May 1, 2026 • 38 mins
A major airline is on the verge of shutting down.
Chuck Zodda and Mike Armstrong break down reports that Spirit Airlines may cease operations and what it says about competition across the airline industry.
Also covered:
Chuck Zodda and Mike Armstrong break down reports that Spirit Airlines may cease operations and what it says about competition across the airline industry.
Also covered:
- Why smaller airlines cannot compete with legacy carriers
- How rising fuel costs are pressuring travel demand
- What higher gas prices are forcing consumers to do
- Why AI driven trading strategies are falling short
- Warren Buffett’s warning on gambling and its broader impact
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
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(00:20):
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Armstrong and Money Matters Radio do not compensate each other
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Exchange with Chuck Zada and Mike Armstrong, Your exclusive look
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(00:42):
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making a donation today. This is the Financial Exchange with
(01:05):
Chuck Zada and Mike Armstraw.
Speaker 2 (01:09):
Chuck, Mike and Tucker here with it and kicking things off. Today,
we've got a little bit of movement happening across financial markets.
S Andp's up about half percent, thirty eight points. The
Dow is up about a half percent as well, two
hundred and eighty four points, and now as that can
posit up two hundred and eleven points a little less
(01:30):
than one percent, So all three major US indices are
in the green. Tenuere Treasury UH pulling back a touch
after rising for most of this week. It's down one
point six bases points to four point three seven four percent.
Dollar Index down point two one percent to ninety seven
to seventy one. Gold is now up fifteen ninety one
(01:50):
ounce after being down about forty bucks an ounce earlier
in trading. It's at forty six forty six, which is
fun to say, fun to look at. And we've got
crude oil West texts Inner Media down three point fifty
one a barrel to one oh one fifty four right now.
And despite that, TRIPI national average for gas prices is
(02:11):
at four point thirty nine and two cents two tents
in a set rather up nine point two cents overnight,
diesel moving up about eight cents as well. Diesel is
now twenty four cents away from a new all time high,
where as the national average for regular gas is still
about sixty two cents away from an all time high.
(02:34):
A little bit of news that just popped up minutes ago.
Nine minutes ago, according to the Wall Street Journal their
exclusive report, Spirit Airlines prepares to shut down as rescue
deal falls apart a big thing. They were hoping to
get a five hundred million dollar loan from the federal
(02:54):
government before running out of cash. It appears that, according
to the Journal's reporting, that is not likely to happen.
They have not been able to get support between bondholders
and the government to make it work, and so it
appears that they are getting close to a ceasing of
operations in the coming day. Shut it down, strip it
(03:17):
for parts now. Anyone who followed their attempted merger with
Jet Blue several years ago knows that despite the fact
that I'm a big believer in hey, we need more competition,
I said at the time, Look, if you're not going
to allow these companies to merge, after allowing all of
the other major airlines to merge back in the early
two thousands. They're at a competitive disadvantage that is not
going to allow them to survive and lo and behold,
(03:39):
that's exactly where we are right now. We have different
sets of playing a different playing field for companies that
were able to merge between two thousand and five and
twenty fifteen and ones that tried to merge after. And
this is going to put one airline with fourteen thousand
employees out of business, and you've got others that are
looking around wondering if they're next. And that's just kind
(04:03):
of where we are right now.
Speaker 3 (04:06):
Yeah, I don't really know how a Frontier and a
Jet Blue compete today. The twenty twenty four passenger volume
was about forty million U sorry, these are seat miles.
So Frontier Airlines had in twenty twenty four about forty
billion seat miles. United had three hundred.
Speaker 2 (04:28):
Is that a lot? It's just three hundred million? Yes, Uh,
these are billions of billion available, not three hundred seat miles.
Three hundred, three hundred billion.
Speaker 3 (04:37):
American had two ninety three, Delta had two eighty eight,
like Southwest can still compete at nearly two hundred you.
Speaker 2 (04:43):
Go tay a look at these other companies. They don't
have the scale. They just don't have the scale to
be able to do this. No, the only way that
that merger should have been not should not have been
approved is if you went to Delton said you got
to figure out some way to make half of you
Northwest again, and go to Americans say half you's got
to be US Air, and you go to United and
(05:05):
say half u's gotta be Continental. Ill this Spirit again.
Speaker 3 (05:08):
If assuming this Wall Street Journal reporting is true and accurate,
I mean they were. I flew them several times.
Speaker 2 (05:16):
I did too.
Speaker 3 (05:16):
My mother in law was nervous as heck on our
latest vacation when I booked her on Spirit because she
was pretty sure it was gonna liquidate while we were
on vacation.
Speaker 2 (05:25):
It didn't.
Speaker 3 (05:26):
But look, they were consistently, consistently thirty to cheaper. Knew
what you were getting it was, you know, they didn't
get pin it, seventy five bucks to carry on a bag,
seventy five bucks to check one, you know, pay for
everything he did.
Speaker 2 (05:39):
But you know what was the model? Your knees were
in your chest with like twenty five inches of pitch
between the seats. Yeah, but like again, like no one
made you fly that flight. You know it was okay,
like great, like it's it's cheaper and fine, I'll hop on.
But yeah, they just can't compete in a world where
some mergers are allowed but theirs is not. I want
(06:03):
to talk about this piece from ABC. It's titled some
driver seeking workarounds as gas soares to highest prices in
four years. I was really wondering what these workarounds were.
Horse Well, I.
Speaker 3 (06:17):
Sold my twenty thousand dollars card I bought a sixty
block last night.
Speaker 2 (06:21):
I'll tell you what I did. I I thought that
maybe if I could put some coal in the blender,
I could make it into gas. And it turns out
that doesn't work. Uh huh. You can't just mix coal
and water in a blender and fill your tank with it.
That's that's a bad, bad approach. So yeah, I don't
think there are really workarounds. The closest I found to
a workaround is what some of these people do, I guess,
(06:43):
which is hey, basically, since the start of March, if
I get down to like three quarters of a tank,
I stop and fill up four gallons of gas because
it's gonna be cheaper than the next day. Well, people,
that's basically the only thing that like I I can do.
I mean, I can't store gas at my house. Yeah.
Speaker 3 (07:03):
The solutions that these people were coming up with is like, well,
I can only afford to put twenty bucks in my tank,
So I'm gonna put twenty bucks in my tank, and
that's gonna get me a lot less, you know, much
shorter distance than it used to.
Speaker 2 (07:14):
And that's not that's not a workaround, No, that's that's
called supplying demand.
Speaker 3 (07:19):
Yeah, a workaround would be you know, picking up your
neighbor and driving to work together. But we don't like
our neighbors.
Speaker 2 (07:31):
I like my neighbors. I think they're great. We did
have a text that came in on the topic. Companies
should be encouraging their employees to work from home to
reduce demand for oil and gas for commuters. In fact,
if you talk to anyone who happens to live in Asia,
it's not just being encouraged, it's being mandated in a
(07:53):
lot of cases, either you know, partial or full work
from home schedules, depending on the country and the specific layer. Here,
we're not there yet, just because the US being in
the unique geographic and resource rich position that we happen
to enjoy. We are able to avert some of what's
(08:15):
gone on to this point. But we're going to get
to a point where as long as Horror Moves remains closed,
prices are going to continue moving up over the course
of the summer. There is no way around it. As
long as Horror Moves remains closed.
Speaker 3 (08:30):
Yeah, I mean, look, I like the idea of fewer
drivers being on the road, but companies are not going to.
Speaker 2 (08:35):
Do that out of the goodness of their own hearts.
Speaker 3 (08:38):
If you want to, if you think it's worthwhile to
provide a tax incentive to companies to say, hey, encourage
your employees to get off the road and we will
throw some money at you, then they'll do it. But
they're just not going to say, yeah, you work from
home because gas prices are higher.
Speaker 2 (08:52):
Let's take a quick break and when we come back,
do wean to talk Zuck, Do we want to talk
AI agents becoming day traders?
