Sky-High Earnings Expectations Courting Disaster? | Lance Roberts

The thing that worries me though about earnings in general is the expectations going out for the rest of this year and into next year are super high. I mean, we're looking at earnings growth rate expectations that normally you see coming out of a recession, not three-quarters of the way into an economic expansion.

Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert, welcoming you back here at the end of the week for a very special weekly market recap with my very good friend, the Centennial Portfolio Manager, Lance Roberts. Lance, how you doing?

Yes. And I am that old. When me and George Washington were like this, and you know, me and James Madison, we were there, you know, signing the Declaration. So, yeah.

You know, put a powdered wig on you, Lance. I think you look like a founding father.

Oh, yeah. I work well in the powdered wigs. Yeah. No problem at all.

Yeah. Uh, well, you should bring it back, dude. Um, actually, I think that would probably be miserable to wear in Houston in the summer. Huh?

Especially right now. You know, it's interesting where, you know, y'all are kind of up in the Northeast and in Canada are having this heat dome. And they're like, "Oh, it's 95 degrees. It's so hot here." And I'm like, you know, dude, come to Texas in August. It's the same as being cremated. But, you know, the difference is is that it's a humid heat here in Houston, which is worse because it's hot and humid at the same time, and it just...

Oh, yeah.

...kind of drowns you. So...

Yeah, I feel for you if you're up Northeast and you're going through the heat wave. That's why we have air conditioning in Houston. It is miserable. And, you know, be sure and hydrate. That's the big thing.

All right. All right. Well, and if you're up in the Northeast, don't set your air conditioner any lower than 78 degrees, right?

Yeah, exactly.

All right. Well, look, Lance, I see you've got a very patriotic uh motif behind you. Looks slick as usual. Um, I've worked with the special effects team here at Thoughtful Money, and I want to show you what we've come up with. So, just bear with me for a second, my friend. Here we go.

I love it.

Not quite as slick as your digital background, but we do what we can here.

I think it's fantastic. So, congratulations. Happy 250th birthday. So, it's a good day.

Happy 250th to the great country of America, everybody.

Um, all right. Well, look, um, let's jump right in. There's a lot to go through here, Lance, and I want to work my way to a piece you wrote this week about record retail inflows. Where is all the money coming from?

Um, but let's get there with the week's news. So, we got the jobs report this week, and it was weaker than what the market was looking for. The report sort of threaded this needle of being weak enough to convince the market that the Fed is not going to need to hike, but not so weak that people are freaking out about the economy. Um, so, you and I were talking last week about kind of sticking our necks out a little bit, saying that despite his chest-beating on how hawkish he is, we think the odds are more likely that the next thing the Fed's going to do, we don't know when it's going to be, but we'll likely cut, not hike. And the market right now is expecting a hike. Uh, and obviously, the jobs market data here sort of adds some validation to what we were saying. How important was this latest jobs report, do you think?

Uh, so there's a couple of problems. And, you know, when you take a look at the economic data, it's important, right? So, let's just answer that question. It was a very important number because that's what the market pays attention to. And regardless of what else we think in the world and how we feel about, you know, employment reports or CPI reports or whatever, you don't go, "It's hogwash, it's all government fiction." It doesn't matter because it's what the markets pay attention to. And the markets definitely pay attention to that number. Yesterday, we saw bond yields reverse. We saw, you know, different areas of the market that are impacted by the potential for a rate hike that pulled a lot of that risk back out. So, you know, the markets definitely responded to the number. But I think it really highlights a bigger issue, which is the issue that Kevin Morse talked about specifically in the last FOMC press conference: the need for better data. And, you know, when you start taking a look at the BLS employment report as a good example of this, the participation rate of that sample is extremely low. It's fallen by about 50% from where it used to be. So, the quality of the survey is getting worse, which brings into question how valid is the actual number and is it really serving the purpose that it's supposed to serve, particularly as a signal for monetary policy? Again, you know, what does the Fed pay attention to the most? What are their two primary indicators? It's basically inflation, which is prices, and employment. And when you take a look at the employment data, it certainly didn't kind of feed into what some of the other data is saying. And this is why, and I'm going to share a chart with you real quick.

Great. And while you're plugging it up, let me just note, in this latest release, the unemployment rate dropped from 4.3 to 4.2. And looking at things like initial claims, still very low.

Yeah.

So, you know, you can talk to how accurate you think this data is, but the data right now is, even though it was sort of a weak jobs print, it's still showing a pretty tight labor market.

It is. And but so this is Revelio Labs. They run an independent survey of employment and they're using more real-time data. Um, and again, I'm not saying that Revelio is right either. I'm just, we're just talking about some different things here. ADP reported the latest jobs report earlier in the week. They were around 98,000, which isn't fantastic, but that's a pretty strong number on a weekly basis. Revelio Labs came out with this number, you know, showing potentially a 258,000 job increase for the month. And if you take a look at that versus the non-farm payrolls, which are the gray bars in the back, there's typically a pretty good correlation between what Revelio comes up with based on their data collection versus the NFP report. And, you know, obviously, that was not the case in this latest report. There was a big deviation. So, you know, again, I'm not saying that there's something wrong with the BLS report, but you know, when you have a very weak sample size, that certainly erodes into the credibility of the data to some degree. And, you know, what's also important is taking a look at, you know, Atlanta Fed GDP. Now, after that number, we're clocking closer to 1% growth. That certainly doesn't suggest that the Fed needs to be hiking rates here. But what, but as I was saying, what I think this...

Wow. Sorry to interrupt, but so we're looking at the red line here. That thing basically plummeted from 3 to one something.

No, no, no. This was before the employment report. I posted this yesterday, before the employment...

Day before yesterday, before the employment...

...but anyways, it just plummeted. I mean, last time I checked it, it was too high in the high two. So, what caused it to drop like that?

Some of the spat in the recent data has not been great. Um, we've seen some deterioration in some of the Fed manufacturing reports. We're seeing some, you know, some weakness in terms of personal consumption expenditures. So, all that's, you know, all that data that we've been noticing in some of the current revisions is starting to reflect through into the GDP estimates as well.

Wow, that's, um, but tend to trend down throughout the quarter, but that's a big last-minute drop there.

Right. And this is going to be a little bit weaker based on that employment report on Friday, uh, sorry, on Thursday. So, you know, the... So, my point though is about this. This goes back to specifically what Kevin Morse was talking about: having this task force really start to look through the data that they're getting and finding, are there better measures? Should we be using real-time data? Because a lot of this data that the Fed is banking monetary policy off of is running a one, two, three, or even a two-quarter lag by the time that data is actually in their hands that's giving them some type of signal on monetary policy. And it's, and effectively, we've talked about this before on the show, is that the biggest risk for the Fed is they're always driving in the rearview mirror. So, they're always making policy decisions based on what happened in the recent past rather than...

Or not even so recent past.

...not even so recent, rather than looking forward to saying, "Okay, where's the trend of the data taking us? What's the expectation next?" And getting more real-time data, which is what I hope Kevin Morse is going to facilitate with these task forces. It'll give them a much better policy signal to work off of.

Okay. Well, so for the many viewers, you're probably confused here now, Lance. Um, so, uh, a weekish jobs report. Um, GDP forecast for Q2 all of a sudden plummeting. Um, yet you put up some other data that showed that jobs are actually pretty robust. What is...

Well, no, no, that... No, that the Revelio data was the estimate. That was Revelio's estimate for the employment report.

So, it was showing a robust uptick in the employment. They were expecting 258,000 jobs, but that's not what we got.

It was, sorry, it was their estimate of what the BLS was going to be. Or is it a different methodology the way that ADP is?

No. No. Yeah. Well, it's their methodology to predict what the employment is...

...in the country. What they're showing, what their data is showing there is what Revelio Labs is showing is that there was 258,000 jobs created in the last month. Obviously, 58,000 from the BLS report falls a bit short of that.

Right. So, I guess my question is, we have ADP, which is showing pretty robust jobs growth. We had Revelio, which is saying all the things we're looking at says it should be pretty good. You then have the BLS, with all of its warts, that you mentioned, showing something weaker. Um, you know, we could make an argument here that, well, the BLS data is not all that great then, for all the reasons that we've talked about. Um, but then you look at the GDP estimate for Q2, and it sank like a stone. So, there's just mixed messages here. And I'm just curious, given, because you look at a ton of data there at RA...

Given what you're looking at right now...

...are you leaning more on the stronger economy side or more on the weakening economy side?

Um, we're on the muddle-through economy side. Um, it's not going to be really robust. It's not. But, you know, look, you know, there's a real probability that by the time we finish up this year, we're going to be closer to 1.8 to 2% GDP growth versus 2.3 to 2.6, right? I just think that, and from all the data we're watching and the impact of things that are happening, we're going to see kind of a continued slowness in the economy. Slowness isn't the right word, sluggishness in the economy. And that's particularly driven by what's happening on the personal consumption expenditure side. You know, the oil price spike we had certainly wasn't a benefit to consumers at all. That certainly weighed on the ability for consumers to consume within the economy because the money was being diverted into paying for gasoline and energy. And we're also, and again, you take a look at the personal savings rates, you look at wage growth, real wages. In fact, I've got an article out today on the website talking about, if you want to know where inflation's headed, pay attention to real wages. There's a 72% correlation between wages and inflation. Um, but that article's on the website or our Substack page at Lance Roberts, either way. Um, but what real wages are actually growing slower than inflation. So, you've got a negative real wage growth on top of a declining personal savings rate. That's not the combination you need for stronger economic output.

So, a couple of things on that. I get your argument. I get that logic. Um, first off, could you make the argument that the reason why maybe GDP is a little bit slower in the first half of 2026 than maybe originally thought is because of all the impacts of the higher oil prices and everything like that?

That's certainly part of it. Yes.

Yeah. So, if oil prices, they've now come down of late, and if they continue to stay down, shouldn't you maybe get a bit of a tailwind from that? Right. It's a little bit of recovery in the pain that the consumer base has felt from...

