2023 New Years Predictions & Resolutions, Ep. #209

In this episode, Luke revisits his predictions about weed legalization and cautions about sinking ships in the industry, while Tony shares his tactful investment approach for 2024, highlighting his penchant for value stocks and caution against pricy giants like Amazon. The conversation takes a festive turn as the hosts discuss their New Year's plans, culinary ventures including dino eggs, and personal resolutions to improve health, increase savings, and even invest in relaxation with an Xbox. Meanwhile, they don't shy away from hard-hitting topics like economic forecasting, weighing in on the volatility of oil production, the reasoning behind a potential bond rally, and separating viable economic data from sensationalist clickbait. Finally, the episode wraps up with the excitement of an office investment challenge victory dinner and a call to listeners for topics to explore in the upcoming year. Tune in to hear seasoned insights that blend serious financial acumen with light-hearted banter to ring in a prosperous New Year.

1. The State of the Weed Industry and Investment Forecasts

Luke led the discussion by reflecting on his previous correct prediction about the widespread legalization of weed. However, he offered a sobering update that a particular unprofitable business in the sector is facing the threat of insolvency due to dwindling demand. The hosts concurred that market saturation and regulation challenges continue to pose a risk for certain companies within the budding cannabis industry.

2. Tony’s 2024 Investment Strategy – A Turn Towards Value Stocks

With an eye towards the future, Tony shared his investment strategy for the new year, placing a spotlight on the potential upswing for value stocks. In contrast to his avoidance of energy sectors and highly priced tech stocks such as Amazon, Tony advises listeners to consider the merits of more traditional value investments, highlighting banks as a potential beneficiary of expected earnings growth.

3. New Year's Eve Plans and Traditions

A personal touch was added to the episode as the hosts exchanged their plans for New Year's Eve, revealing a preference for comfort and simplicity. Whether it's staying in to enjoy homemade dino eggs (stuffed jalapenos) or attending the unique 'walleye drop' event in Cleveland, the hosts remind listeners that celebration doesn't necessarily require opulence.

4. Economic Hot Takes Versus Data-Driven Analysis

In a critique of sensational economic predictions, the team emphasized the need to focus on solid data over clickbait headlines. They dissected the flaws in hot takes and emphasized the importance of critical analysis when it comes to investment decisions. This topic underscored the show's commitment to providing listeners with pragmatic and thoughtful financial insights.

5. Personal and Financial Resolutions for the New Year

The episode wasn't just about financial health; physical well-being was also on the docket. Derek expressed his resolution to make a return to regular gym sessions and to be mindful of his 401k contributions. Tony talked about his goals of maintaining fitness and increasing his Roth savings. Luke added his own personal improvement goals, which include not only physical fitness but also investing in leisure, such as purchasing an Xbox, to balance relaxation with financial acumen.

#CapitalistInvestor #InvestingPodcast #FinancialInsights #InvestmentStrategy #NewYearResolutions #WeedLegalization #StockMarketTrends #PersonalFinance #EconomicPredictions #ValueStocks #InvestmentTips #FinancialGoals #MarketAnalysis

