September 10, 2025 • 37 mins
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The financial markets are running hot as we head into Q4 2025, but are we witnessing sustainable growth or dangerous froth? In this thought-provoking episode, Clem Miller and Steve Davenport tackle the pressing question on many investors' minds: what's ahead for the markets?
Steve kicks things off with a bold prediction - the market appears to be discounting an overly optimistic future, particularly in AI-related stocks. When companies merely mentioning artificial intelligence command 30-50x earnings multiples while established healthcare giants trade at 7-9x earnings, something seems amiss. As Steve puts it, "If it looks like froth and feels like froth, it might be froth."
The discussion heats up around Oracle's shocking 35% single-day gain. Is this unprecedented move justified by legitimate future cloud computing growth, or does it represent market exuberance gone wild? The hosts dissect whether such "statistical anomalies" - these "100-year floods" happening with uncomfortable frequency - should prompt investors to take some chips off the table.
The conversation shifts to practical portfolio management strategies during potentially turbulent times. Rather than abandoning growth entirely, Clem advocates controlling risk through forward PEG ratios, portfolio beta, and monitoring short interest. Meanwhile, Steve recommends increasing allocations to undervalued sectors and maintaining hedges like gold as protection against his predicted 10% correction.
What about the Federal Reserve's next moves? Both hosts anticipate 25 basis point cuts in September and December, though they caution that market expectations for more aggressive easing may lead to disappointment. The episode wraps with a teaser for their next provocative topic: government ownership stakes in American companies under the Trump administration.
Whether you're looking to protect gains, find undervalued opportunities, or simply understand what's driving today's market dynamics, this episode delivers the balanced, skeptical perspective you need to navigate the frothy fourth quarter. Subscribe now and join the conversation!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Clem Miller (00:02):
Hello, welcome everybody to Skeptic's Guide to
Investing.
I'm Clem Miller, I'm here withSteve Davenport and today we're
going to be talking about thefourth quarter.
What can we expect for thefourth quarter of 2025 and on
the market and so the frothyfourth, yeah, what?
(00:26):
The frothy fourth?
The frothy fourth, right?
And so let me uh, let me startand turn it over to Steve, and
Steve, you know, what are yourthoughts about the fourth
quarter?
Steve Davenport (00:40):
Clem, I know this has been repeated or heard
before, but I'll say that itfeels like the market is
discounting a future that is toopositive and therefore I think
that the fourth period willstart to see some consolidation,
as we see that the forecast forsome of these AI growth numbers
(01:04):
have to come back to reality.
I see companies complainingthat they're not getting the
benefits they thought.
I see companies talking aboutthis race.
That really isn't about helpingcompanies and helping
individuals.
It's more about who has thebest server farms and who has
(01:27):
the most NVIDIA chips.
It feels like this market isfrothy, and when I say frothy, I
mean that companies whonormally would get a market
multiple, like a Pfizer and aMerck, are selling for seven to
nine times earnings, andcompanies with any mention of AI
(01:48):
are trading at 30 to 50 timesearnings.
And since we know that thoseextra normal growth can go on
for a while and it has we'veseen extraordinary growth in
these names super normal growthand the question is do trees
grow to the sky?
We've seen extraordinary growthin these names supernormal
growth and the question is dotrees grow to the sky?
(02:10):
Can it continue forever or willwe have to see some type of a
slowdown and contraction inmultiples to get back to more
normal levels Is now the time totake some profits.
Steve, what's your solution?
If you think that theAI-related stocks are too highly
(02:37):
priced, too highly valued rightnow, where are you putting your
money?
Well, I was just saying healthcare at seven
to nine times discounting thegrowth rate of single digits
(03:09):
less one or 2%.
I don't see that.
So I think that what we'reseeing is sectors of the economy
that are more ordinarycommodities, energy, healthcare,
staples those spaces are justbeing tossed aside for companies
with more growth, moretechnology and more access to
(03:34):
the new.
You know, there was theinternet.
There was high-speed internet.
Now we're talking about AI andwe're giving all of these
companies multiples that arepriced to perfection.
I don't think perfection is theoutcome.
So, therefore, I think there'sgoing to be some stumbling, and
(03:55):
now would be a good time to takesome chips off the table.
I'm not saying to get out ofthem completely.
I'm not saying they're not goodcompanies.
I'm just saying they're tradingat levels that you need to take
advantage of.
Look at Oracle, up 35% today.
Is that a normal return for aday Clem.
Clem Miller (04:14):
Or is that an?
Steve Davenport (04:14):
abnormal return .
Clem Miller (04:17):
Well, it's predicting the future of cloud
services, no question.
Steve Davenport (04:25):
Okay Is all the analysts estimates in the past,
prior to today, didn't have anygrowth in cloud.
Clem Miller (04:35):
Of course they had growth in cloud.
Yeah, apparently they weren'tthe whole company could go
Apparently they weren't in oneday.
Steve Davenport (04:44):
Yeah, and it's not filled with just a little
bit of over exuberance.
Clem Miller (04:50):
Of course it has some over exuberance today it
does.
I would say today there's someover exuberance in Oracle, but
clearly, you know, I meanobviously looking, you know,
hindsight's 2020, but you know,the day before today, I mean
yesterday or the day before, themarket wasn't optimistic enough
(05:11):
about Oracle, given the way theprice jumped today.
So, steve, let's think aboutthis.
Let me ask you do you think AIis overblown?
Steve Davenport (05:27):
I think right now it has become overblown.
I don't think AI's potentialcan really be realized.
What we're talking about isconstructing the chips so that
the servers can start to processthe AI calculations we
anticipate we need.
All of the secondary abilitiesof AI have to still be addressed
(05:51):
in terms of how you develop itand how you implement it.
So we're celebrating anaccomplishment and we're
probably 25% of the way in anaccomplishment, and we're
probably 25% of the way in.
We're not near.
You know it's going to be amid-80s, 26, 27 event, and so
(06:16):
we're taking all of this profitforward without having done the
work to implement.
So I don't see how much yourearnings has been enhanced this
quarter because of AI.
Clem Miller (06:29):
Good question.
I don't know, I don't know thatanybody really knows.
Is it 35%?
Well, no, I mean that 35% isjust one company, right?
Steve Davenport (06:41):
But my question is how do you keep having this
happen on a daily basis, whereevery analyst is off?
And is it?
Every analyst is off or themarket is just supercharged to
react to any of these names?
Clem Miller (07:01):
Well, I would agree with you that the market right
now is somewhat overvalued, andthat's why I've got a decent
(07:22):
chunk of both gold stay groundedin a portfolio that does have a
lot of AI or AI adjacent typestocks in it.
