The Fagan Financial Report on WGY
The Fagan Financial Report
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We'll talk about the economic data. This is all in the first half hour. It came out this past week that it really signals a slowing economy. We'll also take a look at Fed Meeting this past week. What was changed within the Open Market Committee's statement, the Bank of England Cut, Bank of Japan Raised Rates. What does this mean for your portfolio? What's the difference between now and late 1990s? Susie Orman basically says you need between $5 and $10 million to retire early, and I'm going to-- When's the early date? I guess we can talk about that myth, but we'll talk about it. Because that always talks about one side of the equation. $2 million is nothing, she said. It's nothing. It's pennies in today's world to tell you the truth. And what world is she living in? Yeah. And what world is she living in? You know what I mean? So we'll talk about that. But that's after asking you, how are you? How's everything? How's life? Pretty good, you. Yeah, I'm doing well. And I can't complain. The market's obviously pretty rocky around here. But good. As may, it's coming up on three weeks. Yeah, we had the Uncle Chris, big C3N3 tournament tomorrow. Nice to meet you. And what time does it start? 10 o'clock. 10 a.m. Yeah, so we'll be there. We had a lot of earnings this week. A lot of volatility in the market. Yeah. Volatility is centering around. Is the economy slowing? Isn't it? It's slowing. The 10 year comes under 4%. What should you do there? A lot of things to talk about. Let's start off with, really, let's work from Friday back in economic data. Mad Farm payrolls grew by 114,000 for the month of July. Down from a revised 179,000 during June, which was also revised down, where the consensus was 185,000. Unemployment rate up to 4.3% from 4.1%. Average hourly earnings up just 0.2% of 3.6% from a year ago, both below expectations. And I think as you look at the labor report, you're looking at really payrolls, at least for the month of July, below the average. Payrolls, in general, weakening a little bit, the unemployment rate going up, the sectors that are doing well, really are the sectors that would do well, almost regardless of the economy, that is health care and the government. So that, coupled with a lot of other data, really does signal an economy that is slowing, I think, the Fed recognized that during their two-day meeting of their monetary policy, meaning Tuesday and Wednesday. And the market is recognizing that. It's a period of adjustment. Other data that came out this past week, non-farm productivity, up 2.3%, ratcheted upward. Real hourly compensation actually rose. It's flat year over year. But it rose on a quarterly basis in the second quarter. That's important. It shows that inflation is slowing down. When you get real hourly compensation up, that's real dollars in people's pockets. So that is a big plus. I will say the employment cost index, up 0.9% for the second quarter, it's also slowing down. So the wages and salaries, up 0.9%, benefits up 1%. So you've got the cost of having an employee going up. So those are positives regarding the economy. Consumer confidence also up to 100.3. This is as told by the conference board up from 97.8. However, the surveys stated that jobs-- those indicated that jobs are hard to get rose and those indicating that jobs are plenty fell. And I think that's which we have going here. The number of jobs available, which is the number of jobs, the hiring also maintain its spread. So there's still more jobs available than there are people looking for jobs. But the gap is narrowing, quite precipitously. So we have a slowing economy that's trading and three more pieces of information. So that's the piece of information we saw during the week of the economy that were somewhat positive, negative. The ISM Institute for Supply Management Manufacturing sector fell to 46.8. Employment, employment component there, at 43.4% versus 49.3%. That was the real shocker that came out yesterday. That Thursday, construction spending down 3/10 of a percent for June. And initial claims for employment benefits up 14,000 to 2/49. So initial claims going up, construction spending down, and manufacturing still week. What I think is happening a little bit, too. And we talk about this with inflation. And what's the problem with this inflation or deflation? People put spending on the back burner if they think they're going to get something cheaper a year from now, two years from now, six months from now. I think you can say the same thing with construction spending and the like and taking on big projects. Now, hey, why start this big project now if we think the Fed is going to cut rates and that we can get maybe a little bit better rates six months a year from now? So I think we're in that area where the market doesn't really know what's going to go on. If we do have the Fed cut, if we do have slowing data, we have the election. So there's a lot of unknowns going on right now that I think is coupled with some overvaluation from the larger cat tech that has led the market so far that people are like, OK, maybe it's time to take some money out of the stock market, put it on the sidelines, and wait till we see at least one or two clear pictures of the three or four major things that are going on in the world. Yeah, I liken it to the tide. The tide comes in, and when it's coming in, everybody knows it's coming in. And then you kind of question, OK, is the tide still coming in? Is it not going in? Is it starting to come out? And I think we're in that period of that latter part of really the tidal flow with the market, the economy. Is