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The Todd Herman Show

The Market Crash and Your Life- Zach Abraham joins Ep-1780

My friend Zach Abraham, Chief Investments Officer of Bulwark Capital Management joined us. I asked him about the so-called Mag 7, down over a trillion dollars. I asked Zach, how many of these companies automatically get 40% of Americans' investment money every single month.  Zach and I also talked about the effect this has on people's lives, the stock market, and how it can change people's lives.  Zach also shared his opinion on if we could see something worse than this. 

What does God’s Word say? 
Psalm 20:7 7 Some trust in chariots and some in horses,    but we trust in the name of the Lord our God.


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Duration:
51m
Broadcast on:
09 Aug 2024
Audio Format:
mp3
So, the stock market, so the stock market, didn't Donald John Trump say, "If you feel like Joe Biden, it's going to be an economic bloodbath. The stock market's going to drop." Didn't he say that? I think he did say that. And then it done and done it. But fortunately, we've got the swap out. And now we have a new figurehead, Harris, and she'll make things so much better. We'll talk about this, Zach Abraham, Chief Investment Officer, Bullwork Capital Management in the US Gradya.com. Thank you, God Almighty, for Wise Council. The Todd Herman Show is 100% disapproved by big pharma technocrats and tyrants everywhere. Now, from the high mountains of free America, here's the Emerald City Exile. Todd Herman. Today is the day the Lord has made and these are the times in which God has decided we should live. Oh, the Chief Investment Officer, Bullock Capital Management. My friend and a guy growing a rough and rugged, manly looking beard. You know what? That's not what they do in the finance world. You're supposed to be able to clean shaven and sit in there in a double triple quadruple Windsor. You can hide a stack of business cards in the thing, hide a small child in it, or some packs of cocaine is what they do back in the West Coast. How are you, brother? I'm doing good, man. Cocaine free. Wait, free cocaine or cocaine free? Well, it depends. Right. Okay. Right. Gotcha. You know, we can get you whatever you need. Yeah, I got you. Oh, I get it. Yeah. I got to stay away from a Peruvian marching powder. Got it. No, do stay away from that. I prefer to. No, man. Yeah, I, it's just, it's hard. It was hard to let go of the freedom beard, man. And then don't let go, man. Don't let go. Yeah. And then the two most important women in my life said that, no, you don't look as good without it. So I said, all right. You know, so there it is, there it is. So I guess I was hoping to have some drama this week, but there isn't any. In the finance world. No, everything is normal. Tant was a thousand point drop in a single day. And I read a statistic that that ain't never happened before. Probably not one that big. I'd have to go back and look at it, but we've had, you know, we had, we, I would say that's probably not accurate because I know there was a day during the COVID crash where at least the Dow was down 13% in a single day. Yeah. But that was potent. Yeah. Well, shut down the economy, right? Right. Right. Cool. So yeah, but in naturally speaking, I mean, it's, it's certainly up there. Yeah. It's big. Okay. So this is what zero hedge posted and you know, me and zero edge, make seven down over a trillion. That was August 5, 2024, 612 AM, NVIDIA down three, three, two, three, 25 billion, Apple 300 billion, Google 200 billion, Amazon hundred and 35 billion, Microsoft 125 billion. $80 billion, Tesla down 60 billion. Remind all the gentle ladies and gentlemen and find people on both sides of the issue, you know, from the Charles. Remind them of how many of those companies automatically get to help themselves to the aortas, financial aortas of people using the electronic trading platforms. Well, yeah, not just that, but I mean, I think the biggest aortas is just the, the passive investing, right? The ETF. Yeah. Yeah. Yeah. Yeah. So, so, I mean, you know, ETFs, it's hard to get an exact number around right now, but I mean, in passive indexing ETFs, you've got about 55 somewhere in neighborhood of like 55, maybe it's as high as 60 now, percent of all dollars going around the marketplace are invested that way. And people are like, well, okay, 55, that's a lot. And you're like, no, no, like all things you got to look at it in context, you've never had a form of investing period. Any form that dominated that much of the money flowing around the markets. Now, look, you've had a couple of bounce back days here, but there's two things. First of all, I think that way more of that got blamed on the economy being on the edge of recession than it should have. We had some weaker economic data, obviously people I think know my attitude or my take on what I think of current economic policies that are in place and the long term pernicious impacts of those. At the same time, I think that that economic data probably made up, you know, let's call it four to six percent of the chaos that we saw certainly added to it. But the biggest part of it was what you and I have talked about before, which was whenever you see things and we kept talking about how small and mid-cap stocks were just getting left in the dust and the NASDAQ was just going through the roof. And that became what we call a carry trade, meaning so what or a payer's trade is some people to refer to it, meaning if I short the Russell 2000, small and mid-cap, so I bet against small and mid-caps, but then I bet for big tech, if something bad happens and this has been the way it's played out over the last several years, even if I lose money on my big tech bets, the Russell 2000 and the small and mid-cap stocks are going to get hit worse. So even if I lose, I still win, right, because my bets against the market are going up faster than my bets for the market, right? And this always happens in markets. The longer those types of payer trades go on, the more people that pile into them and the more fragile they become because they're flawed in the very way that they're looking at it, right? The average guy goes, well, yeah, that makes sense because those companies suck compared to big tech, right? Well, if AI is as powerful and as transformative as the prices of the big tech companies would have you believe, then the only way they can be worth that is if they're