Today on the Joseph Carlson Show, My Portfolio reached an
all new high and the stock market reached an all new high.
We have lots of people excited about the market reaching a new
high. We have Jeremy Siegel calling in
expressing his excitement for the Fed lowering interest rates
by 50 basis points. We're going to be looking at why
he thinks this is such a good decision from the Fed.
We also have news that Amazon is introducing an AI bot for their
third party sellers. Olive Garden just reported their
earnings and it was a huge recovery.
The stock price is jumping and Walmart is taking big steps to
battle credit card networks like Visa MasterCard.
We'll be taking a look at what they're doing with these instant
bank payments and how it may affect these credit card
companies. And then, of course, we're
getting to the weekend. So it's time to check up on
financial TikTok. This one is actually financial
rails, but it's very similar. This individual shares how he
manages to have multiple jobs at the same time that are all high
paying and he built the business doing so.
We'll be taking a look at his advice in this episode.
Now let's go to move on to the main story.
The market is reaching an all time time high and My Portfolio
likewise has reached an all time high.
On the day. We now have $271,000 in gains,
which is incredible. Just today the portfolio is up
1.63%, which is around $12,000. So it's a big day for the
market. It's a big day likely for your
portfolio. Hopefully you've stayed invested
in the market. Hopefully you've ignored all the
bears trying to scare you out of the market.
In many ways, today's a day that you can celebrate as investors.
I think it's good to have time periods.
You're just happy about what's going on with your portfolios.
Companies are growing their earnings, companies are gaining
value, and the market is rewarding investors taking on
this risk. I, for one, am excited about
what's going on. I'm excited about what's
happening with my companies. The biggest contributors to My
Portfolio this year have come from three different
investments. The first one is in the
restaurant category which is Texas Roadhouse.
My total gains in Texas Roadhouse are $38,000, but if I
filter that just by this year, we can click on the year to date
and see that just this year it's up $21,000.
That is a huge gain for a single year in a company like this.
My next biggest 1 is in the consumer category, and of course
we have the rocket ship which is Costco.
Overall a $43,000 gain. When I filter just by the year
to date, Costco has gone up $21,000, matching Texas House's
gains. If we look at 3rd place, it's in
the financial category. We have S&P Global.
Overall, it's up $33,000. If we filter by the year to
date, it's up $18,000. This has been another great
performer. So those are the companies that
have contributed the most to My Portfolio this year.
Now, if I look at the worst performing holdings in My
Portfolio this year, I can also outline the top three.
The worst one so far this year is Salesforce.
It's down $2000. This is the only company that
I'm in the red. It's the only company I hold
that's lost money this year. Next up, we have VICI.
Overall, Vici's in the green by around $12,000.
So it's been a good holding over the years, but year to date, it
just hasn't kept up with the market.
If I filter by just this year, it's only up $500.
And then the third worst performing position in My
Portfolio is Canadian Pacific. It's up 4500 overall.
If I filter it by just this year, the company is up 3600
overall. Again, I can't complain and I'm
very excited about what's going on with my companies.
I feel like they they've been performing to my expectations
and in some cases they've been pleasantly surprising me,
performing better than I expect. Now you might say, hey Joseph,
you're excited. You said you're not supposed to
get excited when the market goes up.
And that's true in my own investing philosophy where I go
over stock selection and the temperament in the portfolio
management to be a great investor.
The first thing I outline from investors that have good
temperament is they don't get excited when the market goes up.
And here I am, excited and celebrating that the market's
going up. Maybe this needs a little bit
more clarification. When I say don't get excited
that the market's going up, I don't mean that you need to
suppress all joy and emotion when investing.
I think it's good to be happy about things, to celebrate
landmarks, to be excited when your portfolio's making gains.
Where I draw the line in terms of investing is acting
excitedly, acting impulsively, piling more money into top
performing positions by chasing gains.
When you translate being excited into acting excited, you start
to make dumb decisions, and I think it's time to be careful
that we don't use the exuberance in the market and translate that
into greed. It's OK to highlight companies
that are doing really well, but in some cases that can translate
directly into temptation, into pushing all your money further
and further into these companies.
And I don't believe that's the best investment strategy.
Rather, we should take a disciplined approach.
We should look at the companies based on their fundamentals and
their valuations. We should continually look to
invest in the ones that we believe have the best risk and
reward. In this case, in My Portfolio, I
still think that Salesforce is one of the best risk and rewards
based on the valuation and growth potential, even though
it's the one that has performed the worst year to date.
So when I say don't get excited when the market goes up, I don't
mean you always have to be somber.
I don't mean you always have to have a scowled look on your
face. I'm not suggesting we all be
like Gurney and Dune. I am smiling.
