Election Market Movements and Nike's Plummeting Stock Ep. 260

Join Tony, Luke, and Derek in this exhilarating episode of "Capitalist Investor" as they dive into the latest market updates amidst election uncertainties. Get their expert analysis on how the political landscape might influence the economy for the rest of the year. They also break down the shocking 25-30% dip in Nike’s stock, exploring whether the brand’s recent decisions have led to its decline. Finally, indulge in a lively discussion about Trump’s audacious golf challenge to President Biden and what it reveals about their characters. Packed with hot takes and financial insights, this episode is a must-listen for every investor!

Transcript

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Hello and welcome to this episode of the Capitalist Investor. As always, you have me, Diamond Hands D, and we got the whole crew here. Tony the tiger, cool hand Luke. What's going on, guys? Yo, yo, what's up, man? Alright, well, Tony's been waiting a while for this one, so let's get all of our hot takes out of our system. All right, we got, we got three, we got three topics. All right, hit it. The election update in the markets. How does this play out for the rest of the year? I think we, I think Luke was itching to talk about that on their last podcast. So we'll talk about it. This podcast. Nike down 25, 30% in the last few weeks. What the heck happened? Or Nike woke. Yeah, but then you also have, during the great debate a few weeks ago, somehow the discussion of golf came up. Now, you know, Trump just recently said, you know, asked President Biden for a golf match, you know, and if he, if Trump were to lose, he'd donate a million dollars. So let's have a hot take on that. So anyway, all right, so elections and the markets, does the market even care that there's an election going on right now? So, Luke, what do you got? Just not yet. Moving on? Yeah, just, just not yet. I don't think the markets cared up to this point. I think as we approach the next three months and we get clarity if Joe Biden is the nominee or someone gets in, I think the DNC convention is, what, September? Is that that far away? Yeah, I think it's in September, if I'm not mistaken. Maybe I'm wrong, but I think it's around that time and I think we get more clarity on if Biden is it, or Kamala Harris or somebody else. Can they move? Like, can they put somebody else out there that quickly, like September, October? I mean, you're too, it could be. Part of their plan to kind of shock and, like, get everyone that, you know, because right now the mentality is Trump kind of has this in a bag. It's kind of how it feels. And I don't like that feeling. I don't like that feeling at all because usually when that feeling happens, like there's something that we're not aware of that's going to be coming and that could be like the last resort case scenario. Things get switched up, something happens, and the next thing you know, a new person's in there and rocking people's feelings and emotions and it, you know, could change the outcome of election. I don't know. My point is I think when we get more clarity. And historically, if you look at markets, if the income has nothing to do. I'm sorry. Go. I'm sorry. My bad. It has nothing to do with Democrats and Republicans. It has to do with the incumbent winning or losing. And typically in election years, when the incumbent loses, we see a drawdown in the market upwards of 16 or 17%. That has not happened this year. We've seen, like, a drawdown of 5%. It's like the biggest drawdown. So I think it's important to take that risk into consideration. If, as we get closer to November, Trump victory looks more likely, we could see a drawdown because of uncertainty. Now people are saying in the markets, all these experts and analysts are saying that the market doesn't care because we've already seen a Trump victory. We've already seen what Trump does, and we already saw what Biden does. So no matter who wins, we already kind of know the playbook. I don't necessarily think that's the case. I think that still, you have to use history somewhat as a gauge to what's going to happen because of unpredictability. And this world gets crazier every single day. It feels like. Yep. So, you know, talking last episode about all the, the cracks in, in the maybe hidden cracks in the economy, everything Luke said, 100% accurate. There's obviously a long history of who gets elected and then what happens afterwards. Usually not a huge correlation either, but it does feel very, very different this time around. I think one of the main things that is really adding to the cracks in the economy is essentially the unlimited government spending, which I can only assume is going to continue if the Democrats and or Biden get reelected. It is just wildly out of control. It is obviously causing one of the main sources of the cause of inflation. And if we just continue down that road, it's definitely going to lead to a recession. If the same policies are just, you know, implemented over and over and over and we're just spending unlimitedly, it's going to end badly and, you know, call. It inflating our way out of debt. Yep, exactly. Yeah. The, the