providing such unbelievable utility to the rest of the economy, therefore maybe the AI companies should be going up more, but you can't have a scenario where you've got whole indexes of small and mid-cap companies not going anywhere and these transformative AI companies going through the roof, right? Those two things can't exist. If those AI companies aren't going to have a really positive impact on the small and mid-cap companies, then why are you bidding them up? Right. And if the small and mid-cap companies can't afford to buy the AI, then where is your customer base? You're going to sell to each other because all the tech companies are getting into AI. And I found myself some news on AI pricing under Share With You, but I want to go through a quick checklist in just a second here with you, Zach, on these companies because I really, this concerns me and maybe it's wrong for me to be concerned about it. Well, so we'll go through this checklist in a second. If you guys go through a checklist in your physical life, can I just ask you this question? Is it take longer to recover from even something like playing football with the kids on Sunday? And I'm quoting a John Mellon Camp song, bonus, bonus, bonus, if you know, playing football with the kids on Sunday. Roaring with the wines all weekend long, no, no, no, Roaring with the lines all week long, just, no, gosh, that's just to tell ourselves we're still the young ones. Let's check it out. Now I screwed it all up. Well, just start over. All right. Let's start over. John Mellon Camp, no, here's the deal. If you go through the checklist, does it take you longer to recover from exercise? I'm talking about muscle soreness or have you begun to break bones or even little bones? So can I just suggest to you, please do not passively allow this to happen. Do some passive-investive in your body. It's super, super easy. I mean, it requires the active swallowing of something, but that's not much to do. Go get native path collagen, which is scientifically backed to increase bone menstrual menodensity and accelerate tissue recovery, it reduces wrinkles, it enhances hair thickness, it strengthens weaker damaged nails, and it doesn't waste time with type 2 collagen, super geeky. Let me just say it this way. One in two, one in three collagen fibers, types are found in 90% of our body. So they don't waste time with type 2. This is found in our cartilage, our bones, our skin, our hair, our gut. And when you are not properly getting enough collagen and you're not unless you're drinking a bunch of bone soup and they don't think you are eating bones or sucking on cartilage and chewing it and swallowing, which you're probably not, you're not getting enough of it. What you can do, go visit getnativepath.com/tod, stock up on native path collagen for an incredible 45% off today, plus get free shipping, it's up to 45% off. Every order comes to the 365 day money back guarantee and you can try at risk free. That website again is getnativepath.com/tod to get up to 45% off getnativepath.com/tod. Now we'll go through the checklists or zacks or here's what I was asking. These electronic trading platforms, so a lot of people involved in this is passive investing every month, they're sending this money to these companies. I don't think the video gets that right. They don't get that automatically usually, right? The video is too volatile or is the video getting that automatically? Oh, and video is the second, well, I think the first, second or first largest company in the S&P. So they're getting, they're getting between six and seven percent of everybody's dollar they're putting into that ETF. That's insane. That's insane because that company is going up billions of dollars a day or a second. It's hard to keep track. Hundreds of billions. A day. Yeah. A day. And the profits aren't increasing. The companies that they rely on for their raw goods aren't increasing. Insane. Apple, they get seven percent. Is that right? They're getting seven percent automatically? Yeah, they're right around six or seven. Now, Nvidia's profits and revenue have gone up unbelievably so, right? But the Dutch, tracking to 200, you know, 200 billion per day. No, that's the insanity is what you've seen multiple days where you see 150 to 200 percent of their annual revenue. So you see market cap movements that are equal to 150 to 200 percent of their annual revenue in a day. In a day. That's my point. It's not that they're not going up, but it's the comparisons. It has no grounding in fact. Apple has said, Tim Cook, time and again, we are not a growth stock. Right? We're not. We're six percent. We're not. We're not. We're 25 percent or 100 percent anything like that. Right. We're sitting on this company. They're down 300 billion. Google is getting seven percent, right? At least Google has. Probably around five, probably around five, five percent. So everyone in these companies even Tesla gets a taste of this stuff automatically? Yeah. It's just whoever's that see, this is the problem with market cap weighted ETFs, right? Especially when they control more than 50 percent of the money in the market is that what happens is the companies that go up the most quit being the companies that are performing the best, they just become the companies that are the biggest, right? And it's a self-reinforcing wheel because the better those companies do, the better the market does comparatively to any other form of investing and value stocks and all that kind of stuff. So more people jump on that train. And pretty soon they control 60, 65 percent, 70 percent of the entire market. And these things make markets more fragile, which is why it's one of the reasons you saw this whole market gyration, but there's another really interesting tell in there, right? The father of value investing, I've been telling you that so many of these things don't make sense on a fundamental basis, right, on price basis. Well, guess who is now sold about somewhere in the neighborhood of 60 to 70 percent of all their Apple stock, Warren Buffett, right? And I've been hearing these people wonder why Buffett's selling. I've heard people saying, Buffett doesn't know what he's doing. And I'm like, okay, you may not like him, but to say he doesn't know what he's doing or doesn't understand the valuation of a company, come on, give me a break, right, right. Why do you sell it? For the same reasons that I've been saying the price doesn't make any sense, right? Like they