Mr. Money Talk

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Episode Transcript

(00:10):
Today after you. This is JoshArnold, this is your money talk on
me here to answer your questions andstopped going with mutual funds and you should
position your investment dollars including your aryin four oh one K. Don't hesitate
to give us a call nine twofive six oh eight. That's nine five
two nine five five six oh eight. You always get straight talk, not

(00:34):
sugar. Code of advice say ifyou need a show, just a fair
warning and a reminder and disclaimer thateverything we discussed on the show is for
discussion purposes only. Nothing should beconsidered investment advice. Some are all the
securities we discussed on the show mayor may not be suitable for you.
Please consult investment advisor before making anyinvestment decision. Investing in the stock market

(00:54):
contains a series of risks, includingthe risk of loss. Well, big
Thanksgiving week, Big week, Thanksgivingweek. I hope everybody have very good
Thanksgiving and we're able to take advantageof some of the bargains on Black Friday.
I know this past week was verybig for retail earns, and most

(01:17):
of the retailers that reported this weekfrom Dick Sporting Goods that did better than
expected, to Best Buy that didnot as well as expected, to cold
stores that really had a big,big miss, and then I can throw

(01:38):
in American Ego Outfitters, or evengo back the last week to Target and
Walmart. It looks as if promotionalactivity is going to be on the increase.
Hence, you should have gotten somebig bargains on Black Friday and will

(02:04):
probably continue to get big bargains intothe Christmas selling season. As these big
box retailers seemed to indicate the consumers, while still consuming, we're moving money
or spending money in other places thanin retail store. They were spending more

(02:28):
money on experiences such as going tosee Taylor Swift or Beyonce and taking advantage
of all the we'll say tickets thatthey could get online we're through live entertainment,
or we're traveling and taking advantage ofAirbnb, Expedia or bookings dot Com,

(02:57):
rather than spending money on we'll sayunderwear at Walmart, Target or Coal's
stores. Retailing, as we've discussedbefore, is very, very difficult,
and it looks like many retailers couldbe more for short term trades than for

(03:23):
I would never buyers. I wouldnever buy a retailer. It's too hard
a business. The inventory Amazon's absolutelydestroying them. It's just a really hard
business. I don't think it tellsyou anything. And it's a really hard
These stocks on the move twenty thirtypercent on every quarter, and that's your
entire return for the year, iscalling four quarterly earnings. Not that earnings
doesn't matter for other stocks. Forretailers, these things move up or down

(03:46):
twenty thirty percent on earnings. Thing. Nobody is a clue. It's just
a really hard way to make money. Not great businesses. They all go
to zero. Well, I thinkthat that's one of the reasons why the
Oracle of Omaha, Warren Buffett,had told his partner Charlie Munger, that
even though Charlie Munger's Costco YEP mighthave been good, he wanted to stay

(04:12):
away. Too hard, too hard. Well, definitely too hard. I
mean you could even see it justwith one retailer which does have a lot
of or has changed their format somewhatto provide them more experiential I will say,

(04:34):
more experiential activity to get people tobuy that being. Dick's Sporting Goods
went from having some major issues lastquarter to surprising this quarter very very very
difficult. Well, that stocks upa bunch, and that's perfect example.
You can't predict data stuff. Theearrings are great and people say, oh,

(04:58):
it's obvious. Okay, it's obvious. Stock just move fifty percent in
two weeks, great, and thenthe next quarter will go down thirty.
I just I mentally tune out fromthis whole space after looking at it.
You look at Bill Ackman, someof his biggest blunders Jason Penny and Target
were retail names. They look theylook great on the spreadsheet, but as

(05:20):
they as the joke goes, morelies. Actually, I think this isn't
really a finance show, This isa life show. More more lies are
told than Microsoft Word than microsoftic cell, which is to say a lot of
lies are told the microsoftic cell.But wow, well on Microsoft or why
no really no, no, nono, Like people who say moralies are

(05:43):
told microsoftic cell than anything are talkingabout spreadsheet math, got it, and
oh, it's really easy for meto model out this company and microsoftic sell
and just believe it's going to turnaround and here's my numbers, and why
it's so she Well, the worlddoesn't work that way, and Microsoft word.
I I'm making a writing an investmentmeal for somebody while I'm going to
be a salesesy about it, andit's just lies. It's all lies.