Okay, think about it this way. Okay, let's kind of do some simple math here for a second. Let's say I earn $100 a month, right? And I normally spend $20 a month in gas, and I have no savings, for the most part, right? So, I normally spend 20 bucks a month on gasoline, and over the last couple of months, I've been spending $40 a month, and now I have only $60 to pay all my other bills with. So, now, first of all, I probably got myself into some debt, potentially. Now, this isn't true for everybody. This is an example, so don't go crazy on me in the chat channel. We're just laying out an example here. But for the last couple of months, I've had to go into debt by $20 to make ends meet because I'm paying $40 a month for gas. So, now, to your point, the gas prices fall, which is great, because now I'm back to spending my $20 a month, assuming we go back to where gasoline prices were previously. We haven't yet, but assuming we go back there, now I'm back to spending $20. $80 is still going to pay my bills, but I don't have an additional pay raise, right? And now I've got to service the debt I picked up over the last couple of months, which is also eating into my disposable income. So, yes, oil prices may come down. That'll help ease the burden, but that's not putting additional cash back into consumers' wallets. It's just simply rebalancing the checkbook on where they were spending money versus where they weren't before.

Okay. And again, it wasn't everybody, but you're basically saying that you expect a hangover to persist.

It lasts a while, and especially if you have no savings, right? When you look at your personal savings rate where it is, and again, real wage growth is running below inflation. That's also problematic to this regard. It's hard for consumers to just go, "Oh, good. You know, gas is back to $3 versus $4, so I can go spend an extra dollar a month on whatever it is, right?" We're just shifting where we're spending money, but that money is still getting spent.

Okay. Um, I do think that if oil stays low, you will have disinflation over the rest of this year, which should give increasing support to the consumer over that time, but they've got to dig out of the hole, is what you're saying. Okay. The other question is around the personal savings rate. Um, on first glance, you hear that, right? US savings rates been trending down, and it has been, and it's now down kind of near record lows. I mean, not record lows, but sort of record average lows, because there have been times where it's flipped negative. Um, and you can look at that and say, "Oh, well, that's clearly a sign of household financial distress, right? People are basically raiding their savings to make ends meet." And I know that there is a lot of that going on in the bottom leg of the K-shaped economy, which is the majority of people. Um, but on the other hand, just mathematically, the boomer cohort is now pretty much entirely into retirement age, right? And once you are, you stop saving because you're not earning anymore, right? Um, and so mathematically, that should be bringing the savings rate down. It should be expected to bring the savings rate down as you have that big bulge go into their non-saving years, right? Um, and they're sitting right now on an estimated $90 trillion in net worth. Um, and they're going to be increasingly spending that, both on enjoying life and supporting their younger kids, increasingly on medical care, stuff like that. It's actually going to be an economic stimulus. So, I'm not trying to say a personal savings rate is the best thing in the world. I'm just saying you can make an argument it's not as bad as it comes across just on a first glance reaction to that.

Well, yes and no, because the millennials are effectively about as big as the boomers, and they should be in their prime earning and savings years, right? So, yes.

Yes. But I just, to interrupt, I don't know if we've had this big a percentage of the overall population not save yet in America's history. And look, I'm 61, right? I'm not retiring anytime soon.

But you're not a boomer.

I'm right on the cusp. I'm, you know, yes, I'm Gen X, but I'm right there.

Your geriatric X is what we're going to call you.

But look, I will tell you that we have a lot of boomer clients in our firm. There are only a handful, probably out of those, that are not working at all. Most are still working. They're still earning. They're still saving.

Again, sorry to interject, though, but your client is not the average boomer.

Oh, no. You're talking... No, they're not the average boomer because they actually have the wealth. So, the $90 trillion in wealth you're talking about.

Yeah.

That's my clients are the ones that have that wealth. Let's talk about the other 80% of the economy that doesn't have that wealth. Do you think the average boomer at the age of 65 in the bottom half of the economy is retiring and spending their savings? They don't have any savings. I know it's something like $250,000, I think, is the average amount that the average people...

I don't know, it's far worse than that. The median savings in 401(k) plans is like $60,000.

Yeah. But I said average.

Yeah. Yeah. So, yeah, averages are one thing because that gets the super wealthy in there. But you get down to medians, those numbers are terrible.

Yeah. I'm just saying on an average, it's not good. $250,000 for your next 20-plus years is not a lot of money. So, no. But that $90 trillion though is still going to get spent, right? I mean, a lot of it's going to get passed on an inheritance, but a lot of it is going to get spent. So, it's still, you know, again, it's the fairness of the K-shaped economy. Even though way more people are unprepared, the rich are keeping the averages going here.

So, I... No, I agree with what you're saying. And, you know, there's, you know, but when we start talking about the average kind of baby boomer, as I was saying before, they don't have a lot of savings. And so, yes, there is this cohort in the top 10% that has a lot of wealth that's going to not really be spent. It's going to get passed on through estates and trusts and all kinds of other things down to their heirs. And most of that will stay in their families long-term. You think about Rockefeller wealth, those types of things where the kids have access to some of it, but they don't have access to the principal. So, a lot of that's going to be locked up for a very, very long time, forever, actually. Um, but then you get down to the people that actually are moving the economy, and that's that bottom 50, 60, 70%, and their savings rates matter a lot because they really can't afford to retire.

Yeah. So, and again, um, I'm making, there's sort of two arguments to be made here. One is mathematically, you know, 70 years ago, your older cohort was a lot smaller because people died off a lot sooner, and it wasn't a huge, we didn't have a baby boom like that traveling through the demographics. Now we have a bunch of people who are living a lot longer. So, just mathematically, when they hit retirement age, they're going to stop saving, and the savings rate is going to come down as a result of that. It's not nefarious, it's just math. Now, to your point, which I totally agree, society, this huge cohort that's now in quote-unquote retirement age, a lot of them don't have a lot of assets, right? Collectively, they have a tremendous amount on average, but distribution-wise, probably the bottom 80% doesn't really have a ton. And that's going to be a, I think, just sort of a rolling thunder crisis here as we basically figure out, well, how do we support these people to the end of their life? And obviously, they're going to get support through Medicare and stuff like that, but obviously, that places a very big drain on the system because those aren't particularly very solvent vehicles. Um, but also too, you know, for a lot of them, look, my mother went through this. I mean, she ended up in quote-unquote retirement age with no assets, no income. I think her Social Security check was like $800.

That's not much to live on, folks. And there was a, we spent a ton of time trying to find ways in which she could benefit from state-subsidized solutions. And there are a ton out there, but still, you add them all up, it's not a phenomenal living. And of course, we then had to supplement a lot on top of that. And a lot of people don't have that family support.

Well, no, and that's the point right there. I mean, that right there is the point to be made here, which is that today, more than ever, we have a sandwich generation, which is people our age that are not only raising kids but also supporting our parents, right? We're caught in the middle. And so now we've got this extra expenditure burden going out every month, every quarter, every year to support our parents along with our kids, and then trying to navigate our way into retirement at the same time. And that's, you know, part of this spending problem that we're going to have going forward is this demographic issue. That, you know, they're just getting the kind of our generation, the Gen Xers in particular, and now the millennials are the next ones to catch this because they'll be taking care of their Gen X parents and then their kids. Um, you know, it's going to the ability to save and invest is going to become much more challenging in the future because, you're right, Social Security is not going to cover it. We're already talking about 2034, 2035, 20% cuts to Social Security if they can't figure out that problem ultimately. There's a lot of arguments for and against that, but that's what the stat says. The Social Security Board of Trustees, that's what they say is going to happen.

But, you know, this is an important thing, and particularly when we're talking about spending, the economy is 70% consumption. And the guys getting caught in the middle, they're not being able to build a lot of wealth because they've got so many expenses going out the door. And, you know, this is one of the interesting conversations I have with clients all the time is they go, "Well, I have to pay for my kids' college, right?" I'm like, "Do you?"

Yeah. So, actually, actually, I want to ask you a tough question about this. Um, but real quick, let's... Our parents were the silence, the Gen X, our parents were the silence. It's the millennials that are going to be dealing with the rolling thunder boomers here.

Um, all right. So, here's the uncomfortable question. So, I was going to ask exactly what you talked about, which is when a parent is challenged to either save for their retirement or pay for their children's launch in life, college, education, help them buy a house, whatever. My understanding is that the kind of the standard rule of thumb from a financial advisor is to say, put your money in your retirement instead. Your kids are young, they'll make their way. The struggle will probably help increase their odds of becoming a self-sufficient adult anyway. And if you instead skimp from your retirement savings to help your kids out, you're increasing your odds of actually being a financial burden on them through their adult lives, which is not going to be helping them, right? Uh, and you're not going to feel good about it. So, that's the knowledge there. So, but the uncomfortable question, Lance, is all right, what about your parents, right? Your parents are struggling. They're old. They can't go back to work. They're getting more and more infirm.

Yeah.

Is there a tough love answer to that one as well, or is it like, "Look, your parents, you got to do what you got to do"?

It's your parents. You do what you have to do. Look, I'm dealing with that with my wife's parents now. I mean, and it's just stuff that comes along in life. But there's a difference. See, this is the kind of tough love conversation I have with my clients, which is they're like, "Oh, well, I have to pay for my kids' college." And I'm like, "Okay, great. No problem. Can you still save for your retirement? Can you still save for this? Can you still save for that? And if the answer is yes, then pay for your kids' college. If you can pay for the kids' education and not impact the savings rate for your retirement, then go do whatever you want to do. That's your choice. But..."

And this is why a financial plan is so important, folks, because it helps you figure out the odds of this, right? You're not making the decision blind. So, sorry, just wanted to make that commercial.