it still coming in? Or is it about to change? And if it does change, how strong will the tide be going out? And what are the ramifications of it? And I think you can take that broad statement, I guess, and then look at different components to the market. One of the worst performing sectors yesterday was the Russell 2000. There's been a lot of talk of the move to mid caps, the move to small caps. Well, the Russell 2000 is also probably the most economically sensitive. Yes, it'll benefit from low rates, but because of the cost of borrowing that they've had to kind of-- the cost of borrowing that they've kind of-- had to take into their business plan and the cost of it. So lower rates will benefit them, but a slowing economy, if it slows too fast, may just hurt them a lot more than the cost of them, then the lower cost of borrowing will help them. So you've got a lot of things going on with the economy, and you're right. I think investors are saying, I think you also have just last week the market-- it was a good week for the market. So I wouldn't make too much week tweak. Seasonably, it's very a difficult period for the market. August is very difficult. A lot of the heavy hitters are not heavy hitting right now. They're out in the Hamptons or whatever those heavy hitters do. So I think we've got some extra extraneous influences on the market. You've got the assassination of the Hamas leader in Iran this earlier this week. You've got the question of China and Russia becoming more integrally integrated. I know. You have an election in Venezuela. I mean, you have the Bank of America cut interest rates. You had the Bank of Japan-- Or Bank of England. Bank of England. Bank of England cut rates. Bank of Japan raising rates. You have the election coming up. You have Biden dropping out. So there's so many things going on right now that it's hard to juggle two things. It's hard to juggle seven. So I think that's what you're seeing a lot, is a lot of data coming out in not really having-- A lot of answers. Yeah, and not having many-- you can't really back test this data that's coming in, especially all of it. So the more things that are unknown and the more variables they are, the harder it is to predict an outcome. And I think that's what we're seeing right now. Even large cap tech, with their earnings awful, no. Amazon's going to open Friday down to almost 10%. So people are kind of in the sell now. Bad news is bad news. Bad news, yeah. Bad news is bad news. Sell now and ask questions later type of earnings season in market. Yeah, I think they're in this time. And we'll touch on Intel, we are on 0.7% of our accounts are in Intel. They had bad earnings, so they'll talk a little bit about what to do there. But I think right now, it's not the end of the world. As an investor, you hope, and we've noted a weekly in our snapshot that we send out to all our clients and those that want it, please feel free to email us at fagenasset.com. We've been saying, consolidation, we think we're going to be going through a consolidation, not a top in IT spending, not a top in AI, not a top in the market. It's just a consolidation of the gains we've seen since the beginning of 2023. So that's-- so the economy certainly does look like it's shifting to a much slower pace. We have the Fed met this past week. And Chair Powell and the Fed statement would indicate it. Their FOMC statement that came out, changed, job gains have remained strong, too moderated. And they changed the statement too, and the unemployment rate has remained up to remain low. Inflation has eased over the past month, and then somewhat elevated from elevated. There have been some further progress towards rather than modest. So they changed their tone. That's what the Fed does. They imply a lot of things and change their policy statements to indicate future policy moves. And there's a more than-- as of now, a more than a 70% chance the Fed will cut by 50 basis points at their meeting in September, early September. You also have the 10 year at 3.8, down from 4.2, literally a week ago. So you've seen the market move in anticipation of that. Powell with his post-FOMC interview, or post-press conference, says if that test is met, meaning if inflation keeps on coming down, a reduction in our policy rate would be on the table as soon as the next meeting in September. Not being too specific, he said, we're watching very carefully about the labor market downturn, where we're aware of that role, which I would call a statistical thing that has happened through history. I don't want to be really specific about what's going on. I never try to make a policy decision based upon the election. So he's saying all the right things, and is also patting himself in the back a little bit, saying it's a different economy now than it was a year ago when the Fed had a raise rates, knowing that inflation has come down. We have a disinflationary environment. You know, and perhaps you're right there, perhaps it is kind of slowing down spending. You also have the National Association of Realtors coming out this week and saying, look, there quite often is a period of time where homeowners say, well, look, I'm not going to buy right now. I'm going to wait to see if rates keep coming down. I think that's what you were talking about with big expenses like that. So that's what you have going on, really. It's time for today's Lucky Land horoscope with Victoria Cash. Life's gotten mundane, so shake up the daily routine and be adventurous with a trip to Lucky Land. You know what they say. Your chance to win starts with a spin. So go to luckylandslots.com to play over 100 social casino style games for free for your chance to redeem some serious