Unlocking Market Secrets with Rhys Williams of Wayve Capital | Buy Hold Sell

[00:00:00] An historic day on Wall Street as the S&P 500 tops 5,000 and closes above the big psychological

[00:00:12] level for the first time ever.

[00:00:14] We also see the Nasdaq hitting a high that we haven't seen since 2021 as tech stocks

[00:00:20] continue to fuel that index.

[00:00:23] Welcome everyone to Buy Hold Sell, I am your trader Todd Schoenberger and I am joined

[00:00:27] by my friend and co-host Tobin Smith out in sunny and hot Scottsdale, Arizona.

[00:00:32] Do you read the newspaper?

[00:00:34] Do you follow golf?

[00:00:36] It's freezing ass out here.

[00:00:38] Well, you know what?

[00:00:39] I gotta tell you, we got a little bit of a warm spell on the East Coast right now

[00:00:42] and I'll take it because in the middle of February, who doesn't want to see some

[00:00:46] warm weather?

[00:00:47] Spring is right around the corner and that damn groundhog was right.

[00:00:50] But with us today and the guy who is always right is Reese Williams.

[00:00:54] Reese Williams has some breaking news because we're going to get into that later,

[00:00:58] but he is the chief strategist right now, Reese, with Wave Capital out of Haverper,

[00:01:05] Pennsylvania, right outside of Philadelphia.

[00:01:08] Welcome to the program, Reese.

[00:01:10] Thanks very much for having me and looking forward to it.

[00:01:12] Absolutely.

[00:01:12] There's a Y in the middle there, right?

[00:01:14] It's not just waves.

[00:01:15] It's wave.

[00:01:16] There's a Y.

[00:01:17] Wave, exactly.

[00:01:19] Wave.

[00:01:20] Well, I want to hear all about the new outlet that you have right now because I know it's

[00:01:27] exciting.

[00:01:28] It's a great story and we're going to tell the audience all about it, but we have to

[00:01:32] talk about the S&P 500 right now hitting the 5,000 mark and closing above this threshold.

[00:01:39] Reese, what's driving this market higher?

[00:01:42] Tech, tech and more tech.

[00:01:44] Yeah.

[00:01:45] It is very reminiscent of the late 90s in that regard where it's like everything you

[00:01:49] kind of had outside of tech kind of sits there and tech is just motoring.

[00:01:54] And especially, obviously, the AI theme is motoring the most.

[00:01:59] But to me, the big stocks that are powering this move are not overly expensive relative

[00:02:08] to their growth rate, relative to their history.

[00:02:10] You know, the S&P just made an all-time high.

[00:02:13] Some of these big stocks that are not at all-time highs, Google, Amazon.

[00:02:18] So I think there's several possibilities for this to keep working because I don't see what stops it here.

[00:02:28] Yeah, especially, I mean, first off, now I get this report that says whether a company

[00:02:34] on their earnings report talked about AI and the stocks that companies that didn't talk about

[00:02:39] AI are net negative and the ones who talked about AI are net positive.

[00:02:43] Well, there's a reason and I'm sort of a little bit sick of the- well, first off,

[00:02:49] all the- oh gosh, everything's overvalued. Historically speaking, give me a freaking break.

[00:02:57] I mean, first off, I think now 86% of the companies that have reported

[00:03:02] have beaten their expectations, number one. Number two,

[00:03:09] you know, I think whoever was talking about this this week is right that when you have

[00:03:14] these trillions and trillions of dollars that are all in essentially algorithmic and or

[00:03:22] you know, market cap weighted stuff, it's a, you know, virtual positive signal.

[00:03:28] It goes up in value. The value stocks go down in value, so you- they automatically sell the

[00:03:34] value whatever the freak that means today and the earnings power companies go up in value.

[00:03:42] Now we're gonna have probably the February correction time, you know, every year,

[00:03:48] particularly when you've had like this 15 out of 16 weeks up traditionally and in a presidential

[00:03:53] year specifically, markets down about 8% in February simply to catch its breath for people

[00:04:00] to take profits, etc. But the overall issue, I'm just looking at the numbers I got from

[00:04:06] the electronics association, $180 billion, the hyperscalers, the Microsofts, the Facebooks,

[00:04:13] you know, Metas, etc., are going to spend in 2024 just on, you know, AI,

[00:04:19] what we call the technology stack of AI. In 2025, they're set to do $140 billion. So let me see one

[00:04:27] okay that's $320 billion in capital and that's just the top five companies. I'm not talking about

[00:04:34] the rest. So it should be leading the market time because it is leading the earnings growth.

