Speaker 1: It's been quite amazing that during a war, and a
Speaker 1: war that in particular had a ton of unknowns throughout it,
Speaker 1: the stock market continued to set records. A lot of
Speaker 1: the reasons the stock market has been setting so many
Speaker 1: records over the last couple of years is the all
Speaker 1: the AI tech stuff. The biggest companies in those top
Speaker 1: tier stocks that are driving so much of the gains
Speaker 1: tech companies, and they all got scared about AI just
Speaker 1: the other day, all of a sudden at the same time,
Speaker 1: Which is kind of interesting how that would happen like that.
Speaker 1: Nasdaq dropped two point two percent on Tuesday alone. The
Speaker 1: Philadelphia Semiconductor Index fell nearly eight percent in one day.
Speaker 1: Stocks like Navidia, AMD, Intel, Marble, Micron, sand Disc all
Speaker 1: got hammered.
Speaker 2: What is going on there?
Speaker 1: I wanted to talk to an expert because I am
Speaker 1: certainly not, and Stephen Kates joins this. He is a
Speaker 1: finance expert clock Tower Financial Consulting.
Speaker 2: Stephen, thanks for taking a little time for us today.
Speaker 3: My pleasure. Happy to talk about this kind of thing.
Speaker 2: Uh great, because.
Speaker 1: Well, is this the bursting of the tech bubble that
Speaker 1: a lot of people have been worried about or a
Speaker 1: mini burst or what is it?
Speaker 3: Honestly, it's me there. It's not a bursting at this point.
Speaker 3: I mean, we can look at the what the market
Speaker 3: has done. Just in the first six minutes of the
Speaker 3: market open, Nasdaq is up half a percent. Obviously that
Speaker 3: doesn't erase yesterday is drop, but you know it's not
Speaker 3: a continuation. We're not careening lower on the second day here.
Speaker 3: Yesterday was just a bad.
Speaker 1: Day, just just a singular bad day, like with no
Speaker 1: greater significance.
Speaker 3: I mean, that's what it seems to be. I mean,
Speaker 3: you can look at you know, where the market's moving,
Speaker 3: and you know, if we were careening lower, opening another
Speaker 3: two percent down, well, that would certainly show some signs
Speaker 3: that there's continued concerns, you know, a risk off attitude
Speaker 3: from investors. But you know, I think we've all been
Speaker 3: conditioned over the last couple of years to expect that,
Speaker 3: you know, if the market is not going straight up,
Speaker 3: that something is wrong and that doesn't happen. You know,
Speaker 3: sometimes we do just have bad days. Yesterday, you know,
Speaker 3: there was a catalyst for that. Semiconductor stocks were down
Speaker 3: and down a lot and going into yesterday's open, uh,
Speaker 3: in the US. South Korea, which is incredibly exposed to
Speaker 3: semiconductor stocks UH was very negative. It's sell ten percent
Speaker 3: UH in their market. That happens before the US market opens,
Speaker 3: and so that did affect us, and that was one
Speaker 3: of the reasons that you know, investors were a bit
Speaker 3: skittish yesterday. Micron has earnings at the end of the
Speaker 3: day today after the market closes. That's a big earnings announcement.
Speaker 3: They're a major player in the semiconductor space. So there
Speaker 3: are some things going on that investors are concerned about.
Speaker 3: But you know, this doesn't appear to be the bottom
Speaker 3: falling out of the market. It was a bad day.
Speaker 3: We seem to be slightly recovering today across the NASDAC,
Speaker 3: the S and P, you know, the Russell two thousand,
Speaker 3: which is small cap stocks, and that's good to see that, you.
Speaker 2: Know, we're seeing a little bit of a bounce.
Speaker 1: I just a couple of weeks ago opened a index
Speaker 1: fund for each of my teenagers, the high schoolers, and
Speaker 1: you know, to get them and got the app on
Speaker 1: their phone and they can follow it on a regular
Speaker 1: basis and put their Christmas money in there and all
Speaker 1: that sort of stuff.
Speaker 2: And I thought.