prizes. Get lucky today at luckylandslots.com. No purchase necessary, VGW Group, void were prohibited by law, 18 plus, terms of condition supply. (dramatic music) (speaking in foreign language) (speaking in foreign language) - With the economy and with the stock market, all leading us to a choppy, choppy market and investors, as you mentioned earlier, at least for the past week, kind of moving to the sidelines and saying, let's caution is the better part of valor. Is that actionable? I don't know, on a grand scale. I don't think so. I think what you want to do is begin to get out a shopping list, especially for those companies that you think are going to remain strong over the next two or three years or the sectors and barbelling that with, we barbell it with N-O-B-L, which is the dividend and aristocrat fund, CLW-C. (speaking in foreign language) - Yeah, I think a 10% pullback happens about once every 1.2 years. So I think we're kind of right in the midst of that now. I personally don't think that this is something that is actionable right here. I think these companies are still doing well. Maybe not as good as some people think, but I think we're in one of those earnings season where investors try to nitpick, I guess one thing of each earnings and say, okay, YouTube revenue was down or this was down and have a sell-off because of that. You know, AMD came out with earnings this week, so they still have a very strong demand, especially for data centers. So I think the spending is still there. I think these companies will continue to do good. I think we just kind of got a little bit too euphoric on the artificial intelligence front. I think it is a pullback that is warranted. - And a lot of these companies, you're seeing stock prices where they were a month ago. You know, we track periodically, depending upon the volatility of the market, for those listeners that are familiar with it, who have heard this, you know, we have about 50 stocks or so that we own for our clients. We have others that someone might call and say, "Hey, can I buy this or can I buy that?" But there's about 50 stocks that we own. And periodically, usually about once a month, we will update those prices at which we would want to sell, look at selling them. We don't hard-code these. We don't, you know, if a stock price falls below, what we think is a trigger point to look into. We look into selling it. We have two sell points that we look at, you know, just to give us some wiggle room. And we then decide what to do. It's not something that's, like I said, hard-coded into the computer that if a stock, we have a stop limit at 30, the stock falls through it. We don't sell it automatically. We say, "Okay, should we look into selling this?" So we have two prices for that. And we adjust those prices periodically. The last adjustment came, you know, about a month or so ago. And we also adjust them to the upside. So if Nvidia goes from 100 to 135, we might adjust the price of what we look to sell. But keep in mind that all the time, if as the stock moves down, your sell point is quite often somebody's buy point. And the reason I'm saying all this is, we only had about five or six stocks of the 50 that were below that point at which we would look at them to sell, which means that, you know, yeah, the markets come down a little bit, but even for the month of July, which ended on Thursday, the S&P 500 was down 1.37, the NASDAQ down 2.3%. I'm sorry, the S&P 500 was up 1.313, the NASDAQ was down 0.75. So, you know, you're in the midst of a correction, maybe. You know, maybe from the highs and NASDAQ's down nine or 10%, S&P's down, you know, six or seven, because it's a heavy tech-weighted, the Russell 2000s within, you know, an earshot of its all time, maybe five or six percent. So, you know, this is something that you've got to live with. And this is something that we really haven't pierced any, any other than, on a grand basis, on an index level, we really haven't pierced any really triggers that would say this is anything more than, you know, a run-of-the-mill correction that we're going through. - Yeah, other than, you know, maybe some weaker economic data that we've seen, but, you know, yeah, other than that, no, I'm not seeing anything here that, you know, is worrisome in the 20 to 30% pullback range. - Yeah. - And I think this is, you know, yeah, a run-of-the-mill, 10% pullback. And maybe a little bit of weaker earnings, though, you know, and, yeah, a little bit of over-hype for artificial intelligence. - Or AI. - Yeah, or AI. Let's take a look at some of those earnings there. I mean, anyone in particular that, you know, strikes your fancy and then we'll get into Susie Orman for three or four minutes before I explode. - Yeah, you know, I think we could start with Boeing. - Go ahead. - I think Boeing had had very weak earnings, but, you know, a good thing about Boeing is it had weak earnings, but it did hover around zero previous. You know, I had a really bad day on Thursday down 7%. But I think, you know, we do own Boeing, we bought Boeing last quarter. - Had about, we had about here. - Yeah, at about years. And I think it's a company that will turn it around. They recently hired a new CEO, Robert Orbegg, who was, I think he worked for Rockwell Collins for a few decades. What else? He's a mechanical engineer, so I think that's good. I think Boeing needs to get back to focusing on their technology and focusing on producing planes in quality. And I think that's a good hire. So I still think Boeing is a good company that, you know, I think deserves, I think, is a good buy-in around here. - Yeah, you know, and I think when you look at Boeing, you might, you're gonna have to wait. I