Steve Davenport (07:34):
I think that's smart, yeah, and I think that's
a good idea, right.
All I'm asking is if you know,just like when a name gets down
and you say, gee, that's apretty good value, and then it
goes down further, is it?
Is it still a good value or isit becoming a value trap?
My question is on the upside,are these growth growth traps?
Clem Miller (08:00):
right and so so.
So, steve, let me raise anotherquestion for you.
You know there's some concernabout the overall economy and
things seem to be a little shakywith employment numbers.
(08:21):
You know, while we can stilltrust the employment numbers,
they seem to be a little shakyand so, you know, there's some
thought.
Are we, you know, are we goingto see a weakening?
Are we going to see a recession?
I know Jamie Dimon made acomment yesterday about that,
(08:42):
his concern about that, and youknow I would submit to you that
you know, in a weakeningeconomic environment, the stocks
that do worse are the cyclicalstocks, and the market would put
a premium on the growth stocksbecause they provide for more
(09:07):
sustainable growth in revenuesand earnings than the cyclical
stocks that are going to go downand up with whatever's
happening with the economy andgiven that-.
Steve Davenport (09:20):
It still comes down to GDP growth, right Colin?
Why it still comes down to GDPgrowth, right Colin?
It still comes down to GDPgrowth.
Clem Miller (09:28):
Yeah, but GDP.
But see, here's what I wouldsay is I have, throughout my
career, I've heard people makethe mistake of thinking that
growth stocks are tied to GDP.
Growth are tied to GDP growth.
Growth stocks are a way ofprotecting you from GDP
(09:51):
movements up and down.
Right.
Steve Davenport (09:55):
They're a way of protecting you.
I think we're talking aboutdifferent levels of
participation Because if I wasto say to you, clint, tell me,
you know, in the three big boxesup top core, growth and value
where is your portfolio on thatcontinuum?
Is it 35% growth, 30% core and30% value?
(10:21):
I would say In the equities,not including your gold and cash
.
Clem Miller (10:27):
Yeah, yeah, yeah.
So I would say it's 50% growthand 40% core 10% value.
Steve Davenport (10:48):
Okay, so there's a bias to one side and
all I'm saying, oh yeah.
Clem Miller (10:54):
No, there's a bias to one side and the bias to the
one side what it does is see I,you know, I know you think in
terms of growth, value and core.
I think less along those lines.
With time, I'm thinking.
Steve Davenport (11:15):
You also have to.
You also have to look at thisin terms of how soon do you
think you're going to use it.
What do you think the overallimportance is to you?
Have you hit the level that youknow?
You know if you're, if you havethe freedom to look at things
and say I'm well, I'm wellpositioned.
You could say I'm going toimmunize myself against the
(11:38):
future and put more assets asideso that I can sleep better at
night or I can have more comfortthat I've satisfied my
retirement goals, my retirementgoals, and so all I'm saying is
not everybody is in the sameposition regarding I feel
(11:59):
comfortable with this growthbecause I know that.
You know what I mean.
I have enough in other assetsto manage.
You know my needs.
Other people say I'm behind andI need to have more in growth
because I want to catch up,because I didn't do a good job
saving into my retirement.
Other people will say I'm 25years old and I want to be more
(12:20):
heavily in growth.
All I'm trying to say is ifyou've looked at yourself and
you've gotten a littleimbalanced and you typically
like to be 40, 40-20 instead of50-30-20, then think about it.
All I'm saying is I feel likeif it looks like froth and it
(12:43):
feels like froth, it might befroth.
If it walks like a duck andquacks like a duck, it feels
like an 08 time, it feels likean 01 time.
Things are just out of controlin one particular area and it
(13:04):
just makes me uncomfortable.
Clem Miller (13:08):
You know, in my portfolio, you know my screening
criteria are aimed at basicallytrying to remove froth.
Ok, so first of all I I try tocontrol my overall forward peg.
So I would say the medianforward peg for one of my stocks
(13:31):
is about 1.5 right now times.
I don't think that's a veryhigh forward peg, to be honest
with you.
I got some that are higher.
I got some that are lower.
Correct Clem.
Steve Davenport (13:46):
I'm not criticizing your portfolio.
You asked me Right.
Well, no, no, no.
I read the other way, I do yourportfolio.
Clem Miller (13:52):
You asked me Well, no, no, no, the reason I'm
bringing up forward peg is whenyou said that certain folks are
going to want to have a greaterpercentage of growthy stocks.
I just want everybody to knowwho might be listening to this,
that when I talk about growthstocks, I'm still talking about
(14:13):
stocks that aren't like wildlycrazy overvalued, right?
I mean, when I think of wildlycrazy overvalued, I think of a
peg ratio of, you know, abovethree right or 3.5 or even
higher.
I mean I remember seeing youknow, taking a look at Palantir,
which I do not own, right, andPalantir's got a forward peg of
(14:36):
like seven, six or seven.
That's crazy, right, a forwardpeg of six or seven.
Steve Davenport (14:42):
Well, yeah, you had some quantum stocks that
you-.
Clem Miller (14:45):
Yeah, I got rid of that.
I got rid of that a long timeago, right, I know?
Steve Davenport (14:48):
but all I'm saying is Cle's a.
There's a desire to be on theedge.
We all want to be on thecutting edge right you want to
have below at market risk I meanoracle is not on the cutting
edge.
A risk is that's why I'mshocked.
But it's up 35 percent.
I mean, can you at least feel alittle shock, or do you just
feel?
Clem Miller (15:09):
joy.
I'm not shocked, you're notshocked.
It's up 35%.
Well, I'm shocked at any stock.
Well, wait a minute.
Steve Davenport (15:22):
There is new information.
Clown the information.
How much of that futureinformation is real?
How much is real orders?
Clem Miller (15:29):
Well, it's as real as any other future information
right.
Steve Davenport (15:39):
Yes, and that's why you should say 35% up based
on that information.
Clem Miller (15:41):
They're talking about hundreds of percent growth
in cloud computing.
That's like a massive newreality about how this world is
going to work in the future interms of AI.
And you know I mean you havehealthcare and you know
(16:02):
healthcare is also going tobenefit eventually, I agree,
from AI right, they're going tobe using it for drug discovery
and for other things.
That's going to help healthcare, but at the same time, it's
also going to help cloudcomputing, right, and AI right.
It's going to help the AIcompanies.
(16:22):
There's going to be somesharing of benefits, I think,
between healthcare and the AIcompanies right, and the AI
companies right.
You know, I think that it'sstill very smart to hold
significant shareholdings in AIand AI adjacent stocks.