No, no, absolutely right. And that's what we do when we're doing financial plans. We figure all this stuff out. But, you know, to your point though, when I sit down with them and say, "Oh, I've got to do this." I'm like, "Why do you have to do that?" Well, it's my responsibility to pay for their school. Who told you it's your responsibility? That's not in the Ten Commandments anywhere. Thou shalt not kill, thou shalt not commit adultery, thou shalt pay for their kids' college. That's not in there. And so this idea of responsibility is something that has been put on us by society, that this is our job to do this for our kids. But if it's putting you in a position, then this is the choice you have to make. And the point you made, Adam, which is absolutely correct, is the decision you have to make is: Do I want to help my kids now and be a burden on them later, or allow them to kind of work their way through this process, take out student loans, whatever it is, so I can continue to save for retirement? And then, if I'm in the position later on, I can help them with their student loans, etc. Then great, that's perfect. Do that. But don't put yourself in a position where you're going to wind up being a burden on them for the rest of their lives. Because again, you know, with our parents' situation, yours and mine both, they don't have the ability to go back to work. You know, they're in their 80s. They're heading towards being infirm. They don't have that ability to go back out and get a job and start earning income. They are now dependent on their family and on Social Security, government benefits, those types of things. Which is why those things were there in the first place. That's when we put them in place to be that welfare leg for our elderly that have put their time into the economy over time. Unfortunately, what we've done over the last, really since the 1960s, is we've now given Social Security benefits out to everybody under the sun, which has depleted the Social Security base. And those are the things we have to refactor back in. But, you know, when kids are young, they have that ability to grow and earn and navigate life. And yes, it's tough. That's what life is. And that's not trying to be hard. That's not trying to be a hard-ass or anything like that. It's just that, you know, as a parent, we've got to make that tough decision. And again, if you've got plenty of excess liquidity and you're set for retirement already, pay for their college, pay for whatever. Who cares? It's your money. You do whatever you want in life. But I think setting yourself up to be a burden on them is something you really want to consider first before you start making those decisions.

Yeah. And maybe we should do a deep dive on this at some point, Lance. Maybe we bring in, you know, Danny and Richard and the guys from RA there on the financial planning side. Um, and this is something I have a lot of insight to get to provide on because, as I said, we went through this with my mother. And without going into the deep story, um, she didn't contribute to my college education, but when I was college-age, she was, her life really started not going in the direction she wanted. And she started to say back then, I remember, "I just don't want to be a burden on you boys." Which I thought was a noble thought. Um, the problem was is she did zero planning around it. Um, you know, she let the fear of the future just kind of keep her from looking at it. And of course, failing to plan is basically planning to fail, right? Um, and so all along the way, I heard, "I don't want to be a burden to you guys," but increasingly the reality was, "Well, Mom, we're really having to take care of all this stuff that you didn't plan for or think through." Um, so it, it, it, I just know firsthand what it's like to be with somebody who didn't plan for the future. It doesn't even matter if she did or she didn't, she just, it didn't work out the way that she wanted, and she needed a lot of help and subsidy. Um, and one of the things that was, I mean, look, we provided an awful lot for her. Um, and it was tough. It was really getting sandwiched, as you were talking about, right? This is right when my kids started getting to college age, and we're trying to figure out how to juggle all this stuff, as well as try to figure out how to plan for our own retirement.

Yeah.

Uh, and it's very stressful. So, one of the things that was helpful, and maybe we can go into this when we're talking with your guys, Lance, is as I mentioned, there are a lot of, at least right now, while there's still funding available, I don't know how long they're going to be around for, but there are a lot of government programs at the federal and state level that if you know about, you can apply for. And one of the key things in here is finding like a senior benefits specialist, especially in your state, who can help you kind of identify what's out there and then help you navigate and apply for all this stuff because there's really no guidebook. There's no... It was amazing to me. I was like, "Aren't there like a zillion other families like this right now? I mean, isn't there really somebody who put together like, okay, here's all the different things that you could be looking at?" No.

You're pretty much on your own.

Yeah, you're totally on your own in this. And what, so that made it challenging. And the other thing that made it really challenging was my mother's pride. She didn't want to have to rely on this stuff, right? You know, that's for poor people. It's like, "Mom, news flash, you're poor at this point in time. Like, this is for you." And so, like the, I'll just mention the one thing that was the biggest help was there are senior subsidized housing. There's a fair amount of senior subsidized housing out there for people below a certain income and asset level. And we actually ended up finding a really great one that my mom went in and, you know, she fought a fight, and then as soon as she was in there, "Oh, this is the best thing ever." But she resisted so long that by the time she finally agreed to say, "Okay, well, I'm willing to do this," they were like, "Okay, great. Well, it's going to be at least a three-year wait, right?" And so we had to wait an additional three years of me having to subsidize her housing personally before a spot eventually opened up and then she got in there. So, a big part of this was not just identifying what's out there, but then a lot of times you got to get in line. And so you want to try to identify this stuff early, get in line, ideally before you need it, so that by the time you need it, you're on the short list.

And just real quick on, let's flip that to the other side of the coin and talk about your kids.

If your kids are getting ready to go to college, there are so many different programs and scholarships out there, and there's so many scholarships out there that people just simply don't apply for.

Don't apply for.

Yeah. It's amazing. And, you know, if you, like I've had my kids go out and just apply for every scholarship under the sun. And you'd be surprised that, you know, they've gotten a lot of scholarships on stuff. It was like, "Why did they get a scholarship from there?" Well, it's because they had nobody else to give the money to. Nobody applied for it. And so there's... So, just, you know, you got to find a good consultant if your kids's going to college. There are people that do this in your state and in your geographic area wherever you live across the country. But they specialize in going out and finding these scholarships and these grants. And there's just all kinds of stuff out there to give you...

And a lot of that money every year, as you said, goes unused.

Exactly. Didn't have enough kids to match with it because not enough kids applied.

A lot of people just assume like, "Oh, I'm not smart enough to get a scholarship." You'd be surprised, right? Or like, "I'm not special. I don't have a super..." I'm not going to get an athletic one because I'm not a sports person, or I'm not going to get a STEM one because I'm not a STEM person. But there's so many out there that don't require any of that. And a lot of them are just random things like, "Do you are you a barista? Well, we've got one for people who work in a service job." Great.

You'd be amazed.

You'd be amazed. Yeah. So, there's a ton out there. So, anyways, folks, if there'd be interest, if there's interest in learning more about kind of this...

What do we call this? We'll call this the sandwich situation.

Um, if there's interest in learning how to navigate the sandwich situation, let me know in the comments. And if there's enough interest, we'll pull the right experts in and we'll do this. Maybe we'll do a webinar where it's interactive, where folks can ask questions after the main presentation.

Yeah.

Um, all right. So, let's, um, let's get on to the TA, Lance. Um, just to make sure we don't put that too far into today's discussion. Um, as you're pulling it up, I just want to note one thing. Um, I didn't really think about it until afterwards. Um, but a lot of comments last week about how things got pretty spicy between you and I. And, um, and I know your gut instinct is just to say whatever I say is wrong, Lance. So, I totally get that. But, um, but people were actually legitimately concerned that we were duking it out. And I just want to reiterate to everybody that Lance and I are like brothers. We have fun throwing the punches at each other, but there's a lot of love and respect there. So, Lance and I are totally fine.

Oh, yeah. Yeah. No, then like, you posted a great tweet, though. I can't, I forgot when you posted it this week. Uh, do you happen to have a copy of that? You pull it up because that was the best tweet you've done in a long time.

Yeah, I'll pull it up here. It'll probably get me demonetized because it's not our content. But yeah, it's the Sophie Cunningham meme of her pointing at the basketball game. So, anyways, as we're talking here, Lance, I'll put it up on the screen and at least part of it up on the screen so folks can see it. But yeah, this is these are the kind of digs that Lance and I take at each other all the time.

Yeah. Yeah. I mean, yeah, you should never be concerned. You know, Adam, like Adam said, we're, he's as close a thing I've got to a brother, and as brothers do, we're going to point and prod, punch at each other. So, just take it with a grain of salt. It's all good.

Um, all right. Let's talk a little bit of TA. This was a very interesting week from a technical basis. Just a second. Let me get my chart up here. Um, so, couple of things. Um, but let's roll back in time just a little bit here and talk about last Wednesday. And I mentioned this last Friday when Adam and I were here on the show is that we made a rotation from value into growth. And specifically, that rotation from value to growth was value to mega-cap. And so when you look at our kind of our sector rotation model, and here, let me just pull this up here real quick for you just so we can kind of walk through this real fast, and I'll get back to the TA. But this all feeds into the TA ultimately, so it's useful to kind of look at this. But when you take a look at the factors over the last couple of weeks, what we find out is that, and again, this has improved over the last week because mega-caps had a very good rally. But the mega-cap growth stocks are very oversold here, and they were even more oversold than emerging markets last week, and actually more than gold miners last week.

Yeah. They were hanging out with the miners, and of course, now they've done better, and the miners are still sitting there in the naughty hole.

Exactly. And so, but they're still very oversold here versus small caps, micro-cap, and these stocks, disruptive tech, these stocks are a lot of the micro, sorry, the semiconductor stocks, etc. They were all doing very, very well and were very, very overbought. So, over the last week, we've seen that rotation. Mega-caps caught a lot of bid. Apple was up like 9% last week. And we're talking about mega-caps in particular. We're talking about the Mag 7. And in fact, that is the subject of this weekend's Bull Bear Report as well, is that, you know, there's a lot of commentary and headlines right now about the, it's the Lag 7, it's not the Mag 7, it's the Lag 7 relative to the rest of the markets. Well, over the last week, the Mag 7 have had a very nice rotation relative to value. And so value sold off last week, semiconductors got sold off. And because semiconductors, Micron especially, is in the value index, because of that sell-off in semiconductors, value underperformed, and the Mag 7 stocks outperformed last week. So, we saw a bit of that rotation get underway. And, you know, this all kind of corresponds. Now we can go back to the actual technical analysis here. Um, but the market sold down to the 50-day moving average. So, I had this conversation last week on The Real Investment Show. I think it was on Tuesday or Wednesday, when the market actually broke below the 50-day moving average, and we said, "Hey, be careful with these breaks of moving averages." Typically, the knee-jerk reaction is to immediately sell that break because it's like, "Oh, you know, I broke the 50-day moving average. That means the market's going to correct big, etc." Always give it a day or two when you break a moving average because typically by the time you get to that break, you're oversold in the market. You've got a lot of negativity built into the markets, and investors have gotten off sides a bit. And so if you give it a day or two, typically you'll see either a retest of that 50-day moving average from underneath that fails. There's your confirmation that we're now into potentially a bigger correction to go down to a lower level, or you're going to immediately recover it and go back up. Well, the next day, we recovered right back above it and then rallied for the rest of this past week. Now, we're not out of the woods yet by any stretch of the imagination. Um, if you'll notice these two blue lines, we were drawing these last week as well, is that we've got this compression of price. And so, price is getting more and more compressed in between these two kind of trend lines within the markets. And so the market's going to break out one way or the other out of this compression at some point, either to the upside or to the downside. We'll see what happens next week. My bet is right now we're going to break out to the upside simply because we're virtually triggering a buy signal on a momentum basis. So, we're starting to see some momentum coming back into the markets. Friday was a really good example of this.