quit growing and now they're trading at 33 times earnings. And it was, oh, it's the refresh of the AI empowered phone and I go, guys, that's a one year, one off type thing. And then the other thing is you got to start looking at the numbers, right? When you get a company that's as big and as successful as Apple, you can't just see a 10 percent increase in earning, right? To increase their earnings by 10 percent, you'd have to have the most amazing phone launch they've ever had by four, right? So you just start bumping up against law of large numbers. And look, I mean, you know, I mean, Apple's already bounced off its low by seven and a half percent, and it's already higher than it was when Buffett sold it. So you know, you're still at a place, even though you have these market gyrations, nobody cares and the market's been trained to think that, look, when stocks sell off, just buy them. And everybody's like, well, isn't that true? And you go, no, no, when stocks get cheap, you want to buy them, right? Not when it was. Yeah. But there is a difference, right? Yeah. Because billions of dollars in value and still still be way, way overvalued, then there's this. Oh, yeah. This is a fun piece. Intel says Gaudi3, that's, I guess, their AI-focused product, is going to be one third the price of the competition. Yeah. Oh, okay. So wait a minute. We see, let's go back to Nvidia, okay. So they're going to be powering the AI revolution. Apple, man, they're selling a bunch of new phones based on AI. They got that Google AI. That's fantastic because it turned our founders into black women who are same sex attracted in some women with penises. So that's, and that's some AI, right? That's a beautiful AI. Amazon, you know, Amazon, or at least they're not really betting on AI, Microsoft is, but they're outsourcing it. It's going to be one third the price of the competition. And Intel has the ability, I don't know, they're relatively big. They might be even able to make a market. So is that going to change the price of these AI companies? Google is going to come in and now start a price war. Yeah. Well, we've had this conversation before too, right? Not doubting the efficacy of AI and its ability to transform things, right from the beginning, we've said that. But you're attributing all of these wins, like to think, you know, how many times have you and I had the conversation, if you think all of these big tech companies are just going to sit back and let Nvidia own this market, you're out of your mind, right? It's just, it's not going to happen. So you're, and you're already seeing that competition come to the fore. Now, Intel actually has the new chip that they came out is actually better than the Nvidia chip is right now. Now, Nvidia has a new chip on the, you know, on the deck, you know, getting ready to come out. That's delays in that. And that chip will be another step forward. I'm just saying, like, Nvidia is unquestionably in the lead. But when you can get something that, you know, a lot of people are building AI tools off of the existing Nvidia chip, right? Well, that means that it's functional and like you and I know, you know, anytime a company's making investment in AI or anything else, you don't just blindly go out and buy the absolute best thing. You're looking for a merger of utility and costs, right? So I'm not saying people are going to quit buying Nvidia chip. What I am saying is you're going to increasingly see chips on the market that are more than suitable to do what a bunch of other players are doing. They may not be suitable for the top players, but the point is one of the biggest driver for Nvidia's revenue and profit surge is they were the only game in town. Okay. Now they're not. And you haven't even seen that be reflected in the stock price. Yeah. And that's insanity. I can remember when people told me, well, no one's ever going to use an AMD chip, you know, and I remember Microsoft know it's Intel, where an Intel world is an Intel world, plus, you know, Apple's never going to use Intel. So this is a way for us to have a competitive advantage. I remember one day reading, oh, well, look, there's an Apple with an Intel in it. Oh, wait, there's a Microsoft with an AMD, but wait, I was told in no uncertain terms that would never, ever, ever happen. I want to bring politics into this in a second, Zach, because there was a major, major shake up, a huge shake up and everything is different. So I want to present that scenario too, because there's people who believe that with this huge shake up in politics, that's why the market took a nosedive and we'll talk about that in a second. So, Zach, there was a major shake up politically. We went from a demented old man who's probably suffering from Parkinson's, who believes in open border policy, allowing the cartels to sex traffic children across our border, changing the electoral college from the back end, using the presence of these bodies, who believes in funding both sides of the war between Iran and Hamas, money laundering through Ukraine, boys or girls, girls or boys, government should be able to steal your kid and trans them. Without crime to run rampant in the cities and give all control to presidents to be able to jail their political opponents, then they swapped and they put in a woman who doesn't have Parkinson's, but believes all those things and more. And she has said that she's going to bring about the Green New Deal, that she will be the one who will make this happen, that finally, this country will get off of our sick addiction, it's a carbon-based energy, and she's going to do it with all carbon-based things, which we are, I mean, we're carbon-based, so maybe she doesn't mean all because she doesn't mean herself. So, there were people, but just us, there were people who say that this switchover to figurehead Kamala Harris, that's why the market dropped. Do you think there's any reality to that? Look, I think that it probably, again, played a role on the margins, but look, when we're talking finance and investing and this is a warning I'll give to everybody, I would like nothing more to sit here and tell you that this is a market freaking out at the idea of Kamala Harris and this complete dole. I mean, he's smarter than she is, but that's not saying much, right? I would love to tell you that's the reason the market freaked out, right? I would love, it's not. The market freaked out, we've been talking about it for more than a month and a half, the