(16:44):
I think that you can controlyour risk by not going too high
on forward peg.
I think you can also controlyour risk by not going too high
on short interest right, becauseshort interest is an indicator
(17:06):
of risk and I think that aportfolio can look misleading in
terms of returns on an up dayor on a down day by having a
beta, a portfolio beta that'stoo high.
So I certainly would not wantportfolio beta to be
(17:34):
significantly higher than one,right?
Steve Davenport (17:35):
um, it depends on what you're comfortable with,
clem.
I mean, I I can see why peoplewho are younger could have one.
Well, but it's it's.
It's really in my mind.
I'm just trying to call out forthat, that old idea of balance,
and it's an old idea and I knowit's not.
You know it's not cutting edgeto think about balance when you
(17:59):
want to put everything into thefuture.
If we want to put everythinginto the future, look at Tesla's
pay package A trillion dollarsif it hits goals of a million
robots, a million auto taxis and10 million vehicles.
Clem Miller (18:15):
Yeah, well, you know, if you run tesla through
my criteria, it fails no, andall I'm saying, clint, is that
there are.
Steve Davenport (18:24):
There are other names besides the names that
you own right, like palantir,like the, the quantum computing,
like some of the names likewe're talking about, tesla that,
in my mind, are trading atridiculous levels.
Clem Miller (18:43):
Well, I look, I think we're in agreement there.
I think we're in agreementthere.
Steve Davenport (18:46):
I'm just saying that you don't want to sell any
of your names because you do abetter job of understanding risk
.
Clem Miller (18:54):
I think, with my criteria, I feel very
comfortable and can sleep, likeI say, sleep well at night by
being able to control beta risk,peg risk and short interest
risk.
I think that allows me to sleepwell, even with stocks that are
(19:15):
showing significant returns.
Now, granted, when you have anoracle that's up 35% in a day,
obviously you think to yourself,well, should I trim it?
And I probably will, you know,I probably will.
You know, we're broad, we'redoing this podcast at nine 30,
so I can't trim it at nine 35.
(19:36):
Right, but maybe, maybe I trimit later today, right, so we'll
see, we'll see.
I mean, I think it's, I thinkit's, it's, it's.
It would be smart to trim itlater in the day, because how
much further can Oracle, as thatindividual stock, still run?
(19:56):
I think is a legitimatequestion, correct?
But the other ones that arebeing pulled up by Oracle, that
may be up 2%, 3%.
I'm not going to trim those.
Steve Davenport (20:10):
No, all I'm saying is it's an abnormal
response in the market, I cantell you, with a statistical
anomaly.
It's one of those 100-yearfloods and I don't know how many
100-year floods we can have ina 20-year period, but it feels
like when we see one we shouldsay, hey, that looks like an
(20:31):
unusual number and statisticallyI know it is.
Clem Miller (20:34):
so therefore, do I take that input and I own the
name and do something aboutright, but you don't need to do
something when you you when,when one reads about you know
this being an anomalousvaluation for the overall market
, you're still talking about theoverall market and you're not
(20:58):
talking about individual stockswithin that market.
And if you're a stock pickerand have a discipline that you
stick with in that market, thenyou know, you know it's
certainly you know.
I mean, what kind of conclusionshould you reach?
If you look at the overallvaluation for the S&P 500 and
(21:24):
you see that it's abnormallyhigh against history, what
conclusion should you reach?
That you buy bonds, right, Imean-.
Steve Davenport (21:31):
I think you can make a few conclusions.
One we're probably in a marketthat's dominated more by
technology than it was in thepast, so the past comparison
might not be as valid.
I will give you that themarkets change and therefore our
estimates of what's normalshould change.
I give you all of that.
(21:52):
I just believe that you'vementioned three or four names
that you said you would neverown, and they're general.
Hey, pick your head up.
I know you've got to go to worktoday, but look around and see
(22:20):
if maybe some of the names thatyou have that are riskier have
gone up an abnormal amount andyou never go bankrupt taking a
profit.
Clem Miller (22:30):
So, steve, on the S&P 500, we've seen it rise a
lot this year, hit numerousall-time highs, right.
So what do you expect?
I mean, by the end of the year,what do you expect?
Do you expect the S&P to bedown about the same or up
significantly?
Steve Davenport (22:50):
I think it's going to correct by into the end
of the year.
So I think the forwardstatements coming out for the
third quarter ending September30, I think are going to be
slightly negative and I thinkthey're going to be more
realistic and I think people aregoing to adjust some of their
targets and I think that's goingto cause a ripple effect.
(23:11):
I also believe next week theFed will disappoint.
I think instead of saying 50basis points, which a lot of
people are talking about now,they'll say we're going to cut
25 and then we're going to waitand see.
And that wait and see commentwill be viewed by the market as
not as receptive as they thoughtit was going to be, and I think
(23:35):
it's going to surprise marketsand it's going to cause people
to rein in their risk tolerance.
And so I mean I see, on dayslike yesterday where there's one
rumor about something in thisspace and the names come down,
three or 4%, like it's nothing,and I just find that to be
(23:57):
concerning because that tells methere's more fast money than
there is slower, more cautiousmoney.
And I think that, you know, whenwe look at the options activity
which is something I haven'treally focused on.
But options activity is settingrecords.
It's setting records in spacewith one-day, two-day options
(24:19):
and I sit there and I go.
This is just people basing iton speculation.
This isn't real.
Hey, I know tomorrow it's goingto be higher than today, so I'm
all in, I'm going to buy a calloption.
Clem Miller (24:33):
So, steve, when you say correction, you mean like
the literal definition ofcorrection.
I mean, do you see, over 10%.
Steve Davenport (24:40):
Yeah, I think it's going to be over 10%.
So I would say that I thinkwe're going to end the year
somewhere around 5,800 on theS&P.
So I don't have a crystal ballto say that this is a serious.
You know, we've got somethingin the market like real estate
in 2008 or in like technology in2000.
(25:04):
I'm just saying that I think wehave a market that has done too
much.
I mean, we were down 18% inApril and it all came back in 30
days, right?
So is that normal Clinton?
Clem Miller (25:23):
Well, I would say that the April development was
policy induced.
It was the announcement of thetariffs and then the pullback
shortly thereafter in thetariffs, and so I think what
that you know, the lesson I takefrom that is that at any point,
(25:45):
the Trump administration coulddo something that could trigger
a correction, a marketcorrection, a correction, a
market correction.
Steve Davenport (25:53):
My point is, glenn, that if you look at it
historically, 18% moves in 10days and then a bouncing up of
24 or 5 that you needed to getback even in 30 days are both
abnormal, correct.