[00:04:40] They sell these services at very high margins. The Nvidia margin keeps getting higher, by the

[00:04:46] way, and the price keeps getting lower on a, you know, on a PE basis. So it makes sense. And if

[00:04:53] you're in a crummy old business, it makes sense that your crummy old business is not valued like

[00:04:59] a crummy old business. I'm just sick and tired of the, you know, I'm a value investor. I've

[00:05:05] been a value investor since 1945. And I haven't made a freaking time for my customers in 10

[00:05:12] years. It's not fair. Yeah. Bruce, how about that though? Because if you take, if you take a look

[00:05:19] at this market, Toby's right. I mean, it's just we are due for a slight correction. It's probably

[00:05:26] going to be healthy. However, is that the theme of this current market right now? Is that it's

[00:05:34] so inflated that only a little thing, Nvidia comes out with earnings next week. What if

[00:05:39] the number is bad? I mean, is that going to send the markets in a tailspin? Or do you think it would

[00:05:44] just be a great buying opportunity? Well, if the number is bad, yes. The market will go down. But

[00:05:49] I think there's no risk at the market. The number is bad. The question is how good is it? And is

[00:05:54] it above the whisper number? That's harder to pick. But you know, there's clearly just so much,

[00:05:59] as Toby pointed out, there's so much momentum behind AI spend. I mean, every one of these

[00:06:04] hyperscalers dramatically increased their 2024 CapEx guidance all to spend on this, right? So

[00:06:10] there's a reason why Nvidia and Supermicro have been going up every day is, you know,

[00:06:15] there's not that many ways to play it publicly. And some of the bigger AI companies are private now.

[00:06:21] I'm sure that will change over the next year or so because Wall Street would like to do some

[00:06:25] IPOs again. But you know, there's some of the data brick and throw back open AI, the biggest

[00:06:31] one, I'm sure. I mean, I can't imagine what a feeding frenzy that's going to be on the IPO

[00:06:36] market when that happens. So so I think all these things are happening and and so therefore could

[00:06:41] there be a correction? Sure. But I still think you want to buy the correction. It feels to me

[00:06:46] like it's the third or fourth inning, maybe the second or third inning. And it's not

[00:06:50] going to be over until Nvidia is 100 times earnings like Cisco was in 1999. Nvidia

[00:06:56] of this decade reminds me of Cisco of the 90s. Right? You had to have,

[00:07:00] you know, you had to get a router. You had to network your company. You were moving jobs over

[00:07:05] to India and China. And, you know, all that was possible because of Cisco and Intel.

[00:07:11] And it could it really wasn't possible before that. And they created this big

[00:07:15] virtuous circle of of margin expansion. And exactly what's happening again. Sorry, Toby.

[00:07:20] Yeah, I know I've had Dez DeVu all over again as Yogi would say,

[00:07:25] you know, many times about the but it's so different. You know, AOL God bless.

[00:07:31] And I've known Steve Case for a million years, but it really wasn't worth 250 times its earnings.

[00:07:37] Right? You know, Yahoo! For crying out loud. Mark Cuban smartest guy in the world.

[00:07:43] He gets a quite he gets his little broadcast FM acquired for $2 billion.

[00:07:50] And then Goldman Sachs sells him a contract that guarantees the two to billion.

[00:07:56] All the other Yahoo! people lost their ass. Mark Cuban thought of basketball teams having a good

[00:08:01] life, but that insanity is not here. And the sanity is again go back to the thing.

[00:08:09] What are you on the call was so what's your AI strategy sir at XYZ company?

[00:08:14] You know, we're just we're just trying to figure it out. Boom.

[00:08:17] Or what's your AI strategy? Well, we have four different departments working on it. We've already

[00:08:21] cut our costs about 13% in customer service and 15% over here. And we're just getting going.

[00:08:27] Stock goes up. I mean, when you get a regime change in the tech stack, we know it's you know,

[00:08:32] when you were talking about Cisco, that was the internet stack right now.

[00:08:36] You know, I mean, we were early investors in SMC. I have only said that 500 times.

[00:08:40] But the reason was, was that in our research group, everybody understood that who was the

[00:08:47] biggest buyer of Nvidia trips is chips. It's SMCI. By the way, when you go to their manufacturing

[00:08:53] plant as I did in Fremont a few months ago, there's eight semis offloading Nvidia trips to.