Speaker 3 (09:02):
Yeah, let's go to AI agent's peak. Okay traders, because
that seems like a basket of fun. Quick break Trivia's
coming up next.
Speaker 1 (09:10):
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(09:31):
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Speaker 4 (09:37):
All right, It's up for sure to be here on
the Financial Exchange. And on this day. In nineteen thirty nine,
Batman made his first appearance in a comic book. There
have been eleven true live action Batman movies over the years.
Despite the popularity of the movies, only one actor has
won an Academy Award for their performance in a Batman
(10:00):
movie soap. Our trivia question today is simply which actor
is the only one to have won an Academy Award
for their performance in a Batman movie?
Speaker 2 (10:10):
Once again?
Speaker 4 (10:11):
Which actor is the only one to have won an
Academy Award for their performance in a Batman movie? Be
the third person today to text us at six one, seven, three, six,
two thirteen eighty five with correct answer along with keyword trivia,
and you win a Financial Exchange Show T shirt.
Speaker 2 (10:30):
Once again.
Speaker 4 (10:30):
The third correct response to text us to the number
six one, seven, three, six two thirteen eighty five with
correct answer along with keyword trivia will win that T shirt.
See complete contest rules at Financial Exchange Show dot Com.
Speaker 2 (10:45):
AI agents are becoming day traders, but gains are elusive.
Speaker 3 (10:53):
Is that because day trading gains are elusive? Or is
that because AI agents are bad at it?
Speaker 2 (10:58):
Well, it's both. I mean, look back the uh tech bubble,
I think that three out of every four Americans were
day traders. It wasn't that high actually, But look, everyone
thinks that they're going to, you know, be this great trader.
I'm sure everyone thinks they're gonna be able to program
(11:19):
a great system so that their agent can be even
better than them because it's not emotional and won't make
the same mistakes that humans do. So I'm going to,
you know, again, look at some of the situations they
are described in this piece and be like oh okay,
Like yeah, you've got some of these like viral posts
(11:40):
that go out on social media about someone that made
a five and sixty percent return in two days only,
and it was later debunked by another AI agent who
proved that it didn't actually happen. So ultimately, look, here's
the deal. If using an AI agent to trade is
(12:01):
no different from setting up a trading strategy for yourself. Sure,
if you can't describe what your edge is in fifteen seconds,
you don't have one.
Speaker 3 (12:11):
And if you don't know how to day trade yourself,
you're not going to be successful in training an AI
agent to do so. No, by the way, this story,
it does seem that the individual that they interviewed had
some experience in day trading and trading options and.
Speaker 2 (12:29):
Just was busy with his job and wanted to check
that out.
Speaker 3 (12:32):
But I found it funny that he was inspired by
the anthropic experiment in which Claude controlled an office vending machine.
And I don't know if this is the same experiment
that the Wall Street Journal reported on, but where your
recall it gave away a free Sony PlayStation or a
live fish, and was I think it was also convinced
(12:55):
that it needed to, you know, kind of become a
commie and give away everything.
Speaker 2 (12:58):
In the vending machine became communists.
Speaker 3 (13:01):
I don't really know that that's the best example of
using for day trading or right like that inspired What
about that inspired you?
Speaker 2 (13:08):
What if you're trading bought, decides it should be communist.
Speaker 3 (13:13):
Just distribute all the profits equally to who you know,
you you, all the other traders.
Speaker 2 (13:19):
You want communal ownership of what?
Speaker 1 (13:24):
Like?
Speaker 2 (13:24):
I just I can't even get there. Yeah, So I
guess what are the takeaways? Though?
Speaker 3 (13:29):
Because Chuck, I will say that every single piece of
software that I'm using these days is telling me about
the new AI tool that they have released or about
to release, or plan to release in the not so
distant future. And I think that some of these are
going to be awfully useful, but it's all there's a
(13:52):
lot of danger to.
Speaker 2 (13:53):
It's no different from any other tool. If you go
and give a monkey a drill, it's probably gonna work
out badly like a You're gonna have holes and all
kinds of stuff be the monkey's probably gonna hurt itself.
It's not gonna go well. If you train a person
(14:13):
to use a drill appropriately, they can be hugely productive
and do things that they couldn't do without that tool.
And that technology. AI is no different except it just
like again power tools, it acts as an amplifier. Like
if if you could make a mistake with a hammer,
you can make worse ones with a nail gun. AI
(14:36):
is the same thing. If you can make math mistakes
and trading mistakes us an excel, you can make worse
ones using AI agents. You can also make better decisions
potentially if like you have you know good processes. But
ultimately it gets back to what is your skill set,
and it's like, no thyself, no your limitations, know your
(15:00):
what you're good at, and ultimately, for most people, trading
is not something they're good at. It's just not.
Speaker 3 (15:09):
If you are evaluating your investment strategy. I know that
there is a lot of infatuation on this moment in
time right now, a lot of potential or already realized
upside due to artificial intelligence, and I think an equal
amount of concern about what that ultimately results in. If
you're looking for some guidance, especially if you are talking
(15:32):
about using that portfolio for your own life expenses sometime
in the next decade, I'd really encourage you to get
a second opinion, whether you're doing it yourself having somebody.
Speaker 2 (15:42):
Do it for you.
Speaker 3 (15:43):
You need to be asking these questions about what is
my strategy and how does that strategy need to change
as my life develops? If you like to book free
consultation with the Armstrong Advisory Group to review that strategy.
The numbers eight hundred three nine three four zero z
zero one. We have offices from Connecticut and Rhode Island
up to Maine, New Hampshire and pretty much everywhere in between.
(16:08):
We would love to chat with you too. You can
go to Armstrong Advisory dot com or call us eight
hundred three nine three four zero zero one.
Speaker 1 (16:16):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax and the state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services.
Speaker 2 (16:32):
Let's see, do we want to talk anything about Meta.
I've kind of had enough AI in Meta for the week. Yeah,
we've been beaten. I just I can't wait take my break. Yeah,
I can't. I can't do any more, zuck at the moment.
Can we talk about Warren Buffett calling sports betting a
tax on stupidity? Yeah, let's talk about this. So Warren Buffett,
(16:55):
who no longer is in the CEO chair at was
his retirement effective immediately or is it a freak won't
be run in the next meeting. In any case, Warren
Buffett not a big fan of gambling. You know his
quotes here to the extent that states raise money from
(17:15):
people who the dollar really means something to them. It
actually relieves the taxes on me or other rich people.
It's not direct, but it's the net effect, which is true.
Speaker 3 (17:24):
Go look at the originations of the lottery systems across
state by state. Massachusetts, yes, one of the first on
that front, and to really leverage it, and it is
a largely reaggressive tax. It is played more by those
in poverty and does dramatically relieve state, state, in town budgets.
Speaker 2 (17:44):
And so Buffett, you know, goes on to say, look,
I don't like things that make suckers out of people.
I don't think the function of the government is to
put play its people for suckers. And look, there's a
reason why so many states have legalized sports gambling. Now.
It's not because they love it. It's because they love
the tax revenue from it. And the fact is between
the tax revenue that remember, the tax revenue is generated
(18:07):
by the gambling companies that you know and end up
paying it ultimately, like when you factor in the fact
that those companies last time I checked, in order to
stay in business, Mike, you need to make money, right
as far as I know you, so, in order to
make money and then have money to pass on in
the form of taxes. It means that gambling is not
a zero sum game. It is a game that is
(18:29):
inherently rigged against the broad population of gamblers. Like you
just look at how the lines are set, and that
is basically how it works. And so it's a situation
where the data that's come out is pretty much that
like a very tiny sliver of people are the big
winners and pretty much, Tucker, I forget what the distribution is. Is
(18:51):
it like ninety percent of people end up being losers
in the sports gambling ecosystem.
Speaker 4 (18:55):
Sounds about right, especially meleely.
Speaker 2 (18:57):
It feels like that, doesn't it. Huh? Sorry, go ahead.