So therefore I say, if themarket is in, a position that
(26:14):
has already shown you rightsomething, do you ignore it and
say I think everything's great,there's no order?
You say, hey, it's telling youthey're telling you something.
Clem Miller (26:25):
Look what happened earlier this year in terms of
the correction and the recoveryvery quickly was all related,
can all be traced to one policydevelopment right, the tariffs
and the pullback.
I think that it was.
I think nobody had on theirgame card, so to speak, the
(26:46):
expectation that the proposedtariffs would be so freaking
high.
Okay, nobody expected thatproposed tariffs would be so
freaking high.
Okay, nobody expected that.
Steve Davenport (27:04):
And and and that had a very significant
impact, uh, on marketexpectations.
But, Clint, let's just take astep by.
When we look at the amount ofstuff we import and when we look
at its overall impact, even ifwe took the 100% worst cases, it
didn't justify what happened tosome of those names.
They couldn't be impacted asquickly as they were pricing in
(27:27):
right.
Clem Miller (27:28):
Well, like you say, the market is pricing in the
future, right, right?
Steve Davenport (27:34):
And is it a good mechanism or is it a bad
mechanism is my question.
And I'd say right now it's anover, it's, it's overreacting on
both the down and upside.
And to the information that ifyou really discounted it more
properly, you would probably saythat should have been a 5% and
7% move, not an 18% move.
(27:54):
And that's my point is that themoves are magnified.
So if you're comfortable withmagnified moves because they go
on the positive side, then goahead, roll the dice.
Clem Miller (28:09):
Guess what?
That's why I've got a lot ofgold, because gold… I know I'm
not criticizing you Clem.
Steve Davenport (28:16):
It doesn't always have to be about Clem.
I use you as an examplesometimes, but my comment is
more general, to everyone andnot just to you, Clem.
So it's really about in my mindyou know, hey, if 35% of the
one one did it, I was thinkingof taking some of off.
(28:38):
You know what I mean.
This is a gift.
You can either take it or youcan ignore it.
But just realize that ifsomething were to happen and
there were to be anotherpullback of 20 percent right,
this price.
Clem Miller (28:52):
I mean I think, look, I think, if, uh, I think
with the oracle, I think, takingthat entirely off the table,
you know I wouldn't object tothat, right.
I mean that's a lot of uh,that's a lot of uh of money in
one day that you can uh, youknow that you can pull off the
(29:14):
table and put into more gold.
Steve Davenport (29:18):
Right, I'm not even saying you have to go all
out.
I'm saying there are good nameslike a Merck and a Pfizer
selling at seven to nine, that Idon't think are franchises that
I would say belong on the scrapheap, should?
Should some things belong onthe scrap heap?
Should some things be on thescrap heap?
Yes, are those two names theexamples?
(29:39):
I don't think so.
Pfizer could possibly have anoral version of this, you know
obesity drug.
Clem Miller (29:47):
Yeah, Let me ask you about another name
UnitedHealthcare.
Where do you stand on that one,Steve?
Steve Davenpor (29:53):
UnitedHealthcare .
Where do you stand on that one,steve?
I can't get behind it.
I mean, I just I find thattheir lawsuit and their
government, I don't think it'sover for them.
I think that when we look atthis in the future, I think we
will say this really brought theidea of companies operating
efficiently and effectively fortheir patients and for their
(30:17):
shareholders.
This is a bias towards theshareholders and I think that
there's still some reckoning tocome in that stock, so I'm out
of it.
(30:44):
But, how do you feel about it?
Well, I think it's terrible andI think it's a great example of
why just investing in cheapstocks is not the way to go.
Yeah, I mean, I think whensomething gets beaten up, you've
got to ask is the rationale, isit fundamental?
How much could it affectearnings?
I think you have to ask sometough questions and if the
answers are, I don't know, Ithink it could be worse then I
think you gotta you gottahesitate and to jump back in.
(31:07):
If everything were cleared upand they paid fines and they
they rectified and they putthings in place so it wouldn't
happen again, I'd be in adifferent position.
But I don't think we're halfwaythere yet.
So I guess I mean, we came intothis wanting to talk about the
fourth quarter and I've givenyou my estimates of what might
(31:28):
happen in the fourth quarter.
I'm calling for a 10% or socorrection and I think it's wise
for people to take some of thehotter areas and I would say
that Bitcoin is one of them.
I mean, Bitcoin here to me isstill on's rein in risk and keep
(31:55):
, keep some funds aside for atime when things could get more
economical and be better values.
Clem Miller (32:12):
Well, I'm kind of.
I think there's a 50% chancethat the market will be about
the same and a 50% chance thatwe'll be down.
You know, maybe 10%, right, 5%to 10%, maybe a little more, so
that's where I am.
Steve Davenport (32:27):
You're giving me a hard time for it.
Clem Miller (32:29):
Right, you basically agree with me, but you
argue about every point.
No, but I'm arguing about whatto do about it and that's why
having some cash, having somegold, being careful about stocks
(32:50):
that have high short interest,high beta, high forward peg I
think if you control thosethings and still stay in stocks
that have shown some decentreturns recently, I think you're
going to be in good shape andum, and when you follow those
(33:13):
rules, you know you're not goingto be in the cyclical stocks
that are going to be hit theworst by an economic recession,
right?
So I feel pretty comfortablethat that in my portfolio I'm,
um, I'm insulated to a gooddegree against the cyclical
(33:39):
downturn that you would see froman economic recession.
I feel pretty good about that.
Steve Davenport (33:44):
Okay and that's what I think we want to try to
say to investors is that everytime you start to feel your gut
is telling you something, youdon't need to listen and act,
but you should just open up youreyes and say do I feel like
there's the short-term loan Igot for the construction?
(34:05):
Should I take some off todayand use that to pay off some of
that loan versus paying interestrate of 6%?
I think I probably should.
(34:25):
I agree with you and thereforeyou know, is my action going to
be the action for everyone?
Absolutely not.
What Clem and I try to do is todebate these things to show you
that there are points andcounterpoints and we're not
always going to be on the rightside, but we know that by being
skeptical and looking at it, wecan eventually create more and
(34:49):
more situations where we succeedand we have less regret and we
have a better ability to sleepwith the holdings that we have.
You got anything else fun?
Clem Miller (35:00):
no, I think that's about it.
I think, uh, I think we've, youknow, communicated our views
about the fourth quarter, and I,what do you?
Steve Davenport (35:09):
think about rate cuts.
What's your judge?
I think we have 25 in Septemberand 25 in December, and then we
have another 50 and in 26.
Clem Miller (35:22):
I'm not going to speculate about 2026.