[00:09:01] I mean, it, it the way of man, we own Celestica CSL because they're also a manufacturer of these

[00:09:08] containers. And they're a second place because what we also learned when I went on that trip is

[00:09:13] guess what? We can't deliver all the stuff we've sold and there's waiting times. And so you go to

[00:09:19] Celestica or look at Sanmina this week, Sanmina also manufactures the containers for the data

[00:09:25] centers. Sanmina pop, you know, 20, 30% cloud flair goes up 40% because all the AI work can't

[00:09:33] be done on the data center. It's got to be done partly on the edge, right on these

[00:09:38] these POPs around the world. I mean, the whole infrastructure is going to get almost a trillion

[00:09:44] dollars of global spending for all high profit margin products. So let's not, you know, kid ourselves

[00:09:52] about why the market's going up because this is a once in a lifetime transition. Again,

[00:10:00] it does seem that way. And Reese, you know, I'm sure you along with all other Wall

[00:10:05] Streeters were watching 60 minutes and you saw Federal Reserve Chairman Jerome Powell's interview.

[00:10:11] And that was the topic conversation earlier in the week. But I got to say over the last 24 hours,

[00:10:17] nobody's talking about it. It's us all about tech and the SAP really hitting that threshold of

[00:10:23] 5,000. What are your thoughts? Is the Fed right now Fed rate cuts? Yeah, they might be off

[00:10:29] the table, but doesn't seem irrelevant. Yeah, I think the market is now accepted that the

[00:10:34] Fed's not going to cut until June. So I think I think if we're still talking about the Fed's cutting

[00:10:39] in December, maybe that's a problem. But but I think the market's fine March, April, May, June,

[00:10:44] anywhere around there, you saw the CPI was revised lower. And I think I think it's going

[00:10:50] to get actually even better in the first quarter because the apartment rents are actually going

[00:10:56] down year over year and it's still listed as like a five or six in the CPI calculation.

[00:11:01] So so that that and that's 25% of the CPI calculation by the way is rent. So so you're

[00:11:06] almost baked in the cake that CPI trends down in the first quarter here, almost no matter what happens

[00:11:12] with the other inputs. So there's going to be some good good news on on that front. And the Fed

[00:11:18] though is going to probably be a little conservative and and cut. And certainly if

[00:11:23] the stock market's going up, why there's no pressure to cut? Yeah, I'm the one of the sort

[00:11:28] of chat my hide has been this. But you know, historically when we have an inverted yield curve,

[00:11:34] we always have a recession. And again, I sort of say, yeah, but that was like 40 years ago,

[00:11:40] 30 years ago, 20 years ago. How does that at all apply? Where because in those times,

[00:11:46] we had 6% unemployment 7% unemployment, we have more people than jobs. And we continue to have

[00:11:53] many more jobs and we have people able to take them. We have the journal had a great one about

[00:11:59] to have you know, 65 is essentially to do 55 every time I say, I got a money. What am I working? Well,

[00:12:06] I'm 65 and I work because what else would I do? But you know, our economy is so different. And

[00:12:13] for people to use old metrics as if nothing's changed in the last 1020 years to me is

[00:12:20] just insane. And then on top of the insanity is was the five interest rate cuts really? I mean,

[00:12:27] wasn't it circular logic, right? The only way they do it is if the economy went into crapper,

[00:12:35] the economy's not going into crapper because we got more jobs than people can take them.

[00:12:41] And oh, by the way, wages are up. And to your point, the craziness of rents that came in

[00:12:47] from the pandemic, I think people again forget remember we had that pandemic stuff sort of got

[00:12:52] f'd up now in air like Arizona here. My friends in the apartment business, their rents are down

[00:12:58] 14% year over year. When that goes into the CPI and then you take the housing prices.

[00:13:05] I mean, I'm shocked that the houses of Beverly Hills, they're down from 100 million down to

[00:13:09] 85 million Todd. I mean, that's heartbreaking. But that's 42%. If you take equipment,

[00:13:16] owners equivalent rent plus lease. So Reese is dead right, we have inflation that is

[00:13:22] tactically and structurally coming down. And Jbo said, we're going to not rush this.

[00:13:30] And they shouldn't rush it. I think that was the message to try to tell the knuckleheads

[00:13:34] the six great cuts you're smoking some great, great weed. And I'd like to have some of that

[00:13:38] great weed, but I've not now. And I look at this as realities coming and then add in the AI

[00:13:46] revolution around the world. And I think the market's doing exactly what it should be doing.

[00:13:54] It has nothing to do with 1999 with 800 PEs and no earnings, blah, blah, blah, blah.

[00:14:00] It's just not nothing is analogous other than the fact that yeah, there's a mania,

[00:14:05] but this mania is making money. What I don't understand though, Toby, and this also goes for

[00:14:13] you, Reese, is that you have, and you're right, Toby, when you talk about, when you look at

[00:14:17] historical data and some of the things that we were focused on 20 years ago, how that does

[00:14:22] not pertain to this current market environment. But the question that I have that nobody can

[00:14:28] answer is why does the Fed even need to cut rates? The economy is thriving, economy's booming,

[00:14:35] jobs are being made, even wages are going higher. Isn't the whole point of cutting interest rates

[00:14:42] a really the really moment that you need when the market is and the economy is going south?