It's OK to smile. Being happy about your returns
is not going to make you a bad investor.
Hubris and emotionally driven decisions are what cause
investors to fail. So I am pleased with the way
things are going today. And if you've been investing
well, you should be too. If we look at what's driving the
market today, of course it was the rate cuts that happened
yesterday. That's really the one major
piece of news that we can attribute this large rally to.
Now there is some confusion. The rate cuts happened during
market trading yesterday and the market ended in the red and then
it surged up a day after. It's a little confusing when the
market decides to trade down the day that they announced the big
rate cuts, but then trade up suddenly the next day.
And this goes into all the different driving factors of the
market in the short term. There's a lot of things going on
behind the scenes. There's some analysts that have
looked at this and they've tried to determine why the market went
down yesterday and is up today after closing lower yesterday.
The stock market suddenly loves the Federal Reserve's half point
rate cut. It may say more about trading
under Fed Chair Jerome than anything about monetary policy.
The stock market initially popped following yesterday's
rate decision before wild trading took hold.
The S&P 500 repeatedly pressed against its highs before pulling
back and finishing the day down. So there is a lot of aggressive
trading going on Yesterday, Charlie Ashley, a portfolio
manager at Catalyst Fund, said. Quote, the moves in equities and
Treasuries right after the announcement indicate that the
market is concerned about the economy deteriorating.
But today it looks like it's a different story.
The markets actions immediately after the Fed announcement tend
to be erratic and irrational. Another analyst wrote that on
Fed days under PAL there have been clear negative bias for
equities in the final hours of trading, which is again on
display yesterday. The truth is that this is all
conjecture, opinion, people throwing out their thoughts.
The real truth of the matter is we don't know.
We don't know why the market ended the day yesterday in the
red and is in the green today. Like I've said repeatedly,
overall interest rates going down is mathematically
beneficial for stocks. Every investment has a relative
value based on other opportunities.
Investing is not in a vacuum. Equities are not the only thing
that you can buy as an investor. When interest rates go down, it
makes other alternative investments like bonds and cash
money market funds, CDs less attractive and stocks,
relatively speaking, more attractive.
So it makes sense that the market goes up after a rate cut.
The only counter narrative is if the economy goes into a
recession, equities take on more risks during recessions.
So investors right now are trying to balance the risk of
holding equities and the chance of us going into a recession.
But lucky for us, recessions during rate cuts are not
necessarily guaranteed. And Jeremy Siegel's an economist
and investor that believes there's a good chance we can
avoid a recession. This was the best news I've
heard from the Fed in in years. And by the way, let me guarantee
you an all time high for the stock market today.
There's not going to be a back and forth the way there is
yesterday. And the word recalibration is is
extremely significant. I think what they did is look at
they said, listen, we're 100% towards our target on
employment. We've got that back to normal.
We're 80 to 100% depending on what data you use on inflation.
And we haven't moved at all until yesterday on the Fed
funds. We say, well, you know that the
neutral fed funds is 2.9%. And you know, why aren't we
closer? We're now thinking about that
gap, which is exactly what I talked about a month ago.
Jeremy Siegel believes that this is the best news the Fed could
deliver, that they're not worrying about the gradual
approach of slowly lowering interest rates down to this
target. He says mind the gap that
there's a large gap between where we are now and neutral.
Neutral from the Fed standpoint is 2.9 percent.
We're currently around 4.7%. So we have a ways to go to get
to that neutral stance. And I think he's certainly
correct about more interest rates coming in the future.
Now, of course, whenever the Fed is on a path of cutting interest
rates like this, investors are not only concerned about
combating the growth in unemployment, they're also
concerned about reigniting inflation.
We have a bit of shell shock from the level of inflation we
just went through and the last thing this country needs is to
reignite inflation again. Inflation shows any signs of
picking up, and the Fed says we're not going to do anything
else anymore. That's correct.
But I don't see any sign of inflation picking up.
I mean, I took a look at the oil markets, you know, all all those
markets going ahead and you know this Jeff Gunlock was on right
afterwards. He said his motto actually shows
a year over year inflation. Next year when those shelter,
new shelter numbers come in, it's going to fall below 2%.
Now, I don't know if that's going to be the case, but that
certainly is not a situation where the, you know, we're off
to the races again. The commodity markets, those
sensitive markets, they tell you when you're off to the races.
They told me in 2020-2021. It's a totally different picture
today. Cutting interest rates is
unlikely to spur inflation once again because we're not doing
the thing we did a couple years ago originally to cause
inflation. Inflation wasn't just caused by
supply chain disruptions. It was caused by record levels,
trillions of dollars being handed out to people.