That if you take a look at the price action on Friday, it was a lot of the big mega cap stocks, semiconductors under pressure, but you across the rest of the map, energy, um, you know, looking at kind of the Walmarts, the Costos, the healthc carees, the financials, they were all doing really well on Friday. So, we saw some broadening out of of the index last Friday. And and so that kind and in fact here I'm just kind of show you a little bit of a heat map here just real fast. So you see that on Friday a lot of these semiconductor stocks under a lot of pressure. You know Micron, AMD, Nvidia, etc. Microsoft, Apple, Amazon doing well. Google's a little bit flat on Friday. But look at the rest of the market over here. So we saw that we've seen a a bit of a broadening out of the index and we're seeing this rotation out of the semiconductors and back into other areas of the market. So remember previously we saw a lot of this you know rally in semiconductors were sucking money out of other sectors of the markets and they were all just crowding into semiconductors that kind of started to reverse.

Now whether whether or not that reversal continues into this next week who knows uh we are moving into earnings season. One thing that was going on over the past week in particular was end of the quarter rebalancing. So this massive move in semiconductors got a lot of people offside and if you run a balanced portfolio then you know you needed to buy bonds and sell stocks and so we saw a lot of that going on. We'll see if that continues into this next week and if we start to see money flows going back into semiconductors out of other areas of the markets then probably this momentum chase is going to continue. If not then potentially we've got a little bit bigger correction coming in the semic which have gotten way ahead of themselves. um and and we'll see some money kind of rotate back out to the rest of the market.

So, uh my my point is is is don't read a lot into what happened over the last week because again, you had this kind of this end of the quarter rebalancing phenomenon that was going on. But next week, we're going to start earning season for quarter two. And by the end of the month, um, when we get into the the last two weeks of the month, we're going to get all the Mag Sevens reporting except for Nvidia, but we'll get Apple and Amazon and Microsoft and Walmart and all these guys reporting towards the end of this month. And we're going into that earning season with a lot of the Mag 7, their expectations have really declined about their kind of their ability to beat rates and earnings. A lot of concerns over capex especially. So there's the bar has been lowered a bit there. So those mag seven have a potential setup and I'm not saying this is absolutely going to be the case but kind of our our internal bet is is that they're in a good position to benefit from a a good earnings a good earnings reporting season which I think they'll have.

>> Okay, which would be part for the course for the past six, seven years. uh you know it's it's always been me you know they they lower the bar the mag sevens step over it market parties right so this would be kind of a return to the way it's been for the past many years >> but but unfortunately you know the thing the thing that worries me though about earnings in general is the expectations going out for the rest of this year and into next year are super high we're we're looking at earnings growth rates expectations that normally what you see coming out of a recession not you know threequarters of the way into an economic IC expansion.

>> So, um, all right. I want I want to talk about that in a minute, but first, as much as it pains me to do so, um, I I I want to give you credit for, um, last week I asked you, >> you raised the question of the the Mag 7 having been the LAG7 >> and the semiconductors going white hot. Um, and one likely having a ton of froth in their prices now and also two being a cyclical industry. And the question was, if the torch was passed from the Mag 7 to the semiis once the semiis burn out, and we use the the bathtub analogy, is just the water just going to slush back to the other side and back into the Mag 7, or is the bathtub going to lose water here, right? >> And you had said, I mean, anything's possible, but you you were thinking it was probably highly likely it would slush back into the Mag 7. That appears to be what is happening, or at least has happened over the past week.

>> Yeah. Yeah. over the look and and yes over the last week that's what happened the bet we made last Wednesday has worked out well how long it lasts who knows you know that's and remember you know we launched the the factor rotation model in January of this year and since January we've already made two full rotations we went from growth to value to growth and and sorry we went from value to growth and then just last week switched back from value sorry I'll say that again let me get that right >> went from growth to value and value back to growth. So, we've made two full rotations in that portfolio and we're only six months into the year. So, that's how fast these things are rotating through the markets.

>> Yeah. >> And it makes it very, very difficult to kind of pin yourself to one theme, right? Is like, I'm going to buy, you know, I'm going to buy this group of stocks because their fundamentals are fantastic and they have all this earnings growth. It's it's wonderful and I'm gonna I'm gonna ride this horse and then the whole market goes somewhere else for six months and you know you super underperform and we're seeing that through all different sectors of the market. I mean you talk about gold miners you know gold miners were grow you know back in in you know December January February we were looking at that rotation chart and GDX was crammed up at the far right hand corner of the overbought cycle at 98 99% which things very rarely get to and now it's on the other end of the spectrum and that's how these things are rotating through the market. So, you know, this is why we pay so much attention to these factor rotations is that there used to be a time where you could just buy the fundamentals of something and it worked out great. That's no longer the case anymore.

>> Oh, Lance, that's so 1960s of you. >> No, it is. And and and again, it makes it but it makes it super difficult to manage money because thesises don't last for long, narratives don't last for long, and then the market runs in another direction. But it's just money chasing money and you just have to and and now more than ever we just have to pay attention to where the money's flowing to.

>> Yeah. So this is similar to a discussion I just had on this channel with Darius Dale. Um and his whole approach is you know trying to be a super fast follower of the market. So let's not predict the market but let's note when the market changes trajectory and let's react quickly to that. And then you know if if we do then the herd follows and we've positioned ourselves ahead of the herd. Right. So that that's what they're trying to do. Um, and he he talks about this, Lance. Um, and I'm sure this is probably just natural market behavior in general, but now it's on steroids with all the hot money that's slloshing around, is you'll have a regime that can last for a long time. You know, some of these regimes will last for two, three months, sometimes six more, whatever. um then they'll start shifting and and it's it's not uncommon to have them kind of shift a fair amount in a short period of time before the next regime finally gets its sea legs and and then goes off in that direction. So, as you're saying, it can be really hard when you're in that transition point where it's just sort of flopping around.

>> Yeah. >> So, another thing that Darius said and I want to try to tie a couple points you've made here together. Um so, Darius has been I think very consistently bullish. I mean, he's had a couple of ris riskoff moments, but generally pretty consistently bullish since markets hit their lows in um October of 2022. Um he was one of the first guys to get really publicly bullish when everybody else was expecting, you know, the the recession to hit. Um and he's largely remained so um even during times where people were beginning to get the jitters. And in general, he's been largely proven right in many of these calls. and he is concerned now that he says that there is, you know, sort of uncomfortably high risk of a what he calls a 1998 style market correction in the next quarter or two.

And um I'd kind of forgotten I mean once he reminded me I remembered but we all think of the late 90s as just well that's just going into the dot party, right? Yeah, >> in 1998 there was actually like a 15% market correction during between July and October of that year, I think. And it was caused by the Russian debt default, but that was the whole thing that brought down long-term capital management, right? So, if you if you know that name, that that was the trigger that that was the correction that killed that firm. Um, and and there are a couple reasons for that. Um, and I'm sure, you know, valuations and overly rosy earnings expectations are are all part of that mix. In Darius's mind, it's sort of tied, and you don't have to necessarily share this, Lance, but uh it's tied to the fact that he thinks that Worsh is actually going to be hawkish for a while here. He doesn't expect a rate hike necessarily, but he expects um tightening of the balance sheet. Um and uh cuz he thinks that inflation actually I think a little bit more than you, Lance. I think I think he thinks inflation's going to be a it's going to require the Fed to take some action over the next couple quarters because he thinks it's not just oil prices that there's there's other um underlying factors.

Um but anyways, given all that mix, he's like, "Yeah, I I I'm I'm a bit worried that we're going to have a decent sized correction at some point over the next two quarters." He then thinks later on after that, given the Fed's response, which he thinks will be doubbish, he thinks 2027 will probably be a pretty good year for risk on assets, but he's like, I that's too far for me to say anything with certainty, so let's let's go from there.

>> But but but given all that, like I said, um he he and and again, he's been pretty consistent bull. So to hear him say he's got this concern makes me listen. You know, again, I I I don't hear you saying, "Oh, we're going into a market rollover, you know, immediately from here." But I I am detecting maybe a little bit more heightened concern than I've heard from you of late about where these earnings estimates are and will they actually be able to be realized.

>> Well, no. And and this is something that, you know, I I told you last week is that, you know, it's it's very possible that we'll see a decent correction sometime, you know, this summer. Um potentially August, September. What causes that? Who knows? We never know what caused correction. We can always kind of guess that it will be Fed. It'll be something else. But, you know, coming into January of this year, how many people had, you know, an Iran attack, you know, the US attacking Iran on their bingo card, right? So, you know, these are are who in 2025 when we had that 20% correction who had a liberation day surprise on their on their bingo card for the year.

Um, but this just but he's right. I mean, you know, a 15% correction, it sounds terrible. It's like, oh my gosh, 15% correction, that just takes you back down to the April 25 lows.