[00:14:48] Yeah, Reese, take that one. Take that one. I get the easy ones, huh?

[00:14:53] You know, I remember 1999, everybody wanted tech stocks that had no earnings and eyeballs,

[00:15:00] and the tenure had a 7% yield as I recall in 1999. And that didn't seem to upset anybody.

[00:15:08] So I don't think there's anything dramatically, I mean, other than over the last 15 years,

[00:15:14] rates have been super, super low. So these rates seem very, very high right now.

[00:15:17] But historically speaking, current rates are not high. So I think everybody will get used to it

[00:15:23] over time. The last 50 years, the average tenure was 4.1%. It's been for a long time. Obviously,

[00:15:34] going into the financial crisis and then, you know, pandemic so on and so forth,

[00:15:38] that we all were, you know, snorting the good stuff and free money was free money which

[00:15:44] made risk taking a lot less risky. But to normalize, I guess to your point Todd, 4% is normal and

[00:15:53] the economy to your point is doing well at 5.5% Fed funds rates. But oh by the way,

[00:16:00] we happen to be big investors in these collateralized loan obligations, the closed-end funds,

[00:16:04] et cetera, that make loans to private companies. Their rates are higher than, you know, the

[00:16:10] 10-year. Companies are paying them quite well unless they're in a commercial office-based business,

[00:16:15] but what was made? We have higher profitability in these industries. They can handle higher debt,

[00:16:21] blah, blah, blah. So to get jiggy that whether we're at 5% for a while, when 4% has been

[00:16:29] historical and then somehow we were going to go cut to 2%, that would be the abnormal.

[00:16:36] And that's the thing with Reese to say, and I just, it would be abnormal and then we would have

[00:16:41] the issues of more inflation so on and so forth. I'll just end with this one though.

[00:16:46] I've known Jay for a long time and he was a history major in college, not a year

[00:16:51] of beautiful school, Reese, but one of those other, I think he went to Harvard.

[00:16:55] And he's a sensitive human being thing. And what really gets him is the 5% of the

[00:17:03] population that is only earning about 20% of the income and has about 15% of the discretionary income.

[00:17:09] Inflation affects those houses terribly in this household. And he sees it in his heart,

[00:17:14] in his duty to get inflation down and up. I have to hold the rates higher for longer

[00:17:19] to make sure that people don't go and buy a dozen eggs in their five bucks now when they were

[00:17:25] $2 three years ago. That's an important part to Jay Powell in my opinion, my experience with him.

[00:17:32] And the stock market too. I mean, the stocks that have something to do with that lower third of the

[00:17:37] income distribution curve are not doing very well and they're all complaining about it on

[00:17:41] the conference call. Even McDonald's which overall is doing well said the lower third

[00:17:46] isn't there right now. Yeah, I don't really go to McDonald's occasionally.

[00:17:52] So nowhere else to go. I was pretty shocked that my McDonald's egg McMuffin sausage thing

[00:17:58] was like $5.50. That's crazy. I remember that was never like, you know, 225 and you got a side of

[00:18:05] fries for free. And that's not long ago. So yeah, I would absolutely, you're feeding a family of four

[00:18:10] and it's, you know, $30 cash money. Yeah, you think everything was super sized. Yeah, that's right.

[00:18:18] They're paying a lot more for labor than they used to. Oh my gosh. Yeah. I don't think the

[00:18:22] franchisees are making huge money. The corporation does because they only care about a percentage

[00:18:26] of revenues. But I think the franchisees are doing less well now than they did prior to COVID in general,

[00:18:31] in most countries including the ones in California with the $21 an hour rate. That's especially hard.

[00:18:36] Yes. That's unbelievable. That's incredible. I tell you people are riding around range

[00:18:41] ververs working at McDonald's. All right, well listen guys, we're gonna leave it there on that

[00:18:45] block because coming up in the next block, we're going to get into some sectors, some favorite

[00:18:50] stocks. And we also have to hear about the big news from Reese about his big career move. You will

[00:18:57] not believe what he's going to tell us. He's making waves, ladies and gentlemen. He's making waves.

[00:19:02] He is making waves. That's absolutely true. So with us today is Reese Williams. He is the chief

[00:19:08] strategist over at Wave Capital. And you are watching by Hosell. We'll be right back after the break. Stay with us.