(06:09):
But Microsoft does not lying. Itis what what you're I'm talking about right
using Microsoft's products and the spreadsheet thatcomes up lies about. Or I could
say it right for you old people, I could say lotus, lotus notes
or word perfect. The idea isthe future is you know, it's very

(06:33):
uncertain. There's some stocks there's justno go not there's no go zones.
He brought up Buffer. I meanthat's sort of a lesson with him.
I mean, look at this disaster. Okay, well, I mean we
can talk about my favorite disaster,Media, which just continues to be horrific,
Disney, Comcast, Warner Brothers,Paramount which used to be CBS,

(06:58):
Charter Communication. I mean, thesestocks are a graveyard, just so terrible,
so awful, and the amount ofmoney wasted on these things. I
mean they're all released. You know, they're big capital investment stories, big
egoes. Media used to be agreat place to make money with John Malone,

(07:18):
iiger Ted Turner. There's a reallygood Ted Turner podcast out today.
Things are just a joke. Directto consumer has been a terrible Netflix kind
of makes a little money. Nobodyelse makes money. Those are terrible businesses.
Yeah, I mean it's very difficult, you know, in media,

(07:40):
just switching from retail to the media. When these guys the whole premise is
we've got the content and rather thanselling the content out to somebody who's going
to deliver it, we might aswell deliver it, deliver it ourselves,
and we could deliver it, youknow, cheaper, and that you have
a price war based on streaming we'retrying to get. You just aggregated the

(08:07):
table bundle and you replaced it withmore a ton of annoyance. Customer acquisition
cost for CAC is really high.It's none of these guys have made money.
They've all lit a ton of moneyon fire. I never understood.
I never understood why they were goingto do that. Never made sense to
me. No industry's coming out offavor. You change one thing and they
go brook to the nature of thebeast. So I don't we up on

(08:33):
Macy's that we're recording this on Thursday, Thanksgiving Day, Macy's Thanksgiving Day Parade
on and I just think to myself, I don't want to invest anything on
the TV, and I certainly don'twant to invest in the in Macy's or
anything like that. With a disaster, most things are a disaster. It's
we have yet another year where theS and P five hundred is outperformed,

(08:54):
which is market cap weighted is outperformingthe equal weighted by a very large margin.
Magnificent seven. You know, youcan start analyzing the MAG seven and
twenty fifteen that's when all the snockswere public, and I think cumulatively they're
up sixteen times your money since twentyfifteen if you bought the Mag seven and
the S and P five hundred,I think is up forty percent in that

(09:16):
period. It's just it's well,that's happened in a lot of different period
that's where you've had one company withinthe index or a group of companies within
the index is actually outperformed on acontinual basis. Sorry, I have those
numbers run since twenty fifteen, theearly so you could started the market cap

(09:37):
weightings up one hundred and fifty sevenpercent, equal cap weighted is up one
hundred and one hundred and twelve percent, and the MAG seven are up thirteen
point three times your money. That'svery significant. It's just not even or
no, fifteen times your money.The difference you would make thirteen point three
times extra your money by being inthe mag seven. It doesn't matter.