>> Okay. And Lance, sorry, that's just a teeny tiny chart. >> Oh, I'm I'm sorry. Yeah, here. >> So, >> we're talking all about the boomers. We got to make sure we can help them. Yeah, exactly. Put on some glasses. >> But no, I mean a correction here >> again would take us back down to the April 2025 lows. I mean, here here's, you know, here's 2025 lows. You know, >> I was going to say pe people would be jumping out of windows if we got to 2025 lows. >> Yeah. Yeah. And here's here's 2025. And and so, you know, back in October of 2022 when you and I were doing this as well, you know, we went we we started writing articles about, hey, the bottom's in. sentiment is so neg we haven't seen sentiment this negative since you know the financial crisis and and you know since then we've been primarily long the markets and and yeah we've adjusted allocations back in 2025 we got out of the markets you know back in in early March before that kind of downturn we we clipped out of the markets in February of this year a bit you know so so we're navigating the these corrections and and he's absolutely right I think a 10 to 15% correction sometime over the course between now and the midterm election cycle is still a high. I'm not saying it's absolutely going to occur. Nothing says anything as as an absolute, but historically speaking, markets don't like midterm election cycles and there's a lot at stake this midterm election cycle in terms of for, you know, future policy. What happens? I mean, you're watching what's happening in New York City with with, you know, the elections there. You know, if we have a a a sweep of the House and the Senate come this midterm election cycle, which is entirely possible, then that's going to really upset the markets potentially on the outlook for future policy and what happens, you know, tax- wise, regulatory wise, um you know, which are going to have a direct impact on what investors are doing in the markets and the outlook for earnings for corporations, etc. That all comes under serious review. And if it looks like there's going to be a sweep, this market's going to have to re-evaluate those earnings expectations uh going forward into next year. And and that, like I said earlier, this is this is what's going on right now with earnings estimates. This is what you see coming out of recessions. Here's 2020 coming out of the shutdown. Here's, you know, 1516, we had a manufacturing recession. Um you know, going back into 2008, you know, we had this massive surge in earnings coming out of the financial crisis. This is all based on what's happening with capex spending right now and and business investment which to to um Darius's uh you know favor is part of what's going to keep inflationary pressures at least stable kind of around where we are and potentially not bring you know even though oil prices drop we may not see a big drop in inflation right now is because all that business investments creating economic activity and so that's going to keep inflation somewhat stable here even with the drop in I mean we'll see we'll see inflation come down a uh because of the pass through of energy prices, but you know, we're not going to see inflation drop back down to below 2% probably anytime this year, probably not even into next year. So Kevin Mors is certainly going to have some challenge on his hand trying to get to his mandated goal. That's going to be probably a little bit longer time coming than he would like and we'll see what that means for policy. But, you know, again, the the the bigger issue as I was talking about is that, you know, I think there's I agree with him. I think there's a a real potential risk of a policy shakeout um over the course of the next couple of months that kind of freaks out of the market a bit and that's why we're carrying you know we're still carrying about 10 15% cash right now. We're still carrying our duration on the short end of the bond curve and that's just all our hedge for our portfolio right now.

>> Okay. Um, one of the things that Darius said, which I'm going to guess you're going to agree with, but I don't want to assume is, um, you you mentioned the recent election results in New York State. Um, we're also seeing them in another number of other states as well >> where these, you know, super progressive candidates are are getting elected who are basically running on a socialist platform, right? And um Darius was saying, I know you tend to think that elections oftentimes are kind of the market doesn't really care all that much. It just wants certainty. But part of his thinking was if there's a really strong showing in the midterms of um you know, kind of like not just a Democrat sweep, but a but a progressive increasingly progressive Democrat sweep. then the market's going to say, "hm, okay, well, this now I got to re-evaluate my odds of the 2028 election." And if somebody if the odds of a super progressive democratic socialist um underscoring the socialist part gets elected, then man, that's going to have an awful lot of impact on the economy. Um and so he thinks the market could actually react pretty pretty dramatically to the midterm results depending on how they go.

>> Yep. No, absolutely agree. you know, the the the best potential outcome for this election is coming up is that I mean, obviously the president's going to remain the president. That doesn't change until 2028.

>> And real quick, when you say best best for whom? Lance Roberts. The markets. What? >> I don't I don't The best for the markets. That's all I ever care about. We're trying to get We're trying to make people make money here. >> I just wanted to I didn't want people to be thinking you were editorializing. You're talking about the market. Okay. what's best for the market is, you know, um, you know, either the Democrats take the House or the Senate, um, and the Republicans maintain control of one, um, or that they stay just kind of they are now because even at the current split, the way it is done now, basically, we're not passing anything.

>> We're basically in gridlock now anyways. Yeah. >> And so for the market, you know, however this election cycle comes out, the best outcome for the markets is going to be gridlock of some sort. either maintaining the current status quo the way it is because the Democrats have enough power to block whatever the Republicans want to do either through filibuster or just, you know, by getting a few Republicans to swing to their side or they actually take control of one of the houses and everything dies right there. So, that's the best potential outcome for the markets. May not be the best outcome for you personally, but for the markets, it's potentially the best outcome.

>> Okay. Um, I'm debating whether to ask this, but I guess I will. um be careful. >> Well, no, it's just it's not central to what we're talking about. But, um you were talking earlier about how real wages aren't keeping up with the the current rate of inflation. >> At the same time, you said re, you know, now just a minute or so ago, um hey, you know, there is a lot of net new investment in this country and um you know, we may see wages propped up through that and that that could add to some inflationary pressures going forward. Um I I I asked this because I saw a interview the other day with Howard Lutnik um commerce secretary, right? Um and he said that uh as of now more factories are being built in the US than at any other time in history. Um and he he cited the 19 trillion dollars in commitments from you know foreign parties and stuff like that. I'm like all right let's not focus so much on that. But he's basically saying, look, there's a lot of investment coming in both domestic, you know, freed up by the one big beautiful bill and international um with all the incentives that we've we've put in place for them to bring their money here and do things. So if indeed that is true and I don't I I haven't seen conflicting evidence to that.

Um so if we are building a record number of factories, >> that's very job supportive. That that should be reflected in stronger wages as the year progresses. It it should be I'm just I did I I just pulled a quick AI Google search and it says that that is not actually a correct statement by whatnick. It it says that we did have a record-breaking surge of building of factories in 2022 through 2024 but that's now starting to ease. I haven't verified any of this data. So just take it at at face value, right?

>> Um but you know my point is is that if you take a look right now at the GDP report, right? Take a look at the so we just revised down the second quarter GDP report from 2% to 1.6%. If you take a look at the breakdown of GDP so how is GDP calculated right that's so first let's start there GDP is is personal consumption expenditures plus government spending plus business investment plus net exports which is exports minus imports. So you add all those together that's how you get GDP. That that's not for you that's for your audience. So, but if you take a but if you break that down into percentages, about 68% of the GDP report comes from personal consumption expenditures. That's what you and I and Adam are spending the that's us paying our bills. That's going to the grocery store. That's all that kind of stuff.

>> About 15%ish uh comes from business investment. Then the rest is is net exports and government spending. So it's very hard dollar for dollar for just business investment to boost the economy when you have 68% of the economy being driven by personal consumption. That's such it's just it's a waiting issue, right? You said such a massive weight of the consumption side, it's hard for the other 32% to to do all the lifting by itself. But if you take a look at the recent report, personal consumption expenditures was very very small fraction. A big chunk of that, most of that GDP report was business investment. And that's that >> capex the AI capex. This is what I've been saying. It's going to be hard for us to go into a recession as long as those capex expenditures happen.

>> But again, that's only about 15% of GDP. So it's not going to create 4% economic growth. But what it can do is keep us out of sub 1% growth. And that's the real kind of marker you're paying attention to here. Because again, if they can if that business investment can keep us growing around 2%, that's going to keep wages growing theoretically around 2%. That should keep inflation right around 2%. So works for the Fed, works for the economy, works for works for businesses. But it's that's why I was saying earlier it's going to kind of keep that business investment because it's creating jobs. You know, for every dollar that that AI spends on building out a data center as example creates about three to$4 dollars of economic,

>> right? And that's kind of my point, which is that spending today's spending on that is tomorrow's personal consumption >> because you're creating the jobs to then put dollars in people's pockets for them to spend.

>> But unfortunately, that's only a couple of year boost, right? Um, sure. Once all the data centers are built, then all that business investment is going to and we're going to start to see a slowdown of that business investment starting next year. So that input is going to start to recede as we get more of these data centers built or potentially we start slowing down on the build out of these data centers.

>> That that's a big statement. Um so uh let me ask you to clarify slowdown in business investment meaning less being spent or slow down meaning the numbers are getting big and so the annual growth is slowing. >> No, no, no. I mean there's there you're eventually going to build all the data centers you need. you you will, but just to be super clear, and I don't have it in front of me, but the latest charts I've seen, it's like 800 billion this year, like 1.1 trillion next year, like 1.3 trillion the year after that. So, it's a couple years of of of growing spending. You you had said it's going to decrease next year. I just want to make sure.

>> No, no, no, no. Sorry, if I said next year, I apologize. That's not what I mean. I meant the next, you know, that we may get, you know, >> yes, this is a building boom. The boom will eventually recede. >> Yeah, we may get two or, you know, one, two, three more years of this. But, you know, there's a lot of potential headwinds. I mean, um, you know, there's states like Texas are starting to kind of push back a little bit on data centers.

>> Let me let me steal this baton from you because this is exactly where I was trying to go with all this, >> okay? >> Which is to take it into the AI. Uh, so so you know, you you talked about, okay, I've got some general concerns given how crazy earnings estimates have grown and all that type of stuff, right? And as I've been saying, you've heard me say a lot, but I've been saying it a lot recently, like who know you who knows if we'll have a big market correction. Um, and if we do, who knows what'll trigger it. And as you always say, Lance, it's generally the bullet we don't see coming, right? So, it's probably something we haven't even thought of yet. And that's probably true for the trigger, but some of the underlying reasons for this, you know, I I and I think you agree with me is is the the the thing that's going to do it is the thing that's going to change the earnings estimate forecasts where it's going to force them to write them down, right?