I think that depends on whetherwe're actually in a recession
or not.
I think, I think, give me your25 numbers.
I think 25 and 25, 25,september 25, a little later
this year.
So that's what I think, I think.
(35:51):
I think that I think, if Ithink, if Trump manages to take
firm control over the fed,manages to take firm control
over the Fed, we might seesomething a little different and
a little more dangerousactually.
Steve Davenport (36:02):
I think that's the 26th event, though, right.
Clem Miller (36:07):
Most likely.
Yeah, I guess so yeah.
Steve Davenport (36:11):
All right, skeptics, thanks for listening.
Please share the podcast withothers and let them know um, we
appreciate you listening and, uh, we look forward to our next
opportunity to talk.
Um, our next podcast is goingto be about us government buying
states and companies.
Is the trump administration ina position to evaluate where
(36:35):
America should be putting itsmoney?
Thank, you everyone and weenjoyed your listening.
Hello, welcome everybody to Skeptic's Guide to
Investing.
I'm Clem Miller, I'm here withSteve Davenport and today we're
going to be talking about thefourth quarter.
What can we expect for thefourth quarter of 2025 and on
the market and so the frothyfourth, yeah, what?
(00:26):
The frothy fourth?
The frothy fourth, right?
And so let me uh, let me startand turn it over to Steve, and
Steve, you know, what are yourthoughts about the fourth
quarter?
Steve Davenport (00:40):
Clem, I know this has been repeated or heard
before, but I'll say that itfeels like the market is
discounting a future that is toopositive and therefore I think
that the fourth period willstart to see some consolidation,
as we see that the forecast forsome of these AI growth numbers
(01:04):
have to come back to reality.
I see companies complainingthat they're not getting the
benefits they thought.
I see companies talking aboutthis race.
That really isn't about helpingcompanies and helping
individuals.
It's more about who has thebest server farms and who has
(01:27):
the most NVIDIA chips.
It feels like this market isfrothy, and when I say frothy, I
mean that companies whonormally would get a market
multiple, like a Pfizer and aMerck, are selling for seven to
nine times earnings, andcompanies with any mention of AI
(01:48):
are trading at 30 to 50 timesearnings.
And since we know that thoseextra normal growth can go on
for a while and it has we'veseen extraordinary growth in
these names super normal growthand the question is do trees
grow to the sky?
We've seen extraordinary growthin these names supernormal
growth and the question is dotrees grow to the sky?
(02:10):
Can it continue forever or willwe have to see some type of a
slowdown and contraction inmultiples to get back to more
normal levels Is now the time totake some profits.
Steve, what's your solution?
If you think that theAI-related stocks are too highly
(02:37):
priced, too highly valued rightnow, where are you putting your
money?
Well, I was just saying healthcare at seven
to nine times discounting thegrowth rate of single digits
(03:09):
less one or 2%.
I don't see that.
So I think that what we'reseeing is sectors of the economy
that are more ordinarycommodities, energy, healthcare,
staples those spaces are justbeing tossed aside for companies
with more growth, moretechnology and more access to
(03:34):
the new.
You know, there was theinternet.
There was high-speed internet.
Now we're talking about AI andwe're giving all of these
companies multiples that arepriced to perfection.
I don't think perfection is theoutcome.
So, therefore, I think there'sgoing to be some stumbling, and
(03:55):
now would be a good time to takesome chips off the table.
I'm not saying to get out ofthem completely.
I'm not saying they're not goodcompanies.
I'm just saying they're tradingat levels that you need to take
advantage of.
Look at Oracle, up 35% today.
Is that a normal return for aday Clem.
Clem Miller (04:14):
Or is that an?
Steve Davenport (04:14):
abnormal return .
Clem Miller (04:17):
Well, it's predicting the future of cloud
services, no question.
Steve Davenport (04:25):
Okay Is all the analysts estimates in the past,
prior to today, didn't have anygrowth in cloud.
Clem Miller (04:35):
Of course they had growth in cloud.
Yeah, apparently they weren'tthe whole company could go
Apparently they weren't in oneday.
Steve Davenport (04:44):
Yeah, and it's not filled with just a little
bit of over exuberance.
Clem Miller (04:50):
Of course it has some over exuberance today it
does.
I would say today there's someover exuberance in Oracle, but
clearly, you know, I meanobviously looking, you know,
hindsight's 2020, but you know,the day before today, I mean
yesterday or the day before, themarket wasn't optimistic enough
(05:11):
about Oracle, given the way theprice jumped today.
So, steve, let's think aboutthis.
Let me ask you do you think AIis overblown?
Steve Davenport (05:27):
I think right now it has become overblown.
I don't think AI's potentialcan really be realized.
What we're talking about isconstructing the chips so that
the servers can start to processthe AI calculations we
anticipate we need.
All of the secondary abilitiesof AI have to still be addressed
(05:51):
in terms of how you develop itand how you implement it.
So we're celebrating anaccomplishment and we're
probably 25% of the way in anaccomplishment, and we're
probably 25% of the way in.
We're not near.
You know it's going to be amid-80s, 26, 27 event, and so
(06:16):
we're taking all of this profitforward without having done the
work to implement.
So I don't see how much yourearnings has been enhanced this
quarter because of AI.
Clem Miller (06:29):
Good question.
I don't know, I don't know thatanybody really knows.
Is it 35%?
Well, no, I mean that 35% isjust one company, right?
Steve Davenport (06:41):
But my question is how do you keep having this
happen on a daily basis, whereevery analyst is off?
And is it?
Every analyst is off or themarket is just supercharged to
react to any of these names?
Clem Miller (07:01):
Well, I would agree with you that the market right
now is somewhat overvalued, andthat's why I've got a decent
(07:22):
chunk of both gold stay groundedin a portfolio that does have a
lot of AI or AI adjacent typestocks in it.
Steve Davenport (07:34):
I think that's smart, yeah, and I think that's
a good idea, right.
All I'm asking is if you know,just like when a name gets down
and you say, gee, that's apretty good value, and then it
goes down further, is it?
Is it still a good value or isit becoming a value trap?
My question is on the upside,are these growth growth traps?
Clem Miller (08:00):
right and so so.
So, steve, let me raise anotherquestion for you.
You know there's some concernabout the overall economy and
things seem to be a little shakywith employment numbers.
(08:21):
You know, while we can stilltrust the employment numbers,
they seem to be a little shakyand so, you know, there's some
thought.
Are we, you know, are we goingto see a weakening?
Are we going to see a recession?
