In this week's episode of The Capitalist Investor, Derek and Tony discuss the trend of retirees returning to work, the upcoming earnings call, and the impact of state regulations on business. They delve into the reasons behind retirees returning to work, the impact of rising costs, and the importance of having a solid financial plan. The conversation takes an unexpected turn as they analyze Nvidia's impressive revenue numbers and the potential implications for the stock market. The episode concludes with a heated discussion on the controversial state penalties and their impact on business decisions.
0:00 Introduction
- Derek and Tony discuss the absence of Luke and Tony's tiredness due to family responsibilities.
1:04 Topic 1: Retirees Returning to Work
- The hosts delve into why one in eight retirees are going back to work in 2024. They analyze the factors contributing to this trend, such as rising costs, financial planning, and debt management.
6:46 Topic 2: Nvidia Earnings
- Derek provides insights into Nvidia's revenue numbers and the potential impact on the stock market. They discuss the implications of AI growth and its energy demands, tying it to the future of nuclear power as an alternative energy source.
18:06 Predictions and Discussion
- Derek and Tony share their predictions for Nvidia's performance after the earnings call and discuss long-term investment strategies.
20:28 Topic 3: New York State Issues
- The hosts discuss Kevin O'Leary's perspective on the challenges of doing business in New York and the business implications of recent legal actions against former President Trump.
26:46 Parting Shots
- Tony shares a relatable anecdote about parenting and bedtime struggles.
We hope you enjoy this insightful discussion on finance and investments. Share your thoughts and show ideas with us at info@swpconnect.com.
#CapitalistInvestor #RetirementPlanning #NvidiaEarnings #NewYorkState #FinancePodcast #InvestmentStrategy #FinancialPlanning #RetirementIncome #EconomicTrends #AI #NuclearPower #BusinessRegulations
In this week's episode of The Capitalist Investor, Derek and Tony discuss the trend of retirees returning to work, the upcoming earnings call, and the impact of state regulations on business. They delve into the reasons behind retirees returning to work, the impact of rising costs, and the importance of having a solid financial plan. The conversation takes an unexpected turn as they analyze Nvidia's impressive revenue numbers and the potential implications for the stock market. The episode concludes with a heated discussion on the controversial state penalties and their impact on business decisions.
0:00 Introduction
- Derek and Tony discuss the absence of Luke and Tony's tiredness due to family responsibilities.
1:04 Topic 1: Retirees Returning to Work
- The hosts delve into why one in eight retirees are going back to work in 2024. They analyze the factors contributing to this trend, such as rising costs, financial planning, and debt management.
6:46 Topic 2: Nvidia Earnings
- Derek provides insights into Nvidia's revenue numbers and the potential impact on the stock market. They discuss the implications of AI growth and its energy demands, tying it to the future of nuclear power as an alternative energy source.
18:06 Predictions and Discussion
- Derek and Tony share their predictions for Nvidia's performance after the earnings call and discuss long-term investment strategies.
20:28 Topic 3: New York State Issues
- The hosts discuss Kevin O'Leary's perspective on the challenges of doing business in New York and the business implications of recent legal actions against former President Trump.
26:46 Parting Shots
- Tony shares a relatable anecdote about parenting and bedtime struggles.
We hope you enjoy this insightful discussion on finance and investments. Share your thoughts and show ideas with us at info@swpconnect.com.