think you're gonna have to wait on Boeing. You're still gonna have a lot of, you know, we use the word choppy in this first half quite often, but I think there's still good news and bad news that's gonna come out as they work through their quality problems. - Yeah. - You know, I think Robert Orbegg, I think you were saying from Rockwell Collins, so a lot of experience, he is an outsider. This is one of the first times Boeing's hired an outsider. So I think there's no nepotism going on that will be going on at Boeing with Mr. Orbegg. I think that Rockwell Collins has a lot of fingers into defense. I think that'll continue to help Boeing. Boeing has about 40% of their revenue comes from defense. So I think that's a plus, a commercial aviation side, you know, there's Boeing and Brere to a smaller extent, but for a wide-bodied commercial jets, there's Boeing and really Airbus. And Airbus didn't report great earnings either, so that might be more a statement of the economy, but I think if you look at a company that's cut in half with a dominant market position, with a very wide moat, hard for a company to just have for me and you to start an airplane company, you know, I think you just kind of buy your time there. - Hey, like with companies like this, I think you have to find a price that you're happy with, knowing that it can go down another 5%, 10% and pick up more shares. I think that's kind of where Boeing is right now. Yeah, it could have gone down another 5% or 10%. Yeah, but I think they are writing their ship. And again, it's basically a duopoly with Airbus that they will get it right over time in my opinion. It's a cheap stock. I guess you would say it's cheap for a reason, you know, revenue of, you know, came in a little bit lower than expected. I'm still losing money after what's been going on with them, but yeah, I think this is a price that you'll be happy with three, four, five years from now. - It's touch on Intel before the break. Intel, you know, Intel came out with very, very disappointing earnings. We do own Intel, like I was saying earlier in the show, we own about, you know, less than 1% of our assets are in Intel, 118,000 shares. I don't know, it's, yeah. - You know, we are doing the show on Friday, so I think we have to think about what to do next with Intel. 15,000 employees. You know, what stinks about Intel is when we bought it incorrectly, you think that, hey, a rising tide lifts all boats, you know, they not only were in a great sector and chip production and semiconductors, but I thought that they had some nice macro factors, governmental factors, you know, bringing jobs back home, you had the chips act, but you know, I was wrong. - We were wrong, yeah, but, you know, I was pretty optimistic about Intel in turning it around, but, you know, they're kind of continuing to disappoint while all these other companies are continuing to take market share and do way better. - Yeah, revenue down 1% year over year, you know, little bit of a, you know, earnings of two cents, 10 cents had been expected, revenue under estimates, AI, you know, according to Pat Gelsinger, their CEO, AI, is still driving demand and, you know, that's not really an Intel's wheelhouse of data centers, you know, so that's, you know, that's, you know, that's gonna pressure margins for Intel. So they've, they're two, three, four years out of really turning the business around, cutting 15% of their workforce, that's about 15,000 people, reducing their dividend. It's hard to cut to profit, it's hard to cut to success. You know, when you're cutting employees, - Yeah, and you know, even data center was, revenue was 3.05 billion, 3% lower than the previous quarter and lower than consensus estimates. And then, you know, you have AMD come out and say, man, the data centers have never been better, they're biggest competitor. So, you know, they're failing at all the things that other companies are succeeding at. And I think that's, that's obviously not good for a company or a stock, open the day down, I think 25%. - I think you take a, - You take 26%, 25%, 26%. So, yeah, I think. - You strike, you strike a new law at which you're definitely going to sell it. These are what we're gonna do. Strike a new law which, a new strike price which you're definitely going to sell it. Or look for alternatives of chips that may be dropping either in sympathy or because the market's pulling back. - You know, Dan, I hope so. - I think that's a video. - It's AMD. I think those are, those are, those are two stocks that if they get pulled in with that, you take a look at Qualcomm's another one. Right now, it's 10.30 on the station, depending upon the news weather and information, Newstalk 810 and 1031 WGY. - Good morning, and welcome back to the second half hour of the Capital District's Money and Investment Program. You're listening to the Fagan Financial Report. We're doing the show Friday morning, markets down about five or two points. And, you know, kind of as, and then it's been a choppy week, it's been a choppy three or four weeks actually, you know, with the bias to the downside. And here's, you know, you know, I think about this all the time. This is literally my 42nd year in this business. It's, you know, founded Fagan Associates in 1989. So 30, 50 year in business. And, you know, some things that I've learned. Please, Ryan, here, and I have a question for you. What do you do when you win? Like, are you a fist-pumper? A woo-hoo, a hand clap or a high-fiver? If you want to hone in on those winning moves, check out Chumba Casino. Choose from hundreds of social casino-style games for your chance to redeem serious cash prizes. There are new game releases weekly, plus free daily