(10:00):
I mean, these find the bigones in riding. I don't with Apple.
Congratulations to you with Apple coming doingwhat it's been doing. It is
well. Apple continues to provide product, product or service that people people want.
Just floating back over one ninety orwe got to come back and we'll

(10:22):
talk a little bit more. Thisis Josh Arnold, mister money talk with
Jet Arnold here to answer your questionson stocks, bonds, mutual funds,
how you should position your investment dollarsincluding your IRA and four one k.
Don't hesitate to give us a call. Ninety five two nine five six o
eight. We're here to help you. This is Josh Arnold, mister money

(10:48):
talk with Jet on here to answeryour question on stocks, bones, mutual
funds. How you should position yourinvestment dollars including your IRA and four one
k. Don't hesitate to give usa call. It nine five two nine
two five five six oh eight.That's nine five two ninety two five,
five, six, eight. Youalways get straight talk, not sure good

(11:09):
advice. Spend forty eight minutes withus, you'll be glad you did.
As we've continued from our previous segmenttalking about the Magnificent Seven, that being
Apple, Amazon, Alphabet or Google, Microsoft Meta, or Facebook, Navidia

(11:35):
and Tesla. These stocks since twothy fifteen have significantly output fifteen times your
money versus one point five minutes.It's just correct. I mean, it's
not crazy as you brought up,or the four horsemen of the apocalypse Oricon,

(11:56):
Microsoft, Intel, You forgot microspeMicrosoft, Oracle Systems, Go and
Intel. They were most of thereturn in nine in the late nineties.
And this just goes on. Andthe ETF flows be the ETF flows.
And it's interesting, you know,yet again to see ten year rates wrapped.

(12:16):
Ten year bonds rallied this year,rates went this week, rates went
down. The ten year rates nowdown to about four zero point four to
three after peaking just two or threeweeks ago at five in the biggest beneficiary
lower rates, obviously great for stocks, is the Big seven, the mag
seven. We also had to oilget a little bit whacked this week on

(12:39):
some OPAC news that they might theSaudis might stop cutting so oils back to
about seventy five bucks. Financial conditionsare decidedly looser than they were three or
four weeks ago, which means theFED probably stays tighter for a little bit
longer. And we're in this sameexhausting move that we've been in for the
last two years, which is whatis the FED to do? It is

(13:01):
very very exhausting with I'll say mostof the talking heads continue to debate what
the FED is going to do.The feeds continues to say higher for longer.
We're still very concerned about the rateof inflation. Uh, and we
want the option at any time shouldwe see data that indicates inflation is still

(13:24):
still there, to raise raise rates. And in the meantime, we're going
to maintain tighter, tighter conditions.And yet now more and more people are
more and more as a more andmore strategists continue to say FED is done,

(13:46):
and we're going to be starting tocall out we need to frame this
debate. We don't care. Wehave to start right there. We don't
care. We think this debate isa waste of time. The initial partage
from the FED, this is anentialmatter. Change in FED policy was already
absorbed in late twenty one and twentytwo. We don't care macro. If

(14:07):
macro is all you think about,macro being rates, oil and all this
other stuff, you're doing investing wrong. Period. Fine stocks that are going
to go up, how do theygo up? Higher revenue growth, higher
earnings growth, change in fundamentals inindustry change. We talked about media early
on. Media used to be greatfor about thirty forty years. It's been

(14:30):
a lousy for the last fifteen.That's going to be lousy for a while.
Oil was terrible from twenty fourteen totwenty twenty one because too much show
growth in the United States meant OPAKlost its pricing power. All of a
sudden, show growth slows. OPAKis attempting to reinsert itself, which means
all of the sequel. The priceof oil goes to seventy to eighty bucks

(14:50):
verse forty to fifty bucks. Boom. You've got a big change. Find
things that are going to grow rightnow, what's the only thing that has
grown the last fifteen to twenty years. He's back seven stocks. They got
the print and press in the basement. I mean Google's one of the best
business of all time. Microsoft ina new all time high this week,
pricing now at thirty two times earnings. That's the one monopoly. If we

(15:16):
thought we missed anything, You've gotApple and Amazon, maybe Microsoft, but
you know what, not doing toobad with Apple and Amazon. Not doing
too bad with Apple and Amazon.But you bring up Microsoft, and that
was a There's a lot of i'llsay, excitement or and or drama this
past week over over Microsoft and OpenAid, to which Microsoft has made a

