The rigs last for thirty

(36:28):
forty years. You buy them upfront, you don't have a lot of
capex. Year to year, you'vegot almost no capex, so you get
a lot of cash flow. That'sthe business. Now. With that,
that also jet applied to some ofthe pipeline companies, Like I'll just point
out one that I have a screenenergy energy transfer. The problem with the
pipeline companies, and we saw thistwenty fifteen, twenty sixteen, they're set

(36:51):
up in this MLP master limited partnershipstructure 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 ofdebt. So yes, there's cash flow
on those things. The capex ispretty low, but they keep these companies
so cash starved because of the MLPtax advantag structure, which is just like
reads. So the second there's anyproblem, and there always is an energy

(37:14):
infrastructure because you're still energy, thenyou got to raise a lot of equity.
You dilute the common shareholders. SoI'm fine with you. Now.
The other the other risk I wouldpoint out, because this is one thing
that has soured me on that becausewe lost a bunch of money, is
when these companies cut their dividend andyou see going half as well as the

(37:38):
dividend be cut and right, stockprices 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, noprotection, no margin of safety if
anything goes wrong. So the secondthings go wrong, you're divodend goes away
and they're issuing equity and then you'rejust destroyed. So I don't like those

(38:00):
guys. We Kimyer Morgan, whenyou 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 expectto have have that lesson happened to them.
So we do learn from our mistakes. Oh we try to. That's

(38:24):
all you can do is put yourhead down and you know, trying to
learn a little bit more. Sothat's it. But that's why I don't
like EMPs. The one EMP I'vedone okay on is NLG. This's Northern
Oil and Gas. It's a Minnesotabased 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 equityand the stock still wasn't traded for more

(38:45):
than four times. He bit's up. What does that tell you? It's
just a bad business. It's justa bad that's it. It's just a
bad business. So anyway, butI hear here, we'll give it,
we'll We've gone over a few otherbad, bad businesses, you know.
I continue to see Disney, Disneyget get upgrades or a reiteration to buy

(39:10):
run run away from Nicky. Justsay no to Nicky, say no to
you know, you're you're, you'regoofy. If you buy that stock,
how about that portfolio is gonna gofrom a giant You're you're not gonna get
seven dwarfs. Your portfolio is gonnahave one dwarf in it. If you
buy that stock, there you go. Oh you are good. You're you're

(39:31):
a heck of a sit down comedian. With that, I mean t k
OH, which is the ticker forthis Hollywood talent agency that just merged with
the World Wrestling Fan. The chickerfor that is e d R is the
talent Hollywood Talent. No, no, dvor urged No, did you still

(39:52):
have endeavor? What merged was uFC merged with w w E to form
t k OH. They paid outa special dividend of four dollars a share
as part of that that merger.That contributing some of the sell off.

(40:13):
And and now share or new shareholdersare dumping the stock. They're dumping the
stock because you're supposed to get theother show, SmackDown ww E. SmackDown
just got a terrible content deal withNBC. Terrible carriage fees, not enough,
not what was baked in. Hegot Disney getting the heisman from Sharter,

(40:38):
the biggest cable company, one ofthe biggest cable networks out there.
These guys can't make money on contentanymore. 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 flowjust five years ago. This is an

(40:58):
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 allthese things are just terrible. The whole
ecosystem they screw. Netflix made people'sheads flip upside down. You gotta writer

(41:21):
strike. These people are crazy.Just you can't make money with content right
now. And I think you canjust 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, youknow he can. He's loved these stocks

(41:44):
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 frommedia 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

(42:06):
interesting week. Monday is probably goingto be lighter trading than usual for the
Jewish jam Key poor. Then you'restill going to be worried about the potential
next week of government shutdown. You'llstill have the ongoing oil strike. You
probably have a few more Fed governorstalking, and then you have Nike reporting

(42:32):
earnings and that's going to be veryinteresting indeed. But we'll be back next
week. In the meantime, shouldyou 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 JoshArnold, mister Money. Talk with Judd

(42:54):
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, includingrisk of loss. Consult your investment professional
before making any decisions about your investmentportfolio,