bonuses. So don't wait. Start having the most fun ever at Chumba Casino.com. Sponsored by Chumba Casino, no purchase necessary. EGW Group, for prohibited by law, 18-plus terms and conditions apply. And I try to impart to you, Aaron. I think we kind of have the same type of vein. You've been here for 13 years. It'll be 13 years. And investing is a lot like life. You know, you need discipline when things are going great. You need discipline when things are going poorly. You know, it's what really controls whether or not you're going to exercise, whether or not you're going to eat right. You know, what is it? What do they say? The discipline's more important than emotion. Motivation. Motivation, right. Because the motivation isn't always there. Hope is not a strategy. Hope is not a strategy. You keep emotions in check when things are going great. So you don't become greedy. And I think we see that. We saw that with clients. So, you know, a month or so, go with the Nvidia split. Everyone had to buy Nvidia at that point. So you want to keep emotions in check when things are going great. You keep your emotions in check when things are going poorly. I mean, how many of us are on the crest of a great thing in life and we do something stupid? You know, because we're just on the crest. Nothing can go wrong. Too happy. You know, too happy. And there's always concerns. There's always stuff that comes up that you've got to deal with. And I think that investing is just that. Go ahead. And I think that although you get carried away with it from time to time and people do and you need to reset, I think it is also one of the reasons why, you know, America and Americans have created, you know, the best stock market in economy in the world because we are an optimistic bunch. Maybe too much sometimes. But when you weigh the pros and cons, the pros of being, you know, too optimistic, especially from an economic and a stock market point of view, has obviously worked out. And I think we go through these times of, I think euphoria. And I think we saw that with, you know, culminating in, you know, as you said, all those calls with Nvidia and just like, you know, when we get up calls for a specific stock or sector like Nvidia, it's usually a time to sell and on the contrary, when we start getting a lot of calls with worry and to sell, it's usually a time to buy. And I think that, you know, we haven't gotten many calls with, you know, too much fear right now. But you know, I think, again, you know, we talked a little bit about it on the beginning of the show in the first half is, you know, I think this is a consolidation phase. I think things have kind of gotten, have run away a little bit and we've become too optimistic to euphoric and the market's resetting itself. You know, we had Amazon, Microsoft, Meta, Google, earnings, and in my opinion, they were all pretty good. I agree. Amazon, which was. Apple's had great earnings. Yeah. Apple had great earnings. You know, Microsoft had great earnings. So we can, you know, maybe start with Microsoft, they beat on earnings. They beat on revenue, 13.8% year over year growth for the largest company in the world isn't too bad, $65.24 billion in revenue. The company's top segment, Intelligent Cloud, generated $25.82 billion in revenue. Revenue from Azure and other cloud services grew 29% during the quarter. Good. But below expectations. Below expectations of the 31, the 31%. So, you know, I think Microsoft is still a great company, obviously. It just got a little bit ahead of itself from a price standpoint. I think that's okay. And you know what, here's the difference, Air, and let's touch on that for a minute. The Azure pull down Microsoft, now where's Microsoft trading right now? Are you on the screen or no? Yeah. And Microsoft, it's, you know, about 10 o'clock. It's down 2.34%. What's it's high about? You know, 460, almost 4.7% at some point in time, you're looking at that saying, "Hey, that's a buy." And here's the difference. Okay. Here's the difference between now. I was here from 95 to 99. And I think this is a consolidation along the way to perhaps in 99. So you, if you say we're in a bubble, yeah, that bubble has burst to it. That bubble's small, like a bubble piece of bubblegum, not like a big, you know, hot air balloon. And there's the difference right now. And who are the leaders? You know, these are not also ran, you know, snap pad bad earnings, Pinterest had bad earnings. If they were the leaders of this AI revolution, we would have problems, you know, but they're not. Back in the late 90s, you know, the leaders were companies that aren't even around now. CMGI, you know, vertical net, data dog, and not data dog, I forget the name, fog dog. You know, these were companies that got way blown up, way out of proportion, that weren't that were, we were, we were, we were counting on the bull was counted, bullish sentiment was counting on clicks and, you know, how many clicks a company was getting rather than what would translate to revenue. Today, we have average revenue per user. We have, you know, it was company like Microsoft with such a strong balance sheet. So Amazon, so, so maybe, maybe they'll continue to pull back. They're not going anywhere. I think that's why, yeah, 300 billion people that are using one of their, there's 700, 700 billion. Yeah. Yeah. Three billion, three point, like, oh, seven billion people using one of their applications or products daily, like Microsoft, sixty five billion dollars in revenue. I mean, I think what we're seeing here is, although, you know, you might have an overvaluation from now, if we look at, you know, just one metrics, I know it's only one metric, but even the Ford PE of Google is