Transcript

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Hello and welcome to this week's episode of the Capitalist investor New Year's week episode. And as always, you got myself, diamond hands D, and we got the squad back together. Tony the tiger. Cool hands, Luke. What's going on, guys? What's up, yo yo? Getting old. Another year, another dollar. Post Christmas, pre new year, right in the mix. So, yeah, we got. What are you guys doing for New Year's real quick? Probably staying home. Yeah, you do nothing on New Year's. When you get old, you make a bunch of food, you grill something fun, and maybe I'll smoke something. Yeah, maybe that's what in New York. I'm in New York all this week and I was going to possibly stay for the ball drop, but I heard it's horrible. To stay for the ball drop. It sounds awful. You literally can't go with restroom anywhere. You can't find food. You're cold, freezing your butt off, and it's like a horrible experience. I heard. And plus, you're paying $1,000 a night for like a hotel, right? So one night, whatever. You're in New York. What are you doing? Like Maria? Yeah, Maria. I did yesterday, Tuesday, and then I got one on Friday this week as well. So tune on. You know, it's Christmas week. Mark wanted to take a little time off and he called me up to the big league. So there you go. Anyway, I'm going to the walleye drop. If anyone's in Cleveland. If anyone's in Cleveland, this is the most awesome hillbilly experience you'll ever have. Port Clinton walleye drop New Year's Eve, they drop 100 foot glass walleye from a crane. They count down like ten. 9876. They have buses that take you all the breweries, wineries. It's awesome. So I recommend anyone at midnight. Yeah, it's like a big festival gathering. So instead of watching the New York ball drop or Chicago ball drop, they have their own. How far do they drop them from a crane? It's like 200ft. No way. It's 100 foot glass walleye. It's not real. It's like a big glass thing. It's like a big slide. Yeah, but it's awesome. It's awesome. It's almost hillbilly thing. Slide them right into the water. That's what we're doing. I'm going to look into this. Come what we got this week. All right, well, we don't really need to set up too much, so we're going to talk about some hot takes. So look to the year ahead. What do we see? We're terrible at these hot takes, so this ought to be fun. Yeah. I don't even want to rewind last year. What I want to say is in relation to that, and then we'll talk a little New Year's resolution, maybe one personal, one financial. See what we got on the docket for 2024, which should be a wild year. It should be wild. Yeah. All right, so hottest economic take. So I'll kick this one off. I think one of my hot takes is that don't listen to hot takes. That has nothing to do with what we're going to talk about here because I've been sent the same article probably like three or four times now, and it's basically a hot take. It's a clickbait article, even though it was on CNBC, basically saying, like, expert or expert economists are predicting the biggest market crash in our lifetime in 2024. And I've had clients send it to me. I've had friends send it to me. Is it clickbait to buy gold? Yeah. You open the article and there's really nothing in there that tells you why. They want you to buy gold. I'm sure there's advertisements, buy gold before we run out. Always take these conversations with a grain of salt. When we're looking at the economy and we're trying to make stock trades and all that good stuff for our clients, we're not focusing on the hot takes, we're focusing on the data. So these shows are always fun to talk about. But like I said, it was great timing. I've been sent that article several times now. So don't plan your financial future around financial hot takes because they may not happen. All right, well, the financial hot take of 2023 was recession. Right. That never came. Exactly. So, I mean, that's the hottest take. Every analyst on Wall street was predicting a recession. Not even close. Well, 65% of Americans think we are. There you go. But the data doesn't say it. I know the data. All right, so think about this. It's not one hot take, but it's kind of two. But they blend together. So in December, 2023, right? Now, a couple of weeks ago, Joe Rome, Powell, Fed chair, came out and said that next year, in 2024, there's a possibility, a good idea that we cut three times. Okay. The market rally. That Santa Claus rally. No, it's Jerome Powell rally. Right. Santa Claus is Jerome Powell money printing a burr. And then immediately as that happened, the market shot up like a one and a half percent, whatever that tay that he came out a couple of days later, you got another Fed guy come out and try and walk it back and say it's way too premature, but the market is pricing in six cuts. If you look at the probability of everything. So again, I think I said it before another podcast. Think about a rate cut. It's pretty much a stimulus. They're cutting rates to stimulate the economy. Would you guys agree on that? Do you feel that that way? Okay, well, then if you stimulate the economy doesn't like history, and just the last couple of years of history, doesn't that tell us that that spikes inflation? Yes. Okay, so then are we going to be looking, are they predicting deflationary environments? Apparently. I like this. I'm sure you'll back it up. Like, what's going to break next year? Well, to cut, here's my hot hold on. I got one more thing. 2023. So I had this conversation with the client the other day, and 2023 was the year of multiple expansion. That means earnings did not go up, but the stock did. Let's take Apple, for example. How much are they up this year? Like 40 5100 percent, probably 50, 60%. They have negative revenue growth. They've been shrinking. They're decelerated. They're coming down. They are not growing. 58, 58%. They are not growing, but yet the stock is up 60%. That is the definition of multiple expansion. All right, 2024 could be and should be because every analyst is, the average analyst, I should say, is saying that we're going to have 10% earnings growth next year. That means all the value stocks that got left behind in 2023 should or could catch up to all the mega tech stocks that took off this in 2023. So 2024 could be the value stocks. So think of the banks, for example. If they are going to cut rates, that's great for banks. So again, next year could be not the non growth stocks, but the value stocks that keep this market afloat. So this is my take. Goes along right along with yours. I think bonds outperform stocks next year. That's my hot take. I think the 60 40 portfolio that hasn't really worked the past two years, as in bonds, do the same thing stocks have done the past two years. I think you're going to see kind of a disconnect next year where bonds actually do their job will rally, whether rates, whatever stocks do. I think bonds will