Speaker 1: Maybe we get a crash and they maybe that would
Speaker 1: be a good thing to have their first lesson of
Speaker 1: investing be that it doesn't always go up.
Speaker 3: I don't know, Well, it's not a bad lesson. It
Speaker 3: has and I think to have those lessons early on
Speaker 3: is ideal. I learned that lesson firsthand actually in the
Speaker 3: industry watching the been great, you know, coming out of
Speaker 3: the Great Financial Crisis. I didn't love that lesson, but
Speaker 3: it was it was a valuable one. Nonetheless, you know,
Speaker 3: for a lot of people, understanding the way the market
Speaker 3: moves and what is and isn't normal is one of
Speaker 3: the most foundational things that you can understand. A lot
Speaker 3: of people have been conditioned to expect that the market
Speaker 3: just goes higher, that we get up, up, up all
Speaker 3: the time, twenty percent growth year over year or year.
Speaker 2: That isn't the case.
Speaker 3: We've been very lucky in the last five even fifteen years.
Speaker 1: Yeah, I'm thinking we're going to time it perfectly for
Speaker 1: retirement to crash right when I need it. So I'm
Speaker 1: going to let you argue with chat GPT. I asked
Speaker 1: the question, what can you tell me about the big
Speaker 1: tech sell off?
Speaker 2: And it said.
Speaker 1: Investors starting asking a question that they haven't asked much
Speaker 1: over the last year around the whole tech thing. Are
Speaker 1: all these trillions of dollars being spent on AI actually
Speaker 1: going to earn enough money to justify it?
Speaker 2: Is that a question people are asking.
Speaker 3: I think that's a legitimate question to ask, and certainly
Speaker 3: people are asking that. You know, it's a question of
Speaker 3: how long will it take for this to play out?
Speaker 3: You know, is there you know, really a thesis here
Speaker 3: that that can can can bear out? And you know,
Speaker 3: in some ways, when you look at companies like open
Speaker 3: ai or Oracle, uh, you know, they're spending a lot
Speaker 3: of money, the revenue is not quite catching up. I
Speaker 3: think open ai Financials leaked recently and they lost twenty
Speaker 3: billion dollars last year or something to that effect. So
Speaker 3: that's not encouraging, But you know, it is a it
Speaker 3: is a situation where you know, a lot of the
Speaker 3: companies that are involved with open ai or backing some
Speaker 3: of these AI ventures, uh, like your Amazon's, your Google's,
Speaker 3: your Microsofts, they are still incredibly profitable companies and still
Speaker 3: earning an enormous amount of money. Where things get a
Speaker 3: little bit dangerous is if they continue to make you know,
Speaker 3: make the spending larger and larger, to the point where
Speaker 3: the revenues never grow, but the spending keeps increasing and
Speaker 3: they have to take out additional equity for debt to
Speaker 3: supply the funding for this. That's where things start to
Speaker 3: get a little concerning. We are potentially crossing into that threshold,
Speaker 3: and we're going to need to see these companies and
Speaker 3: this debt actually start to pay off in some way.
Speaker 3: We're going to need small companies, regular companies actually to
Speaker 3: see efficiency gains. We're not necessarily seeing that profits for
Speaker 3: major tech companies have been enormous, but you know your
Speaker 3: small cap companies, your regular mom and pop shops, you know,
Speaker 3: the everyday businesses all around our cities and towns. Are
Speaker 3: they getting any benefit out of this? Are they even
Speaker 3: using it? And if the answer is no, then it
Speaker 3: gets a little bit concerning whether this actually has a
Speaker 3: there there.
Speaker 1: So Friday before last we were talking about fullmo fear
Speaker 1: missing out around the whole SpaceX stock and I didn't invest.
Speaker 1: If I had invested in SpaceX, would I be happy
Speaker 1: today or not?
Speaker 2: I haven't been checking.