only 20, if you're counting in next year's earnings from, from the price here. So, you know, these companies are big. They have tons of cash available. They're very healthy from a fundamental standpoint. They're not relying on anybody to fund them. They're leaders of, I do believe that they were leaders of yesterday, but they're leaders of today. And I think they will be leaders of tomorrow, you know, AMD still had a great forward outlook. So I think we're still continuing to see the build out of data centers, of data storage, of how we process data. And, you know, what I think is that, you know, the market has skipped the, the market just got ahead of itself from an artificial intelligence standpoint. I think that we're going to see, you know, I do believe that software will do good going forward. Maybe not from here. Maybe 10% down from here. But I think, you know, the can, I think data will be the gap to bridge today in this, you know, artificial intelligence revolution that we'll see, you know, maybe two, three, four years from now. See, and I agree, and I think what I think is that when the tide goes out, it reveals who's swimming naked, right? So if you look at our 50 holdings as people swimming, we might have three or four that when the tide goes out, we might be like, wow, we didn't realize that. We can tell might be one of them, you know. So that's going to happen, all right? But you don't want everyone's swimming naked. Yeah. And I think that's why you have diversification in a portfolio across sectors, you know, across market capitalization, across, you know, where companies are domiciled, you know, we're pretty much US centric. You know, we have some international holdings, mostly through ETFs, but that's what you want to do. It protects its, you know, you regret it when the market's going straight up, but you benefit from it when the market's, you know, pulling back like it is. Now I'm looking at, you know, sheets, there's, and look at Google, 82 billion visits a month. You know, YouTube, 31 billion visits a month, Facebook, 15 billion visits a month. You know, Amazon, 2 billion visits, these are the most visited websites per month according to similar web and as of June, 2024. So, you know, you have real companies pulling back not a worry in my mind and you move from there, not like 1999 or in 1998, where you had companies without any earnings with little revenue, you know, you know, looking at eyeballs to the website as far as valuation goes. And I think you can see that in the earnings of AMD this week, they sold over a billion dollars in the MI, 300 chips over the last quarter, and its data center category surged 115 percent. Earnings were one cent above more than expected. Revenue was 5.84 billion compared to 5.72, and AMD is down year to date. The company is the second largest vendor of data center and graphic processors. At least as you said, as a result, we now expect data center GPU revenue to exceed 4.5 billion dollars for 2024 up from $4 billion we guided in April. So I think the underlying, I guess like fundamentals of this data, data center expansion is still there. It's just the companies that I think will benefit from the data and data centers got a little bit overvalued here in that that's where we're seeing this pullback. And then you say, "Okay, who's going to benefit from this?" You know, Google Alphabet basically said, "Look, we've got to keep spending. We're going to overspend rather than underspend," Senator Pichard said, their CEO. So who's going to benefit from that? Probably AMD, probably Nvidia. Then you have Apple come out and say, "We're going to use Google's processors chips." So there's a little bit of uncertainty there as to the demand for Nvidia going to stay constant for the next three or four years or grow over the next three or four years. And I do think it will from what we've read, and we read a lot on it, but also from the industry experts, the industry experts, not the financial services industry, but the chip industry experts, really see demand for Nvidia for quite some time. So Nvidia's trading down around a little bit above 100, it was 135. Those are the times where you say, "Okay, I'm going to take a look at that because their business is sound." And I guess we're beating a dead horse for probably the whole show, but I don't want to see our clients in this what we believe is a natural consolidation be swayed or moved to make changes in their portfolios that they're eventually going to regret. I think right now, I think the changes that you would make probably pertain more to the fixed income side as interest rates come down with it. Yeah. And Dan Niles, who I think runs Sequoia Capital, is a technology investor, and he posted something the other day on Twitter. And he's someone who you really respect in that industry and really knows what he's talking about. You see, he said, "My belief is that over the next two to four years, Nvidia revenues are likely to roughly triple from its current levels with the stock roughly doubling. However, before year end, we may be a near-term digestion phase for the amount spent on AI over the past one and a half years." He goes on to say even during the build-out of the internet, Cisco, which became the most valuable company in the world in 2000, went through periods of severe stock declines as concerns rose about internet spend digestion. Cisco's stocks saw declines of 26% in late 1995, 38% in early '97, and 37% in 1999. This is even before the stock bubbled, as revenue growth rates, while still hugely positive, either declined or plateaued. Despite these entry-year declines, the stock was up each of those years in total and increased 4,000% to its peak in 