(15:45):
very substantial well they haven't made no, they haven't. Both committed to making
a ten billion dollars investment for afifty percent state, but they have not
made it. Most of what theyare offering is future server capacity, which
they don't have to make. Andnow they walk away either getting sent the
team for nothing or the strengthener hand. This board, the board decided to
fire, not Microsoft board. OpenAI's board decided to fire the CEO without

(16:10):
telling you anybody, all the outsideinvestors who poured billions in. You've got
a combination of people that I justlove, and I mean love sarcastically.
He've got an academic from Georgetown,which this was on the board of open
Ai. Open Ai came up withit with a product called check GPT.

(16:30):
It turns out that open ai hasgot a very we'll call it unique business
structure, that being a uh fiveoh one c three nonprofit owns a profitable
well, we won't bore you,we have it. This is another instance
of a board being absolutely insane forwhatever reason, they fire the founder and

(16:53):
the CEO, not telling the outsideinvestors they don't have a noncompete so he
can get hired by literally anybody.They have to change cos midweek bring him
back. The number three guy atthe company helped leave the palace coop.
Now he's saying it was all amistake and he's trying to play dumb.
This is every time I see thesematchinations, I just want to throw up.

(17:18):
People think the corporate America is sophisticatedand whatnot. Boards are typically dysfunctional.
It's just anyway, for Microsoft,it's a net positive because they're going
to get a greater state grade ofcontrol of open Ai. Jack Ebt,
Microsoft's doing just I think this isall noise. It's it's interesting to read
about. I think it's all noise. I think the real simple, super

(17:41):
simple story is rates has stopped goinghigher, and that's a tailing for stocks
and oil state and we're entering anelection year, which is typically good for
stocks. Well, let's just spenda few minutes on Microsoft. Microsoft is
you would end up being a leaderin this generative AI and maybe they become

(18:07):
a dominant you know, very dominating. You're you're paying thirty some times earnings
for it, it better be dominant. Yeah, okay, I don't.
Microsoft has typically had a fairly highHiPE for very long long period of time,
and they've added some additional products youon the back of this generative artificial

(18:32):
intelligence. Microsoft has one of thebest monopolies of all time, which is
Microsoft Office. It's their number oneproducts, the best thing ever. Microsoft
Windows is obviously a secondary monopoly that'sreally good. You got their server business,
which is okay, But realistically Microsoft, they just need to keep maintaining
Office and Windows. But thirty sometimes earnings, I don't know. Maybe

(18:55):
they'll do good. Who the heckknows who wins TODAI. My best guest
with AI is the same people who'vebeen winning in tech a're going to keep
winning Amazon, Microsoft, Apple,Google, Facebook because they have the most
money to invest. AI is expensive, and I don't know how AI transitions
into something profitable. It sounds likean extra layer on top. It seems

(19:17):
all theoretical to me. But we'llsee. Yeah, I don't. I
mean they're giving away the product.Well that's the point they're using it.
You know, ten million dollars forMicrosoft there investment in open Ai. Who
cares? It means nothing. It'sa multi training dollar company. So yeah,

(19:38):
I don't know. Palisingering. Thisis just all a fancy way of
saying that there's seven stocks in themarket that have been out performing everything,
and keep buying them, and here'sa story going on with one of them.
Okay, well we like, welike at least two of two of
them. One of one of thesedidn't report earnings this week, that being

(19:59):
the video one of the Magnificent seven. I think they were the last last
of the seven to report. Theyreported some fairly decent, decent numbers,
but the stock did not react positivelyto their their numbers because they were a
little bit cautious into the next quarterdue to what has been going on in

(20:25):
China. We'll talk about that andmore when we come back with more money
talk. This is Josh Arnold,mister money talk with Judd Arnold, always
here to help you. Don't hesitateto hear us a call at nine five
two nine two five five six eight. We're happy to sit down with you
and provide you some direct direction inthis market. This is Josh Arnold,