Republican National Convention is next week. The Democrats is in August. Yeah, mid August. So it's in Chicago. But anyway. Well, I was one month late, so. Yeah, this, this administration is, I kind of, my theme is, yeah, they're gonna make sure that this thing stays afloat. So it is not a topic at a debate. Like, look at the, look at the, the economy, look at the market. It's crashing. Like, that's not gonna be something. So that is why there is a lot of government jobs being created. Keeping this thing afloat for the next six months is in the current administration's best interest. And that's what's going on right now. And that's why we're spending a trillion dollars in the first quarter of this year. I think we're on pace to do the same damn thing, man. And now you start hearing kind of a side note, now you just start hearing about how on the debate, Trump is like, Joe, you're killing Medicare and Social Security. You're letting all these illegal immigrants coming in and putting them on Social Security. Right away, man. I can't wait to see the updates because we always talk about that in our educational classes when trust fund's going to run out. Could be running out a lot quicker. But another thing is, is that CEO's do care about who is going to win, because then they can start planning ahead of time. And after this last debate, you know, Trump took even more commanding lead on who's gonna win. And that means that the current tax rules are gonna stay in place. They'll probably be modified or whatever, but not much, not much is going to change. And CEO's can build around that. And uncertainty is what drives the market down. When there is certainty and you can deploy capital into whatever you're going to do, that that goes a long way. So that's my hot take I try to look at. So how my brain works is I think the way you sometimes want to position or think about the future is what would be the most likely headline? Or what? What, what headline can you imagine is going to be the case here in a couple months? So when I take a look at my brain, I'm like, what could be the headline in like September, October, right before the election in regards to the stock market? And I can just imagine a 10% plus drawdown happening around that time in the market. The first 10% drawdown we've had this year, which is very common actually, in election years, when sometime right before the election, like September, you think before? I think, like right afterwards, that's gonna happen right before. And then Trump's gonna see, say, see, look what Joe Biden is doing to the economy. The market's down. This is all because of Joe Biden. And then you have Joe Biden say, well, in the polls right now, Trump's winning this market's pricing. And like, Trump winning, this is what you're going to get when Trump wins. I can kind of see, like, that fight them blaming each other for that because it's always going to be spun. But I can see, like, the headlines, like, you know, us, everyone talking about it on tv, seeing Fox, CNBC, whatever it be like, you know, why is the market drawing down? Is it because Trump is because of Biden? Like the big debate? Like, I think that is likely actually to happen, right? I think the headline, I can just see it right there plastered everywhere. All right, next hot take, Nike. It's down 25% in the last two weeks. Any hot takes? Well, the obvious hot take is their stance on things lately might have been slowly, you know, eroding their base. I used to buy all kinds of Nike stuff, and I don't think I stopped because of Colin Kaepernick or whatever the case is. I just kind of naturally have stopped. Honestly, I would say 80% of my golf gear was Nike. And a lot of that has to do with Tiger woods. This is definitely a hot take. So Tiger woods leaving Nike essentially ruined the golf brand for Nike. It is not as cool anymore. You barely see anyone wearing it. Now, the guy at the John Deere classic, I can't come up with his name, but he was a first time winner. He had a cool Nike shirt on. That was the first time I've noticed a cool Nike shirt on the golf course in a long time is usually Scotty Scheffler. Dave Thompson. Dave Thompson, yes. That was a guy. I think he shot a 59, too. That was wild, dude. He was 25 under. So I think it's a combination of things. I think the coolness factor to the brand is down. I think the popularity of the brand is down. But I also think the economy is not as strong as people are saying. And it is a lot of luxury items, whether it's shoes, golf clothes, exercise gear, whatever the case is, you know, people are just, you know, that's, that's not a need. That's not what they're going to buy. I think the last point is key there. I think that's what I would blame it on is just what we talked about before. You know, some holes, cracks forming in our last podcast. I think that all trickles through discretionary spending. You're seeing restaurants take a hit. You're seeing the kind of fast food, the junk food take a hit because, you know, people blame on Zempic. But I think it's also because discretionary income, you see Nike take a hit. So I think it's all based around discretionary income just being lower and people feeling strained. I mean, you