In any case, I think the big thing here that
I keep coming back to because again, you talk to
any male in their twenties and they're like, yep, most
of my friends have sports gambling debt. If you want
to have it legalized, it's fine. But I think we're
(19:19):
really kind of borderline destroying parts of society by allowing
you to just have it on your phone, And I
think you sho have to go into a nice, fun,
cool sports book and do it there, because it's just
less dangerous.
Speaker 3 (19:31):
To being able to sit in your same it supposed
to ignore the addictive piece of it.
Speaker 2 (19:34):
Quick Break Wall Street Watching Trivia Answer.
Speaker 1 (19:36):
Next, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Tell Ow Foo whoa street watch tracking the stocks,
the data, and the headlines driving markets so far today
(19:58):
right here on the Financial Exchange Rate.
Speaker 4 (20:00):
Well, they is starting off in positive territory of strong
earnings in tech continued to lift market sentiment. Right now,
the Dow is up a tenth of a percent, SMP
five hundred up two thirds of a percent, Nasdaq now
up over one percent or two hundred and seventy six points,
RUSS two thousand edging about a tenth of a percent higher,
Tenure Treasure Reel down one basis point at four point
(20:21):
three seven six percent, and oil down three percent today
trading right around one hundred and one dollars a barrel,
breaking news this hour after the Wall Street Journal reported
that Spirit Airlines is preparing to shut down after the
budget airline had been hoping to finalize a five hundred
million dollar lifeline from the government before running out of cash. Meanwhile,
Applestock is gaining four percent after the tech giant reported
(20:45):
its iPhone revenue climb twenty one point seven percent to
nearly fifty seven billion dollars in the previous quarter. Elsewhere,
sand dis shares are up modestly after the data storage
company beat earnings expectations and offered stronger than expected guidance.
Western Digital also impressed with its quarterly profit, yet the
stock is down over two percent. Elsewhere, Elastian stock ralling
(21:06):
twenty three percent after the software company reported strong cloud
growth in data center revenue. Roadblocks cut its full year guidance,
has efforts to boost its safety features weight on its
latest quarterly results. Shares in the video game maker tanking
by fifteen percent, and social media company Reddit reported double
digit sales growth in AD revenue and boosted sales and profit.
(21:30):
That stock is up by eleven percent. I'm Tucker Silva,
and that is Wall Street watching. In the previous segment,
we asked you the trivia question which actor is the
only one to have won an Academy Award for their performance.
Speaker 2 (21:44):
In a Batman movie?
Speaker 4 (21:47):
And that would, of course be Heath Ledger as the
Joker in the Dark Night. And Chris from Pelham, New
Hampshire is our winner today taking home the Financial Exchange
Show t shirt. Congrats to Chris, and we played trivia
every day here on the Financial Exchange. See complete contest
rules at Financial Exchange Show dot com.
Speaker 2 (22:06):
The mails here, here's the mail that the mails. It
makes big one, the wag matail. When it comes. I
want the whal bag.
Speaker 1 (22:15):
You've got questions, We've got answers. It's time for the
Money Matters Mailbag. We are tackling your calls and emails
on everything from economic policy to global markets and everything
in between. Leave us a voicemail at three three nine
three nine nine four three three three and you might
hear it on the show. You can also email your
question to TFE Show at gmail dot com. Now it's
(22:38):
time for the Money Matters mail bag.
Speaker 4 (22:40):
All right, let's get right to the Money Matters mail
bag here in the Financial Exchange. That's your chance to
ask Chuck and my questions that you might have in
the old noggin. So uh, let's get to it here.
Tony and fall River has a question for Chuck and Mike.
Tony says, I am thirty years old, have been invested
since I was eighteen. I have multiple investment accounts, and
(23:04):
I'm wondering if it's better to consolidate for higher compounding
possibilities or keep them separate.
Speaker 2 (23:11):
Good question. Can I address that? Michael? Please do so here.
Here's the big thing is multiple investment accounts. They don't
compound faster or slower depending on where you hold them.
There are different reasons to keep things in different accounts.
For example, sometimes you have to just because of tax considerations.
You can't just, you know, combine a roth IRA with
(23:32):
an after tax account, or you can't just combine a
traditional IRA with a roth There are tax considerations for
doing so. Beyond that, occasionally you run into situations where
it makes sense to have certain accounts that are separated
because maybe certain ones give you access to certain types
of investments that you can't access in other ones, and
(23:56):
so you might choose to keep them separated that way.
From a personal perspective, sometimes just when it comes to
different financial accounts, whether it's investment or bank accounts. I
keep them separated just so that I can very easily see, like, okay,
here's my bucket that I have for X or Y
or z, and so it can make sense to have
things fashion that way.
Speaker 3 (24:15):
But I have gotten this question about compounding before, because
it's true, right, the more money you have, the bigger
the compounding rate. But if you already have the funds right,
like just play and simple, you have two accounts where
one thousand dollars and each of them get a ten
percent return, you've made one hundred dollars in each of
those two accounts. If you put them together and you've
got two thousand dollars and achieve a ten percent return, yes,
(24:37):
you've made the same two hundred dollars, just in one
place rather than two.
Speaker 2 (24:41):
Now, there are sometimes when consolidating accounts can help, just
in terms of record keeping and understanding where everything is.
Lower fees. Sometimes sometimes you can end up with lower fees.
Sometimes you might move to an account that has, you know,
additional services that other ones might not offer. So these
are some of the considerations. It's not a a binary
black and white like yes, always do this or no,
(25:04):
always do that, but there are valid reasons in some
situations to consolidate valid ones to not But ultimately that
shouldn't be something that influences your overall ability to compound
that portfolio.
Speaker 4 (25:18):
Agreed, all right, next question here to the Money Matters
mail bag. Chris sent us an email to tfe Show
at gmail dot com with this question, is a wroth
conversion as exposed to market swings as much as an
equity rich traditional IRA or a four to one K?
Speaker 3 (25:38):
So good question, and I think a pretty common one.
But I think you're maybe mixing up a couple of
concepts here. So when we talk about a roth conversion,
we're talking about simply taking investments out of one shell
and putting them into a different shell that holds those investments.
(25:59):
And you know it'll surprise people. But can you take
your wroth your converted assets into a wroth IRA and
buy CDs with it? Yes, you can, in which case, no,
I would expect that there would be no market swings
if you have an FDIC and short CD holding your.
Speaker 2 (26:17):
Wroth IRA assets.
Speaker 3 (26:18):
Not that that is what I'm recommending anyone do, but
the wroth versus the traditional four oh one K or
the IRA, or any of these buckets are merely shells
to hold different investments, and you can completely customize, if
you so choose, what degree of risk you are willing
to take in one bucket versus another. Now, there's a
(26:39):
bunch of considerations that you need to think about there,
in one of them being Hey, I now have a
bucket a shell that will never be taxed again in
my life, and one that will every penny that comes
out of it be taxed, And so should I be
investing differently in one versus the other? My guess would
be probably yes, But it's highly dependent on your own specifics.
Speaker 2 (27:00):
Yah An you can add on that. No, it's understanding.
One is the rapper, the other is the candy bar
that goes inside it. All right.
Speaker 4 (27:09):
The final question when this week's edition of the Money
Matters mail Bag is the following, what are the advantages
of broad market and income oriented ETFs over mutual funds
and a tax advantaged IRA?
Speaker 2 (27:26):
So again, kind of a very big broad question. Uh, Look,
quite honestly, it's going to depend an awful lot on
specific products and including again, mutual fund versus ETF is
kind of a difference of rappers. There are some functional
differences as well, but hey, ultimately it's going to be
(27:50):
what is actually inside of there that makes some key differences.
If you're talking about having it inside a retirement account,
there aren't really any tax differences in that case because
none of the money is taxed until you are withdrawing funds.
So ETFs and mutual funds can have some differences in
taxation amongst investments that are held inside of them, but
(28:12):
beyond that, it's really going to depend on the specific product,
the fee structure, how it's constructed, where the income's coming from.