market freaked out because you've had this insane environment going on so long that people start doing insane things because getting way over-leveraged and those things always come apart. How do you know that? Go black back and listen to the shows that we've been doing for the last month. We were saying that this was going to unwind and it was going to unwind very violently because that's what always happens. It doesn't make us a prognosticator or no stardomist. What I will say, though, is that I think that that certainly played a role, again, on the margin. I think that it was a serious role, but all one up that, I think one of the most concerning things about this whole deal is that that market drop isn't attributed to that, right? Okay. Got to explain that. Meaning, I would feel much more comfortable about the rationale and the foresight and the thinking of the American populace or the American investor if that was attributable to it. But here's the thing, Kamala Harris, and again, this is going to be offensive to people, but I'm just telling you, Kamala Harris presidency on balance probably means that big tech deserves to go even higher. Why? Because they're going to pad her pocketbook, this is not a smart human being. Okay, as a matter of fact, I think we could be looking at the lowest IQ that's ever been on a major ticket. No, and people think that this might just be because you lean conservative and I'm slightly conservative. I'm mostly a moderate, but right. This is demonstrable because any time this, and I've taken a pledge because people are saying, look, are you Christian or not? Because if you're Christian, stop calling her Kammy, I mean, have at least the respect to use her name. Okay. So figurehead Kamala Harris, because she's a figurehead, she's not going to be a president. This woman, anytime she leaves her notes, you get things like this today, we're here to celebrate a very important relationship with North Korea. They've been an ally for a very long time or we're thinking about the significance of the passage of time. I mean, time, let me think about that, the significance of time and the passage of it. And then this, and this is why I called her Kammy, that cackling laughter, she, here's what she is though. You know who else is not smart? You know what else is not smart? Or Wolverine. A Wolverine is not smart, but if you have what a Wolverine wants and you are alone in the woods and you don't have yourself a pretty serious weapon, the Wolverine will have what you have and it will have you. Yeah. Right? No, they're, they're weasels too. By the way, those are, people think they're bears. They're not, they're huge weasels. Yeah. It's a weasel family. Right? And they'll come and they'll get you and they'll stalk you or you know what else. A Komodo dragon. Yeah. Yeah. Do you know how Komodo dragons kill you? Yeah. They bite you and follow you for like two weeks and to die. Right. Right. They don't even bother. I'm not going to waste the energy. They've got disgusting bacteria in their mouths. So they come and they'll bite you in a big muscle and they know, oh dude's going to rot in the vine and they're just sitting there with their, you know, you can climb a tree and they're like, whatever, I mean, you're going to fall out when you die. Right. And then as your muscles are rotting from the other side, they're going, no, that one's cooking up nice. Yeah. And they're looking at you with those reptiles. Yeah. I'll eat you in a little bit. And here's the thing with, with, with figurehead Kamala Harris. She's not smart, but she's got the instincts of a political killer. And don't tell me she wasn't working the phones in the back end and maybe working some other things in the back end with Barack Obama saying we got to get Joe out. And don't tell me she wasn't looking at chops. So don't tell me she's not mobbed up and there's not big companies in there saying, okay, look, here's what we're going to need. We're going to need more infusions of cash. We've got to have a new flu. Like we got to, like we tried that cow flu thing that wouldn't, don't tell me that she's not the perfect political predator to be, to be taken advantage of by other political predators and cause to do their will, right? Yeah. Well, she has to be mobbed up. There's no other, there's no other way she'd make a ticket and me sitting there saying that she's adult and she has an incredibly low IQ. Look, my faith is my guiding light in my life too, right? I take it very seriously. Yeah. This person has injected themselves into the public sphere saying that they're dumb, right? That's not being anti-Christian. We got to think of ourselves as being on the board of USA, right? And we're effectively picking a board chairman, right? And if that board chairman walks in and can't string together seven words in a cohesive manner, it probably doesn't really look good to their, you know, to their mental acuity, right? Right. And so me saying that she's dumb, that's an observation. Right. I say, I'm not making a judgment call, I'm not judging her. She is asking for me to approve her in a job that impacts my life. My job as a citizen is to put her through as many filters as I can and try to sit there and say, is this person, if she walked into the boardroom of a single fortune 500 company and she didn't have the weight of the federal government behind her, would she be elected to a single board position or the CEO position in any one of those 500 companies? And the answer is resoundingly no. It's ridiculous. I know. Would Donald Trump? Yes. Multiple. Right. Now I'm not saying I'd hire him for my, you know, right, but I'm just saying you have a competency issue, Joe Biden, you could say the same thing, circa 2016. Was he, was he more mentally fit or more capable that there's none? There's no question. Right. Like I said, I, I even know liberal people and people that disagree with me that will sit there and admit to you objectively and be like, yeah, she's not a sharp knife. Well, no, no, and in fact there, CNN did a piece about how she was a drag on the ticket. Guess what they mentioned? And her laugh, her laugh and her voice and the perception that she's not smart. They did it in a pre-produced package that went through a whole bunch of different reviews. And now they're saying, Oh, wait, wait, she is a black woman. She grew up in the deep hood. She was with the crypts. She survived the drive by shooting. Then she dealt drugs for a number of years