gotta remember, companies need to grow to. For the stock prices to go up. And even if they're flatlined, like, that's still gonna impact the stock. And that's essentially what's happened, is you gotta continue to grow. The economy still needs to remain so hot for companies to make money, and that's just not happening. Yeah. So I was on, like, Schwab network back in February, and I talked about Nike as one of the stocks that we own. And, you know, some of the great one. The reasons why we own it, fundamentally, technically, all this stuff is, you know, they're one of the most recognized brands. You know, did not. Did Tiger woods ruin that? Maybe. I don't know. You know, but on the golf gear stuff, just. I have a lot of golf shirts, and now I just, like, there's, like, little pockets of. Of people creating golf shirts that are just as expensive as Nike, but look cooler and the designs look more fun. So, I mean, I shout out Peter Millar if you want to sponsor me. Travis Matthews. A great brand. Sunday swagger, really tiny. Never heard of any of these. Yeah. Need to golf more. Last hot take on Nike. Oh, I'm sorry. Do you have more on Nike? Oh, yeah, I just started. I just started. No iconic brand. They have been, you know, their numbers have been anemic and. But 2024 should have been. It should be a big year for them because the Olympics, they're the main sponsor of the Olympics this year. They're gonna be everywhere on tv for the next, you know, for three weeks in a row. Right. They recently announced a$22 billion caught reduction program. Well, they just cut a bunch of people. They just fired a bunch of people. 2% of their labor force. Yeah. I mean, and, you know, there's a lot of. Lot of people at the top all. Exactly. So that's another thing. But they have historically just generated good free cash flow, and I'm sure, like, the dive in their price, you know, could make them a good buy at this point. You know, and they provide a dividend. They were talking about stock buybacks, and they might even be more aggressive on that now that the stock's down 25%. If they have sitting on cash and they like their stock at 95, they're going to love it at 75. So maybe they're even more aggressive on their stock buyback. That's fair. I like that. And again, back in February, within two years, our team at that time, I didn't really research. I didn't go and ask them this morning or last couple days, but their fair market value on the stock is $150 a share. Could be a good buy. I might go buy it myself. I don't know. I got to see what our investment team's doing. Keep us posted on it, so. But it's not a recommendation. SWP did own. I think they still own Nike, unless they trimmed it or sold it because of the fall. As of this. As of this recording, I'm not 100% sure, and. But I don't own it. But I might because of the things I just talked about. All right, next. So last. Last take on Nike. How old is too old to wear Jordans? We do on Nike. Yeah, we stole it. Yep. I knew Chris wears Jordan. All right, so our engineer. Our engineer, who's pushing 40. You're basically 40. 46. Okay. Okay. All right. I was gonna. I was gonna go maybe, you know, late thirties, early forties. Okay. All right, man. I like it. Still rocking. Jordansen. Um, I don't know, man. You have to have a look. Never too late. You got you. You gotta be. You gotta dial it in with everything else. It's never too late to have swag. That's what I say. Never too late. Never too late to have swag. Everyone can have swag at any age. I know. Seven year olds have tons of swag. More swag than I ever will in my life. Fair enough. All right, there's a. Derek, is when. When do you. I mean, you brought the question up. I I think. I think. I think anybody at any age can pull it off as long as the rest of your demeanor, the rest of your gear looks tied in. I don't know. I mean, I was at the airport last week, and I saw, like, this. 75. You had to be, like, in the seventies using a wheelchair. He had earrings. He had tattoos all over. He had, like, swagged out, like, he had, like, a phoenix v neck, something on. He had, like, a chain. Like, I'm like, this dude swagged out. He's, like, 75 years old. I'm like, this guy. I will never be this guy. I want to be that guy. I will never be that guy. Just an example. So I personally think I'm too old to wear Jordans now, so I just can't pull it off because I don't have that swag. And next year, you're going to be, get off my lawn, guy. Yeah, well, I mean, I'm already there. Already there. Get off my lawn, Chris. So do you wear, like, the casual Jordans, or are you, like, sport jacket, jeans, and Jordans as, like, the dress shoe. Both. Yeah. So, you know, I just. I just can't pull that off. I just can't. And I knew. I just had a feeling that Chris was so I thought it would be a good. A good topic. I mean, I have some, like, classy looking tennis shoes, but they're. They're. No, they're like. They're not Nike. They're not a tennis shoe. But they look like a. Like a. You know, converse. You know, they look. But they're. But they're all black. But they're a tennis shoe. But they. If you look hard enough, they could pass as a dress shoe, you know, but they're really a tennis shoe. That's. That's