There's a lot that goes into that entire conversation there.
Speaker 3 (28:25):
Yeah, I was trying to find some averages, because averages
can kill you because this is not how you should
run things. But on average, exchange traded funds are less
expensive in terms of their expense ratio than a mutual fund. However,
averages can beat you up because there are mutual funds
(28:47):
that are substantially cheaper than atfs. It just depends on
what your strategy is and what you are going for,
So on average, I'd be comfortable saying that the advantages
of broad market and income oriented ETFs is probably one
of cost to the shareholder. But there are a lot
of exceptions to that general narrative.
Speaker 2 (29:08):
Anything else in the mail bag.
Speaker 4 (29:09):
That's it for this week's edition of the Money Matters
mail Bag. And again, if you have questions for Chuck
and Mike, shoot us an email to TFE Show at
gmail dot com, or we can leave us a voicemail
at three three nine three nine nine four triple three.
Speaker 1 (29:24):
The Financial Exchange is life on series XM's Business Radio
Channel one thirty two weekdays from eleven to noon. Get
the latest business and financial news from across the country
and around the world, and keep up to date on
how it might affect your wallet. That's the Financial Exchange
weekdays from eleven to noon on a series XM's Business
Radio Channel one thirty two. Face He's the Financial Exchange
(29:46):
Radio Network. Ladies and gentlemen. The weekend.
Speaker 2 (30:01):
As promised, we are now joined by the one, the
Only Paul A Monica. I actually don't There might be
another Poul Monica somewhere, but he doesn't join us. Each
and every Friday. Is the Paul.
Speaker 1 (30:13):
On the planet.
Speaker 4 (30:14):
Paul am is the I checked?
Speaker 2 (30:15):
We have another Paul that hosts occasionally? Yes, is it
this one no different. Paul. Okay, lame mister Lamonica, how
you doing?
Speaker 5 (30:24):
Thank you. I've checked before, I've googled myself. There are
other people on the planet with my name. Whether or
not there are any other Paul Richard lamonicas I I
do not know.
Speaker 2 (30:36):
Well, I appreciate you doing the research for us too.
Weank you to confirm, Paul, you did some research on
CBS as well. This is a company that I don't
want to say, has been you know, left for dead
for the last twelve thirteen years, but just hasn't really
gone anywhere. And I'm curious your take as to will
it still continue to go nowhere or is there somewhere
(30:57):
for it to go.
Speaker 5 (30:57):
Now Yeah, I think you could take the case that
there is somewhere for CBS to go, and and that
hopefully could be up, not down or flat. The stock
is relatively cheap, you know, particularly compared to some of
its insurance rivals like United Health and Humana. And yes,
(31:19):
I said insurance because even though CBS, you know, probably
most consumers know it as a drug store chain, it
also owns Etna, obviously owns care Mark, as well several
other businesses within the healthcare ecosystem. So I think that's
one of the reasons why it's had this discount. There
(31:40):
is this complexity that you know, some investors have argued
maybe you penalizing the company, and there had been talk
in the past about, you know, a possible breakup, but
that seems to have you know, dived down right now.
Speaker 2 (31:56):
I guess the part for me that is is interesting
is look, as you know, we all know that the
thing that ultimately drives a company in the long term
is going to be earnings growth. And the thing that's
wild is that CBS right now does around four hundred
billion dollars in revenue and they're trailing twelve month net
income was about two billion dollars, not not very much.
(32:18):
It's kind of wild to me that their net income
is basically in the same place that it was back
in two thousand and five, two thousand and six, when
revenue is a tenth of this size. So what's their
path to like turning all of this revenue into profit
actually instead of just having it getting eaten up by
expenses all the time.
Speaker 5 (32:36):
Yeah, No, it's a great question. I think that there
are some hopes that the medicare advantage you know, rebates
that you had been a concern that there was going
to be a much smaller payments from the government to
(32:58):
AT as well as the insurance rivals. They're not going
to be as tiny as hope. There's going to be
a bit of an increase this year about two point
five percent compared to you know what had been expected
to be you know flat. So that should hope boost margins,
you know, going forward. And I think CBS also could
(33:19):
benefit from some of the turmoil within the retail pharmacy industry.
I mean, Walgreens has had some issues and is scaling back, right,
aid has gone away. You could argue that, yes, now, uh,
CBS's competition is less about pure play drug store chains
and more about Amazon and Walmart. But you know, I
(33:40):
think CBS still holding in there, you know, and that
you could see you know, earnings, you know, growth pick
up in the latter half of this year.
Speaker 2 (33:50):
Paul, what about the idea that like CVS is we're
going to become the place that people go for just
you know, random medical this in that it feels to
me that that has really panned out, and instead you've
got all of these urgent care places that have popped
up instead. Are they still trying to make more inroads
into becoming just an overall health center.
Speaker 5 (34:10):
Yeah, definitely, without a question. I mean, obviously they still
have the Minute Clinics. I think a lot of people
probably have gotten vaccinated there. They have a primary care
center brand Oak Street Health. They have an in services
home provider named Signify Health that they bought. So CBS
is clearly of the mindset that being a one stop
(34:32):
chop for consumers' healthcare needs when they can do things
that don't involve maybe a specialist care, is the right
way to go. The question, you know, clearly is going
to be whether or not having all these businesses eventually,
to your point, turn into more steady and higher levels
(34:54):
of earnings growth. If not, then maybe there will be
calls once again to break up the company split up.
You know, that's something that you know, Karen Lynch, the
former CEO, faced, but you know, once she stepped down
a few years ago, the new CEO has been pretty
adamant that, uh, you know, CBS is going to stay intact.
(35:14):
It's not gonna be breaking up.
Speaker 2 (35:16):
Very good, Paul, appreciate you joining us today and I
hope you have a fantastic weekend. You got any uh
any any Derby picks for us?
Speaker 5 (35:26):
I do not. I think my Derby pick is that
I need to go to the grocery store and get
some mint because I already have the bourbon so I
can make my own mint Tulia.
Speaker 2 (35:35):
There you go. I do uh. I believe that the
the Bowpost guys have a horse running. I think it's
emerging market this year, so uh hey, there you go.
I don't know anything about horse racing as fodder was matters,
you know about as far as I go on.
Speaker 5 (35:50):
Also, Berkshire hat the way weekend.
Speaker 2 (35:52):
Oh that's right, you converge.
Speaker 1 (35:53):
Ye.
Speaker 5 (35:54):
Let's see that no horse named after Warren Buffett, that
would be the pick to go with.
Speaker 2 (35:58):
Yeah, if you had an Oracle of Omaha horse, which
would be a great name for a horse too. I
got a side. Yeah, the Oracle of Kentucky. Derby's is
what city is that in?
Speaker 5 (36:10):
Uh, Louisville.
Speaker 2 (36:12):
It's it's in Louisville, the Oracle of Louisville. It's got
a nice ring to it. Yeah, Paul, appreciate you joining us.
Have a great weekend.
Speaker 5 (36:19):
Thank you very much. You guys.
Speaker 2 (36:21):
Can I share a quick Derby story for you.
Speaker 1 (36:23):
Sure.
Speaker 2 (36:23):
Yeah. So buddy of mine who I used to live
with back in like ten fifteen years ago, right after college,
he was for work. He was going to uh Omaha
for the Berkshire Annual meeting. Did you wear a Giant Hat?
And afterwards he was going to Mexico for some due
diligence on a company that he was researching. He called
(36:44):
me from Omaha on the day of the Kentucky Derby,
so on the Saturday, and he had forgotten his passport
in his room and so it was like, I don't know,
four o'clock and like I was at a Kentucky dirty party,
and so I was like, okay, Like what do you
want me to do. He's like, I've already talked to United.
(37:05):
They have a cargo terminal at Logan. You need to
bring the passport to them, give it to this guy,
you know, Hank or whatever, and he's gonna get it
on the United flight that goes overnight to Omaha so
that I can pick it up at the cargo terminal
there and get to Mexico with no problems. Did it work?