(20:53):
mister Money talking with Jut Arnum hereto answer your questions on stocks. One
on mutual on is how you shouldposition your investment dollars including your riot rate
and four one K. Don't hesitateto give us a call at nine two
five six eight. That's nine fivesix oh eight. You always get straight

(21:15):
talk, not you your COVID advicereal quick. If you missed the start
of the show, do keep inmind that everything we discussed on the show
is for discussion purposes only. Nothingshould be considered investment advice. Some are
all of the securities we discussed inthe show may or may not be suitable
for you. Please consult the financialadvisor before making any investment decision. Investing
the stock maintains a series of risks, including risk of loss. In Vidia

(21:41):
with the bat I didn't want tosay a bad guy in video is a
super expensive stock as well, so, so focusing on quarterly earnings moves is
exhausting and whatnot. I think mostpeople need to acknowledge if you're not a
Wall Street type, and even ifyou are a Wall Street type, the
biggest quote unquote armatry are investing istime arbitrage, i e. Having a

(22:03):
longer time horizon and letting things work. So so we talked about Microsoft last
night. Microsoft did nothing for fifteenyears. Yeah, I mean absolutely nothing.
But now you look at the stockshurnt versus the tech bubble in two
thousand, you can't even see it. Compare that to Cisco, where it's

(22:23):
still not back up to his pretech bubble high. But to Nvidia seeing
some soccer economy stuff, the stockwas, you know, the stock's up
five x this year, so it'soh, it's very very expensive stock.
It's done very very well. I'vehad some okay trades in I'll say in

(22:45):
the video or with the video,as well as a few other semiconductor names,
but that that area has been verydifficult for me for I'll say,
through the years, not just forany particul through a year, but through
the years, trying to get thesemiconductor cycle it's a really hard it's a

(23:06):
really hard space. It's just thought. It's another hard space and aim at
Lamb Research I was very polished onin fourteen fifteen. Boys, I had
a lot of ups and downs.They've worked, but there's been better traits
to be at. And quite frankly, all of these things, which is
playing on more digitization, more chipsand all that other stuff, you end
up doing just fine. In theMags Oven you don't. But actually,

(23:30):
I say the Mag six you don'tneed to own the chip stuff. Yeah,
you don't need to own a video, but I mean, look in
videos of five times it's done incrediblywell. They displaced Intel what I got,
Well, they've displaced Intel, andAMD is also displaced Intel. Yeah,

(23:53):
and Intel is now trying to changewhat they've they've been doing. But
intel stock, somebody could point out, jeez, intel stock is up a
bunch from it's low. So isIntel going to be the next place to
invest in? The chip? Chipspace seems really hard. I have no
idea. I have no idea.Most things I have no idea about.

(24:18):
So what do you have an ideaabout? I don't know. Other than
your daughter, I don't know we'vehad a looking back, we've had a
volatable and very profitable year we've had. We've done very well. And offshore,
our tide water Calm they do boatsoffshore rigs has done incredibly well.
That's come back recently from Ohio midseventies to mid fifties, but still way

(24:41):
up from where we bought it,which was under thirty bucks about a year
ago. That's been great. Ourontology stock is doing incredibly well. Ticker's
TOI. That is a small campstock, incredibly small. It's about a
two hundred million dollar company, butthat has done really well. We've that's

(25:03):
been our biggest winner in the oncologyinstitute. We bought it at the bargain
basement price and if you want todo a fully diluted because there's one hundred
million share, they bought it forsixty five cents to share, so they
paid sixty five million bucks for theequity. It's got one hundred million at
debt. And the stocks around methis year from a low of thirty five
cents to a high two dollars andsixty cents. You know, if you

(25:26):
multiplay stock prices buy one hundred bucks, they start to sound like your kind
of stocks, Like I like that, like my kind of stocks. Yeah,
well, but I do do preferyou know, more, you know,
large capitalization stocks rather than the smallcapitalization stuff. So you like,
I'll say this with the oncology instdo one of the things that we may