I know Jamie Dimon made acomment yesterday about that,
(08:42):
his concern about that, and youknow I would submit to you that
you know, in a weakeningeconomic environment, the stocks
that do worse are the cyclicalstocks, and the market would put
a premium on the growth stocksbecause they provide for more
(09:07):
sustainable growth in revenuesand earnings than the cyclical
stocks that are going to go downand up with whatever's
happening with the economy andgiven that-.
Steve Davenport (09:20):
It still comes down to GDP growth, right Colin?
Why it still comes down to GDPgrowth, right Colin?
It still comes down to GDPgrowth.
Clem Miller (09:28):
Yeah, but GDP.
But see, here's what I wouldsay is I have, throughout my
career, I've heard people makethe mistake of thinking that
growth stocks are tied to GDP.
Growth are tied to GDP growth.
Growth stocks are a way ofprotecting you from GDP
(09:51):
movements up and down.
Right.
Steve Davenport (09:55):
They're a way of protecting you.
I think we're talking aboutdifferent levels of
participation Because if I wasto say to you, clint, tell me,
you know, in the three big boxesup top core, growth and value
where is your portfolio on thatcontinuum?
Is it 35% growth, 30% core and30% value?
(10:21):
I would say In the equities,not including your gold and cash
.
Clem Miller (10:27):
Yeah, yeah, yeah.
So I would say it's 50% growthand 40% core 10% value.
Steve Davenport (10:48):
Okay, so there's a bias to one side and
all I'm saying, oh yeah.
Clem Miller (10:54):
No, there's a bias to one side and the bias to the
one side what it does is see I,you know, I know you think in
terms of growth, value and core.
I think less along those lines.
With time, I'm thinking.
Steve Davenport (11:15):
You also have to.
You also have to look at thisin terms of how soon do you
think you're going to use it.
What do you think the overallimportance is to you?
Have you hit the level that youknow?
You know if you're, if you havethe freedom to look at things
and say I'm well, I'm wellpositioned.
You could say I'm going toimmunize myself against the
(11:38):
future and put more assets asideso that I can sleep better at
night or I can have more comfortthat I've satisfied my
retirement goals, my retirementgoals, and so all I'm saying is
not everybody is in the sameposition regarding I feel
(11:59):
comfortable with this growthbecause I know that.
You know what I mean.
I have enough in other assetsto manage.
You know my needs.
Other people say I'm behind andI need to have more in growth
because I want to catch up,because I didn't do a good job
saving into my retirement.
Other people will say I'm 25years old and I want to be more
(12:20):
heavily in growth.
All I'm trying to say is ifyou've looked at yourself and
you've gotten a littleimbalanced and you typically
like to be 40, 40-20 instead of50-30-20, then think about it.
All I'm saying is I feel likeif it looks like froth and it
(12:43):
feels like froth, it might befroth.
If it walks like a duck andquacks like a duck, it feels
like an 08 time, it feels likean 01 time.
Things are just out of controlin one particular area and it
(13:04):
just makes me uncomfortable.
Clem Miller (13:08):
You know, in my portfolio, you know my screening
criteria are aimed at basicallytrying to remove froth.
Ok, so first of all I I try tocontrol my overall forward peg.
So I would say the medianforward peg for one of my stocks
(13:31):
is about 1.5 right now times.
I don't think that's a veryhigh forward peg, to be honest
with you.
I got some that are higher.
I got some that are lower.
Correct Clem.
Steve Davenport (13:46):
I'm not criticizing your portfolio.
You asked me Right.
Well, no, no, no.
I read the other way, I do yourportfolio.
Clem Miller (13:52):
You asked me Well, no, no, no, the reason I'm
bringing up forward peg is whenyou said that certain folks are
going to want to have a greaterpercentage of growthy stocks.
I just want everybody to knowwho might be listening to this,
that when I talk about growthstocks, I'm still talking about
(14:13):
stocks that aren't like wildlycrazy overvalued, right?
I mean, when I think of wildlycrazy overvalued, I think of a
peg ratio of, you know, abovethree right or 3.5 or even
higher.
I mean I remember seeing youknow, taking a look at Palantir,
which I do not own, right, andPalantir's got a forward peg of
(14:36):
like seven, six or seven.
That's crazy, right, a forwardpeg of six or seven.
Steve Davenport (14:42):
Well, yeah, you had some quantum stocks that
you-.
Clem Miller (14:45):
Yeah, I got rid of that.
I got rid of that a long timeago, right, I know?
Steve Davenport (14:48):
but all I'm saying is Cle's a.
There's a desire to be on theedge.
We all want to be on thecutting edge right you want to
have below at market risk I meanoracle is not on the cutting
edge.
A risk is that's why I'mshocked.
But it's up 35 percent.
I mean, can you at least feel alittle shock, or do you just
feel?
Clem Miller (15:09):
joy.
I'm not shocked, you're notshocked.
It's up 35%.
Well, I'm shocked at any stock.
Well, wait a minute.
Steve Davenport (15:22):
There is new information.
Clown the information.
How much of that futureinformation is real?
How much is real orders?
Clem Miller (15:29):
Well, it's as real as any other future information
right.
Steve Davenport (15:39):
Yes, and that's why you should say 35% up based
on that information.
Clem Miller (15:41):
They're talking about hundreds of percent growth
in cloud computing.
That's like a massive newreality about how this world is
going to work in the future interms of AI.
And you know I mean you havehealthcare and you know
(16:02):
healthcare is also going tobenefit eventually, I agree,
from AI right, they're going tobe using it for drug discovery
and for other things.
That's going to help healthcare, but at the same time, it's
also going to help cloudcomputing, right, and AI right.
It's going to help the AIcompanies.
(16:22):
There's going to be somesharing of benefits, I think,
between healthcare and the AIcompanies right, and the AI
companies right.
You know, I think that it'sstill very smart to hold
significant shareholdings in AIand AI adjacent stocks.
(16:44):
I think that you can controlyour risk by not going too high
on forward peg.
I think you can also controlyour risk by not going too high
on short interest right, becauseshort interest is an indicator
(17:06):
of risk and I think that aportfolio can look misleading in
terms of returns on an up dayor on a down day by having a
beta, a portfolio beta that'stoo high.
So I certainly would not wantportfolio beta to be
(17:34):
significantly higher than one,right?
Steve Davenport (17:35):
um, it depends on what you're comfortable with,
clem.
I mean, I I can see why peoplewho are younger could have one.
Well, but it's it's.
It's really in my mind.
I'm just trying to call out forthat, that old idea of balance,
and it's an old idea and I knowit's not.
You know it's not cutting edgeto think about balance when you
(17:59):
want to put everything into thefuture.
If we want to put everythinginto the future, look at Tesla's
pay package A trillion dollarsif it hits goals of a million
robots, a million auto taxis and10 million vehicles.