(37:25):
I think? So I found the passport sprinted to Logan
dropped the thing off got back for the Derby, and
I'm assuming he made it to Mexico because I never
heard anything else on it. Never heard from him again.
In fact, no that you mention it. I never did.
Hank just took his passport. It's never heard from Hank either.
(37:47):
But to uh, it's kind of wild. But uh, let's
take a quick break for the entire weekend. Hope you
all do have a great Berkshire Annual Meeting weekend and
Kentucky Derby Kentucky Derby Race weekend. Gobys, we'll see you
on Monday.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
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making a donation today. This is the Financial Exchange with
(01:05):
Chuck Zada and Mike Armstraw.
Speaker 2 (01:09):
Chuck, Mike and Tucker here with it and kicking things off. Today,
we've got a little bit of movement happening across financial markets.
S Andp's up about half percent, thirty eight points. The
Dow is up about a half percent as well, two
hundred and eighty four points, and now as that can
posit up two hundred and eleven points a little less
(01:30):
than one percent, So all three major US indices are
in the green. Tenuere Treasury UH pulling back a touch
after rising for most of this week. It's down one
point six bases points to four point three seven four percent.
Dollar Index down point two one percent to ninety seven
to seventy one. Gold is now up fifteen ninety one
(01:50):
ounce after being down about forty bucks an ounce earlier
in trading. It's at forty six forty six, which is
fun to say, fun to look at. And we've got
crude oil West texts Inner Media down three point fifty
one a barrel to one oh one fifty four right now.
And despite that, TRIPI national average for gas prices is
(02:11):
at four point thirty nine and two cents two tents
in a set rather up nine point two cents overnight,
diesel moving up about eight cents as well. Diesel is
now twenty four cents away from a new all time high,
where as the national average for regular gas is still
about sixty two cents away from an all time high.
(02:34):
A little bit of news that just popped up minutes ago.
Nine minutes ago, according to the Wall Street Journal their
exclusive report, Spirit Airlines prepares to shut down as rescue
deal falls apart a big thing. They were hoping to
get a five hundred million dollar loan from the federal
(02:54):
government before running out of cash. It appears that, according
to the Journal's reporting, that is not likely to happen.
They have not been able to get support between bondholders
and the government to make it work, and so it
appears that they are getting close to a ceasing of
operations in the coming day. Shut it down, strip it
(03:17):
for parts now. Anyone who followed their attempted merger with
Jet Blue several years ago knows that despite the fact
that I'm a big believer in hey, we need more competition,
I said at the time, Look, if you're not going
to allow these companies to merge, after allowing all of
the other major airlines to merge back in the early
two thousands. They're at a competitive disadvantage that is not
going to allow them to survive and lo and behold,
(03:39):
that's exactly where we are right now. We have different
sets of playing a different playing field for companies that
were able to merge between two thousand and five and
twenty fifteen and ones that tried to merge after. And
this is going to put one airline with fourteen thousand
employees out of business, and you've got others that are
looking around wondering if they're next. And that's just kind
(04:03):
of where we are right now.
Speaker 3 (04:06):
Yeah, I don't really know how a Frontier and a
Jet Blue compete today. The twenty twenty four passenger volume
was about forty million U sorry, these are seat miles.
So Frontier Airlines had in twenty twenty four about forty
billion seat miles. United had three hundred.
Speaker 2 (04:28):
Is that a lot? It's just three hundred million? Yes, Uh,
these are billions of billion available, not three hundred seat miles.
Three hundred, three hundred billion.
Speaker 3 (04:37):
American had two ninety three, Delta had two eighty eight,
like Southwest can still compete at nearly two hundred you.
Speaker 2 (04:43):
Go tay a look at these other companies. They don't
have the scale. They just don't have the scale to
be able to do this. No, the only way that
that merger should have been not should not have been
approved is if you went to Delton said you got
to figure out some way to make half of you
Northwest again, and go to Americans say half you's got
to be US Air, and you go to United and
(05:05):
say half u's gotta be Continental. Ill this Spirit again.
Speaker 3 (05:08):
If assuming this Wall Street Journal reporting is true and accurate,
I mean they were. I flew them several times.
Speaker 2 (05:16):
I did too.
Speaker 3 (05:16):
My mother in law was nervous as heck on our
latest vacation when I booked her on Spirit because she
was pretty sure it was gonna liquidate while we were
on vacation.
Speaker 2 (05:25):
It didn't.
Speaker 3 (05:26):
But look, they were consistently, consistently thirty to cheaper. Knew
what you were getting it was, you know, they didn't
get pin it, seventy five bucks to carry on a bag,
seventy five bucks to check one, you know, pay for
everything he did.
Speaker 2 (05:39):
But you know what was the model? Your knees were
in your chest with like twenty five inches of pitch
between the seats. Yeah, but like again, like no one
made you fly that flight. You know it was okay,
like great, like it's it's cheaper and fine, I'll hop on.
But yeah, they just can't compete in a world where
some mergers are allowed but theirs is not. I want
(06:03):
to talk about this piece from ABC. It's titled some
driver seeking workarounds as gas soares to highest prices in
four years. I was really wondering what these workarounds were.
Horse Well, I.
Speaker 3 (06:17):
Sold my twenty thousand dollars card I bought a sixty
block last night.
Speaker 2 (06:21):
I'll tell you what I did. I I thought that
maybe if I could put some coal in the blender,
I could make it into gas. And it turns out
that doesn't work. Uh huh. You can't just mix coal
and water in a blender and fill your tank with it.
That's that's a bad, bad approach. So yeah, I don't
think there are really workarounds. The closest I found to
a workaround is what some of these people do, I guess,
(06:43):
which is hey, basically, since the start of March, if
I get down to like three quarters of a tank,
I stop and fill up four gallons of gas because
it's gonna be cheaper than the next day. Well, people,
that's basically the only thing that like I I can do.
I mean, I can't store gas at my house. Yeah.
Speaker 3 (07:03):
The solutions that these people were coming up with is like, well,
I can only afford to put twenty bucks in my tank,
So I'm gonna put twenty bucks in my tank, and
that's gonna get me a lot less, you know, much
shorter distance than it used to.
Speaker 2 (07:14):
And that's not that's not a workaround, No, that's that's
called supplying demand.
Speaker 3 (07:19):
Yeah, a workaround would be you know, picking up your
neighbor and driving to work together. But we don't like
our neighbors.
Speaker 2 (07:31):
I like my neighbors. I think they're great. We did
have a text that came in on the topic. Companies
should be encouraging their employees to work from home to
reduce demand for oil and gas for commuters. In fact,
if you talk to anyone who happens to live in Asia,
it's not just being encouraged, it's being mandated in a
(07:53):
lot of cases, either you know, partial or full work
from home schedules, depending on the country and the specific layer. Here,
we're not there yet, just because the US being in
the unique geographic and resource rich position that we happen
to enjoy. We are able to avert some of what's
(08:15):
gone on to this point. But we're going to get
to a point where as long as Horror Moves remains closed,
prices are going to continue moving up over the course
of the summer. There is no way around it. As
long as Horror Moves remains closed.
Speaker 3 (08:30):
Yeah, I mean, look, I like the idea of fewer
drivers being on the road, but companies are not going to.
Speaker 2 (08:35):
Do that out of the goodness of their own hearts.
Speaker 3 (08:38):
If you want to, if you think it's worthwhile to
provide a tax incentive to companies to say, hey, encourage
your employees to get off the road and we will
throw some money at you, then they'll do it. But
they're just not going to say, yeah, you work from
home because gas prices are higher.
Speaker 2 (08:52):
Let's take a quick break and when we come back,
do wean to talk Zuck, Do we want to talk
AI agents becoming day traders?
Speaker 3 (09:02):
Yeah, let's go to AI agent's peak. Okay traders, because
that seems like a basket of fun. Quick break Trivia's
coming up next.