(25:47):
be doing more of is I offeredto buy the company. I think that
was that was kind of kind ofclever. You know. When you told
me about that, I remember thatyou have to you'd have to go out
and raise a lot of money tothat company. But I know you well,
the company responded in the way Iwas hoping they would respond, not
interested, not interested, and theywent back to the drawing board. This

(26:08):
idiot thinks he can buy our companyfor I offered a dollar twenty lo and
behold, they got that snock overa dollar twenty real quick. I was
pretty pretty pretty happy. See havean activist in the family. Oh.
I think there is a tremendous opportunityin small and mid cap stocks over the

(26:32):
next couple of years. Now,the problem with it for most people is
most people are not doing what I'mdoing. They're not buying big steaks and
offering to buy companies. There's alsoI will fully acknowledge if you buy a
basket of these, meaning multiple,you're probably not going to do very well.
Most of them are not going toin well. Even some of the
ones I invested are not going todo well. But the way when you

(26:56):
invest in in that arena is very, very difficult and there's more chance of
loss. Let's say, A bigtakeaway for me and multiple people who I've
reached out since is the feedback ofif you're going to go in, make
sure that you can shake the tree, so to speak, and be an

(27:18):
activist. I think it's a reallybig thing because also you're not going to
be an activist in every stock,so it needs to set up right.
And that's a really good check ondo you have a good investment piesis can
you defend your position and what Becauseit's going to be evolile, it's going
to be less liquid, not foreverybody. And again we would not recommend
buying quote unquote the menu. There'sthe Russell two thousand, you can buy

(27:42):
the ETFs IWM. I would notrecommend it. It's the smallest two thousand.
Others top three thousand stocks. Whatwould you recommend going into to an
index like the Russell Russell two thousandIWM. As I've listened to I'll say
the Financial TV and numerous say strategistsfor investment people on there have said buy

(28:11):
these indices rather than buying or pickingany individual stocks. And there's a huge
difference between buying the Russell and buyingthe S and P five hundred. By
the Russell, you get two thousandmediocre to bad companies. Because it's still
diversified. The best companies can't offsetthe battles. Think about the S and

(28:33):
P five hundred versus the equal weightedS and P five hundred, Well,
you have a lot more weight thetop ten stocks for thirty percent of the
index. Top ten stacks tend tobe the best companies, right, Okay,
so most of your money is inthe best stuff, right, And
that's why year after year the Sand P five hundred typically outperforms the equal

(28:56):
cap weighted. Now, you gothrough long periods like after the tech bill
where you got a bunch of garbagegoes up and becomes a big weight in
the S and P five hundred,but typically as long since somewhat slow moving,
the good ones offset the more thanoffset the losers. Because again simple
math, you can lose one hundredpercent on bat, you can lose one
hundred percent on bad, and youcan make more than one hundred percent on

(29:21):
good. And so when you havethe S and P five hundred where we're
talking about, look at look themax sevenths and twenty fifteen have done about
fifteen times your money. Right theregular S and P five hundred, the
market cap weighted has done one pointone hundred and fifty five percent or one
hundred and fifty seven percent. Oh, that's a huge thirteen point five times
your money. More in the seventhstocks verse just a verse fine by being

(29:45):
the S and P five hundred,then the equal cap weight it's only up
you know, I think it's aboutone hundred percent. So leaning into your
winners is a big thing, andthat's a big part of your strategy,
which is you don't sit there.You know, off of made this joke
years ago. Selling your winners todouble down your losers is watering your weeds

(30:07):
to cut your flowers. Yeah,and winning company winners to tend to keep
winning, and they can keep winningbecause they're better businesses. So there there
you have it. Well, Ido know with one of one of my
winners. People will always want towant to knock it down, and you
know they can knock the sock downtempor earlier, not the company down temporarily,