Clem Miller (18:15):
Yeah, well, you know, if you run tesla through
my criteria, it fails no, andall I'm saying, clint, is that
there are.
Steve Davenport (18:24):
There are other names besides the names that
you own right, like palantir,like the, the quantum computing,
like some of the names likewe're talking about, tesla that,
in my mind, are trading atridiculous levels.
Clem Miller (18:43):
Well, I look, I think we're in agreement there.
I think we're in agreementthere.
Steve Davenport (18:46):
I'm just saying that you don't want to sell any
of your names because you do abetter job of understanding risk
.
Clem Miller (18:54):
I think, with my criteria, I feel very
comfortable and can sleep, likeI say, sleep well at night by
being able to control beta risk,peg risk and short interest
risk.
I think that allows me to sleepwell, even with stocks that are
(19:15):
showing significant returns.
Now, granted, when you have anoracle that's up 35% in a day,
obviously you think to yourself,well, should I trim it?
And I probably will, you know,I probably will.
You know, we're broad, we'redoing this podcast at nine 30,
so I can't trim it at nine 35.
(19:36):
Right, but maybe, maybe I trimit later today, right, so we'll
see, we'll see.
I mean, I think it's, I thinkit's, it's, it's.
It would be smart to trim itlater in the day, because how
much further can Oracle, as thatindividual stock, still run?
(19:56):
I think is a legitimatequestion, correct?
But the other ones that arebeing pulled up by Oracle, that
may be up 2%, 3%.
I'm not going to trim those.
Steve Davenport (20:10):
No, all I'm saying is it's an abnormal
response in the market, I cantell you, with a statistical
anomaly.
It's one of those 100-yearfloods and I don't know how many
100-year floods we can have ina 20-year period, but it feels
like when we see one we shouldsay, hey, that looks like an
(20:31):
unusual number and statisticallyI know it is.
Clem Miller (20:34):
so therefore, do I take that input and I own the
name and do something aboutright, but you don't need to do
something when you you when,when one reads about you know
this being an anomalousvaluation for the overall market
, you're still talking about theoverall market and you're not
(20:58):
talking about individual stockswithin that market.
And if you're a stock pickerand have a discipline that you
stick with in that market, thenyou know, you know it's
certainly you know.
I mean, what kind of conclusionshould you reach?
If you look at the overallvaluation for the S&P 500 and
(21:24):
you see that it's abnormallyhigh against history, what
conclusion should you reach?
That you buy bonds, right, Imean-.
Steve Davenport (21:31):
I think you can make a few conclusions.
One we're probably in a marketthat's dominated more by
technology than it was in thepast, so the past comparison
might not be as valid.
I will give you that themarkets change and therefore our
estimates of what's normalshould change.
I give you all of that.
(21:52):
I just believe that you'vementioned three or four names
that you said you would neverown, and they're general.
Hey, pick your head up.
I know you've got to go to worktoday, but look around and see
(22:20):
if maybe some of the names thatyou have that are riskier have
gone up an abnormal amount andyou never go bankrupt taking a
profit.
Clem Miller (22:30):
So, steve, on the S&P 500, we've seen it rise a
lot this year, hit numerousall-time highs, right.
So what do you expect?
I mean, by the end of the year,what do you expect?
Do you expect the S&P to bedown about the same or up
significantly?
Steve Davenport (22:50):
I think it's going to correct by into the end
of the year.
So I think the forwardstatements coming out for the
third quarter ending September30, I think are going to be
slightly negative and I thinkthey're going to be more
realistic and I think people aregoing to adjust some of their
targets and I think that's goingto cause a ripple effect.
(23:11):
I also believe next week theFed will disappoint.
I think instead of saying 50basis points, which a lot of
people are talking about now,they'll say we're going to cut
25 and then we're going to waitand see.
And that wait and see commentwill be viewed by the market as
not as receptive as they thoughtit was going to be, and I think
(23:35):
it's going to surprise marketsand it's going to cause people
to rein in their risk tolerance.
And so I mean I see, on dayslike yesterday where there's one
rumor about something in thisspace and the names come down,
three or 4%, like it's nothing,and I just find that to be
(23:57):
concerning because that tells methere's more fast money than
there is slower, more cautiousmoney.
And I think that, you know, whenwe look at the options activity
which is something I haven'treally focused on.
But options activity is settingrecords.
It's setting records in spacewith one-day, two-day options
(24:19):
and I sit there and I go.
This is just people basing iton speculation.
This isn't real.
Hey, I know tomorrow it's goingto be higher than today, so I'm
all in, I'm going to buy a calloption.
Clem Miller (24:33):
So, steve, when you say correction, you mean like
the literal definition ofcorrection.
I mean, do you see, over 10%.
Steve Davenport (24:40):
Yeah, I think it's going to be over 10%.
So I would say that I thinkwe're going to end the year
somewhere around 5,800 on theS&P.
So I don't have a crystal ballto say that this is a serious.
You know, we've got somethingin the market like real estate
in 2008 or in like technology in2000.
(25:04):
I'm just saying that I think wehave a market that has done too
much.
I mean, we were down 18% inApril and it all came back in 30
days, right?
So is that normal Clinton?
Clem Miller (25:23):
Well, I would say that the April development was
policy induced.
It was the announcement of thetariffs and then the pullback
shortly thereafter in thetariffs, and so I think what
that you know, the lesson I takefrom that is that at any point,
(25:45):
the Trump administration coulddo something that could trigger
a correction, a marketcorrection, a correction, a
market correction.
Steve Davenport (25:53):
My point is, glenn, that if you look at it
historically, 18% moves in 10days and then a bouncing up of
24 or 5 that you needed to getback even in 30 days are both
abnormal, correct.
So therefore I say, if themarket is in, a position that
(26:14):
has already shown you rightsomething, do you ignore it and
say I think everything's great,there's no order?
You say, hey, it's telling youthey're telling you something.
Clem Miller (26:25):
Look what happened earlier this year in terms of
the correction and the recoveryvery quickly was all related,
can all be traced to one policydevelopment right, the tariffs
and the pullback.
I think that it was.
I think nobody had on theirgame card, so to speak, the
(26:46):
expectation that the proposedtariffs would be so freaking
high.
Okay, nobody expected thatproposed tariffs would be so
freaking high.
Okay, nobody expected that.
Steve Davenport (27:04):
And and and that had a very significant
impact, uh, on marketexpectations.
But, Clint, let's just take astep by.
When we look at the amount ofstuff we import and when we look
at its overall impact, even ifwe took the 100% worst cases, it
didn't justify what happened tosome of those names.