>> Um and just given how gargantuan these AI related um capex spends are, to me, I think that's the most vulnerable thing. anything that that that causes Wall Street to start to ratchet those down is going to dramatically impact the markets. Um, and to your point, um, there there I've listed a whole bunch in the past, so I won't list them all, but but there are an increasing amount of pins. If the AI sector is in a bubble, there's an increasing amount of pins out there that it could bump into, and some this week. One is um we're seeing um more US companies now starting to turn to Chinese solutions. Um like it's just in the news this week that Microsoft is increasingly looking for like special permission to use some of China's um AI solutions. And part of this is because you know the Chinese have because they can't win the hardware race on chips. They're saying, "Okay, how can we win in software?" And they're they're writing large language models that are more efficient at using compute power, right? And and if that trend continues, a big if, but if that trend continues, whether internationally or just domestically, the the existing large language model people start copying the Chinese and say, "Well, wait a minute. Let's be less reliant on chips and more reliant on our code, you're just going to need less chips going forward." Right? So, that's one risk. Another one is we're seeing that um companies are starting to hire workers back because AI is kind of like too buggy. Um it's not that it's not working, it's just that hey, we kind of fired this department because we thought AI could handle it. We're learning that AI really can't and we need some humans there to kind of help it out.

Um so anything that basically just makes the corporate America say, "Ah, I was planning on being super AI reliant in the future. I'm just going to be a little bit less, you know, tomorrow than I am today given this." That's another issue. And then the third one is what you mentioned earlier is we're seeing an increasing rise in public push back on these big massive data centers uh especially near um any sort of population centers. And what's been big in the news this week, Lance, was the um the Blackwater uh or sorry, the Blackstone um Blackstone or Black Rock. Black Rock. >> Blackstone. >> Blackstone. um it it's been involved in building I think the biggest data center complex in the US and it just backed out of it and I think in in the fallout other people have backed out of it as well and so the there's a lot of mounting evidence to be concerned that maybe all these data centers will eventually get built out but they're likely not going to get built out at the rate that is currently assumed in the Excel spreadsheets of the financial analysts.

Well, okay. So, first a couple of corrections real quick. Microsoft was was lobbying to buy Chinese chips, semiconductor chips, and then and they've also been kind of lobbying to export their hardware as well to China. So, there's so there's that. But, no, but it's true. Your your point is very true. I forget the name of the the semiconductor maker. It's like starts with a C. >> Okay. But, but real quick, I just want to I'm looking at this these headlines. Microsoft eyes deepseek for enterprise AI. Microsoft mulls China's deepseek for co-pilot. >> Yeah. >> So it's not just chips. It actually is looking at the actual >> No, no, not argument, but yeah, they are seeking uh to to get around some of the bans. But this is also why if you didn't realize this or know this week, um the government has now released all the restrictions and Anthropics Fable is now available to US consumers because it is the most powerful version of that and it's better than the Chinese version.

and and so people were looking at the Chinese version because Fable was restricted, but now with Fable available, it's now going to it's now shifting the ball back into the US's favor. This and this is going to be tit fortat for a while. Um, and I wouldn't read a whole bunch into it. It's just look, this is competition and competition's great. Um, if China's got a cheaper product, you know, one of the questions you've got to ask yourself, you really want to give all your information to China, but >> Sure. Yeah. And there's all sorts of privacy and national security. My just to be super clear though, my point there was that what they are demonstrating is that you can do more with code efficiency than than the West currently is. Right.

>> Correct. And again, everybody's going to evolve. And like I said, competition is a good thing. We shouldn't be afraid of competition because again, if I'm let's say say I'm anthropic, right? And if China comes up with something better than mine, then I'm going to throw all my developers on it and say, "Build me something better than that one." or hey, they came up with a really good idea for, you know, using less compute power. Let's figure that out. And so this this is going to be a push back and forth and and this is why we're spending trillions of dollars over the next few years on winning this AI race because this is the race to win. Whoever wins this race dominates the game, >> right? It is it is like the nuclear arms race at the sovereign level. They're like, we just we can't come in second. Yeah.

>> Yeah. But be careful. Uh, I saw and and again, thanks for bringing up the the Blackstone thing. Um, I had to go do some research on this one because the headline was kind of the way you couched it a bit and this is kind of a general take is, "Oh, look, the data centers are going under now because look what Blackstone just pulled out of the deal." That was all political and and I'm going have to read you I'm I'm going to read you some notes that I took down this morning just so I can keep them all in order because there's quite a few points.

>> Um, this wasn't a demand story. This is Virginia and you we just talked about kind of the elections of some of the Democratic socialists that are happening in New York. We're seeing the same type of elections occur in Virginia right now. Um what what the what actually killed that data center was and they had 2100 acres, 22 million square feet that was next to Manassa's Civil War battlefield. Uh the county approved the reasonzoning back in 2023. It required public notice and that notice was never given. And so on on that technicality, the courts voided the the reszoning for that potential data center and that was in August of 2025, but they upheld the the appeal in March of 2026. But once the approval was void, the whole thing kind of unraveled. Compass, the co-developer of that, um they walked back in April. QTS forgot it was the forgot it to the last minute. Oh, sorry. QTS fought it until the last minute and they appealed within three hours of the deadline. Then they folded on July the 2nd and that was pretty much the game over. So, you know, the question though is is why Blackstone and why not everywhere else? So, the part is is that the smart money is out and this is what the crowd gets wrong. At the same time that Blackstone was getting out of this one, they were selling three of their other properties at huge profits. So, you know, they they walked away from one dead site and they kept building every other site that they're in. So, this is a very local Virginia story based on politics and filing and reasonzoning and these types of issues. This isn't a and again kind of the headlines that I was reading and not not from you, Adam, but the headlines I was reading particularly from Zero Hedge and some of these other sites that are kind of the doom porn um are like, "Oh, see this this the first pin to hit the bubble in the data center. Blackstone pulls out of this deal."

you know this this wasn't that kind of a structure this was a a whole kind of regulation political structure and and the politics of all this is the real angle in that story >> okay um so from my perspective I don't really even care what the reason is is you have this big mega data center that's not getting built right and and my point is just the the sector is is valued right now based upon the Excel spreadsheets which is, hey, if if they can if they can um if Nvidia can make chips fast enough and the money comes there, then we're going to have a gazillion data centers over the next, you know, three years, right? And there's just so many different factors out there that can throw sand into the gears of that, right? Whether it's the fact that there's not enough permitted land, whether it's the fact that the the local populace, you know, rebelss and and and the politicians get involved, >> whether it's there's not enough capacitors, which is like this week's headline of the the physical shortage. There's just all these real world things that could cause >> the actual build out of the data centers not to go as fast as the Excel spreadsheet models. And if that's the case and the analysts finally have to say, "Oh, shoot. We got to put some haircut on this, >> maybe it's only going to build out at 75% the rate that we thought, that I think is what's going to hit the markets." Right.

>> Well, this and and so this is that's a very good point. And if you have ever invested in private equity of any type or invested in a real estate deal or anything else, they provide you these wonderful performance. these performers show you is like, oh yeah, if we're going to grow this thing and look, financial most financial plans, not the ones that we do, right? Because we we calculate the sequence of returns, risk, all type of things, but most financial plans are these wonderful performers that your money is going to grow at 8% a year for the rest of eternity, right? Markets don't function that way. And so, yes, uh, Wall Street analysts trying to justify today's positions, they're certainly just ratcheting these expenditures out into the future as far as the eye can see. They're going to be wrong. 100% they're going to be wrong. But let's let's let's break this down into a couple of important things. Back to my notes. Um one is is the AI demand real? Absolutely. There's no question about it. Is the a AI demand real? However, um there to your point, Adam, um is that there's a lot of friction out there the potentially to some of these buildouts. And you know this is you if you take a look at what's happening you know we start looking at the cost timeline you know that's that's a concern you start taking a look at roughly 7 and 10 Americans right now in recent surveys they don't want a data center next to them they're loud they're noisy they increase electricity prices so there's a lot of public push back against the buildout of these data centers particularly in specific areas so trying to locate a data center you got to find some place nobody wants to live like Reno and stick them out there

>> which they have in our economies is based on that and even here people have rebelled. There's now a moratorium on building new ones. Yeah. >> Yes. And that's my point and I'm I'm joking. Reno's beautiful city. >> No, no, no, no. But it's it's such a great point because there there are few places that are as well situated to put one and that people were behind. But even here, sentiment has shifted. >> Yeah. But but but the point the bottom line of this look, Texas is putting, you know, starting to put restrictions on things that you know like electricity usage and those type of things. those that friction to your point, Adam, that friction is going to cause a lot of these more optimistic expectations to to come up short. But now, let's roll all this back for a second as investors because this is all that matters.

>> Take a look at the Mag 7, the hyperscalers. there. While the rest of the market was rallying and you take a look at kind of the dispersion in the markets, the MAG Seven have been massive underperformers over the last couple of months because they've been factoring in a lot of this these headline risk, right? Because you're not the first person to talk about this obviously and neither this has been all over the media. So, this concern is valid and it's been being priced in to a lot of these Mag 7. Now, is there more downside risk? Potentially, absolutely. Don't dismiss that. But you know one thing we have to remember is that when sectors of the market go through these corrective cycles they are factoring in these concerns and these concerns are valid. That friction is absolutely there.

>> Uh you know like I said I want to just caution you on taking a a headline risk out of Virginia because that wasn't an AI demand problem. That was a political problem. But you know you take a look at the rest of the economy. Adam's absolutely right about the friction there and and that's certainly going to impede these more rosy forecast and we have to factor that into our investments >> but don't discount don't or and don't dismiss >> the amount of AI demand that's actually there and that's going to feed through into the future.

>> Yep. Uh so let let me tweak my commentary here which is I don't think what to the extent that the I feel pretty confident saying this uh the AI bubble whatever you're going to say uh it's going to burst at some point in time and the reason I feel so confident about that is that's the way it happens with every sort of new transformative technology rollout. You don't know where the too much line is >> until you pass it right. So we will keep building until we realize it's in the rearview mirror. Right.

>> So we will we will have that event somewhere. >> Yeah. Exactly. >> What what I feel what I'm saying is is I think the probability of what causes that >> is much more likely to happen on the supply side than the demand side. >> Yep. >> The demand will be there. The money will be there. The chips might even be there to keep the party going. But there's going to be some sort of limiting physical factor on the supply side or or coalition of limiting factors where it just can't grow and roll out the way in which the forecasts have said for the reasons we've talked about.