Speaker 3: If you oh, you're still happy, but you're not as
Speaker 3: happy as you were Wednesday of last week. Today, if you,
Speaker 3: I think, and I'll have to see exactly where it opened,
Speaker 3: because I didn't look before we talked. Is surprised is
Speaker 3: about one hundred and fifty one dollars. It peaked at
Speaker 3: over two hundred and twenty, I believe, or two hundred
Speaker 3: and fifteen or so, So we're down considerably from from
Speaker 3: where we were just a week ago. Almost everybody who bought,
Speaker 3: possibly everybody who bought post IPO. So in the secondary
Speaker 3: market you didn't get the IPO price, but if you
Speaker 3: bought after that, you may have already been been losing money.
Speaker 2: What uh you got? You got?
Speaker 1: You know this?
Speaker 2: You know?
Speaker 1: No, no, I'll tell everybody to turn off, turn off
Speaker 1: for radio.
Speaker 3: Just now.
Speaker 2: It's just between me and him. Are you personally invested
Speaker 2: in space X No not, you're not. No.
Speaker 3: The you know it was exciting to watch. I think
Speaker 3: everybody probably felt that fomo you know where, could I
Speaker 3: have gotten some shares and then wow, what a pop?
Speaker 2: I'm up forty.
Speaker 3: Percent you know or whatever that was from Monday to
Speaker 3: you know, Friday to Wednesday. But now, if you bought
Speaker 3: the secondary market, you're losing money. Uh, And that isn't
Speaker 3: surprising because five percent of the total space x stock
Speaker 3: is available for for buyers. Uh, there is going to
Speaker 3: be another forty or fifty percent of that stock that's
Speaker 3: going to become available over the next eleven months, and
Speaker 3: so there's going to be an incredible amount of insider
Speaker 3: selling pressure. People who are part of the company or
Speaker 3: they have been investors in the past when it was private.
Speaker 3: They're going to be selling their shares to actually create
Speaker 3: some liquidity for themselves to actually utilize some of the
Speaker 3: wealth that they have created from being investors in FASEX.
Speaker 3: That kind of supply coming into the market is going
Speaker 3: to push this price even lower. So there's not a
Speaker 3: good case for buying in now and expecting a profit
Speaker 3: over the next six.
Speaker 2: Or twelve months.
Speaker 1: Okay, I'm really glad I asked. That's very interesting. I'm
Speaker 1: mostly in the prediction market. I've got a lot of
Speaker 1: money on whether or not Prince Harry and Megan market
Speaker 1: divorce in the next year.
Speaker 2: That's mostly where I put my money to top market.
Speaker 1: I regularly say that the stupidest mainstream reporting in all
Speaker 1: of journalism is economic reporting. Does does mainstream economic reporting
Speaker 1: drive you crazy? Because the way they react to little
Speaker 1: market jigglings. It drives me nuts, and it probably should.
Speaker 3: I love that kind of news, but that's just me.
Speaker 3: I don't think most people do. It is important to
Speaker 3: not get so in the weeds where every little market movement,
Speaker 3: every little adjustment to every economic report, sends you into
Speaker 3: a tizzy. You know. The media promotes that kind of
Speaker 3: attitude where we have to react to everything and you shouldn't,
Speaker 3: whether you're investing for your retirement and you're just trying
Speaker 3: to keep your sanity, or whether you're trying to figure
Speaker 3: out how is the job market? Can I change jobs?
Speaker 3: Can I buy a house? You know, reacting to every
Speaker 3: little nuance of the economy or the stock market is
Speaker 3: going to drive you absolutely bananas. You have to have
Speaker 3: a longer view, and you have to try to make
Speaker 3: decisions with the information you have in the moment you
Speaker 3: have it.
Speaker 1: If you could give me a short answer on this,
Speaker 1: because I got a break and I appreciate your time,
Speaker 1: But the the the no spend, no politics. What's the
Speaker 1: state of our economy?
Speaker 2: Good? Bad, poor, excellent? I'll give you those.
Speaker 3: Four some good things, there are some bad things, and
Speaker 3: your circumstances are going to dictate sort of whether you
Speaker 3: feel you know better or worse about that. Hiring a swell,
Speaker 3: but most people still do have jobs. If you want
Speaker 3: to buy a house and you are a first time
Speaker 3: home buyer, life is pretty terrible because you just can't
Speaker 3: get one.