rally with the perception of rate cuts with maybe some sort of flight safety if something does break. So my hot take is that bonds maybe not go full long duration on your bonds, but maybe start looking at getting some duration in your bond portion of your portfolio, which we don't want. We're looking at doing that in our portfolios. But that's my hot take. I think also going along with your take on the rate cuts next year, I does something major have to break? Well, that's one theory. I just talked about this on Varney show yesterday. It was my hot take on the Varney show. They posted me on the website. I was pretty happy. That's how I know I do all right when I do tv is when they post me on the website. But my hot take was that the political pressure next year's election year, we got to acknowledge that politics does influence, you know, he even came back, David Asman came back at me and said, well, are you seeing the Federal Reserve's not independent and they actually are influenced by politics? I'm like, yes, that's exactly what saying, like, at the end of the day, you're supposed to be independent, but you already know. Trump was even telling Powell what to do with rate cuts, rate hikes. You already know. Joe Biden is already calling him up, say, hey, it's election year. Help me out a little bit lower rates. Let's stimulate the economy a little bit. So my hot take is whether or not something breaks next year. I think the reason why there's a big disconnect between Powell pricing in three rate cuts or saying that we're going to rate cut rates three times, that's perception compared to the market pricing at six. I think the three additional rate cuts is coming from political pressure. That's my hot take. I mean, and think about this. We're producing oil at the highest rate ever in the United States. I don't know what happened to save the economy or to save the environment and everything, but that's obviously out the window. But that's good for us. Gas will be low. It'll help the wealth effect deflation like you mentioned. I just think it's mind blowing that we are silently producing more oil in this country than we ever have ever, and it doesn't fit the Democrats agenda. Right. It's just crazy, like what's actually happening and it's crazy that that's happening into an election year that will help the wealth effect. But I wanted to really look up, your agg is positive. I want to know what it, I'd like to, I would like to look historically because that's a bold statement that bonds will outperform stocks. I'm looking at TLT right now. TLT is off 20% from the bottom. That's long duration bonds. And that's in a month and a half. It's actually how much? 20% off the bottom? Yeah. I mean, it's outperforming the market already the past month and a half. I guess that correlates with long term bond. I mean, weren't long term treasuries like 30 years? Weren't they cresting five? They were above four. Now they're around four ish nerds are 20%. Well, if we have deflation, let's say we actually have deflation. And I'm talking disinflation. I'm talking deflation, like negative inflation. Well, in that case, you'll see the 30 year and tenured bonds trade below probably two or 3% yield when they were trading above five. That could prop TLT IeF. These long duration bonds. We get deflation. Yeah, bonds could be. There's two reasons to that risk off because something brand new. What does the market do next year? Does it do? I think you'll see 10% and bonds do 20. I think next year will be one of the best years for active managers, which is what we are. I think the top magnificent seven are going to stall out. The S and P and Q's will basically do nothing is my prediction. It's a bold statement. We might be completely wrong. They might not do much next year. These big indices, but the bottom 493 and the equal weight and things like that, there's going to be some alpha to be generated in these smaller cap, these smaller names, smaller mid. Even. Some of the value stocks, like not the growth stocks, but the large value I mentioned, like banks and stuff. All right, New Year's resolutions. Good take, guys. I like that. Don't listen to the talking head, because they're not really going to be right. You won't have all the answers all at once. Right? You got to take things. If there's new information, take that, process it and see what happens. Last thing, what if Jerome Powell nails this soft landing? What does that like, though? I think we're experiencing it, kind of like we talked last week, the silent depression, maybe that is actually going on. And when we get to these rate cuts, if that actually happens, the economy goes again. That means it's in the realm of possibilities that it could actually happen. When I thought there was zero chance this whole time. Pretty crazy. We'll see what happens. I'm not kicking it out of bed. So we're good the question is, what happens ten years down the road when we actually do have a downturn again in the economic cycle? What breaks then? Because something will break. It's not like we're going to go 50 years rocking and rolling, right? Ten years from now, next year, we'll see. Anyway, resolutions. Derek, hit me with one personal and financial resolution. Well, one personal. I got to get back into the gym. Eating right this last quarter, it's been rough, it really has. With the kids doing stuff every single weekend. Got to get that back to a priority. As far as financial goes, honestly, I don't have too many, but what I would say is, for people listening, if you want generalized financial advice, it's hard to give. But saving money into your four hundred and one k or your plan at work, especially if there's a match. Something everyone should take a look at doing. And it's pretty simple. It's not simple, but the concepts are simpler. What we do here, the earlier and more often that you save, the better off that you will be. Today, we talked about it last week. There's higher standards now. Everyone wants to do everything and post it on social media. Make sure you're saving. I'll say that. Okay. Same thing with me. Obviously, personal is health. So working out, stretching more. I need to stretch more. I am not flexible, to say the least. I am actually working with a kind of a personal trainer on. This is very painful. I don't know. So tight. My hamstrings in particular. I can't even bend over sometimes. Well, I can. It's just not comfortable. Right. I'm not like completely worthless and useless. I can move around and I'm good. I just want to be more right. One thing is I still want to just keep on getting better at golf. So I guess that'll just be the carrot that I'll never catch. Finance. I just like to be more diligent on saving. In my Roth, I either forget or because I got to do the backdoor route and stuff like that. So it's like, damn, I got to remember to do that. And then there's multiple moves behind it. So those are the two things. And