>> Yeah, exactly. I mean, that's what we saw in the Well, there there look there's a huge difference between the AI bubble and and the.com bubble. And I'm not saying that there's not a bubble, but I've got an article coming out in the next couple weeks talking about why bubbles are so hard to spot. Mhm. >> And you don't you don't ever recognize the bubble until they're in hindsight. We can predict bubbles, but remember 1995 we were all predicting a bubble in 9596 and it took till 2000 for it to pop. So >> yeah, I I I Okay, well this is debate for a different day. I think not every time, but I think you can you can recognize that you're in a bubble at some point in time. It doesn't do you a lot of good though because you have no idea how long it's going to last for.

>> That's my point. That's my point. No, I I agree with you. I'm not saying that there's not a bubble. saying that we are probably I'm agreeing with you. No, we are probably in an AI bubble and there will be a huge something will happen. I absolutely agree with you in two years, three years, five years, whenever it is that all of a sudden, you know, we we kind of unwind things. The only thing I the only thing I meant about this not being the dot bubble is that you remember this back in the.com cycle. These companies had no earnings, didn't have a business plan. Most of them were just sticking a dot name on the end of their whatever their business name was. These are real companies with massive revenues. And so we do need to keep that separated. And that's all I'm saying. It doesn't doesn't mean it's still not a bubble.

>> We just need to realize that there are fundamental differences between the two cycles. >> We we we we do. That said, um there was real value obviously created by the internet um revolution. Um it just took in many cases the second generation of companies to really figure out how to go after it. Yeah. um there is real today, you know, present- day value that AI is creating. That said, I don't think I think it's a tiny fraction of the current spend. So, um you know, yes, you're right, but um we're going to need a tremendous amount of future value to arrive pretty quickly to justify uh the spend that's been on here. And if it doesn't, that's going to be probably the reason for why there's going to be a big correction here.

>> No, no, I I I agree with that. >> I I know you do. And look, >> you know, we built we built, you know, we built miles upon millions of miles of fiber optic cable that was dark for years until Google comes along and says, "Oh, wait. I can use that." And >> you know, somebody somebody interviewed, I forget who it was recently, but somebody interviewed recently told me that there apparently is still some fiber that is still unused from that buildout. >> That's how much we built. We built every I mean we were cramming every pipeline we could find full of fiber optic cable >> and you know and and the time it was like like oh we were going to need every bit of this and it again it took four or five years before Google Google figured out YouTube could use it and you know now we're using a lot of it's going to be the same and my point is be the same thing with compute we're going to overbuild AI compute >> there's going to be this big lag and then we're going to figure out how how to use it and some company that we probably haven't even heard of will be the next Google that figures out how to use all this AI compute and maximize it, >> right? And then then there's the issue which I don't want to get into in detail

Here, but we talked about this the other week, which is one thing that is kind of different about this infrastructure buildout is it has a tremendously shorter shelf life than fiber optic cable or or iron railroad um rails. Um, and that's going to be an interesting thing to be figured out from here. But that's that's >> Oh, wait, wait. I do know the company that's going to do it. It's called Skynet, but yeah. >> Oh, yeah. Okay. Um, good call. Um, and look, Lance, again, I I'm I'm I'm sitting here kind of poking these points. Um, not to be Mr. Doom and Gloom and give any everybody a sense that like, oh, this is going to happen. Get out of the market. It it's it's kind of on the contrary, which is I'm with you and with Darius, which is we don't know when that's going to happen. Like, we have a pretty good confidence that it's going to happen. There is going to be a big bust. Um, it's probably going to be terrible as we go through it. Um, but we don't know if it's going to happen next week or if it's going to happen seven years from now. And so the reason why I prod because I'm always looking for signs and signals to say, is it maybe happening soon? And if not, great. Let's keep riding the party that's going on, right? Um, but if if we're starting to see some of the early um warning signs that we would expect to see, well, then that starts to say, okay, maybe it's time for more prudence.