2000 from the end of 1994. The stock market will always have bubbles, but that doesn't mean we're currently in one. I think you said that at the beginning of the show. We might be headed for a bubble, but I think we're in a phase of consolidation on the way to it. Yeah, I agree. Right now, it's good to separate the wheat from the chaff. It's good to take a look at the companies that are in that digestive phase, probably Amazon wanted them, and you look at prices that you want to begin to nibble at it, and then you look at other prices where you want to begin to nibble a little more. We have clients who just came over recently, so we're going to put some money to work today. Maybe these securities will move a little bit lower, and we're going to offset that with some ETFs and go from there. You can also take a look at Amazon, Microsoft, Google, and say, "Hey, we're still going to spend on these," and you could say, "Hey, that's good or that's bad," but their earnings, their revenue, that's today, and these companies, although they might be spending a little bit too much on artificial intelligence, and who knows, that might be a wrong move down the line. But today, Amazon Web Services still had $26.3 billion in revenue. Advertising still had almost $13 billion in revenue, and just for the quarter, they still had $148 billion in revenue. Although they might not be spending their money as wisely as some might hope or want, they're still earning a lot of money. They're still very well-run companies, and these earnings are real. These past quarter's earnings are actually real. I think that's what people found from Microsoft is they are getting revenue from their Chad GBT. They are getting revenue. You're seeing the biggest companies in the world having just for Azure revenue up 30% year over year. These aren't just the largest companies in the world. These are the largest companies in the world, and they're having revenue increases year over year, like smaller tech companies, which is amazing as well. They're in the wheelhouse of what is really going to be a transformative stage for the economy. Those are some things that I think investors, once we get through this tumultuous period, we'll begin to focus on. As we move along, because Apple is probably one of our second or third largest holdings, we got about 10 minutes left, wanted to touch on that. With AI becoming more prevalent, and then AI also becoming embedded in iPhones with, I think it's their next release. We're really going to have a huge upgrade cycle. This was probably the last quarter before they entered that upgrade cycle. They had to get by this quarter. They did get by it, EPS of $1.45 cents above estimates, revenue, almost 86 billion, 1.5 billion above estimates, iPhone revenue above estimates, iPad revenue about $1 billion above estimates, and billion dollars, $1.5 billion, $500 million, $7.16 billion versus $6.61 billion. That's a big difference there. Wearables above revenue, services at 24%, gross margins above estimates at 46.3%, you have a company-- That's amazing. Right. You were saying that just a few minutes ago, you have a company that is a behemoth and still posting those types of numbers, and they had year over year revenue growth for one of the first times in several quarters. You have a company that is really moving into an upgrade cycle, the likes of which we haven't seen for probably a decade. That bodes well for the company. But investors are moving a little bit to tech. I think as interest rates come down, they move to utilities. And I was just going to say that. Apple is kind of like a utility, too. You do need your iPhone. You do need the internet wherever you go. I'm pretty optimistic they had wearables at $8.1 billion compared to $7.79 billion. I think that was also good, services 24.21 compared to 24.01. Apple is obviously still a great company, and it'll continue to do good. But just in my opinion, it's kind of gotten past the phase of its meteoric rise. But if I had to put all my money in one company, it would probably be Apple. So before we get to Suzy Orman, to probably close out the show, just as the market pulls back, ask yourself some questions. If it pulls back another 15%, does anything happen to me financially? Does anything affect my future, does it affect my cash flow from a time? If your portfolio is keeping you up at night because you have three stocks in it, I think that's something you need to re-evaluate not just now, but filling forward as well. A well-diversified portfolio will always have some losers. I think what we've kind of noticed, too, is again, for new clients, if you have a portfolio and it is in individual stocks, you have to say, "Hey, how optimistic am I about this company?" But how optimistic am I about this company compared to its allocation towards the S&P 500, which I think is the fairest, I guess, one sector from a US standpoint to compare yourself against. Microsoft is still 6.87% of the S&P. Apple's still 6.83%, so even if you're starting a new portfolio, in my opinion, be equal weight with these companies right now. With that index, with the S&P, yeah. With that index. But I do think at the time, some things we've picked up recently, GE Healthcare, 3M, NEX Terra, Boeing, Pfizer. So I think it's a good time to find some companies that are more value oriented, that are trading at lower PE ratios, lower fundamental metrics, because I think you could see maybe a stalling out of these larger cap tech companies as they absorb some of these gains, and the market catches up to them. But that said, again, Google's trading at 20 times next year's earnings, barring anything macroeconomically, or let's say something happens with the