then, Luke, I'm going to let you go, but then we're going to talk about our inner office victory. We're going to take brag a little bit. We're going to take a victory lap. Personal, same as both of you guys in regards to health, need to start working out again. Flexibility. I've been having, like sciatica pain. I'm too young to be saying this, but I've been having something down my back and down my leg. I think of some sciatica stuff. I don't know. I need to stretch some more. I've been feeling, like, sore just randomly just getting old socks. But that's one thing, really. My personal goal is to learn how to turn my brain off for next year. I think sometimes you need to go slower to go faster. That's kind of like the saying, one of the sayings, or some of the books I read. And I just need to learn how to just shut my brain off, be able to relax at home. And that goes along with financially. I've been saying this for years for you, Luke. Yeah, but financially as well, it goes along with it. The need to be doing something all the time obviously cuts into your budget, whether it's going out to restaurants, socialization, cocktail hours with a networking event, whatever you're going to. It kind of adds up every once in a while. So learn how to do something at home. I told you think I bought an Xbox. Xbox or PlayStation? I never will be Playstation. I hate PlayStation. But Xbox bought the brand new Xbox Series X, and I'm like, this can be my investment. I'm going to save money because it'll keep me indoors more. I'm going to learn how to turn my brain off. But I told you, it's stressing me out more because I'm not good at it. Because you're getting by 15 year old, seven and 15 year old. It's ridiculous. Anyway, so that goes along with my financially. So let's talk about our win. All right, so Luke and I are part of a couple other the investment we're up against. Advancement team. But it's individual. It's individual thing. So there's about five of us this year, three cfas, and me and Luke, we all pick three stocks in the beginning of the year, and whoever has the worst portfolio has to pay for dinner for the other four. What's interesting, everyone did pretty well. We just did better. What about one of the two cfas? They're positive. They turn positive. Yeah, they both turn negative. They both turn positive. They're, like, doing what the s and P 500 did this year. Close to it. Yeah. And just think, like, this dinner is not cheap. Luke and I, unfortunately, have lost the last two years, so we've come up with deals to help, not pay as much. But this is our year, Luke. I think we're going to finish one, too. My picks were Fang, which is an energy company, only up 15% I picked Amazon. They're up like 90% year to date, believe it or not. And then I picked Activision because they were supposed to be bought out by Microsoft. It was a binary event and I knew that. And binary happened. It went up like 20% after that. And what are you in total? Like 50% total, something like that. Aggregate, all them? Yeah, it's like double the Sp. Dude, good stuff. Hey, thanks. Yeah. So we will be going to what? To marble room. Marble room. Marble room. It's going to be a nice night. I mean, for five people. I'm going to eat some wagyu steak. I'm going to eat a little bit. You're going to do everything that they did to us last year. They racked up a bill. They racked up a bill. So we're going to rack it up on that. Nice, like, hey, do you have this wine? Great. I'm going to drink two of them. I'm going to drink whistle and pig. Twelve year rye. It was nasty. They, they did not take. My stocks were Palantir, which was my rock and a roll stock, 100 and I think 80% year to date. That'll get you in the winter circle. Yeah. So that one, Palantir is a stock that is kind of a defense software contractor stock. It's done phenomenal. I think it will continue to do phenomenal. It's the stock I think long term wise could be the next Nvidia Apple over the next 20 years. Anyway. Palantir was mine. Axon Enterprise. As crime goes up, people, the police officers need the software and hardware to record things like that. Axon provides the software solutions and hardware solutions to police officers. It's up like 50% this year. Okay. My third one was the complete crapshoot that actually my first two saved canopy growth. I was right about weed legalization over the national nation this year, like Ohio, a couple of other states. I was right about that happening. The problem was when you have an unprofitable business and doesn't really matter when you get legalized. Did they go out of business? They're about to, yeah. So it's down like 80% this year. How do you go out of business selling weed? Not enough demand, my man. I don't know, but yeah, actually 2024 stocks, man, that's going to be a tough one. I think you have to pick a macro agenda and go for it. Yes, I think themes, I mean, at the end of the day, we talked about the mental health thing. I don't know, I was brainstorming with a buddy of mine a couple of days ago. People are lazy. They're sad. Now, how do you play that theme? Well, McDonald's people are sad and unhappy and they want to crave junk food. Just simple things. I'm definitely going to own some type of value stock, maybe two. I don't know. It's definitely not going to be energy. Well, I'm not going to say not energy, but I'm not picking Amazon again. They're up 90% this year. It's like crazy. I don't know. And then Activision doesn't. They just got wiped out. Derek, you join us next year. You want to pay$5,000? Dinner does not sound like fun unless you win, but we're going to have fun this year. Sounds like some good picks. Yeah. All right, let's get it next year again. It doesn't really go along with our whole eating healthy and stuff. We're about to go slam some nice food and it's going to put on. The weight before 2000 calorie. Was it Jan 2000? Maybe three, if not four. Yeah, I'm doing ten. Dude, they have a lobster Mac and cheese. And this Mac and cheese, it comes out in this big thing that you would see at Thanksgiving dinner with like a turkey on it. It's got like a half of a lobster on it. It's got truffle. Truffle. Dude, this thing's like $120. I fell over when I saw it, when somebody ordered it. And I'm like, are you kidding me? He's like, shut up and pay for it. It's what he said. But that being said, anyone in the Cleveland area. So I don't go out to these places often. It's like once every couple, you know, every six months, I'll go to a nice restaurant for anniversary, birthday, know, we got demonico is red. You got marlboroom. In my opinion, guys, marlborooms just blows everything out of the water. I think marlboroom's for sure the best food. If you want high end food in Cleveland, it's just hard to get in. I think you have to book like five months in advance. Yeah, it is crazy. If anyone's Cleveland area and hasn't been in my room, recommend. The only thing I can tell you is if you get