Speaker 1 (09:10):
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(09:31):
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Speaker 4 (09:37):
All right, It's up for sure to be here on
the Financial Exchange. And on this day. In nineteen thirty nine,
Batman made his first appearance in a comic book. There
have been eleven true live action Batman movies over the years.
Despite the popularity of the movies, only one actor has
won an Academy Award for their performance in a Batman
(10:00):
movie soap. Our trivia question today is simply which actor
is the only one to have won an Academy Award
for their performance in a Batman movie?
Speaker 2 (10:10):
Once again?
Speaker 4 (10:11):
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Speaker 2 (10:30):
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Speaker 2 (10:45):
AI agents are becoming day traders, but gains are elusive.
Speaker 3 (10:53):
Is that because day trading gains are elusive? Or is
that because AI agents are bad at it?
Speaker 2 (10:58):
Well, it's both. I mean, look back the uh tech bubble,
I think that three out of every four Americans were
day traders. It wasn't that high actually, But look, everyone
thinks that they're going to, you know, be this great trader.
I'm sure everyone thinks they're gonna be able to program
(11:19):
a great system so that their agent can be even
better than them because it's not emotional and won't make
the same mistakes that humans do. So I'm going to,
you know, again, look at some of the situations they
are described in this piece and be like oh okay,
Like yeah, you've got some of these like viral posts
(11:40):
that go out on social media about someone that made
a five and sixty percent return in two days only,
and it was later debunked by another AI agent who
proved that it didn't actually happen. So ultimately, look, here's
the deal. If using an AI agent to trade is
(12:01):
no different from setting up a trading strategy for yourself. Sure,
if you can't describe what your edge is in fifteen seconds,
you don't have one.
Speaker 3 (12:11):
And if you don't know how to day trade yourself,
you're not going to be successful in training an AI
agent to do so. No, by the way, this story,
it does seem that the individual that they interviewed had
some experience in day trading and trading options and.
Speaker 2 (12:29):
Just was busy with his job and wanted to check
that out.
Speaker 3 (12:32):
But I found it funny that he was inspired by
the anthropic experiment in which Claude controlled an office vending machine.
And I don't know if this is the same experiment
that the Wall Street Journal reported on, but where your
recall it gave away a free Sony PlayStation or a
live fish, and was I think it was also convinced
(12:55):
that it needed to, you know, kind of become a
commie and give away everything.
Speaker 2 (12:58):
In the vending machine became communists.
Speaker 3 (13:01):
I don't really know that that's the best example of
using for day trading or right like that inspired What
about that inspired you?
Speaker 2 (13:08):
What if you're trading bought, decides it should be communist.
Speaker 3 (13:13):
Just distribute all the profits equally to who you know,
you you, all the other traders.
Speaker 2 (13:19):
You want communal ownership of what?
Speaker 1 (13:24):
Like?
Speaker 2 (13:24):
I just I can't even get there. Yeah, So I
guess what are the takeaways? Though?
Speaker 3 (13:29):
Because Chuck, I will say that every single piece of
software that I'm using these days is telling me about
the new AI tool that they have released or about
to release, or plan to release in the not so
distant future. And I think that some of these are
going to be awfully useful, but it's all there's a
(13:52):
lot of danger to.
Speaker 2 (13:53):
It's no different from any other tool. If you go
and give a monkey a drill, it's probably gonna work
out badly like a You're gonna have holes and all
kinds of stuff be the monkey's probably gonna hurt itself.
It's not gonna go well. If you train a person
(14:13):
to use a drill appropriately, they can be hugely productive
and do things that they couldn't do without that tool.
And that technology. AI is no different except it just
like again power tools, it acts as an amplifier. Like
if if you could make a mistake with a hammer,
you can make worse ones with a nail gun. AI
(14:36):
is the same thing. If you can make math mistakes
and trading mistakes us an excel, you can make worse
ones using AI agents. You can also make better decisions
potentially if like you have you know good processes. But
ultimately it gets back to what is your skill set,
and it's like, no thyself, no your limitations, know your
(15:00):
what you're good at, and ultimately, for most people, trading
is not something they're good at. It's just not.
Speaker 3 (15:09):
If you are evaluating your investment strategy. I know that
there is a lot of infatuation on this moment in
time right now, a lot of potential or already realized
upside due to artificial intelligence, and I think an equal
amount of concern about what that ultimately results in. If
you're looking for some guidance, especially if you are talking
(15:32):
about using that portfolio for your own life expenses sometime
in the next decade, I'd really encourage you to get
a second opinion, whether you're doing it yourself having somebody.
Speaker 2 (15:42):
Do it for you.
Speaker 3 (15:43):
You need to be asking these questions about what is
my strategy and how does that strategy need to change
as my life develops? If you like to book free
consultation with the Armstrong Advisory Group to review that strategy.
The numbers eight hundred three nine three four zero z
zero one. We have offices from Connecticut and Rhode Island
up to Maine, New Hampshire and pretty much everywhere in between.
(16:08):
We would love to chat with you too. You can
go to Armstrong Advisory dot com or call us eight
hundred three nine three four zero zero one.
Speaker 1 (16:16):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax and the state planning advisors before
making any investment decisions. Armstrong may contact you to offer
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Speaker 2 (16:32):
Let's see, do we want to talk anything about Meta.
I've kind of had enough AI in Meta for the week. Yeah,
we've been beaten. I just I can't wait take my break. Yeah,
I can't. I can't do any more, zuck at the moment.
Can we talk about Warren Buffett calling sports betting a
tax on stupidity? Yeah, let's talk about this. So Warren Buffett,
(16:55):
who no longer is in the CEO chair at was
his retirement effective immediately or is it a freak won't
be run in the next meeting. In any case, Warren
Buffett not a big fan of gambling. You know his
quotes here to the extent that states raise money from
(17:15):
people who the dollar really means something to them. It
actually relieves the taxes on me or other rich people.
It's not direct, but it's the net effect, which is true.
Speaker 3 (17:24):
Go look at the originations of the lottery systems across
state by state. Massachusetts, yes, one of the first on
that front, and to really leverage it, and it is
a largely reaggressive tax. It is played more by those
in poverty and does dramatically relieve state, state, in town budgets.
Speaker 2 (17:44):
And so Buffett, you know, goes on to say, look,
I don't like things that make suckers out of people.
I don't think the function of the government is to
put play its people for suckers. And look, there's a
reason why so many states have legalized sports gambling. Now.
It's not because they love it. It's because they love
the tax revenue from it. And the fact is between
the tax revenue that remember, the tax revenue is generated
(18:07):
by the gambling companies that you know and end up
paying it ultimately, like when you factor in the fact
that those companies last time I checked, in order to
stay in business, Mike, you need to make money, right
as far as I know you, so, in order to
make money and then have money to pass on in
the form of taxes. It means that gambling is not
a zero sum game. It is a game that is
(18:29):
inherently rigged against the broad population of gamblers. Like you
just look at how the lines are set, and that
is basically how it works. And so it's a situation
where the data that's come out is pretty much that
like a very tiny sliver of people are the big
winners and pretty much, Tucker, I forget what the distribution is. Is
(18:51):
it like ninety percent of people end up being losers
in the sports gambling ecosystem.
Speaker 4 (18:55):
Sounds about right, especially meleely.
Speaker 2 (18:57):
It feels like that, doesn't it. Huh? Sorry, go ahead.
In any case, I think the big thing here that
I keep coming back to because again, you talk to
any male in their twenties and they're like, yep, most
of my friends have sports gambling debt. If you want
to have it legalized, it's fine. But I think we're
(19:19):
really kind of borderline destroying parts of society by allowing
you to just have it on your phone, And I
think you sho have to go into a nice, fun,
cool sports book and do it there, because it's just
less dangerous.
Speaker 3 (19:31):
To being able to sit in your same it supposed
to ignore the addictive piece of it.
Speaker 2 (19:34):
Quick Break Wall Street Watching Trivia Answer.