When you create more demand through stimulus while
simultaneously having a shutdown with supply chains, that's
obviously going to spur a lot of inflation.
We're not giving out record levels of stimulus anymore, and
supply chains are back on track. Neither contributing factor that
caused inflation originally exists today, so it's
unnecessary for the Federal Reserve to keep their interest
rates as high as they were when they were combating that
inflation. Now, of course, I'm not saying
that there's no inflation. There's always going to be a low
amount of inflation, 2 to 3%, that's on any given year.
And our government does that to lower the value of our
staggering amounts of debt. So we should expect a constant
amount of low inflation and the assets that we invest in help
protect us against that inflation.
But overall, I think Jeremy Siegel is correct that we're not
facing hyperinflation. I don't think it's going to go
back up like it was during 2020. And I think there's more reason
to be bullish on this market. So as of right now, I'm excited,
I'm staying invested and I'll continue to buy companies that I
think represent good value. Now moving on, we get to the
news that Amazon continues to roll out generative AI based
assistance and tools for a company that's not a so-called
AI company. Amazon really never gets grouped
into that basket. It's usually Microsoft or
Google. People avoid calling Amazon an
AI company and it sure seems like Amazon's coming out with a
lot of AI tools for a not AI company.
This latest 1 is a project code named Amelia.
Amazon introduces this by saying that they've been investing in
machine learning and AI for more than 25 years.
More recently, advancements in generative AI have made it
possible to deliver even more innovative experiences,
including further simplifying selling in Amazon stores while
providing more powerful avenues for growth.
Now again, this bot, Amelia is not a customer facing bot.
Customers don't see it. This is only for sellers on
Amazon. And for what I can see, it's a
trained bot on a large language model to look at your data and
give you specific answers to questions about your store.
You can ask it how your sales are doing or how your products
are doing, what your click through rates, lots of different
things about the analytics. This tool gives sellers the
ability to just type stuff like how's my business doing?
And then it gives a bulleted point of the sales units sold,
selling price, the amount of traffic, the changes month over
month and year over year. And then it gives a plain text
summary adding commentary to how your business is doing.
Overall, your business is doing well with impressive growth
across key metrics like sales unit and traffic.
While conversion rate could be optimized, the strong momentum
positions you well for the upcoming holiday season.
Now, of course, this is their demo and it's in beta right now,
but if this thing runs anywhere close to like these demos, this
is going to be a game changer to sellers.
Not every seller on Amazon is a data analyst that can decipher
all the metrics and determine the biggest things to focus on,
so having an AI bot do that for you could be invaluable.
Now you know that I've been bullish on Amazon for a while.
I really like the company, both from a customer perspective and
from an investment standpoint. I still believe that Amazon is
one of the more undervalued companies in the market based on
my assumptions of its long term from cash flow growth and
terminal value. So when I see news like this
today with the growing fundamentals of Amazon, it makes
me more happy about the company. Now we move on to a story that's
a bit more concerning if you're invested in the payment card
networks like a Visa MasterCard. Apparently Walmart is planning
instant bank payments that would completely circumvent going
through Visa MasterCard. Walmart customers will soon have
the option to pay directly from their bank account with instant
transfers for online purchases. The enhanced feature is a
flashpoint in the escalating tensions between the merchants
and the card network setting the fees for payment processing.
So basically what they've done here is found a way to speed up
the ACH transfer so it no longer has that two to three business
days pending transaction. When the transaction processes
at a real time payment, customers get immediate access
to see that payment come through.
So they see the payment come through and then they know how
much money they actually have. They have no pending
transactions. Pending transactions can make it
so customers get their payments confused and in many cases
overdraft their accounts. Now the big question for me when
reading this news of trying to circumvent Visa MasterCard is
the rewards program. Using Visa, MasterCard at
merchants like Walmart is an essentially freeway to get
rewards from those purchases. You get 2 to 3% back on every
purchase. Is Walmart going to make up for
that loss in rewards? Is Walmart going to offer a
separate reward program now? As an investor of MasterCard, I
think it's important to ask what the potential is for this in the
future. If it is true that Walmart and
other large retailers can completely surpass their
networks, that's not good news for them.
That's hundreds of billions of dollars of volume processed that
MasterCard could potentially miss.
But I think this will be much more difficult than Walmart
expects. People really, really love their
credit cards. It is difficult to pry a credit
card from a user that's been using it for years.
They want to use it on their transactions.
They want to earn the points on the specific card that they've
chosen. So this is some news where I put
in the basket of keeping an eye on it.
It is slow, progressive news that could overtime potentially
deteriorate the mote of MasterCard.