[00:19:20] Bye. Hold sell brought to you by Cross Check Management.

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[00:20:25] financial future starts here. Hey, this is Jeff Herc, editor in chief of the Stock Traders

[00:20:31] Omninec. You got to listen to Todd and Toby on Buy Hold Sell.

[00:20:41] Welcome back to Buy Hold Sell. Well today was a historic day on Wall Street with the S&P 500

[00:20:46] closing above the threshold of 5,000. We also see the new stack hitting its highest high

[00:20:52] since 2021. It's unbelievable. Everybody's popping champagne and everybody's making power moves

[00:20:58] and one of those individuals is with us today, Reese Williams. He is the chief strategist over

[00:21:04] at Wave Capital in Haverford, Pennsylvania. Reese, I got to say you got to get into this because

[00:21:11] you were with a very reputable firm with Spouting Rock and I know the people at Spouting Rock

[00:21:17] very well. You're now stepping up even higher with a great story. Tell us all about it.

[00:21:24] So Wave Capital was started a couple of months ago and it's three African-American gentlemen

[00:21:30] all in their 30s and myself. And the genesis of this company was really a couple years ago

[00:21:38] where I met a gentleman named Abraham Cromat at a Duke event. He was an all-ACC linebacker

[00:21:44] at Duke and then played for the Redskins for a nanosecond but really played for the CFL

[00:21:50] for about three years and then went on to be a CBRE industrial real estate broker where he was

[00:21:56] a major player in the mid-Atlantic. And I actually own Prologous which is the leading industrial

[00:22:03] REIT. And so we just got to talking because obviously he had real-time information and for

[00:22:08] quite a while people have been thinking the industrial REITs are about to roll over and

[00:22:12] rents that it's too extended and you should diversify into office, which of course has

[00:22:18] been a tragic mistake. But anyway, long story short he just became a source we started talking

[00:22:23] back and forth and then I don't know somewhere in the last year or so we kind of talked seriously

[00:22:29] about starting a firm because you know this is a really great story. He's a first-generation

[00:22:35] college student with this background and then he happened to have his best friend from Duke

[00:22:41] who was an Alston Bird attorney and also has done a lot of private equity deals with

[00:22:47] another gentleman that gentleman's name is Glenn Williams. He's the Baltimore native and I think

[00:22:54] you guys would get along great. And then Geron Smith excuse me Geron Davis is our

[00:23:02] leading our PE effort and he came out of the Black Entertainment Network Robert L. Johnson's firm

[00:23:09] and he was Forbes 30 under 30. So he's got a tremendous resume and he has actually worked

[00:23:16] with Glenn on these PE deals together both and Glenn's both a lawyer and an operator.

[00:23:22] They've changed out ERP systems they've changed out management and so our strategy on the PE side

[00:23:28] is kind of interesting because Geron led the owner operator group at Robert L. Johnson's firm.

[00:23:36] So he knows all these owner operators so we don't have to do auctions, we don't have to do

[00:23:40] club deals and we're much smaller in terms of the kind of the market we're going after. We're going

[00:23:46] after that five to 15 million in EBITDA company. That frankly is not an area that Blackstone or KKR

[00:23:53] Carlisle can care about because it's just called to move the needle. It's not going to move the

[00:23:57] needle. Yeah so we're playing in a sandbox where we can still buy it five times which by the

[00:24:02] way that's what KKR started out at 30 years ago. They bought it five times they improved it

[00:24:06] they sold it at nine or ten times and that's going to be our business model. Nowadays these

[00:24:12] bigger guys and no offense to them because they've obviously been tremendous companies but they're

[00:24:17] buying it 11 to 14 times and they're kind of hoping for the best so I think we have a real leg up

[00:24:23] and that we can play in a much smaller sandbox. Yeah and you can get rich picking up crumbs.

[00:24:30] I mean that's for sure so that's a great great great out outlook. We don't look at them as crumbs

[00:24:36] we just look at them as smaller companies where there's not quite the feeding frenzy. We want to

[00:24:41] buy you know good companies and and as Geron Geron would be a better spokesman than myself but he

[00:24:47] has this what you would call a bond and a call strategy. He wants most of the business to be

[00:24:52] very predictable maybe not super high growth but then a call option on you know something

[00:24:58] that's AI or whatever just something that has some sizzle that can grow really fast so we can get

[00:25:03] some we have some downside protection but also some upside potential. So that's you're starting at

[00:25:09] the right time yeah you know we've gone through the the with the bust we come back back up

[00:25:17] and again as you say is interest rates come down to a normal level you can you know

[00:25:23] borrow money at a reasonable rate and the returns in your space are pretty outstanding so congrats.