until she made a rap album and then she got her imprint and then she went to prison for a while. She did a stretch there for a killing she did back in the gang days. And then she turned her life around and she adopted 400 black children and raised each of them individually with one minute a day. They're all now MBAs and she's been through the struggle, and but was she ever an Indian American? Well, a little bit. Yeah. All right. Well, when it was convenient, I know race of convenience. I know. You made me spit take. Yeah. Just witness the spit take and it all just went over to the screen. I do have a question about the stock market in people's lives because I'll tell you something I did one day back when I was doing a film for a client who does not what you do. They do it very, very differently. But back in the day, they did some investing, buy and hold investing. I'll tell you what I did. And I want to ask you about I want people to understand the stock market and their lives. People understand this about their lives that you have. Okay. All right, this is a very impolite thing to say. But if you have someone in your house who has to take a lot of medication, you love them dearly and you are sacrificing time and money to care for them. And they're living in these circumstances where they can't get out. You produce a smell of a hospital or old person smell and they know that I can remember going and visiting my aunties and they were not nice women. One of them was an angel, Kay was an angel, but the other ones were not nice. And they didn't like kids, but they did apologize for the old lady smell. Now they shouldn't have to do that. They're human beings. They're in bed. They don't want to be in bed. You can give people like this a gift, the oxy, oxy leaf to thunderstorm device. It'll take that smell away. Their room will smell like it's been a thunderstorm in there and it does this with O3. That's ozone. So you don't get the chemical smells and the medicine smells and the I'm trapped in bed smells. That happened to my dad. He didn't want to smell that way in bed. He was in bed for a year before he died. He didn't want to smell that way. But there's all sorts of other smells. Like for instance, I think about you guys who are long haul truckers and you listen to the podcast as you drive. Number one, thank you. Number two, like if you're living out of the cab of your truck on these long cross country stretches, it can't always smell nice. So you put the oxy leaf to thunderstorm device in there and these ozone molecules just negate the bad smells. It works with things as awful as cat litter or kid puke that baked in a car overnight and it just negates it. It also does this to viruses. Plugged into the wall. In the case of your truck, it comes with a USB thing. That easy and it's tiny. Go to evenpredeels.com and use code Toddbogo. Why? Because buy one, get one. Dig it. Buy one, get one. Buy two, get two. Evenpredeels.com use code Toddbogo and breathe a breath of fresh air again or give that to your loved ones. It's not just limited to old person smell. It can also be people living in middle military barracks or young person smell. That's not smell. That's stink. A bunch of kids in a college room, that's full on stink. It's evenpredeels.com use code Toddbogo. Back of the day, Zach, I made a little film for some friends who do buy and hold investing. That's not something I can sponsor anymore. I think buy and hold is insane. We would go make little films and we made it outside of fidelity. Then we made it outside of a first interstate bank, two places. These are people leaving fidelity. People walking out of fidelity and we had a sign that said free $25 Amazon gift certificate. This was like 15 years ago when that met something. Just come and do an interview. People walk up to us. Hi, thanks. Hey, do you want to sign up for the Amazon gift certificate? You just have to answer some questions for us on camera. Do you invest in the stock market? Nine out of the ten people walking in a fidelity said, "Oh, no, I don't do any investing in the stock market." Oh, you don't? So what do you put your money? Oh, no. I'm all about mutual funds. I think it's true. I think the stock market is too risky, plus that's for rich people. So I'm just in mutual funds. What are mutual funds? Well, wait, is that the stock market? Yes. There was that. Again, this was the golden one because that was very embarrassing for people to laugh. Oh, my gosh. I'm so stupid. Of course, I'm in the stock market. And that was funny. We give them their certificate. Then we went to the U-district where the colleges, University of Washington, we went outside of a first in the state bank, $25. Now they're college students, man. We got a line, but we have to take them around the corner so they don't get the answer. So people come up, "Okay, hey, thanks. Hey, you're there. You have a checking account? Yeah, what about a savings account? Yeah, absolutely. Save your account, too. Cool. Do you invest in the stock market? Yes. Absolutely not. I'm not rich. It's filthy. It's for a stinking, disgusting capitalist, or I don't have enough money or no. Okay, but you have a savings account, yeah. So where does that money go? These are college students. Well, it's in the bank. Like it's in there right now? Well, not all of it. I mean, some of it. What do you think the bank does with it? Stock market? They would figure it out. So, cradically. It's in three questions. They would saccratically, wait, wait, so I am investing in the stock market. No, no, you're not. No, no, no, you're just getting your little 1% return. They're investing your money in the stock market. So everybody's in the stock market. My point is this, 1,000 point drop in a day, and it didn't, I mean, okay, it really affected some people for sure. Now, retirement's different. Now retirement's not five years. Might be seven, how tied in to the lives of folks is the stock market, in your opinion? Well, it's certainly much more today than it ever has been, even if you're not invested in it. And the reason why is, and look, I don't, there's a lot of empirical data that I could present, but this is still kind of something that's in the theory stage because it's, I wouldn't say it's widely recognized, but I think that I think the empirical data really points to it, which is, I think that the stock market has a bigger impact on the economy than at any other time, meaning, you know, the way we think about it is