But as of right now, it's just a headline.
Now, moving on, we get to the news that Darden Restaurants,
the owner of Olive Garden, is jumping today.
The stock is up big. In fact, if we look at it right
now, it's up 8.83%. So a big day for this company
after they reported their earnings.
This is an exciting earnings for this company.
They announced a delivery partnership with Uber
Technologies. That's another company that I'm
rather bullish on right now. And they signaled that they're
succeeding at attracting cash strapped consumers into their
eateries. They say that this recovery led
to them maintaining their full year guidance despite a
significant drop in customers in July.
The deal between Olive Garden and Uber also signals that the
restaurant chain is trying to expand its reach as it battles
the spending pull back. Now the thing that I look at
with this is it's great to see that Darden is doing well.
In many cases, people would look at this and they think, wow, I
own Texas Roadhouse. Should I be concerned about
this? A competitor is doing well
compared to Texas Roadhouse? I don't think so.
When I look at Darden Restaurant and I compare both the
restaurant, the operations, the value proposition, the customer
experience to Texas Roadhouse, I consider Texas Roadhouses as
superior. I believe the value proposition
is better at Texas Roadhouse. You get food that's considered
to be higher quality, more expensive food.
You're getting steaks instead of spaghetti.
And typically, if you compare the dinner prices from one
restaurant to another, you're also not paying much, if not
anymore at Texas Roadhouse. So in the minds of consumers, I
still believe that Texas Roadhouse maintains the best
value proposition amongst casual restaurants.
But either way, when I'm looking at these companies and the
bounce back in restaurants between Chili's and Darden, I
consider that a good thing. I think it benefits Texas
Roadhouse. It shows that customers right
now are willing to go out and purchase experiences.
And I believe Texas Roadhouse will continue to carve itself
out as one of the top restaurants that people
frequent. Now finally, as tradition,
typically on weekends, we look at people that are
entrepreneurs, that are investors that have somehow
managed to make great returns doing something.
We're going to look at how this individual became rich so.
Basically, I built a business using Airbnb and other people's
properties to make money and then I got a job at Deloitte as
an investment banker. Deloitte is a world famous
investment banking company and I used my extra time because I
built like a four hour workweek business to get a job 4050 sixty
hours a week. I don't hear of many people
running businesses that require 4 hours a week to run.
That seems like an incredible business.
I'd probably just invest more time into expanding that
business if it's that efficient. You only need 4 hours a week to
run it. Just spend more time in that
thing. Anyway, it seems like he's not
done here. Let's let him continue on.
I use that 60 hours to generate money to do amazing things like
this. And then actually what I'm doing
at the moment is I'm getting, I'm negotiating a remote job
with Deloitte so I can get a job at Ernst and Young and Swiss
Bank so I can get multiple remote jobs going.
And then I'm going to hire assistants overseas to do those
jobs for me because I find all that stuff very complicated.
He says he's going to use his free time after starting his
business that requires 4 hours per week to run.
He's going to use all the extra free time to get a job at
Deloitte, which is one of the the big, massive BIG4 firms in
the US. So it's a big, respectable firm.
Getting a job there is not easy, requires intense background
checks and extensive interviewing processes to get a
job at that firm. But then he also says he's going
to simultaneously interview and get a job at Ernst and Young,
which is another one of the the BIG4 firms in the US, which
again, requires an extensive application process, interview
process, background checks, all of that stuff.
Those are two of the BIG4 firms in the US.
And then he says he's also going to get a third job at the Swiss
bank, which is a term to refer to any of the big banks over
there, which of course have their own extensive interview
processes. Somehow he's going to get a job
and get accepted at all three of these companies.
But not only that, he says once he has the job, he's going to
outsource it. Assistance overseas to do those
jobs for me because I find all that stuff very complicated.
Apparently, overseas assistants can easily do these jobs, even
though he says that they're complicated.
If there's any trend that really needs to die, it's the one where
someone stands next to something that's kind of sort of
impressive or something that's kind of expensive, and then
rattles off a bunch of nonsense things while they're standing
next to it. In this case, the individual is
on a boat with three women in the background.
That is that. That's what he's doing.
That's so impressive. That's supposed to get you to
buy in to what he's saying. Does he know the women?
Who knows? Is this boat his?
Probably not, but that's supposed to be enough to
convince you to buy into whatever garbage he's selling.
I think we need to do better. More people need to call this
stuff out. More people need to mock it
because of how ridiculous it is. And hopefully we can change this
in the future. Hopefully we can make this type
of nonsense less prevalent now. That's going to be it for this
episode. I hope you enjoyed and I'll see
you in the next one.