(30:32):
but for some strange reason. Foras long as I've held Apple,
I'll say my my research shows thatit's going to keep coming back. Well,
well, we'll have to come backand wrap up because his Josh Arnold
missed her money talk with Judd Arnoldalways here to help you. Don't hesitate

(30:56):
to give us a call at sixeight. Spend forty eight minutes with us.
You'll be glad you did. Ninefive two nine two five five six
oh eight. This is Josh Arnoldmissed her money talk with Judd Amart here

(31:18):
to answer your questions when stops goingon mutual funds, how you should position
your investment dollars including your IRA andfour O one K. Don't hesitate to
give us a call. It ninefive two nine two five five six oh
week it's nine five two nine twofive five six eight. You'll get straight
talk. Not sure you go ofadvice, Well, jud the bond market

(31:45):
has rebounded a little bit in thepast. We'll say we can week and
a half as the ten year treasuryyou has gone from we'll say five percent
now to just under or four pointfour percent. That means that bond prices

(32:05):
have gone up as yields have comedown. And that also is an indicative
that mortgage rates have also come down. And I have been hearing again strategists
saying, oh, that's why youshould be putting money in bonds as interest

(32:27):
rates come down. Now bond tracesare going to make money and you've locked
in. If you were smart,you would have locked in these high yields
and now you've got the yield plussome appreciation. Now, my response has
always been I want to own stocksbecause if interest rates, Yeah, if

(32:52):
interest rates go down, you makemore money in stocks. The time to
own bond the time you feel bestabout owning bonds is when stocks have gotten
slaughtered. The problem with this currentperiod of time, when interest rates were
historically low they started going up istheir move up in rates, which is
down and bond prices slaughtered bonds andstocks equally. Yeah, it's been a

(33:15):
so now you want to tell meand after both look, I don't want
to tell you what anything. Iwant to avoid bonds. Well, for
both of them. The whole pointof bonds is to protect when stocks sell
off. The last three years hasbeen the most horrific bottom. Now to
sit here and bound the table onbonds, which effectively, now we're going
to concede it. Not us.We've been saying it the whole time.
You're just making an interest rate bet. But for these people say, well

(33:38):
no, look now it's time tolock it in. Take duration, move
from short term to long term.What have you? Okay, great,
I'll tell you this much. Ifyou're right on bonds from here, you're
going to make way more in stocks. The only time bonds outperformed stocks is
when stocks sell off. And thistime, we said it for ten years.
This was not they weren't going toprotect you, and they didn't.

(34:01):
You lost a truckload of money overa thirty year capital and bond in the
last three years. I think you'veactually lost a little more than that.
You lost more than stocks. Youlost a lot more than stocks on the
same macro economic thing that the Fedwas going to eventually raise interest rates,
and they did it. So look, some people like bonds. Great.

(34:23):
I think you're wrong. I thinkyou're demonstrably wrong. I think all the
evidences. You're wrong, and Ithink you're not making a safety net and
making an interest rate bet. Butcongratulations, because your financial advisor may charge
you higher fees for investing in.If you're going to buy bonds directly,
you're gonna get your face ripped offon biit ass threads. Well, you're

(34:44):
going to get your face hurt aswell buying a bond thow Well bond from
Yeah, none of them traded thatassid value. They all traded a discount.
But look, some people like thisstuff. It's fine, it's fine.
Some people do it. I thinkit's a joke. Not that I
know anything about bonds. I meanI only worked in the distress debt for
eight years. Did you really?Did you really? I know, you

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know an awful run about bones.All you know, distress bonds are basically
you're buying very complex equity investments typicallyand then with investment grade in treasury bonds.
I'll tell you this much. Theonly people I know who made a
killing in investment grade in treasury bondsdo it with a lot of leverage.
And if you're going to take alot of leverage, why don't you just