[00:25:29] All right tell them to talk about stocks damn it. All right well let's let's again with that though

[00:25:36] what is wave I mean you're having you have these great minds these brilliant minds working at this

[00:25:41] firm you guys aren't just talking about shop and how to grow this business you've got to be

[00:25:45] talking about the markets give us some ideas give us something other than tech that you think

[00:25:51] that you have your eye on right now that investors should consider for this year. Okay well I kind

[00:25:56] of agree with you and Toby that tech is going to be the leadership so with that caveat I do think

[00:26:03] an area which is underloved right now and a good diversification would be energy stocks.

[00:26:10] I think it's been a air and obviously it was a bad performer last year not so great this year

[00:26:16] but in general some pretty good dividend protection and there's a lot that you know the market is

[00:26:21] ignoring right now about the Middle East that could get you know significantly worse because neither

[00:26:27] Israel or Hamas has a lot of incentive to take a deal that the other will accept

[00:26:33] and given that we think that that conflict is going to keep going and as long as that keeps

[00:26:39] going the chance of something going wrong from a non-state actor just increases so and you know the

[00:26:45] Houthis live for you know live to get their name in the paper and to stand up and to be tough and

[00:26:52] we don't think that anything Biden does even if Biden did a lot worse to the Houthis they keep

[00:26:57] they keep fighting so it's really there there's no really short-term answer and so as long as

[00:27:02] this thing keeps percolating we think there is that risk that energy you know gets really on fire

[00:27:08] and potentially you know you could have a 90 or 100 dollar barrel of oil if anything goes

[00:27:13] spectacularly wrong in the Middle East. I would not use that metaphor for oil that is on fire but I

[00:27:19] know what you're saying how about you know in the United States our own production is down

[00:27:25] because the larger companies are buying stock back they're paying dividends where before it was

[00:27:32] drill baby drill and now it's pay dividends baby pay dividends and buy your stock back blah blah blah

[00:27:39] so I'm with you there I you know the ones that are multi-variate though they have natural gas

[00:27:46] you know they're they have a lot of problems and so I I'm looking at energy I'm looking at

[00:27:51] energy that's much more oily and and then looking at what's happening in Brazil what's

[00:27:57] happening in Ecuador etc for those big offshore well the new developments that are crashing it

[00:28:05] and also by the way Saudi Arabia just said screw you slumber jay and and the other guys don't work

[00:28:12] over here we're not we're gonna quit our drilling program so yeah well they didn't say they were

[00:28:16] going to quit they just weren't going to start a new one in three years yeah it doesn't really

[00:28:20] affect the next next couple of years but that's good everybody's a little cautious about

[00:28:24] oil and the end of oil and you know you I think these stocks will work as long as people think

[00:28:29] there's an end of oil coming in the in the nearest future because it just it doesn't stimulate a lot of

[00:28:36] drilling and a lot of speculative drilling and you know another Duke guy was my fraternity brother

[00:28:39] named like Aubrey McLendon and and I remember with the drill baby drill guys so yeah I would

[00:28:47] add this one quickly for you just kind of you said Aubrey and I immediately thought a natural

[00:28:51] guess I forgot oh I know I'm just gonna say this so there's a there's an MLP fund that's called AMSA

[00:28:59] AMZA and it was started by a good friend of mine like in 2014 right what a great time to you

[00:29:06] know so they bought all these MLPs they had redemptions like crazy anyway the share price

[00:29:13] is about 28 bucks we're in it for like a negative five dollars because we bought it at five and then

[00:29:19] we've taken a two dollar and five cent distribution I mean crazy crazy but they will not pay taxes

[00:29:26] if you're a shareholder in it it's an MLP but you're not going to pay taxes until the stock

[00:29:32] gets to 70 dollars because of the loss carry forward so it's a nice you know 11 12 yield tax

[00:29:39] free so if you're living in California or New York or some of those others Connecticut

[00:29:42] beats working wow we've won a little of the AMLP I'm gonna have to take a look at that thanks for the

[00:29:48] tip yeah so when the thought back to what you were saying in the Middle East are you suggesting

[00:29:55] that if something happens we're saying an oil field is bombed a scud missile goes into it

[00:29:59] that that's going to push oil higher I mean that's what that you're seeing that as as the risk

[00:30:05] yeah or or Iran gets very you know gets involved in a significant way you know which there's a lot of

[00:30:12] a there's a lot of oil in Iran now I think that that that that proxy war maybe Israel fires a misalid

[00:30:19] Iran I mean Israel doesn't like the fact that they might be a nuclear power soon so they might take

[00:30:25] this opportunity to settle that score while you know everybody's busy there's just lots of things