#CapitalistInvestor #RetirementPlanning #NvidiaEarnings #NewYorkState #FinancePodcast #InvestmentStrategy #FinancialPlanning #RetirementIncome #EconomicTrends #AI #NuclearPower #BusinessRegulations
Hello and welcome to this week's episode of the Capitalist Investor. As always, you have me, diamond hands d. We don't have Luke this week, but we still have Tony. How you doing, Tony? I'm doing well, man. I'm a little tired. My four year old got me last night. Oh, yeah. A little under the weather and she let me know about it. Yep. So one of those mornings it happens. It happens. All right, man. What do you got for me? What are we talking about today? So, yeah, we got some good topics this week, actually, some really good topics because I have a few things to say on these topics. An interesting article that we found that basically says one in eight retirees are going back to work in 2024. So we're going to dig in as to why. Obviously, a big earnings call will happen Wednesday after the bell. So pretty much the next day after this episode comes out. Yeah. So we're talking before the announcement. People will probably hear about it after. So you get to hear us completely whiff on what it's about to happen. We've been doing pretty well on these lately, actually. And then we'll talk about canceled in New York state. It's not good. All right, man. So one in eight retirees are going back to work. My immediate reaction to that is one out of eight things happen. Right. I understand inflation is first and foremost. Things are just more expensive and people weren't expecting this and maybe put a wrench into retirement game plan. Right. Especially if you retired maybe three, four, five years ago. Now it's even exponential more cost. But there's also life events, family events. It could be where they know the cost of living in different parts of the country are extraordinarily different. Yep. You saw that. Mean the difference between living in California versus, I'll just say Cleveland or Cleveland, Ohio. Or it's a million dollars goes half as far in California than it does in maybe a flyover state like Ohio and Oklahoma. But I was actually having this conversation with somebody, a newer client that lives in California. And we were talking about, they were asking me, do we have enough? How does everything look? And I'm like, well, the fact that you live in California and spend what you like, I feel pretty good about your plan because everything's about to be paid off. But everything that they own is like, I mean, their house is one and a half million dollars. In Ohio, you have a one and a half million dollar house and it could take up a city. The again, region is such a big deal. But it makes me question though, it comes down to for us and our clients, Derek, is financial plan. Do you have a plan that has the right inflation rates in it? Do you have a financial plan? I also start there. Have you mapped out, have you built a plan so that you can look into the future? Right. I'm sorry. No, go ahead. No, you're good. That is exactly the first thing that came to mind as I was reading this, because the people going back to work, 61% of them cited rising costs, but basically 34% said that they cut it too tight and they don't have enough and they miscalculated a little bit and they need a little extra to make ends meet. So basically, a third of these people going back to work have admitted that they just didn't really have much of a plan. Another 34% was paying down debt. And this is a huge one. As soon as people start talking to us about their plan or retirement planning, everyone wants to focus on investments, right? And obviously investments are important and you have to reduce kind of the standard deviation and the volatility in your portfolio. But you can accomplish so much just by having a good financial plan and knowing kind of what you're up against. In case in point is spending. If you're making $100,000 a year and you're accumulating 5710 thousand dollars of credit card debt every year, you're just spending above your means. So if you're clearing $70,000 after taxes and maybe a little 401k savings, you're spending 75 or 80, right. That's not going to be sustainable through a financial plan. And if you put that number 70,000 in the plan instead of 80 or 85, where it needs to be, that's going to make a huge difference in your overall plan. Whenever we meet somebody for the first time, they never have taken the time or energy or thought pattern to do a budget. Right. It's just not like, hey, I spend what I make or whatever, just like the scenario you just said, and I might rack up a little bit of debt. So, okay, you're spending over x, right. So that's why one of the things that we'll do is, I know that we built a lot of plans for our clients with a 3% inflation rate, but that was during 2010, 2020. Right. And inflation was zero to 2% through that whole time. So we were overinflating. Now we got to stay like, okay, does it normalize under three because we still use 3%? Because we just feel that this last few couple of years have just been a spike, a significant spike. I think it will normalize, but I think 3% will be a good number going forward. But that's why we always talk with our planning team to see, hey, do we need to readjust these plans? So that's one thing. And then also building the what if your budget is right. What if. What if I spent