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buy a stock? Well, Idon't even need to. You don't need
leverage, you're not tax advanged onall these other things. But what people
say about bonds is so colored bythe forty year bond bull market that we
had from when vulgar defeated inflation andtreasuries were paying seventeen percent for ten years.
Wow, shocker, this is tenyear treasury rates. Yields went from

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seventeen percent to two percent. Youmade money in bonds. My mind is
well, if you don't understand mysarcasm, rates coming down is a tailing
for bond prices moving up. Goodnessin reverse. Goodness gracious, but so
be it. The secondary point onbonds is how much duration you want to

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take. And we have consistently saidrecently if you want to buy bonds just
by short duration, and then thebond goals will say, well, then
you have reinvestment risk. I saygreat. I would rather have reinvestment risk
than take price risk, because ifI'm wrong in interest rates on a two
year bond, the bond matures intwo years and I can save myself.

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If you're wrong on interest rates ona ten year bond, you can lose
real money and your stock all youhave to do is what is the fair
and balance counter to what I amsaying. This is the other thing I
struggle with. Yeah, there isno fair and balance counter You're going to
lose money if interest rates go upand you and you're gonna pay higher fees.

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Don't get me wrong, Okay,if the interest rates go I'm trying
to find prices come down. Thereis no fair, fair and balanced in
this other than you get if you'rebuying a bond, it's going to pay
you twice twice a year, whateverthe coupon is. But I know the
other thing that annoys me about bonds. Literally every financial crisis we've had in

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my lifetime, and most of theones before my lifetime, have occurred when
it's supposedly triple A security has beenproven to not be triple A. Correct.
I just I just always said,let me unpack that for people right
now, Silicon Valley Bank Court andSignature Bank, the two big bankruptcies this
year, and for what's FRC.What am I First Republic First Republic Bank

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all blew up on buying treasuries,triple A mortgages and some commercial mortgage backed
securities, right and they were theywere levered up a little bit. They
levered the daylights out of them inthe day of the funding this match,
they borrowed up for a year andthey leant out for ten to twenty During
the global financial crisis of seven AMand nine, all these triple A securities

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from the subgrime, they slide anddice them, got triple A ratings and
blew these people up. And youknow ninety nine eight it was ninety eight.
Wait the sovereign crisis where everyone saidthat a sovereign issue I'm talking about
Russia would never default on their owncurrency bonds. They did. It was
the first thing. And the jokethere is you don't default in your own

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currency because you can just print moreof it. Well, then I can
go back to the SML crisis innineteen ninety. That's my other problem with
bonds, which is they seem wellvolatility. Then when a financial crisis happens.
If you want to feel volatility,wait till you see bond price quotes
during a financial crisis. There eitherare none or the bond that you wanted

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ninety five cents is offered a sixtyfive and you want to throw up because
all these people who thought you knowown the same stuff. Is it's safe
for regulatory tap requirements are blowing upup on a triple a ascid. Oh
goodness, all right, anyway,going, some people out there have a
reason to buy them, and Ihope you people touch them. Let's be
talking about what we're thankful for.We're thankful for finding great returns, great

(39:13):
family, having great clients, greatweather, and great health. And I
think it's going to be a greatnext twelve months. Despite how pessimistic I
sound, I'm actually very I don't. I don't think you sound pessimistic.
I think you sound very, verytruthful. When you're you're talking, you're
talking about things that you're passionate aboutand and and those things that do not

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make sense. And to us,investing in bonds does not make sense.
Investing in companies with growing sales,which should produce growing earnings over a period
of time, and and by andcompanies that produce a product or service that

(39:59):
people need or want, makes upmakes a lot of sense. This is
Josh Arnold, mister money. Talkwith Judd Arnold. Have a wonderful Thanksgiving
weekend, and remember give us acall. We're here to help you.
Nine five two nine two five fivesix eight. Josh Arnold Investment Consultant is

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a registered investment advisor located in thestate of Minnesota. All securities discussed are
for informational purposes only. Investment containsrisk, including risk of loss. Consult
your investment professional before making any decisionsabout your investment portfolio.