Look, and look, it it's it's so what's most important as an investor is is forget everything else. You know, this is reason why, you know, I wrote that article uh last Friday about Milton Friedman. And, you know, the the title of the article was Milton Friedman was right, just mostly misqued. And the reason I write those articles is because there's it's important to look at every narrative that comes along and then analyze it for both sides of the argument, right? And and you know it's important to have these conversations because we need to analyze both sides of every argument so that we don't fall victim to confirmation bias and so you know a lot of the stuff is talk about which is why I write these articles you know generally we'll have a conversation and like we had one we we had some topics earlier this morning while we're talking and I've already started sprinting an article off on that um because these are things that we need to keep in the back of our mind and you're absolutely right those risks are real those risks are there it's the timing that's so difficult and if you go well Adam said that there's an AI bubble I'm going to get out of the market today there may be an AI bubble but just like 1995 96 97 98 you could have gotten out of the market any time through there and then missed you know the run to 2000 and you know you lost a lot of money by being out of the market so it's important to recognize the risk but what's more important is to Adam's point is to watch for the signals that are timing that risk coming to fruition All right. Couldn't agree more, buddy. All right. Uh, I want to start trying to land the plane here so we can get to the rant and then go enjoy our July 4th weekends. Um, LA, just real quick, last week, um, you showed us how margin debt was at a record high. >> Um, so we were talking about, you know, the tremendous amount of speculation that is in this market. Um, and what I've heard you say about margin debt is it's it's actually great as long as it's rising. As long as it's rising, markets market doing just fine and having a great party. You know, it only becomes a problem when um, you know, the margin debt starts collapsing and everybody gets margin calls and it becomes a a vicious uh, draw down. Um, I'm just curious any I'm sure we're still at record levels. It's only been a week, but anything worth noting about this story from last week? >> No, no, not at all. And I got an article coming out on Monday. Um, so, you know, you can publish on on your site, you're free to, and then if you go to our Substack account at Lance Roberts on Substack, you can get it there or at our website, Real Investment Advice. But I'm writing a whole article on margin debt. I'm going through three pieces of margin debt is kind of faulty analysis. So, you'll see this a lot on social media like margin debt to GDP, margin debt to M2. That's kind of not really good analysis because you're measuring margin debt against stuff that has nothing to do with margin debt. >> It's not super correlated with Yeah. Yeah. Yeah. Connected to it. >> It makes a great chart, right? Um but it doesn't really have anything to do with margin debt. Um so we go through those kind of what not to look at. Then we also go through what you should be looking at. And there's certainly some concern >> about margin debt, but as you as you pointed out correctly, margin debt's fuel for the rise. What concerns me right now more than anything and and again I'm watching that semiconductor space very closely um particularly over the last couple of days there's a lot of margin debt risk in that sector in particular because investors were not only taking on a lot of margin debt to buy you know semiconductor stocks they were taking on margin debt to buy leveraged ETFs that were directly related to to semiconductor stocks. No, no, no, no. Margin debt to buy options on leverage ETFs in that space. >> No, but that too, but there's also 2x and 3x leveraged ETFs on semiconductors that have been spun out because of this. So, the point is is that if that decline and look, you you know, you take a look at a chart of semiconductors, you can barely see the decline, but it's been pretty significant so far. But you get to about a 25 or 30% decline in semiconductors, you're going to start triggering margin calls in that sector in particular, that may weigh on some of the rest of the market. >> You're definitely going to trigger it in that sector and you'll see liquidation and semiconductors. So, you know, if you're long that sector, that's fine. Um, it's been doing exceptionally well. Don't forget to take profits and rebalance some risk here. And I would definitely put some stop levels in, you know, at least mentally. Maybe not put them out live on the markets because the the markets will hunt your stops, but at least mentally have a stop level to where you're going to get out of these positions because if this reversion margin debt works on the way up, but it works twice as fast on the way down. If you start triggering margin calls, you could potentially wake up and see semiconductors down, you know, 15 20% in a day or two and just a very, very sharp reversal. So again, you just don't want to get caught up on the wrong side of that. Now, if things calm down and semiconductors start to recover next week, then it's fine, right? Just but again, there is a lot of leverage risk on in that particular sector and I just watch it real close right now, at least for the next few days. >> Okay. Um that's important warning for us to at least just pay it close attention to. Um okay. Uh trades, what trades, if any of you made over the past week? So just the last so we we started last Wednesday and we rebalanced our portfolios you know from from the value back to the the mega cap growth trade in particular and so we finished that on Monday in our 6040 allocation model. So we did Thursday, Friday, Monday. Um but basically we we reduced our waitings in things like Walmart, Costco and and again you know th those stocks we had added to those stocks previously on the value side. They were pretty overweight because of the run they had in the market. So we just trimmed those back to target weight. They did really well on Thursday um as well. But so we still own good positions of them. We just took profits. >> Yep. >> Reduced them back to target. And >> you and your skew but the skew is more towards mega growth, right? >> Well, because the mega caps have been underperforming. They were underweight, their target weights. So we pretty much brought them up just up to target weight. So we added to Palunteer and Microsoft and Apple and uh a couple of other of the mega cap stocks this past week. They've had a really good week. Uh, Palunteer did really well. Um, but we didn't change our net exposure any. It was really just a a rebalancing between the value and growth side of the model. So, that's all that happened this week. >> Okay. And you had told us last week that that's what you were going to be doing. So, you basically just >> completed >> executed on what you said you were going to. >> Yeah. We have we have we have several thousand accounts. So, trying to do rebalances it takes us a couple of days. >> Takes a while. >> Yeah. >> Okay. But it's over and it's the beginning of a new quarter. So now you got a open playing field ahead of you to do whatever you want. Um >> well just real quick I just want to be clear. >> Yeah. >> End of the quarter had nothing to do with the rebalance. It was literally the trigger of our values of our factor rotation model. It just happened. >> Well, that's good clarification. >> Yeah. It just happened to happen at the end of the quarter, but it had nothing to do with quartering rebalancing. >> Okay. Um all right. Well, we'll wrap things up here. Um Lance, happy fourth. >> Yep. >> Great. Great. Uh, great to see your special effects behind you. Mine are much more old school. I kind of feel like um was it George C. Scott and Patton when he's walking in front of that but >> um >> okay so trying to think about you know we we sort of talked last week about how the fact that yeah America certain for sure got its problems um but as you know motivated proud patriotic uh citizens of that country it's our job to call out the problems but then do what we can to fix them um but also in the process of that just remember and appreciate all the amazing things about this country um and uh you know realize why fighting to correct our our shortcomings um is so meaningful is because there's an awful lot of wonderfulness to preserve. Um and obviously as I think I said last week folks this is true for anybody in whatever country you live in. I think you should be very patriotic about wherever you choose to live. Um, but since this is America's 250th birthday, I was trying to think of what to talk about today. And um, what I came down in is um, something that's very America centric, but also I think relevant to everybody's lives, which is the power of a just cause. Um, I've been, you know, watching some documentaries on the founding of the the country recently, just kind of, you know, brushing up on my my history. And um what one of the things that just amazes me, Lance, um every time I do this uh is how I'm struck by how many chances there were that the American Revolution could have been strangled in its crib before it even got started. >> Yeah. >> I mean, there were just the the odds of what happened here were so low. uh and and and they were they were driven by, you know, some of the greatest personalities in in history. Uh were incredibly fortunate for that. But a huge part of it was just um you and their determination and grit. But but I think at the core of it is was the the ideas. These were the ideas were just just uh and and and righteous and they just needed enough time and enough momentum behind them for long enough for that that spark to then ignite the tinder and then finally bring it into full being here. Um and I was just you some of the some of the challenges that we faced. Um most Americans thought of themselves as British subjects. They were not looking for independence. In fact, the vast majority were looking just for um reconciliation. You know, oh, we we don't like the fact that there's tension with us and our homeland and how do we bring it back into alignment? So, you know, for for for an awful lot of uh, you know, until things kind of crossed a line, we couldn't we couldn't come back from uh the vast majority of the population was was not looking to go to war with the greatest military power of the day. Um and uh this is one of those situations where you know King George if he had just given a little he could have kept so much for England. Um but it just he just didn't want to bend on some things that turned out to be just uh just you know table stakes that we were unwilling to give up here. And it was enough motivation for us to, you know, obviously go and do what we did. But it was such a kind of colossal blunder, I think, um, in terms of ruling a country here where, you know, if George had the foresight to to see how big America could have been, could have become, um, you know, a little bit of giving, he could have probably kept a lot of that and we'd still be Greater Britain today or part of Greater Britain. Um the American army almost fatally failed a zillion times during the the revolution. Um and right at the very beginning and I've I've been to Conquered and gone through the tours there. Um, Conquered's a pretty small town and you know, we know the shot heard around the world was fired in, you know, Lexington and Conquered as as as the British um came up from Boston and they they came up from there because the the the colonists had decided, hey, you know what? We think we got to push back uh against the the British oppression militarily. And so they started stockpiling a bunch of armaments there in Conquered. And the British got word of it. So they started marching up and of course famously the one if by land, two if by sea. You know Paul Riverier saw they were leaving ran to spread the word in the countryside. So um the British come up there and um they get into the skirmishes that created the the shot that was heard around the world. But but while they were doing that they were also basically going around the town of Conquered and trying to find those armaments. and all the men were were at the north bridge, I think it's called. Um, and so it was women. Um, it was the wives and their kids who were basically deceiving the British soldiers who were trying to do house-to-house hunts. Um, and largely being like, "Oh, you can't go in that room. My daughter's changing in there." Right? And of course, the room is stacked from floor to ceiling with, you know, musketss and gunpowder and stuff like that. And so basically had the British actually found the majority of the stockpiles there and conquered this thing probably would have been over before it even started. Right. And then of course during the war um Washington spent most of the first part of the war just on the run basically just trying not to get his army captured. Um and and specifically if you've looked at the Manhattan campaign which was a big route uh for Washington's forces and and we had to flee up the aisle of Manhattan. If General House forces had caught Washington, then again would have totally been over. So there's just a ton of times in in which this could have failed. You know, the army was was very poorly equipped, very poorly supported logistically. The men weren't paid for a lot a lot of it. Um it's a miracle that they persisted as long as they did through this. Um and of course, uh we never would have made it through this without the support of France, uh without the role of Lafayette. Um, and so there were just so many failure points along this, but my my underlying point here is is the cause was just, the vision was just, and we had guys that were willing to fight for it, who were capable, and they were able to fight for it long enough through these overwhelming odds that it got to the point where the spark could ignite the tinder and it could become a self-sustaining fire. And then, of course, it it became what it was here. and um the you know so we have an awful lot to celebrate here in America this weekend um that indeed the spark did catch the tinder and and and ignited the flame that became our democracy but I think this is also really true just in life um you know if you're trying to improve your station um if you are you know part of a community and uh things aren't going the way that you want them to in the community and you you you want to stand up for your values or for a better tomorrow. Um my underlying point here is if your cause is just um and you fight for it and push for it um yeah it might be might be a rocky road but if you keep doing it you will eventually prevail because the power of the just cause will bring itself into into existence if given enough time. Um to borrow the words of Winston Churchill uh during World War II um is he said never give in never never never never in nothing great or small large or petty never give in uh except to convictions of honor and good sense. So in your life uh stick to your principles, do the right thing. Um even if you've got to take great risk um just never never never give in until you succeed. and you will if you don't give up and throw the towel again if you're doing the right thing. So, Lance, that's my that's my diet tribe here on America's 250. >> I I I think that's an awesome diet tribe and I think that's absolutely perfect. And I think it's very important for people to realize that these men that came here and founded the United States, these weren't boomers. These were eight, you know, James Monroe was 18 years old, Aaron Burr was 20, Alexander Hamilton was 21, James Madison was 25, George Washington was one of the older ones than Ben George Washington was 44 and Ben Franklin was 70. But most of these were kids. >> Yeah. >> That were, you know, they they were knowingly committing treason. They knew that if they failed that they were going to be executed and they did it anyway. And so the to your point is that they believed in their cause. they believed in what they were fighting for. But that's the same thing if you're starting a business, if you're, you know, have a have a vision of what you want to achieve, don't a don't let anybody tell you no, b believe in it, and go see go fight for it. And, you know, the problem for most people, most people that I run into that have, you know, are struggling with trying to do something is because people are telling them, "Oh, Adam, you can't do that. That's right. You you you just don't even try that. You cannot do that. There is not one person that has succeeded in life that's that listen to other people tell them no they can't. I mean how many people told Elon Musk that he can't launch rockets? I mean you know that you go through history and all these people that have built fabulous wealths have been very successful. A they failed multiple times. B they were on the verge of bankruptcy. Even Elon Musk was on the verge of bankruptcy. If SpaceX's rocket had failed one more time he would have been bankrupt. Not worth a trillion dollars. But everybody that's achieved success in this country has either been in bankruptcy or on the verge of bankruptcy at least once before they made their way to success. So it means that you can do it and it doesn't mean your age is is an impediment because if Aaron Burke can do it at 20, you can do it at 20 as well. >> I I think that's also great and it is this combination of persistence, determination, grit, whatever. Um but but plus the right cause, doing the right thing, right? I mean, if Elon Musk didn't have the right model for reusable rockets, he never would have launched them. They never would have gotten off the ground, right? Um, but the point is is once you feel you've got the just cause, you've got the right idea, you know, to Church Hills worlds, never never never never give in. Um and uh you flagged something I want to talk about in a future rant Lance which is um yes a lot of the people involved in in founding America were by today's standards incredibly young right and we see this with most of the great personages in the world the Mozarts the you know the great creators the great thinkers most of their best work was done in their 20s or their 30s Right. Um, and I think we as a society have kind of infantilized um the the later teens and the 20s um where oh my gosh kid's only 19. We we can't expect him to be prefrontal cortex isn't even fully developed yet, right? And it's like are you kidding me? In the scope of human history, some of the greatest, you know, achievers did their greatest work at 19 or 22 or whatever, right? Um, so I'd love to dive more deeply into that, but I want to end with what you started with, which is, um, on this 250th, uh, lots to celebrate and let's be very grateful for the heroes who didn't give up and who who achieved these amazing achievements in the face of just overwhelming odds to the contrary uh, and enjoy this and appreciate this better world that they left us. I mean, >> imagine what we would be doing right now had that not happened. Um, we would be part of of Great Britain, which wouldn't necessarily be the the worst thing in the world. But think about all the innovation that came out of that American spirit. It had been kind of strangled. And no, you guys aren't independent achievers, you're subjects, and you just kind of got to do what we tell you to do. I I think a lot of what made America the the great force in the world for innovation, for freedom would have been stymied. It would be an incredibly different world, I think. So, >> Oh, yeah. Absolutely. >> Tremendous amount to celebrate. Everybody go out there. Have a fantastic time. I'm doing something really fun, Lance. Um, which I can't talk about publicly yet, but um I will talk about it next week. Hope to have some great stories for you all. I hope you and your family there in Texas, too, are going to celebrate it Texas style. >> Absolutely. Yeah, Texas style it means guns and fireworks. So, yes. >> Yeah. And and I'm guessing a ton of barbecue. >> And a ton of barbecue. Absolutely. >> All right. Well, have a great time, my friend. Everybody else, um have yourselves a wonderful fourth, too. No matter what country you live in. Um and whatever country you live in, you should be celebrating that country, but but also give America a special thought on its special birthday. Um thanks so much, Lance. Um, oh jeez, I forgot to give the the general closing here, which is first off, folks. Um, if you enjoyed, uh, everything Lance shared with us this week, let him know that by hitting the like button and clicking on the subscribe button below. And obviously, if you want to talk to his firm or one of the other financial advisory firms that thoughtful endorses, just fill out the very short form at thoughtfulmoney.com and the firms will be in touch with you right away. All right, my friend. I will see you in a week. Have a great uh, great holiday. Everybody else, thanks so much for watching.