more? What if I spent less? What if I worked longer? Just building those what if scenarios inside a financial plan is such a big deal. Yes, absolutely. When you're building a financial plan, especially towards the beginning, I think kind of what you were alluding to there, building in some conservatism. So you're not just trying to bounce your last check on this earth basically. Right. That's why when we're working on these plans and our clients are getting closer to retirement, I really want their Monte Carlo score to be an 80%. We say 70% is kind of the minimum for a working plan. But when all is said and done and we have all the different moves in there, all the tax strategies, all income strategies, when all that's put together and we're still at an 80% monte Carlo and we factored in inflation and we've budgeted properly, you're just so much more confident than just having kind of a goal based financial plan that took 20 minutes to run that says, well, if you get 6%, you'll be okay, right? The goal based plan versus the cash flow based plan. I mean, it sounds real technical, but basically it's like what comes in, what goes out, cash flow. And rather than saying, hey, I think I spend this and I think I'll spend that, those are goals, right? So the cash flow based plan is a lot more sophisticated, more in depth. But the one thing I like the word that you used, and I'll end on this, is that the conservatism side of it. I know that when we build plans, I know we have people living the 95, the average is 85, the mortality rate. People are like, I'm not going to live that long. And I'm like, that's fine, I still want to build your plan. So it's just a layer of conservatism. I want your money to last longer on the back end of your life so we don't run out of money. And then also investment returns. The last decade has had high single digit average returns, if not higher. Well, we build our plans like around 5% or 6%. Just what, because can this continue? Can this rapid rise over the last decade market continue to go straight up? Right? Question mark probably not. Let's hope so. We're trying our best, but I'd rather plan around lower returns and then overachieve, obviously. All right, Navidea, everyone's sweetheart. The darling is reporting today. So what do you got, Dee? What are you? You know, if I'm being completely honest, I really haven't studied the revenue numbers of Nvidia before today. But it's astonishing. The numbers that they're looking for. Basically, the revenue number that they're looking for for the quarter, I believe, is 20.4 billion. That's for the quarter. Their 2022 entire revenue was 27 billion. Entire revenue. And at this time last year, the quarter was 6.1 billion. Wow. So, I mean, it's just absolutely massive numbers that they're reporting and it's being exponential growth. I guess that backs up the exponential growth of the actual stock, too, which is crazy. And that was going to be one of my main points. We can talk about predictions here in a minute, but normally, kind of the life cycle of these high flying stocks, right, is like Tesla, right. It took Tesla a very long time to actually make revenue. And there was a lot of people making a lot of bets on Tesla for a very long time, that it was basically going to turn into the company that it is today. This Nvidia, with AI being the leader in AI, it seems to have come out of nowhere. But there's also massive revenue numbers to back it up immediately, which is what you don't see a lot of when people are speculating. Right. Which is pretty crazy, these data centers, which actually, we'll talk a little bit about in the last segment here. I think that's what the analysts are saying is going to be the key number is the revenue from the data centers. And I think that alone is going to be, they're expecting about 17 billion in revenue just from those data centers. I was on Fox Business yesterday claiming, and I prepared something for more Navidea, in case she asked. And so think about this. So, like, the CEO of Nvidia came out and said, hey, we're in about the second or third inning of this growth, right? And if they continue to grow the way they're growing, it could be a $7 trillion govie. I mean, hypothetically, it's hyperbolic, right? It's parabolic on the growth of this stock right now. And in my opinion, I think it's priced for perfection. It's up 40% year to date. Year to date, right. And over the last two days, the last two trading days of what I've seen on Tuesday and Wednesday going into their earnings, is that a lot of the AI stocks have come down like AMD Nvidia. Are they a little worried about what's happening? Is it priced too great? For know, there must be some kind of concern out there. But we still own Navidea in one of our portfolios. But we manage risk. We don't just buy it. And it's not up 400% in our portfolio. We trim it every time it gets to a certain level because we're managing risk. And the biggest thing that, what I'm really noticing right now is even on some of the bad days of the market, it feels like Nvidia is flat or maybe even up. So as people get squirrely and skittish on the rest of the market, is this the new, like, remember, I know Nvideia has been compared to Cisco back in the.com days and stuff, and how that was parabolic or parabolic kind of growth on that stock. They're comparing a lot of it, Nvidia, to what that is. And if you look at