that the stock market is a reflection of what's going on in the economy. But I think you've reached a point where I think the inverse is true. I think one of the largest inputs into the economy and a consumer spending is the stock market. And the reason I believe that is this, a lot of us know that, know this, know these stats. But baby boomers, let me just give you, and I'll pull up the real numbers while we're sitting here. If you had to guess how much of the country's wealth is held and owned by the baby boomers? Country's wealth. I'm going to say 85%. No, so it's a little less than that, but this is looking. You can look me now and say you're an idiot. It's a lot. No, no, no, no, no, no, because these numbers are a little bit deceiving, meaning if we say total wealth, that includes real estate holdings and things of that nature. So it's not going to show, but baby boomers by definition, okay, make up about 20% of the population of this country. And if we look at the total percentage of the country's wealth, baby boomers control 52% of it. Okay. I thought it was 82, but I was guessing that might well, so that will, that's like top 1%, right? So the top 1% controls, you know, 85 to 90% of this goes to the question of what is wealth. And I'm going to defend myself a little bit here, because I think most of those people in the top 1% are baby, baby boomerage could be wrong. But I think most of them are over 90%. Okay. For sure. Okay. All right. Okay. So if, if, but let's just think about, let's, let's just think about grandma and grandpa. Okay. My grandpa are dead. Why are you doing that to me? Hold on. Let me get whatever that's dead. Hold on a second. What do you want? Think of a retiree. We're looking for a 30 year old retiree, right? Yeah. And they're getting ready for Christmas with the kids. Yeah. For the individual year, they got two to $3 million in the investment portfolio. And that year alone, the investment portfolio is up 25%. Does that increase their propensity to buy some extra Christmas presents for the grandkids? Well, you know, 25% on a two to $3 million portfolio, you're talking about five, seven hundred grand. Okay. Yeah. So, so I think it, so then what you've seen, and you've seen this multiple times, you've seen the stock market drop and you've seen consumer spending start to tip over, then you see the stock market recover and you watch consumer spending recover with it. The layman would sit there and go, oh, the market's so smart, the market's looking ahead, it knows what's going to happen. And we sat there and gone, huh, I don't think that's the case. I think the case is, is that consumer spending by way of baby boomers, especially, and then just the country's wealth, right? The country's wealth by a percentage is far more represented by the stock market today than it was, you know, 40 years ago, meaning if we look at the percentage of, if you add up all the millionaires in the world and say how much of their, or in our country, how much of their net worth is in the stock market, it is a substantially higher percentage than it was 40 years ago. So even if you're not invested in the stock market, and this is why I tell people, yeah, I don't invest in the stock market, I'm like, that's not smart. And they're like, why? And I go, because the stock market is ground zero for inflation, right? It's the first sign of inflation, right? Meaning it's where people are putting, you know, it's where people are putting money to grow and protect themselves from inflation. Should it be all of your investments? No. Should it be risk managed? I think so. But whether or not you think you're impacted by it, I mean, if you had the stock market drop by, let's, let's say nothing economically changed and you had the US stock market drop by 40%, you would, in a, in a very short period of time, you would see unemployment go up sharply and you would watch consumer spending come down rapidly, okay? And then unemployment would go up even more. Yes. You, if you go back 30 years ago, right, if you go back and look at 1987, for instance, in 1987, the stock market dropped over 21% in a single day, okay? It didn't even spur on a real recession, right? It, it, it, you had a little bit of economic slowdown and things like that as people were a little under, if you did that today, think about like COVID, right? So COVID markets dropped 36% in five weeks. That effectively happened at, that was, market dropped about 29% in 87 over the course of four weeks. Okay. So, but you didn't have a shutdown, right? You didn't go compare the outcome difference. Well, and then look at the lasting change to the commercial real estate prices, small businesses, their states that lost 40% of their small businesses and have not come back. Right. And people working one small business job are now working three and that's great for the economy because then they've got three jobs. And hey, look at the job numbers. Right. So I want to ask you a question about this happening again. And I want to remind people some trust in chariots and horses and others trust in the everlasting Word of God. If your chariots and horses are in the form of your 403 B and your 401K, hey, look, be wise stewards, you know, get risk management, my judgment, this is the dude and his company to work with. That's my judgment. That's what we do. So please, please make sure that your trust is parked with God almighty. Please make sure of that. My friend, Tim Crookshank on his coffee company, Bone Frog Coffee, every bags his God country team. And this weekend, Tim at Bone Frog Coffee is proud sponsor of the Navy Seal Foundation swim across the Hudson. And this is taking place in the Saturday, New York City. The swim supports over 30 essential Navy Seal Foundation programs for the seal community, active duty veterans and their families. You can get more information at NavySealFoundation.org and Tim has come out with a summer coffee. It's a cold brew and these are packs. Okay. So you just, all you need is cold water, make cold brew at home, place two pouches in filtered water, let them steep in the fridge for 20, please don't take a shortcut. Don't do six hours, don't do 12, trust me, do the full 24. And what you're going to get is an incredible ice roast coffee and it's going to get you hooked. And by the way, sometimes ice roast, it gets faster into the system. I'm just saying because believe it or not, your body has to cool down the other coffee before it can get in your