my. That's my angle these days. Like, low key. I'm just kind of trying to stay low key. Like, I'm not. I don't need white and baby blue Jordans with my suit on the. Yeah, I can't do that. Did you have that? You have the original Jordans back. Back in the day? All right, we gotta get to our last topic, guys. Yeah, I think we gotta get back to tradition and just wear, like, top hats and, like, suits everywhere. That's what I think. Top hats is a. It's a bold move, Cam. I will do that. Cam Newton likes that. All right, all right. What's the last one? All right, last one. We heard at the debate, them talking about golf, Trump and Biden. And now Trump has officially come out and said, I want a match against Biden for a million dollars if he beats him. If Trump gets beat, he would donate a million dollars to any charity he wants. And Trump said he would give him 20 strokes, ten on each side. And that is essentially telling Biden. Trump is telling Biden that he sucks, like, a lot, because according to Jin, you know, which is, like, the official handicap keeper of the golf clubs and things like that, Trump is like, a two or three handicap. That means he's pretty. Pretty dang good. He'll shoot near par all the time. He's basically telling Biden that, you know, you probably can't shoot under 110. That's essentially what he's saying. I mean, how can he not be right? I don't know. That dude can't walk down steps or upstairs. I don't think he. How do you even putt. There's zero chance he could finish 18 holes. I mean, 18 holes on a putt putt course. Trump would eat his lunch. Yep. I think. I mean, Trump obviously has a vanity handicap, and that is, you know, basically saying, that you are better than you are, so your handicap gets lower. Whether that's, you know, giving yourself putts, kicking it out of the trees, whatever the case is, he's definitely not a two handicap, but he's. He's a decent golfer. But. But it. So we had this discussion before we even. The thing, like, Chris is like, he lies about, and, like, that's okay, but he's officially a two. So when if I were to go play Donald Trump, like, I'm gonna get a bunch of strokes because he decided to have a vanity handicap. That's on him. That's on him. Not. Not because he. Sure, if you want a line, you're not ever going to win a competitive match in golf at your country club. Essentially what it means. I hate to be the boomer here. I hate that we're talking about this. Why are we in the Hunger Games right now watching the debate and seeing them talk about golf for a minute and, like, arguing about who's better and what handicaps are like. I'm like, how did we get here as a nation? As a country? We used to fight world wars, you know, win those. We used to be men of integrity, respect, and, like, the presidency was respect, a respectable position. It's like, now we're talking about golf, which majority people probably don't golf. Cause no one has the time to golf. They're working their butts off. I mean, the man. The man's got a hobby that he's passionate about. You know, he's passionate about the country. Did you hear him talking about all the other. Was. It was two minutes out of a 90 minutes conversation? Yeah. Why? It came up. Yeah, it was a little weird, but it made 90 minutes a little more. Maybe made him relatable, and so. I don't know, but, like, maybe relatable to 5% of people that golf. I don't know, but it just. It irritated me a little bit, I'll be honest. Well, there. Not to be the Debbie downer. There was many more parts of that debate that irritated me a lot more than. Than just the golf talk, I'll say that. There was a moment of levity in an otherwise embarrassing, embarrassing performance. I think a golf match should determine the election. That's, I think. Yeah. Trial by combat. Yeah. I like this. Well, it's like, you know, back. You know, I was watching movie this couple days ago, like, you know, the old school way of, like, you had two, you know, leaders of nations or two, like, warriors. They would fight it out. Whoever won would, like, dictate the battle. Who won the battle? Like, they wanted to do that. I think that we should go back to that. Yeah, I mean, there's several movies like that, like the Skulls, Troy, like Troy, you know, Brad Pitt. And then you got, like, the end of the last thing of John Wick. You know, they did a duel, I'll be honest. Grab a gun. I was watching 20 paces. The movie I was watching, the movie I was watching was Warcraft. It's based on World of Warcraft. It's the first time I've ever seen that movie, but that's what I was referring to. But at the end of the day, I mean, it's. And I think as of as this podcast, like the gauntlet was thrown down and Biden administration declined. So it's not gonna happen, but it will continue to be talked about for sure. All right. All right. Well, we got a little rambly there at the end of that one, but thanks for listening. We would definitely be interested in your hot takes if there's anything that you wanted us to debate. But thank you for listening to this episode. If you have any questions or comments, show ideas, hit us up at info connect.com and we'll talk to you next time. 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