Speaker 1 (19:36):
Next, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Tell Ow Foo whoa street watch tracking the stocks,
the data, and the headlines driving markets so far today
(19:58):
right here on the Financial Exchange Rate.
Speaker 4 (20:00):
Well, they is starting off in positive territory of strong
earnings in tech continued to lift market sentiment. Right now,
the Dow is up a tenth of a percent, SMP
five hundred up two thirds of a percent, Nasdaq now
up over one percent or two hundred and seventy six points,
RUSS two thousand edging about a tenth of a percent higher,
Tenure Treasure Reel down one basis point at four point
(20:21):
three seven six percent, and oil down three percent today
trading right around one hundred and one dollars a barrel,
breaking news this hour after the Wall Street Journal reported
that Spirit Airlines is preparing to shut down after the
budget airline had been hoping to finalize a five hundred
million dollar lifeline from the government before running out of cash. Meanwhile,
Applestock is gaining four percent after the tech giant reported
(20:45):
its iPhone revenue climb twenty one point seven percent to
nearly fifty seven billion dollars in the previous quarter. Elsewhere,
sand dis shares are up modestly after the data storage
company beat earnings expectations and offered stronger than expected guidance.
Western Digital also impressed with its quarterly profit, yet the
stock is down over two percent. Elsewhere, Elastian stock ralling
(21:06):
twenty three percent after the software company reported strong cloud
growth in data center revenue. Roadblocks cut its full year guidance,
has efforts to boost its safety features weight on its
latest quarterly results. Shares in the video game maker tanking
by fifteen percent, and social media company Reddit reported double
digit sales growth in AD revenue and boosted sales and profit.
(21:30):
That stock is up by eleven percent. I'm Tucker Silva,
and that is Wall Street watching. In the previous segment,
we asked you the trivia question which actor is the
only one to have won an Academy Award for their performance.
Speaker 2 (21:44):
In a Batman movie?
Speaker 4 (21:47):
And that would, of course be Heath Ledger as the
Joker in the Dark Night. And Chris from Pelham, New
Hampshire is our winner today taking home the Financial Exchange
Show t shirt. Congrats to Chris, and we played trivia
every day here on the Financial Exchange. See complete contest
rules at Financial Exchange Show dot com.
Speaker 2 (22:06):
The mails here, here's the mail that the mails. It
makes big one, the wag matail. When it comes. I
want the whal bag.
Speaker 1 (22:15):
You've got questions, We've got answers. It's time for the
Money Matters Mailbag. We are tackling your calls and emails
on everything from economic policy to global markets and everything
in between. Leave us a voicemail at three three nine
three nine nine four three three three and you might
hear it on the show. You can also email your
question to TFE Show at gmail dot com. Now it's
(22:38):
time for the Money Matters mail bag.
Speaker 4 (22:40):
All right, let's get right to the Money Matters mail
bag here in the Financial Exchange. That's your chance to
ask Chuck and my questions that you might have in
the old noggin. So uh, let's get to it here.
Tony and fall River has a question for Chuck and Mike.
Tony says, I am thirty years old, have been invested
since I was eighteen. I have multiple investment accounts, and
(23:04):
I'm wondering if it's better to consolidate for higher compounding
possibilities or keep them separate.
Speaker 2 (23:11):
Good question. Can I address that? Michael? Please do so here.
Here's the big thing is multiple investment accounts. They don't
compound faster or slower depending on where you hold them.
There are different reasons to keep things in different accounts.
For example, sometimes you have to just because of tax considerations.
You can't just, you know, combine a roth IRA with
(23:32):
an after tax account, or you can't just combine a
traditional IRA with a roth There are tax considerations for
doing so. Beyond that, occasionally you run into situations where
it makes sense to have certain accounts that are separated
because maybe certain ones give you access to certain types
of investments that you can't access in other ones, and
(23:56):
so you might choose to keep them separated that way.
From a personal perspective, sometimes just when it comes to
different financial accounts, whether it's investment or bank accounts. I
keep them separated just so that I can very easily see, like, okay,
here's my bucket that I have for X or Y
or z, and so it can make sense to have
things fashion that way.
Speaker 3 (24:15):
But I have gotten this question about compounding before, because
it's true, right, the more money you have, the bigger
the compounding rate. But if you already have the funds right,
like just play and simple, you have two accounts where
one thousand dollars and each of them get a ten
percent return, you've made one hundred dollars in each of
those two accounts. If you put them together and you've
got two thousand dollars and achieve a ten percent return, yes,
(24:37):
you've made the same two hundred dollars, just in one
place rather than two.
Speaker 2 (24:41):
Now, there are sometimes when consolidating accounts can help, just
in terms of record keeping and understanding where everything is.
Lower fees. Sometimes sometimes you can end up with lower fees.
Sometimes you might move to an account that has, you know,
additional services that other ones might not offer. So these
are some of the considerations. It's not a a binary
black and white like yes, always do this or no,
(25:04):
always do that, but there are valid reasons in some
situations to consolidate valid ones to not But ultimately that
shouldn't be something that influences your overall ability to compound
that portfolio.
Speaker 4 (25:18):
Agreed, all right, next question here to the Money Matters
mail bag. Chris sent us an email to tfe Show
at gmail dot com with this question, is a wroth
conversion as exposed to market swings as much as an
equity rich traditional IRA or a four to one K?
Speaker 3 (25:38):
So good question, and I think a pretty common one.
But I think you're maybe mixing up a couple of
concepts here. So when we talk about a roth conversion,
we're talking about simply taking investments out of one shell
and putting them into a different shell that holds those investments.
(25:59):
And you know it'll surprise people. But can you take
your wroth your converted assets into a wroth IRA and
buy CDs with it? Yes, you can, in which case, no,
I would expect that there would be no market swings
if you have an FDIC and short CD holding your.
Speaker 2 (26:17):
Wroth IRA assets.
Speaker 3 (26:18):
Not that that is what I'm recommending anyone do, but
the wroth versus the traditional four oh one K or
the IRA, or any of these buckets are merely shells
to hold different investments, and you can completely customize, if
you so choose, what degree of risk you are willing
to take in one bucket versus another. Now, there's a
(26:39):
bunch of considerations that you need to think about there,
in one of them being Hey, I now have a
bucket a shell that will never be taxed again in
my life, and one that will every penny that comes
out of it be taxed, And so should I be
investing differently in one versus the other? My guess would
be probably yes, But it's highly dependent on your own specifics.
Speaker 2 (27:00):
Yah An you can add on that. No, it's understanding.
One is the rapper, the other is the candy bar
that goes inside it. All right.
Speaker 4 (27:09):
The final question when this week's edition of the Money
Matters mail Bag is the following, what are the advantages
of broad market and income oriented ETFs over mutual funds
and a tax advantaged IRA?
Speaker 2 (27:26):
So again, kind of a very big broad question. Uh, Look,
quite honestly, it's going to depend an awful lot on
specific products and including again, mutual fund versus ETF is
kind of a difference of rappers. There are some functional
differences as well, but hey, ultimately it's going to be
(27:50):
what is actually inside of there that makes some key differences.
If you're talking about having it inside a retirement account,
there aren't really any tax differences in that case because
none of the money is taxed until you are withdrawing funds.
So ETFs and mutual funds can have some differences in
taxation amongst investments that are held inside of them, but
(28:12):
beyond that, it's really going to depend on the specific product,
the fee structure, how it's constructed, where the income's coming from.
There's a lot that goes into that entire conversation there.
Speaker 3 (28:25):
Yeah, I was trying to find some averages, because averages
can kill you because this is not how you should
run things. But on average, exchange traded funds are less
expensive in terms of their expense ratio than a mutual fund. However,
averages can beat you up because there are mutual funds
(28:47):
that are substantially cheaper than atfs. It just depends on
what your strategy is and what you are going for,
So on average, I'd be comfortable saying that the advantages
of broad market and income oriented ETFs is probably one
of cost to the shareholder. But there are a lot
of exceptions to that general narrative.