blood. So if you're like me and you're saying main line me the caffeine, well, then it could do that. You can get multiple, multiple blends. You can get the goat locker extra dark roast or you can do the doorkick or light roast, but with the highest caffeine amount that you can get in Bone Frog, go to bonefrogcoffee.com/todd to get 10% off your first order, you also get 15% off subscription coffee, just enter code TOD at checkout, bonefrogcoffee.com/todd, enter code TOD that's bonefrogcoffee.com/todd, enter code TOD. So Zach, you are very, very careful to always say you're not a prognosticator, you don't know the future, always appreciate that. This was a big, big drop. Do you think it's the worst we'll see in the next three years if you're guessing or do you think we'll see a thing like this again or was this the tremor and the earthquake and now the tectonic plates are kind of relaxed for a little while or do you, do you think this was the tremor leading to the bigger, the bigger earthquake? Well, you know, I don't know what's coming up around the corner. What I will say though is I think history is probably our best guide. If we're looking and we're paying attention to what's going on, you should notice that these once-in-a-lifetime, aberration market looks like are happening in the free space, right? Who's lifetime? Right. And I think what that reflects is the growing fragility in the market, meaning the market is becoming increasingly brittle the further it goes up because the concentration of money is going in fewer and fewer companies, the longer it goes up, the more that the average investor is comfortable using leverage, right? The other part to look is look at the relatively violent snapback you've seen, right? What you're seeing is a market that is unbelievably volatile both ways and so I think you're going to continue to see that volatility grow. I was sitting there thinking about it today. I think that you watch entire indexes and I'd have to break it down and have somebody sit there with me through the day, but you'll watch entire indexes swing in half a percentage point to a percentage point and inside of a minute, right? People are like, "Well, it's just one percentage point." I'm going to think of how much value you're talking about. You're talking about what, I mean, you're talking hundreds and hundreds of billions of dollars of value in a second. And then just things should not move that by the way. Well, unless let's say that you are a big-time investor and you buy deal flow, which is the thing where you get to get in front of what the little people are doing, the little people are all lining up, we're all going to go out and buy Apple. Hey, Apple's low, buy low, right? This is the common wisdom. Apple's low, buy Apple today and their brother-in-law, buy Apple and so the people who get deal flow, these massive, massive investment companies, so mobbed up, somehow made it legal for them to go, "Oh, look at that. All the little people are buying Apple, get us some deal flow, they don't even need to say anything. Their software goes out, it gets ahead of that. They buy, they bump themselves in line, like in a ticket mastermind, they go a hundred to the front that we're cutting in front, they buy, then turn it around to the little people. So what I'm saying is, okay, that happens and it's theft in my judgment. It's utter theft. It's no different than someone budding in line at Ticketmaster for the Pearl Jam tickets and then turning around and selling you at a scalper's price. But with this violent market flow, you're talking 200 billion here, 200 billion there, am I honestly to believe that there aren't people who have software systems seeing that and even shaving 1% of the 1%? Oh, for sure. I mean, there's whole investment strategies built around that. That's why they're front running in the first place, right? Oh, wait, wait, wait, wait, wait. So there are investment strategies and software that are sitting there monitoring $200 billion. Hey, this company's worth 400 billion. No, it's not. It's worth 200. Oh, it is? Well, no, it's worth 600. Wait. No, they're doing that. 100%. 100%. Yeah. It's like you said, it's front running data. I mean, that's what they're looking at. And you have so many of these things that have been built into the market now that have created this reflexivity, which is, you know, and that's why there's a really good argument to make to be like, it's going to get even crazier. But I think is the further and further you go up, the more and more volatility you're going to see to both sides. I mean, for instance, look at this snapback, right? Like the reason the market tanked the way it did was because you have this ridiculous over, you know, over levered scenario where people were shorting small and mid caps going long tech. Okay. Well, now what's getting bid back just to start tech right now, like in the last two days anyway, right? And so you sit there and go, what's the problem with that and go, guys, the whole reason we were so offside is because people had bid tech up. So then the storm hits, you unwind that trade and everybody's first ideas. Well, text down, you got to go buy it and you go, no, no, no, tech was where was that because of this ridiculous carry trade, right? But let me say it this way, because this is how my small brain takes in terms of your big brain. Well, gifted differently, you see the stuff so clear. This would be a like a lot of people showing up at the Chick-fil-A and they all go into the Chick-fil-A. They've got a special Chick-fil-A is the place, there's 400 people in line. You know what they're doing? They're giving you a six of the Chick-fil-A Chick sandwiches. I've never, I've only been there Chick-fil-A once. Someone brought it to me once in Texas. It was like a billionaire meeting. I'm not kidding. It was like we were in the lobby and there's Karl Rove and it was like billionaire investors wanted to invest in politics and win after. They brought us in to present and we're in the lobby and I see Karl Rove, who I knew. He wouldn't remember me. Well, he probably remember me. He cooked me breakfast in his house but he's in the lobby. I go up for this meetings act and I'm presenting all these ideas and they're going to buy us lunch. I'm thinking, okay, we're on the 44th floor of this building in downtown Dallas and they've got all the custom made furniture and the walls are white and they're soft and the windows move. It's just like a waterfall