They couldn't be impacted asquickly as they were pricing in
(27:27):
right.
Clem Miller (27:28):
Well, like you say, the market is pricing in the
future, right, right?
Steve Davenport (27:34):
And is it a good mechanism or is it a bad
mechanism is my question.
And I'd say right now it's anover, it's, it's overreacting on
both the down and upside.
And to the information that ifyou really discounted it more
properly, you would probably saythat should have been a 5% and
7% move, not an 18% move.
(27:54):
And that's my point is that themoves are magnified.
So if you're comfortable withmagnified moves because they go
on the positive side, then goahead, roll the dice.
Clem Miller (28:09):
Guess what?
That's why I've got a lot ofgold, because gold… I know I'm
not criticizing you Clem.
Steve Davenport (28:16):
It doesn't always have to be about Clem.
I use you as an examplesometimes, but my comment is
more general, to everyone andnot just to you, Clem.
So it's really about in my mindyou know, hey, if 35% of the
one one did it, I was thinkingof taking some of off.
(28:38):
You know what I mean.
This is a gift.
You can either take it or youcan ignore it.
But just realize that ifsomething were to happen and
there were to be anotherpullback of 20 percent right,
this price.
Clem Miller (28:52):
I mean I think, look, I think, if, uh, I think
with the oracle, I think, takingthat entirely off the table,
you know I wouldn't object tothat, right.
I mean that's a lot of uh,that's a lot of uh of money in
one day that you can uh, youknow that you can pull off the
(29:14):
table and put into more gold.
Steve Davenport (29:18):
Right, I'm not even saying you have to go all
out.
I'm saying there are good nameslike a Merck and a Pfizer
selling at seven to nine, that Idon't think are franchises that
I would say belong on the scrapheap, should?
Should some things belong onthe scrap heap?
Should some things be on thescrap heap?
Yes, are those two names theexamples?
(29:39):
I don't think so.
Pfizer could possibly have anoral version of this, you know
obesity drug.
Clem Miller (29:47):
Yeah, Let me ask you about another name
UnitedHealthcare.
Where do you stand on that one,Steve?
Steve Davenpor (29:53):
UnitedHealthcare .
Where do you stand on that one,steve?
I can't get behind it.
I mean, I just I find thattheir lawsuit and their
government, I don't think it'sover for them.
I think that when we look atthis in the future, I think we
will say this really brought theidea of companies operating
efficiently and effectively fortheir patients and for their
(30:17):
shareholders.
This is a bias towards theshareholders and I think that
there's still some reckoning tocome in that stock, so I'm out
of it.
(30:44):
But, how do you feel about it?
Well, I think it's terrible andI think it's a great example of
why just investing in cheapstocks is not the way to go.
Yeah, I mean, I think whensomething gets beaten up, you've
got to ask is the rationale, isit fundamental?
How much could it affectearnings?
I think you have to ask sometough questions and if the
answers are, I don't know, Ithink it could be worse then I
think you gotta you gottahesitate and to jump back in.
(31:07):
If everything were cleared upand they paid fines and they
they rectified and they putthings in place so it wouldn't
happen again, I'd be in adifferent position.
But I don't think we're halfwaythere yet.
So I guess I mean, we came intothis wanting to talk about the
fourth quarter and I've givenyou my estimates of what might
(31:28):
happen in the fourth quarter.
I'm calling for a 10% or socorrection and I think it's wise
for people to take some of thehotter areas and I would say
that Bitcoin is one of them.
I mean, Bitcoin here to me isstill on's rein in risk and keep
(31:55):
, keep some funds aside for atime when things could get more
economical and be better values.
Clem Miller (32:12):
Well, I'm kind of.
I think there's a 50% chancethat the market will be about
the same and a 50% chance thatwe'll be down.
You know, maybe 10%, right, 5%to 10%, maybe a little more, so
that's where I am.
Steve Davenport (32:27):
You're giving me a hard time for it.
Clem Miller (32:29):
Right, you basically agree with me, but you
argue about every point.
No, but I'm arguing about whatto do about it and that's why
having some cash, having somegold, being careful about stocks
(32:50):
that have high short interest,high beta, high forward peg I
think if you control thosethings and still stay in stocks
that have shown some decentreturns recently, I think you're
going to be in good shape andum, and when you follow those
(33:13):
rules, you know you're not goingto be in the cyclical stocks
that are going to be hit theworst by an economic recession,
right?
So I feel pretty comfortablethat that in my portfolio I'm,
um, I'm insulated to a gooddegree against the cyclical
(33:39):
downturn that you would see froman economic recession.
I feel pretty good about that.
Steve Davenport (33:44):
Okay and that's what I think we want to try to
say to investors is that everytime you start to feel your gut
is telling you something, youdon't need to listen and act,
but you should just open up youreyes and say do I feel like
there's the short-term loan Igot for the construction?
(34:05):
Should I take some off todayand use that to pay off some of
that loan versus paying interestrate of 6%?
I think I probably should.
(34:25):
I agree with you and thereforeyou know, is my action going to
be the action for everyone?
Absolutely not.
What Clem and I try to do is todebate these things to show you
that there are points andcounterpoints and we're not
always going to be on the rightside, but we know that by being
skeptical and looking at it, wecan eventually create more and
(34:49):
more situations where we succeedand we have less regret and we
have a better ability to sleepwith the holdings that we have.
You got anything else fun?
Clem Miller (35:00):
no, I think that's about it.
I think, uh, I think we've, youknow, communicated our views
about the fourth quarter, and I,what do you?
Steve Davenport (35:09):
think about rate cuts.
What's your judge?
I think we have 25 in Septemberand 25 in December, and then we
have another 50 and in 26.
Clem Miller (35:22):
I'm not going to speculate about 2026.
I think that depends on whetherwe're actually in a recession
or not.
I think, I think, give me your25 numbers.
I think 25 and 25, 25,september 25, a little later
this year.
So that's what I think, I think.
(35:51):
I think that I think, if Ithink, if Trump manages to take
firm control over the fed,manages to take firm control
over the Fed, we might seesomething a little different and
a little more dangerousactually.
Steve Davenport (36:02):
I think that's the 26th event, though, right.
Clem Miller (36:07):
Most likely.
Yeah, I guess so yeah.
Steve Davenport (36:11):
All right, skeptics, thanks for listening.
Please share the podcast withothers and let them know um, we
appreciate you listening and, uh, we look forward to our next
opportunity to talk.
Um, our next podcast is goingto be about us government buying
states and companies.
Is the trump administration ina position to evaluate where
(36:35):
America should be putting itsmoney?
Thank, you everyone and weenjoyed your listening.
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