election, I'm pretty positive about these companies over the next one to two years. Yeah, me too. And I think just as you were saying, I'm thinking we were talking a little bit before the year about it. At some point in time, even in the near future, will value become overpriced. I think you want to have diversification mentioned some companies we've diversified with. We've got four fortunate with 3M in their earnings. Pfizer's held in around 30, which is nice, it pays a 5% dividend. But I wouldn't want a full portfolio of those companies. I'm looking at secular growth, still with AI and IT. If the market pulls back 10% every one year, essentially, and you can't take what's going on now mentally, then you'd learn, I guess, you'd lean towards the fact that maybe you really shouldn't be invested in the stock market, because this is going to happen essentially every single year until you decide to take your money out of the stock market. But if you don't, statistically, you're going to end up behind. Historically, you're going to end up behind. People without pensions, it's almost not an option. You got to get used to being uncomfortable a little bit. That's an old saying when you're investing, get used to being uncomfortable. But anyway, so those are the questions you're going to ask, are you going to be okay if the market keeps going down a little bit? Are you adequately diversified? Do you have some bonds? What about your cash flow? All those types of things, what if inflation hangs around? What if rates fall? Those are some things, are you diversified across industries, and those are some things we try to do with Fagin Associates. We're our largest holdings are technology companies, but if you look at our portfolio, the Lowe's and the JP Morgan's and the Cows, the ETFs, the COWZ, the JAPY, Johnson & Johnson that we have, the Regeneron, the Vertex, these are all things Boeing that we feel comes up with, riding whatever the market delivers out. I mean, in an article from Crystal May, Saturday, July 27 was the article. His famed financial guru, Susie Arman, once told Paul a pant on the Ford Anything podcast that $2 million isn't enough to retire earlier, so how much does she say you will need to live comfortably? True retire early. She advocates saving significantly more closer to $5 to $10 million to retire early. Sometimes, I think that we live in an area that is a little bit disconnected from... I think it's the opposite. Yeah, but I'm disconnected in a good way. Most of our clients don't have $20,000 per month in expenses. Right. No, it's $5 million. In fairness to Susie Arman, she is more than talking about that fire movement, the financial independence. Not more of that, like that fire movement. I guess I would agree with her to the extent that if you're 40 and you have $2 million, it's probably not enough to retire on, generally speaking. That's risk-free about $80,000 a year. Well, I'm not tied to inflation. Yeah. And you get one bad sequence of returns early on, and that $2 million, you have $2 million drops. You'd say it is in the stock market, you get a 20% pullback, then your $2 million goes down to $1.6, so then your distribution rate is even less than that. Yeah, I would agree with that, actually, that it would be hard to... But everyone has different goals. Let's say you had $2 million, you don't have any kids, you have to spend $100,000 a year. I think every situation is different. Right. You know, I think too, so if someone comes in here generally speaking, and they're 55, and they have a life expectancy of, let's say, 30 years, so they've got to 85. Their active life is probably going to go until 78. Yeah. So they're going to have 80% of their life is going to spend active, statistic. And 80% is a big window to live on a fixed income and not be eventually your purchasing power affecting your standard of living because of inflation. Your purchasing power may not affect your standard of living if... Yeah, you're taking duration risk, if you're having a 40. And also, let's say you retire at 40, and this is the hypothetical situation, you retire at 55, and you can do a 72T or something like that to get you to 62, then you're getting social security. Social security. Social security. Social security. Social security. Social security. You're in your way for each getting 30, you retire at 40. Your social security is going to be way lower. That's a good point as well. Because you have so much less work. So, not only that $2 million sounds even lower, the early you are in your retirement because that fixed income that you'll finally get from that social security pension is going to be not the number that someone who retired at, let's say 55. That's a good rule, you're playing. Because you have the 40s. When anyone comes in and they want to retire early, a lot of the things usually take in social security earlier, and you're trying to bridge that gap between distributions from your accounts and getting that income stream from social security. But most people that want to retire earlier are usually pretty good spenders, to be honest. They are. Just about to do it though. Thanks for listening. Give us a call during the week, 518-279-1044. Check us out on theweb@faganasset.com. Have a good weekend. It is Ryan Seacrest here. Everybody needs some variety in life. That's what I love about Chumba Casino. They know how to keep things fresh and exciting. All their games are free to play. At Spin Slots, Bingo and Solitaire, you can claim free daily login bonuses too. And they release new games every week. So spice things up with ChumbaCocino.com now for your chance to redeem some serious prizes. 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