is all over the place and go, man, I can't wait to see lunch and I, you know, hey, lunch is here, guys. What is it? Chick-fil-A. What? Chick-fil-A. Chick-fil-A. Chick-fil-A. Chick-fil-A. I, I, I thought, okay, this has to be genius and the Chick-fil-A comes in like, this is like a KFC sandwich. No, this is really good. What was they going to talk about? Oh, it was this. 400 people online at the Chick-fil-A, here's what they're doing. They're giving you 12 Chick-fil-A sandwiches in one bag for this much money and there's people going, wait, there's only six sandwiches and they leave, wait, there's only six, there's only six sandwiches and then other people are like, I'm out, man. I'm getting out of line because it's not 12 at six. And then they go and they're yelling at each other and then some guy goes and get back in line. Wait, he's back in line. I bet they're doing 12. No, I bet they're doing 12. Now they're doing 12. Then everybody goes back and gets in line. Yeah. Oh, they're doing eight. Yeah. Yeah. Does that compare? Yeah. Yeah. No, it does. And the other thing that's gone on, this has gone on so long now. And the reason it's gone on so long is because I did an interview with a PhD economist from Harvard that's also a money manager and believe it or not has his head on pretty straight. Really straight, actually. I did it today. And he and I were talking about the reason it's gone on is because we live in a new age of government intervention into markets. If you look at the last 15 years or 14 years, out of the last 14 years coming out of the financial crisis, you had stimulus activities going on in 11 of the 14 years. And one way or the other. And in the years where you didn't have stimulus going on, you had government spending an amount of money that they can't afford to spend in the long run, right? You were running trillion plus dollar deficits, which is a form of stimulus in and of itself. This last year, the Fed's raised rates, they're so constrictive. Well, the treasury on the other side of it was effectively doing quantitative easing by not issuing any long-term bonds. So you're building up this market and this economy that only function quote unquote correctly, i.e. going up in perpetuity, as long as somebody is fueling it. And so I think what you're seeing is a market that is increasingly reliant on artificial inflows, artificial stimulus. But here's the thing. Now you've got a scenario, and this is what people need to be worried about, too. Now you have a scenario where, look, we all know that the powers that be are not going to sit back and let a great depressionary collapse happen, okay? They're not going to. They've showed that. Right? As a matter of fact, go back and look at the last 15 years. Every single time the S&P gets down 20 to 25% from its high, they stimulate every single time, okay? So what I think is now you're sitting here looking at, you just got a pretty decent jobs report this morning. It was significantly better than the last one, and it does not point to imminent recession. You got stock markets knocking on the door very close to all-time highs and valuations that are absurd. And now what's the Fed going to do in September? They're going to cut rates, okay? Now we were talking about this six months ago, but now you're kind of starting to see the path forward. Remember the last time the Fed cut rates into a strong economy? You do. 1998. Oh. Right? Tech bubble. Right? NASDAQ went up. So, look, people shouldn't, and this, guys, this isn't me advocating you go out and buy this stuff either. What I'm saying is you're going to see the moves of this thing continue to get exacerbated and blown up to both sides. And if a guy from the future, let's say 12 to 16 months in the future were to come back and say, "Hey, the market's going to be up 150% over the next 16 months." I'm not saying I'd make a bet on it, but I wouldn't bet my house city's wrong, because in this environment, you're about ready to go cut rates with the treasury doing everything they can to stimulate, running deficits that are six and a half to seven percent of GDP. And you got the economy still running at 2.8% to 3% growth, unemployment at 4.2%. I think you and I are talking after this over a business. I'm thinking of starting. You told me it's capital intensive. Sounds like pretty stinking good time to go out and raise capital because people are going to put a whole bunch of money into risky ideas like mine. Yeah. Yeah. I would say that that. Okay. And again, I'm not guaranteeing that. Look, nobody knows for sure, including me at these things are going to happen. But what I'm saying is we always think about crazy markets being to the downside. You may be, this is, yeah, I mean, you look at today's rally, the NASDAQ up virtually 3% on the day. It's absurd. It's absolutely absurd. The entire index is trading at nine times revenue. In the height of the dot-com mania, you know what the NASDAQ was trading at? No. 6.8 times revenue. Okay. Then I'm calling you. Let's just quit this public conversation and I'll phone you after this and you're going to tell me, Todd, put your fundraising hype back on. Get your suit and tie. Get ready. You got to shave. I am shaved. You're not. Yeah. No, I can't. By the way, I got another face for the company. I don't believe the face. It's BIPOC and same sex attracted plus indeterminate sex. And we had the genetic screening done. They can't tell. They can't tell. It's XY. They had it masked. Leaving your fingerprints. So perfect. Genderless. Yeah. No. Right. So I don't want to bring it all over it. Yeah. No. And oh, by the way, I can say the word ecosystem and mean it. It's so, I mean, and it's solid, right? Really? Right. Oh, by the way, 10 million followers on the socials. I mean, this is a $10 billion company already. Game over. I pushed for a $20 or $30 billion value. Business plan. No. Did you meet the CEO? I mean, this is what we're doing. Right? Yeah. In fact, I demand money now before I leave. All right. Zach, thanks for the wise counsel. It's always good to see you. Say hi to your precious family. And I actually will call you after this. Not necessarily because that's the CEO, but huh. What God have mercy on us for our pride and worshiping of the markets. This is the Todd Herman Show. Please go be well. Be strong. Be kind and please make every effort to walk in the light of Christ. [MUSIC PLAYING] [MUSIC PLAYING] [MUSIC PLAYING] [MUSIC PLAYING] (dramatic music) [BLANK_AUDIO]