AVOID MAG7

“The problem is, is what typically happens, is you earn a dollar a share, and Wall Street says, oh, earnings are going to be tough next quarter. It's going to be real tough. We're only going to earn $1.10. And then it comes out with like $1.25, and everyone's like, oh, my God, you did great. Well, the expectation was always $1.25. They just told you it was $1.10, so they could walk over that bar a lot easier than if it was higher. So they lower the bar, and then they walk over, and they're like, look at us, we won. It's like a professional athlete playing against somebody's little league.”

“We had a surprise on Thursday night, Wednesday night going into Thursday, where the markets dropped really quickly as there was some news out that there was some missiles being fired back and forth. And then the reports came back and said, no. No. No. That was just they were just doing training missions. Like, oh, so in the middle of a war with the ceasefire, you're doing training missions where there's a bunch of firing going on. That's a good idea. That's a really, really smart idea. Glad they thought of that.”

“At the end of the day, it's neither bullish or bearish. This is late-cycle behavior. And that data doesn't show that a booming economy, it doesn't show a collapsing one. It does show sign for caution. Late cycle is an area in which it's time to start getting your financial house in order and trying to keep it that way from the things that can hit. Late cycle economy has credit still growing, but concentrated. Business growing, but maybe defensive. Consumers active and inconsistent. And housing is starting to weaken from being flat. That's what traditional late cycle looks like.”

“The markets over many, many decades, they tend to have certain correlations. If you look back 20 years, there's a inverse relationship between stocks and bonds of negative 0.5, which is pretty good, stocks and bonds, which means when stocks go up, bonds go down, stocks go down, bonds go up, it's an inverse relationship. And that's how most people have their portfolios. Problem is starting in 2022, when interest rates went up, stocks went down, prices of everything went down. And since then, now we're at a positive 0.5, which means when stocks go up, bond prices go up, when stocks go down, bond prices go down. That's a weird thing to consider. So what's the point of diversification? It doesn't work.”

“We work with families right now, looking at schools with $50.60, dollars 70,000 cost of attendance. But this is a real world example of a family that we worked at with a 42,000 executive scholarship, plus an $8,000 music scholarship. And by the way, affluent families aren't filing FAFSA. They got a $2,000 scholarship just for filing FAFSA. So it pays to file FAFSA and they got another $2,000 referral credit. That was 54,000 right off the top of that $72,000 cost to tenants, and that didn't even touch local or department level scholarships, yet.”

“If you're investing in tech, especially the the Mag seven, here's something you should keep in mind. Now this is we call it CapEx. So this is the amount of money they're spending. If I own a company and they make a $100 and my earnings as an investor is $30, but then they take 29 of those dollars and go spend it on a data center that earns them no money, I'm not gonna be happy. I'm gonna sell that stock and go find another one that they treat me better.”

“When you think of investing, you have to think of the world in terms of frameworks. We as human beings are not good at all at predicting the future. We all do it. Our brains operate like a prediction engine. We all try to predict the future, and we're terrible at it. All of us are terrible at it. Because if you're good at it, you'd be a bazillionaire.”

“When you think of investing, you have to think of the world in terms of frameworks. We as human beings are not good at all at predicting the future. We all do it. Our brains operate like a prediction engine. We all try to predict the future, and we're terrible at it. All of us are terrible at it, because if you're good at it, you'd be a bazillionaire, but we can't predict the future. But our brains naturally go there. So rather than trying to predict the future, a better way to handle it is to look at the world in terms of frameworks.”

“If you're investing in tech, especially the Mag-7, here's something you should keep in mind. Now, this is we call CapEx. So this is the amount of money they're spending. So historically, Big Tech has not had a lot of capital expenditures, because they don't need it. It's a very scalable model. They generate a lot of cash and they don't have a lot of expenses. Up until right around when AI started to pick up, and now you see that the CapEx starts to pick up. If I own a company and they make $100 and my earnings as an investor is $30, but then they take $29 of those dollars and go spend it on a data center that earns them no money, I'm not going to be happy.”

“How do you invest right now? Patience and caution. Don't jump on the market just because it's going higher. Be patient. Maybe take a small position in something. Start. If your full position is 5%, maybe put 1% in. Start there. See if you're right. If you think it's going higher, okay. At least you have something and you can keep adding to it. But if it goes lower, well, you don't have that much exposure. You're not gonna get hurt that much.”

“There's another game that Wall Street plays to do, which is hide the earnings. So typically what they do, they'll give an estimate of what they expect next quarter's earnings to be. Well, the expectation was always a dollar 25. They just told you it was a dollar 10, so they could walk over that bar a lot easier than if it was higher. So they lower the bar, and then they walk over. They're like, look at us. We won. It's like a professional athlete playing against somebody's little league.”

“Let's talk about credit college loans. If you've got a $72,000 cost of attendance, but this is a real world example of a family that we worked at with, a $42,000 executive scholarship plus an $8,000 music scholarship. And by the way, the fluent families aren't filing FAFSA. They got a $2,000 scholarship just for filing FAFSA, so it pays to file FAFSA. And they got another $2,000 referral credit. Oh, by the way, their parents could refer the child. So the referral credit certainly didn't take some outside party. They could refer themselves. That was $54,000 right off the top of that $72,000 cost of attendance.”

“So if you think of the investing world is like the Titanic, all the investors are on the Titanic. It's going in one direction. Now, if you're changing from scenario one to scenario two, well, that Titanic's got to make a really a beeline, like a sharp turn all the way around. That doesn't happen. It takes a while. It's not like a quick nimble ship. It has to go slowly over time. So pretty much that last month, slowly the markets turned and started to go negative. Then once Trump's like, hey, the war's over, even though it's not over, all of a sudden you had to do the big turn again all the way around. Well, the problem is everybody's chasing the market higher because they don't want to lose out on that return.”

“Patience and caution. Don't jump on the market just because it's going higher. Be patient. Maybe take a small position in something. Start. If your full position is 5%, maybe put 1%. Start there. See if you're right. If it's going higher, okay, at least you have something and you can keep adding to it. But if it goes lower, well, you don't have that much exposure, you're not going to get hurt that much. But that's how you should be thinking about the markets is slow and steady.”

“So if you look back twenty years, there's a inverse relationship between stocks and bonds of negative point five, which is pretty good, stocks and bonds, which means when stocks go up, bonds go down. Problem is starting in 2022 when interest rates went up, stocks went down, prices of everything went down. And since then, now we're at a positive point five, which means when stocks go up, bond prices go up. When stocks go down, bond prices go down. So what's the point of diversification? It doesn't work. If you have a sixtyforty, it's not working for you.”

“When you put it together, you don't really get a simple growth story. You get a mixed picture. Businesses are borrowing more. Consumers are active, but uneven. Housing is weakening. Banks are adjusting how they find themselves. That is not broad expansion. It is selective and shifting activity inside the system. This is late cycle behavior. And that data doesn't show that a booming economy, it doesn't show a collapsing one does show sign for caution.”