[00:30:31] that can go wrong as long as this thing is as long as there's a very hot war going on in Gaza

[00:30:36] which is currently so the longer it goes then the risk premium actually well gets quite

[00:30:43] really more substantial especially when you're talking about the price per barrel

[00:30:47] which therefore it could translate into higher royalties anyway for yeah but also also remember

[00:30:54] the the tanker rates are up about 40 percent over the last three months so for you to ship

[00:30:59] that million barrels of Brent or WTI it now costs more so therefore you know there used to be this

[00:31:06] arbitrage where you could buy it cheap and go sell it with a lot more money because the tanker rates

[00:31:11] were so low the transportation costs are now high enough that for instance in some parts

[00:31:16] that China and Japan you know we're beginning to liquid LPG propane distributors but in China

[00:31:24] the price is the price has gotten so high because of the delivery on the shipping

[00:31:30] that they're starting to cut back so that's another aspect of what I think Rhys is talking about is that

[00:31:37] it's landed cost and it's the landed cost that as you get higher rate you have no other chance

[00:31:44] but to raise rates yeah that makes a lot of sense then all right let's switch topics here we have

[00:31:49] the Super Bowl coming up Toby you sent me some amazing statistics earlier today talking about whether

[00:31:55] the AFC team the Chiefs if they win or the NFC team the 49ers if they win what which team should

[00:32:02] Wall Street be rooting for you're rooting for the 49ers because 49ers the last five times the

[00:32:09] 49ers have won and of course remember you know they were sort of doing well in those 80s early

[00:32:14] 90s the market was up 20% like 19.8% the next year if the 49ers it wasn't the NFC or the AFC

[00:32:24] the other you know bromide has always been if the AFC wins the market goes up like 8-9%

[00:32:29] but the 49ers so since I think the market's going to be up 25% overall next year anyway

[00:32:35] I'm rooting for the 49ers but I'm betting on the Chiefs

[00:32:39] so

[00:32:41] Rhys do you have an opinion on the Super Bowl?

[00:32:44] You know I like Andy Reid so I'm gonna I'm gonna root for the Chiefs too and Taylor shifts okay as

[00:32:49] well so oh there you go it's awesome I can't name any of your songs but she's good to be there

[00:32:55] right isn't there a conspiracy Todd with the Maga folks there's a conspiracy on everything if

[00:33:01] nobody gets their way there's a conspiracy if you lose a presidential election as well

[00:33:06] so who knows all right final finally here Rhys can you talk about with the election this year

[00:33:13] how that can impact stocks because we've had we had Sam Stovall on we had Jeffrey Hirsch everybody has

[00:33:19] said because this is an election year when the incumbent is running markets always rally

[00:33:26] but what happens now after the the latest revelation on Joe Biden what happens if Biden steps away

[00:33:34] will that have a negative impact on the markets you know that's a very interesting question but I

[00:33:38] would say almost everything in Washington that could go wrong has gone wrong recently

[00:33:44] and the markets don't seem to care yeah so I think you can overly sweat what's going on in

[00:33:49] Washington I mean clearly there's complete dysfunction in Congress right they can't even

[00:33:53] they put together a bill that everybody agreed to and then they decided that the last minute

[00:33:57] because Trump didn't like it that wasn't gonna happen I mean and everybody walks away and

[00:34:02] and you still have you know clearly a border issue that everybody seems to agree that there's a big

[00:34:07] issue and nobody can do anything about it and yet the market doesn't care so I just think you

[00:34:12] can as long as Washington doesn't do anything completely crazy to the economy or to the

[00:34:17] stock market the people will look through it to your question about Biden and whether there's

[00:34:22] a replacement there's certainly no sign that he's going to back down you would have thought

[00:34:26] he could have gone out like a hero a couple months ago a democratic hero he beat Trump

[00:34:30] and he's going to pass it on to the next generation but for whatever reason he's decided he's not

[00:34:34] going to do that so I don't know why especially now that the special special prosecutor said he was

[00:34:42] you know losing it that he's going to decide today to step away I wouldn't I can't see why he

[00:34:47] would do that yeah I was interested in the there's there now a couple of research groups

[00:34:53] are doing the research on one of the things that surprised about the US economy is because

[00:34:58] we have so many immigrants that have come in that are mostly all working that there's a level of

[00:35:06] income and spending that we haven't had and if you take over the last two years that's like

[00:35:10] six million people out of a country of 335 million you know at the margin that they're getting

[00:35:18] paid in cash mostly and they're spending that cash and they're spending it in areas that are not

[00:35:24] you know necessarily urban suburban areas which helps other parts so I'm not saying where it's right or