there when they open at 05: 22:59

00 p.m. You might be able to get. Because the bar is first come, first serve. Yeah, because personally, I'm a pub kind of guy. Just give me a nice little greasy burger and tavern. Food. I enjoy going to a nice restaurant, high scale restaurant, and sitting at the bar. Yeah, usually the bartender is exceptionally good. They're friendly. The other people sitting at the bar are typically friendly. So I enjoy it rather than sitting at a table. That's just me. 100%. All right, cool. All right, well, happy New Year's. Enjoy the new year. Enjoy sitting at home, Derek. I will be too. Maybe I'll facetime you and say hi. I might watch the ball drop, but. Maybe if I get there, my wife. No way. She'll be up at midnight. Zero chance. Yeah, I think we're already talking about it. It might be some people that also don't want to go out and come over. I think I'm going to make my dino eggs. Nice. The stuffed jalapenos. Those are good. Those are delicious, man. And then wrap them. Only time it came to your house, Tony, you had dino eggs and I was a happy camper. Yeah, well, maybe if I have some extra, I'll bring one in for you. Do that. The first week of January. If anyone has any kind of good topics as we head into new year, please send them to us. We're always looking for good content, new content, things like that. So always feel free to send your New Year's resolutions of what you want to accomplish financially, personally, and maybe we. Can talk about it. Absolutely. Well, hey, thanks everyone for listening. Have a great new year's and we'll talk to you next year. The opinions expressed in the podcast are for general information purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.