Speaker 2 (29:08):
Anything else in the mail bag.
Speaker 4 (29:09):
That's it for this week's edition of the Money Matters
mail Bag. And again, if you have questions for Chuck
and Mike, shoot us an email to TFE Show at
gmail dot com, or we can leave us a voicemail
at three three nine three nine nine four triple three.
Speaker 1 (29:24):
The Financial Exchange is life on series XM's Business Radio
Channel one thirty two weekdays from eleven to noon. Get
the latest business and financial news from across the country
and around the world, and keep up to date on
how it might affect your wallet. That's the Financial Exchange
weekdays from eleven to noon on a series XM's Business
Radio Channel one thirty two. Face He's the Financial Exchange
(29:46):
Radio Network. Ladies and gentlemen. The weekend.
Speaker 2 (30:01):
As promised, we are now joined by the one, the
Only Paul A Monica. I actually don't There might be
another Poul Monica somewhere, but he doesn't join us. Each
and every Friday. Is the Paul.
Speaker 1 (30:13):
On the planet.
Speaker 4 (30:14):
Paul am is the I checked?
Speaker 2 (30:15):
We have another Paul that hosts occasionally? Yes, is it
this one no different. Paul. Okay, lame mister Lamonica, how
you doing?
Speaker 5 (30:24):
Thank you. I've checked before, I've googled myself. There are
other people on the planet with my name. Whether or
not there are any other Paul Richard lamonicas I I
do not know.
Speaker 2 (30:36):
Well, I appreciate you doing the research for us too.
Weank you to confirm, Paul, you did some research on
CBS as well. This is a company that I don't
want to say, has been you know, left for dead
for the last twelve thirteen years, but just hasn't really
gone anywhere. And I'm curious your take as to will
it still continue to go nowhere or is there somewhere
(30:57):
for it to go.
Speaker 5 (30:57):
Now Yeah, I think you could take the case that
there is somewhere for CBS to go, and and that
hopefully could be up, not down or flat. The stock
is relatively cheap, you know, particularly compared to some of
its insurance rivals like United Health and Humana. And yes,
(31:19):
I said insurance because even though CBS, you know, probably
most consumers know it as a drug store chain, it
also owns Etna, obviously owns care Mark, as well several
other businesses within the healthcare ecosystem. So I think that's
one of the reasons why it's had this discount. There
(31:40):
is this complexity that you know, some investors have argued
maybe you penalizing the company, and there had been talk
in the past about, you know, a possible breakup, but
that seems to have you know, dived down right now.
Speaker 2 (31:56):
I guess the part for me that is is interesting
is look, as you know, we all know that the
thing that ultimately drives a company in the long term
is going to be earnings growth. And the thing that's
wild is that CBS right now does around four hundred
billion dollars in revenue and they're trailing twelve month net
income was about two billion dollars, not not very much.
(32:18):
It's kind of wild to me that their net income
is basically in the same place that it was back
in two thousand and five, two thousand and six, when
revenue is a tenth of this size. So what's their
path to like turning all of this revenue into profit
actually instead of just having it getting eaten up by
expenses all the time.
Speaker 5 (32:36):
Yeah, No, it's a great question. I think that there
are some hopes that the medicare advantage you know, rebates
that you had been a concern that there was going
to be a much smaller payments from the government to
(32:58):
AT as well as the insurance rivals. They're not going
to be as tiny as hope. There's going to be
a bit of an increase this year about two point
five percent compared to you know what had been expected
to be you know flat. So that should hope boost margins,
you know, going forward. And I think CBS also could
(33:19):
benefit from some of the turmoil within the retail pharmacy industry.
I mean, Walgreens has had some issues and is scaling back, right,
aid has gone away. You could argue that, yes, now, uh,
CBS's competition is less about pure play drug store chains
and more about Amazon and Walmart. But you know, I
(33:40):
think CBS still holding in there, you know, and that
you could see you know, earnings, you know, growth pick
up in the latter half of this year.
Speaker 2 (33:50):
Paul, what about the idea that like CVS is we're
going to become the place that people go for just
you know, random medical this in that it feels to
me that that has really panned out, and instead you've
got all of these urgent care places that have popped
up instead. Are they still trying to make more inroads
into becoming just an overall health center.
Speaker 5 (34:10):
Yeah, definitely, without a question. I mean, obviously they still
have the Minute Clinics. I think a lot of people
probably have gotten vaccinated there. They have a primary care
center brand Oak Street Health. They have an in services
home provider named Signify Health that they bought. So CBS
is clearly of the mindset that being a one stop
(34:32):
chop for consumers' healthcare needs when they can do things
that don't involve maybe a specialist care, is the right
way to go. The question, you know, clearly is going
to be whether or not having all these businesses eventually,
to your point, turn into more steady and higher levels
(34:54):
of earnings growth. If not, then maybe there will be
calls once again to break up the company split up.
You know, that's something that you know, Karen Lynch, the
former CEO, faced, but you know, once she stepped down
a few years ago, the new CEO has been pretty
adamant that, uh, you know, CBS is going to stay intact.
(35:14):
It's not gonna be breaking up.
Speaker 2 (35:16):
Very good, Paul, appreciate you joining us today and I
hope you have a fantastic weekend. You got any uh
any any Derby picks for us?
Speaker 5 (35:26):
I do not. I think my Derby pick is that
I need to go to the grocery store and get
some mint because I already have the bourbon so I
can make my own mint Tulia.
Speaker 2 (35:35):
There you go. I do uh. I believe that the
the Bowpost guys have a horse running. I think it's
emerging market this year, so uh hey, there you go.
I don't know anything about horse racing as fodder was matters,
you know about as far as I go on.
Speaker 5 (35:50):
Also, Berkshire hat the way weekend.
Speaker 2 (35:52):
Oh that's right, you converge.
Speaker 1 (35:53):
Ye.
Speaker 5 (35:54):
Let's see that no horse named after Warren Buffett, that
would be the pick to go with.
Speaker 2 (35:58):
Yeah, if you had an Oracle of Omaha horse, which
would be a great name for a horse too. I
got a side. Yeah, the Oracle of Kentucky. Derby's is
what city is that in?
Speaker 5 (36:10):
Uh, Louisville.
Speaker 2 (36:12):
It's it's in Louisville, the Oracle of Louisville. It's got
a nice ring to it. Yeah, Paul, appreciate you joining us.
Have a great weekend.
Speaker 5 (36:19):
Thank you very much. You guys.
Speaker 2 (36:21):
Can I share a quick Derby story for you.
Speaker 1 (36:23):
Sure.
Speaker 2 (36:23):
Yeah. So buddy of mine who I used to live
with back in like ten fifteen years ago, right after college,
he was for work. He was going to uh Omaha
for the Berkshire Annual meeting. Did you wear a Giant Hat?
And afterwards he was going to Mexico for some due
diligence on a company that he was researching. He called
(36:44):
me from Omaha on the day of the Kentucky Derby,
so on the Saturday, and he had forgotten his passport
in his room and so it was like, I don't know,
four o'clock and like I was at a Kentucky dirty party,
and so I was like, okay, Like what do you
want me to do. He's like, I've already talked to United.
(37:05):
They have a cargo terminal at Logan. You need to
bring the passport to them, give it to this guy,
you know, Hank or whatever, and he's gonna get it
on the United flight that goes overnight to Omaha so
that I can pick it up at the cargo terminal
there and get to Mexico with no problems. Did it work?
(37:25):
I think? So I found the passport sprinted to Logan
dropped the thing off got back for the Derby, and
I'm assuming he made it to Mexico because I never
heard anything else on it. Never heard from him again.
In fact, no that you mention it. I never did.
Hank just took his passport. It's never heard from Hank either.
(37:47):
But to uh, it's kind of wild. But uh, let's
take a quick break for the entire weekend. Hope you
all do have a great Berkshire Annual Meeting weekend and
Kentucky Derby Kentucky Derby Race weekend. Gobys, we'll see you
on Monday.
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