that chart, like how much Cisco came back down to earth in a quick amount of time, as fast as it went up. As fast as it went down. Right. So with caution, is it okay to be involved in Nvidia? Sure. Do you want to push all in? I don't know if I would do mean. That's why managing risk, whether you're investing on your own or what our investment team does, is very important. But maybe can this one particular stock carry the rest of the market? That's what everyone's hoping for. So, yeah, it's going to be a giant referendum on AI and tech in general and the economy going forward. This one earnings call. So I don't know if it's going to be all of that, but if the numbers are big, I think you could even see it move up from where it is right now. There's price targets of$1,000 out there, and if you look at that, that's a 50% gain from where it is today. But we saw 50% in the first month and a half of the year in this stock. So just this year alone, the movement has been tremendous. So we'll see. But the one thing that I was going to be prepared to talk about that I thought was pretty interesting was my theme was about nuclear energy and how that's a great alternative energy source. And I went on there and I talked about Camico, because they're a uranium miner up in Canada, and that's the fuel for nuclear power, right? But one of the themes, because the show likes to have Wall Street Journal type of headlines for a topic, and nothing's more sexier than nuclear power, right? So I said my theme was how the AI push could lead to a nuclear revolution. Because think about this. When bitcoin was all the craze, you had all these miners, right? And they talked about how much energy they were using and the data centers, the cooling centers to keep these machines cool while these machines work nonstop to mine. Bitcoin. AI is nearly the same thing. Why? Because when AI starts, quote unquote, thinking they are using energy constantly, it just doesn't stop. Like right now, they said if Google were to transition their whole platform to AI, they would first of all need $100 billion of infrastructure, which they just physically can't do. I'm sure they can do the money part, but the equipment isn't available to do such a mass move. But they said that their energy suck would be nearly two to three x of what it is now. It would be the size of a small country's complete energy suck, like Ireland or something like that. That's how much energy would go into if AI were to just be immediately implemented. But obviously, there's supply chain issues, things like that to get us there tomorrow. But I thought that was pretty interesting. And how I tied that together is saying, okay, well, if we're trying to get to a carbon neutral worldwide agenda, solar and wind stink, right? They're not ready for primetime is what I arrived at, where nuclear has got, like more of a 50 year track record. It's cleaner, it's more dependable. It's been around a while, but the push would need to be there, right, and build these plants. Luckily, in Washington, there's actually bipartisan support. Biden administration has been pumping billions into power plants, and Trump's openly said that he doesn't mind nuclear and thinks it's a good idea. So maybe regardless of who's in the present United States come November, it doesn't matter. Nuclear could be that alternative push. You never know. Absolutely. But think of, I mean, with all that energy that it requires for AI, are we ready for that? We are not. No, we are most definitely not. But definitely went on a tangent there. But it's amazing on how fast it's coming. And are we prepared for the AI revolution? We will find out. Two interesting questions and we shall definitely find out here, if not later today, definitely in the coming months. Looking into your crystal ball, do they beat and perform and are they going to be up 10% after the bell, or are they going to come down a little bit? Yeah. So I think what you'll see is the numbers will be good. I think they'll hit on most of their key targets, and I think it's going to be more of like a sell the news type of situation combined with, I think people might not like the guidance that they give because the guidance that they would need to give is pretty insane. Right. Like we said, we're going to have 300% next quarter or whatever that might look like. Yeah. And then, plus you have the trade restrictions that have been put on China. How much is that really going to hurt them? We'll hear what they have to say about that, but I like what you have to say. Sell the news. It's already up 40%. Right. Does that mean if it does pull back, time in the market is better than timing the market? If you own it? I'm not sitting here telling you to sell because it is probably a very long term play now. But if you don't own it, if you miss out on 10%, on the upside, the bad side of the story, buying it before earnings, I think you should watch, see what happens if it pulls back. Then probably a good entry point is what I would imagine. So we shall. You know, I think going forward, it's going to be a lot like Apple was maybe five, six, seven years ago, just kind of a stock you just want to own. You don't really want to trade on it. You don't really want to try to predict the future. It's just one that's going to be a good long term name for a very long time. Right. And plus, it's like somewhere between. It's around $700 a share. I mean, what happens if they decide to split it, right? Do a five to one or ten to one split and allows smaller investors to get involved? We'll see. We shall see. All right. Canceled. Hit me with it. Yep. So, I mean, this ties in perfectly with what we're just talking. I saw. I just happened to look up and catch it live, but Mr. Wonderful, Kevin O'Leary, big watch guy, by the way. He was on tv showing off all of his watches. Oh, yeah. He brought in his whole collection. Holy cow. Yeah. He's made the rounds on the Internet as well with the watch people. But anyway, so he was on a bunch of different networks actually talking about Trump, basically, and the$350,000,000 penalty, I guess, that was issued against him in the state of New York. And it's a long story and I don't really want to talk about it, but basically Trump got in trouble, I guess, quote unquote, for doing what essentially every single real estate developer in the whole entire world does. And that's what O'Leary was on, know, not only Fox, but I saw him on, you know, basically there's no victim. And what Kevin O'Leary was saying on that clip was essentially people like him, investors, there is essentially no chance whatsoever that they would ever do business in a quote unquote loser state like New York. That's what Mr. Wonderful said. And he's not usually a hot take guy. So for him to say that, and basically the example he gave was the data centers is basically New York and California. They are just essentially last in line in places that you would want to go to build out a facility like that. It's a $4 billion facility, he was saying. And the regulation is ridiculous, the cost of living is ridiculous. And what we were just talking about, the energy, right? Energy was one of the big reasons people are leaving those states and moving to places like Texas with abundant energy and less regulation. But yeah. So essentially, on one side you have basically just a horrible business environment. On the other side, you got people getting fined$350,000,000 for basically doing just exactly what everyone else is doing, trying. To get a good deal, got a good deal, got a bank to okay the deal, paid him, paid off the bank. Yet he's still getting jammed up. Right? In my opinion, this seemed like the very pointed, objective type of lawsuit against former President Trump. Optically, that's what it looks like. Is there merit behind it? Hard to say. But when the bank comes out and says, this dude didn't do anything wrong, we're okay, and we lent him the money, we got paid back, we made money on the deal. But I guess the state's like, well, you guys had a backdoor deal instead, it should have been worth 300 million dollar deal and you did 200. So we missed out on tax revenue. Essentially what happened, right, is that's what they're going after. But now you have companies like Remington, the gun company. I saw that, that they're talking about moving Grant cardone, big real estate mogul, talking about like, he will not be partaking in anything in New York. Yeah, I think they nixed Trump from doing any deals in New York now. But now you have, and they're saying, hey, like Florida and Texas, hot states to move to for building your business. And I think a lot of it has to do, like, with the state tax, I guess I'll call it maybe pro business, pro capitalism for the red states that they are Florida. But the thing that they don't have any state tax, that's a big deal. They get you other places like sales tax and items like that. But it's crazy. They said that New York already has a 50% vacancy. 50% of the buildings are full. You see that going up right after what just happened? How many people want to say, like, yeah, I think New York is where I want to land. And it's scary because you don't know who the courts will go after. That's exactly what they were saying. The governor came out and she know, you know, don't worry, guys, we're not going to do this to you. Trump was just misbehaving, and everyone else is like, are you kidding me? I could go down at any point in time whenever anyone wants to try to attack me. And no one seems to care. Honestly, no one seems to care. And it's a wild thing. I wonder what former President Trump does, right? Does he. Appeal and create more tax litigation to try and win, or does he just burn more money on litigation and still have to owe the fine and penalty? Right? It'll be interesting. He said he's going to appeal, but I mean, I've seen that other side of the thing. It's like, man, it might just be worth it to walk away because it can get extremely expensive. Bad situation all the way around for President Trump. For people, not President Trump. All right, man, well, good stuff this week. You have any parting shots? You know what? I got nothing. My daughter sucked it out of me. She got me last night, man. It's hard not to go in there when she's calling your name. I'm like, I gotta do this. And then I tried to get up and she go. And she basically looked at me and she goes, what? What are you doing? Where are you going? I guess I'll lay back down. Nice. All right, well, thanks, everyone, for listening this week. If you have any questions, comments, show ideas, hit us up at info@swpconnect.com and we'll talk to you next week. The opinions expressed in the podcast are for general informational purpose 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.