Speaker 2: That's interesting.
Speaker 1: That's like the old reminded me, the old saying of
Speaker 1: it's a recession if you have a job, if you
Speaker 1: lose your job, it's a depression. I mean, it matters
Speaker 1: to your personal situation, what the economy is like.
Speaker 2: It's a very much so.
Speaker 1: Yeah, okay, Stephen Kates, appreciate your time. Finance expert clock
Speaker 1: Tower Financial Consulting. Thanks a lot for coming on on
Speaker 1: short notice about.
Speaker 2: The tech stocks.
Speaker 3: My pleasure, happy to do it.
Speaker 2: Yeah.
Speaker 1: I need to talk to people like that regularly to
Speaker 1: calm down because, as Joe says, everything's clickonomics and then
Speaker 1: the money is to be made by the Wall Street
Speaker 1: Journal or CBS News or whoever. To make it seem
Speaker 1: like whatever the stock market did up or down is
Speaker 1: a really really big deal, when quite often it's not.
Speaker 1: It's just the market goes up and down. You got
Speaker 1: to see trends over you know, weeks or months to
Speaker 1: really start talking about it. I got more on that. First,
Speaker 1: I need to tell you about simply Safe, which I
Speaker 1: absolutely love. Every time I pull away from my house
Speaker 1: seeing the simply Safe sign right there to remind me
Speaker 1: that my house is protected with the system that I
Speaker 1: ordered from simply Safe. I went online. I customized it
Speaker 1: to the house that I currently live in. The cameras,
Speaker 1: the censor's, all the different sort of stuff, It comes
Speaker 1: in the mail fast. I set it up myself in
Speaker 1: about thirty minutes. They'll offer help to you if you want,
Speaker 1: but you can't do it yourself. It's super easy. You
Speaker 1: don't have to be some sort of you know, handyman
Speaker 1: to be able to do that. No long term contracts,
Speaker 1: because simply safe believes you're gonna like it enough to
Speaker 1: keep using it, and it's dang dang impressive if you
Speaker 1: want to experience the same peace of mind that I
Speaker 1: do every time I pull away from my house, which
Speaker 1: is why we've partnered with simply Safe to offer this
Speaker 1: exclusive discount to our listeners.
Speaker 2: Right now, you can get.
Speaker 1: Sixty percent off and a free outdoor camera, which is
Speaker 1: essential on your new system by visiting simply safe dot
Speaker 1: com slash armstrong, simply safe dot com slash armstrong.
Speaker 2: There's no safe like simply safe.
Speaker 1: Yeah, my kids, my brother actually had brought this up
Speaker 1: to them over Christmas, and it took me five months
Speaker 1: to get it done.
Speaker 2: But they now have this.
Speaker 1: They both have a little index fund, and hopefully I'm
Speaker 1: going to encourage them strongly to put birthday money, Christmas money,
Speaker 1: any money they earn from chores, that sort of stuff,
Speaker 1: at least part of it into that index fund and
Speaker 1: see how it grows. Because the most valuable thing you've
Speaker 1: gotten me You know this, once you're old, and maybe
Speaker 1: you missed out, the most valuable thing you've got in investing,
Speaker 1: more than anything else in the world is time. Time
Speaker 1: is the big multiplier.
Speaker 2: I wish I had done that.
Speaker 1: Everybody says that it's so hard to convince young people
Speaker 1: that I don't care how broke you are. Put money
Speaker 1: in your four oh one K. I do not care
Speaker 1: how broke you are, put money in your four o K.
Speaker 1: It makes so much difference. You just it's so hard
Speaker 1: to imagine ever being old when you're when you're twenty five,
Speaker 1: you think I'm never gonna be sixty. It just ain't
Speaker 1: gonna happen. It's weird that human beings deny the reality
Speaker 1: of the calendar the way we do. Anyway, that's a
Speaker 1: topic for a different day. We get a lot more
Speaker 1: on the way to stay here.