[00:35:29] wrong but yeah inside effect of all these 6000 people today by the way in 60 minutes they had an

[00:35:36] incredible story this last weekend about how this guy has this land near Tijuana and people just

[00:35:43] there's YouTube's that tell them how to how to get there so they can step over this guy's land

[00:35:48] yeah it's amazing a week yeah I mean and we can't stop that you all the three of us could go freaking

[00:35:54] stop that if you know we actually want it though but but to your point it's it's great for America

[00:35:59] it's it's the reason why we're not China and we're not Europe right we have immigrants and they do

[00:36:04] jobs that buy we won't do don't want so so to me it's like the greatest story ever told

[00:36:09] immigration I don't but it's it's a political non-starter both with the democrats and republicans

[00:36:14] and I actually think it's a risk for after the election because certainly if Trump gets elected

[00:36:19] it's going to be there's going to be a hammer down on all kinds of immigration I bet you both legal

[00:36:25] and illegal uh and and that has some longer term implications for the US economy so

[00:36:31] well that's that's way down the road come on it's way down the road it's not this year

[00:36:35] it's not let's think about it's good to play at that sea though yeah but the S&P 500 was a thousand

[00:36:43] on February 2nd 1998 it's 5000 today I'm not really good at math but there seems like that in 26 years

[00:36:52] it went from 1000 to 5000 that is the story of America capitalism technology you know and um

[00:37:04] I I'm a you know all those years on Fox News believe it or not I'm totally politically

[00:37:08] agnostic thankfully on the shows that we never got into that stuff but man I you know I can't

[00:37:13] solve that problem but I can help people make money on it I help people get you know retire better

[00:37:18] that's all I can do on it but don't ever you know who said it recently don't ever bet against America

[00:37:25] it is not a good bet and by the way Germany is going to be about negative 5% this year

[00:37:31] Italy is going to be negative 4% the Americans they know how to make this money

[00:37:37] yeah Toby is announcing his candidacy for us senate I love it oh yeah that's another break in

[00:37:44] history my skeletons have skeletons taught okay it's not gonna work do you think that matters anymore

[00:37:52] there's nothing you could do that that has ever done that would surprise anybody anymore

[00:37:57] I've never been the dog or heard a cat that's about it that's everything else probably is a

[00:38:03] fair shot I love it I love it I think that's great well listen I know Toby you've been rocking it as

[00:38:08] well with your performance and that that's for goes I mean you're an experts expert along with Reese

[00:38:13] Williams so but and we definitely have to get into those numbers later on and I know we will

[00:38:18] definitely on your new show Money Mavericks which is going to be launching in the next couple

[00:38:23] of weeks we are so excited about this show it is cutting edge everybody's on the edge of

[00:38:27] their seats waiting for this show to come out and it's going to be fascinating I can't wait

[00:38:32] to watch as well as so many others I wish I lived in your private Idaho Todd I really do I think that's

[00:38:41] there you go Reese I want to thank you so much for joining us today on Buy Hold So we're so happy

[00:38:47] to hear about the power man you have with your career and can't wait to hear more about it

[00:38:51] yeah excited we have a description for everybody as well can I just add one more division that

[00:38:56] we didn't get a chance to talk about we have a really good business which is focused on influencers

[00:39:01] and athletes obviously two of the principles of our firm are former athletes and they have

[00:39:06] a good Rolodex of fellows in their you know late 20s early 30s but but but we can we can help people

[00:39:13] with some of their financial matters and a lot of these people are kind of new to money and

[00:39:19] and I pick are underserved because in general you know Wall Street is guys like us and clients

[00:39:25] like us and this is like a whole new a whole new world of people with with with new money that

[00:39:31] that not necessarily know a lot about how to how to manage it so we're going to try to help that as

[00:39:36] well I love that I think that's that's wonderful and Toby and I will be at the Emmy Awards next

[00:39:42] year so maybe we can get you some more prospects that would be great so one that entertainment

[00:39:49] Reese thank you so much for joining us today on Buy Hold So I just can't wait to get you

[00:39:54] back on and um and can't wait to hear more about it so what do you have thank you thank you and on

[00:40:00] behalf of Reese Williams and Tobin Smith and the rest of the crew we'd like to thank all of you for

[00:40:06] joining us today on Buy Hold So I can't wait to talk about it next week we have Danielle Shea she's

[00:40:11] going to break down these video numbers for us on the technical side you definitely don't want

[00:40:15] to miss that because she's got some great things to say for everyone so have a great weekend

[00:40:20] enjoy the Super Bowl take care

[00:40:28] Buy Hold Cell brought to you by Cross Check Management

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