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Speaker 1: Welcome to another episode of the Chicks on the Right

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podcast where we talk with our friend and sponsor of

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the show, Zach Abraham from Bulwart Capital Management. And as

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of the recording of this program, we saw some crazy

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swings in the stock market as a result of China's

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AI which is apparently very competitive and cheaper than the

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United States open AI, and that sent stocks like scrambling

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and then everything's sort of leveled out, which is why

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we wanted to talk to you today, Zach, about what, like,

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what should the reaction of a regular person be when

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it comes to their portfolio and they see these kinds

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of swings, Should they be fearful of tech stocks or not?

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Speaker 2: Yes and no. So the issue with the issue with

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tech stocks we've been talking about so today today is

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a very good example of the dangers of owning some

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stocks that are extraordinarily expensive. Okay, so if you look

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at Nvidia, like a stock like in Vidio, it's getting

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hit one of the hardest today, great company, but it

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has so much optimism built into the price of that

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stock that even the smallest little adjustment to those forward

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looking earnings projections they change massively and the stock has

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to sell off, So generally speaking, I don't think there's

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a big thing. Here's the problem, though, the problem is

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because of the way people have been invested, they are

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more exposed to these kinds of stocks than they have

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ever been exposed to any kind of stock. So let's

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just say they have an SMP five hundred ETF for

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mutual fund. Okay, probably somewhere in theybor to forty to

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fifty percent of their holdings are companies like in Vidia

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and Marvel and you know, these tech based companies. And

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then what's scary in general about this market? You know,

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I look at a company like Apple, Apple's up over

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four percent. That's just as stupid to me as what

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you see going on the others. Meaning, this is what

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scares me about this market. This market, regardless of what's

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going on in the underlying economy, this market is just

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completely divorced from anything financial. Right, So, like, if you

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look at Apple today, it's up four percent, that's about

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one hundred and fifty or one hundred and sixty billion

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dollar increase of their market cap because AI chips that

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they don't sell are going to go for less what

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it and it's just one day, right, you can't take

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one day too seriously exactly. But these are examples of

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how ridiculous this entire market really is. And one of

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the things that we've been telling people is, look, whether

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you're going to get hit right now or whether it's

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coming later. The one thing I can tell you is

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you are the most loaded up in the most expensive

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and most overrepresented sector in history. So should you have

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exposure to it? Yes? Should you have as much as

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you probably do? No, not even close. And and it

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even gets exacerbated because not only people will own these

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ETFs and mutual funds that are way over represented by

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this kind of stuff. On top of it, a lot

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of them have bought these stocks along the way. So

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we'll take in, you know, we'll take in portfolios all

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the time that are sixty seventy percent in those companies, right,

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and it's just it's just way too much. Now on

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the flip side, you're going to see a bunch of

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things get hit today again, like some of the uranium

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companies that we own have sold off hard. How does

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that really correlate to AI chips? It doesn't. But again,

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in a stupid market that is working so and I

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you know, I don't know what else to call it.

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It's just detached from reality. We said, look, a lot

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of this stuff's gonna have to sell off. When it does,

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a lot of the really good, cheap, really solid, fundamental

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stuff will sell off too. Why because why not? Right?

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So we actually see this over the short term, if

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you own a lot of that stuff, I think that

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you know who knows. I mean these stocks are still

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so expensive that you know, you look at companyike in video,

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in Vidia could drop fifty percent and still be historically expensive, right,

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I mean it's down sixteen percent today, So yeah, I

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think people need to be careful. But this just gets

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to the risks that we're seeing out there, which we

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see so many great opportunities. But the problem is is

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tech is dominated for so long that it has become

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the vast majority of everybody's portfolio. Should you have exposure

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to it? Yes, But diversity is a good thing. Right now?

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Speaker 1: What's the percentage then? Like what what what would you

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recommend as a percentage of your entire portfolio?

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Speaker 3: The diversification percentage?

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Speaker 2: Yeah? I mean long term, you know, we don't ever

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like to exceed twenty five or thirty percent in a sector,

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but for us to be that involved in a sector

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we have to see extraordinarily low prices. Right Again, this

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is what's so pernicious about that. Not only are you

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so overloaded by like forty percent in this sector, it's

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also the most expensive sector in the market, and it's

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the most expensive sector in the history of the market. Right.

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So again, not saying the whole bottom is gonna fall

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out tomorrow, but there's two things that are gonna happen.

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Those stocks have made the majority of the gains that

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they're gonna make over the next five decent, meaning those

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stocks are not going to continue their performance over the

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next five to seven that they have over the previous ten.

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They're just not okay either well they either they won't

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or those companies will all be larger than the size

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of the entire US economy. I'm gonna bet that's not

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gonna happen, okay. And so the other big issue, though,

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like we've said before, it's not so much well it is.

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It's not just a problem what you're exposed to, it's

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what you're not, right, that's the other problem. Not only

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are you forty percent exposed to this sector, but what

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else are you not exposed to?

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Speaker 1: Right?

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Speaker 2: And that to us is the biggest danger because we're

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looking around a bunch of different sectors and a bunch

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of different places, and we're seeing you know, I was

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talking on our own show about a wonderful, growing, well run,

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beautiful balance sheet, solidly cash flowing natural gas company that

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we own that's going to be right in the middle

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of shipping this whole surge of shipping liquid natural gas

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to Europe. And oh, by the way, they're also paying

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a twelve percent annual dividend, right, And so you're looking

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at stuff like that, You're like, man, why am I

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going to mess with something like Nvidia twenty five or

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thirty times revenue when I'm sitting here buying these wonderful

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companies that are paying me twelve percent. You know, there's

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there's just so much better.

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Speaker 1: Stuff to own out there, and go ahead, No, no, too, Bay,

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go ahead. Oh I was gonna say. So, Like when

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there's these giant you know, when you read the headlines

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first thing in the morning and you see, oh my god,

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like the futures are saying the world is ending and

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everything is going south, it's so tempting, I know, for

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people who are risk averse to be like Oh my god,

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I gotta get rid of all my tech stalks. Yeah,

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but you're you're not suggesting like when you see a

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headline like that, dump everything and run for the hills,

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you still should be exposed. Maybe, just not a crazy amount,

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is what I'm understanding.

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Speaker 2: Yeah, and this is what's so important. Right Today is

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an annoying day for us because some of our stuff

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is getting hit right along. But why are we not concerned?

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We're not concerned because our stuff is at ridiculously priced, right, meaning,

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you know, if I've got you know, let's say you know,

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let's say I'm buying a I don't know. Let's say

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I'm buying a house right now in or let's say

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I bought a house five years back and it only

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it had only rallied fifteen percent since the eight or

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nine lows. Right, I might not be the best price

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out there, but I'm sitting there going, Man, if this

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thing's only fifteen percent off the O nine lows, I'm

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probably safe. Right, There's probably not a lot of fluff

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in it. For instance, if you're buying these kinds of stocks,

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these AI and tech type stocks right now, it's like

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buying a house in two thousand and seven, right, I mean,

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you're just buying these things priced to perfection. It doesn't

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guarantee a collapse. These things have been expensive for a

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long time. But what it does say is again today

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should be a good reminder to people, this is why

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you need to make sure you have a portfolio. And guys,

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this cycle has gone on so long that it's to

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the point when we get clients that bring portfolios in,

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it is a rare event that you have a portfolio

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that is properly diversified. It's shocking even people that have

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somebody else managing their money. Right. So, then, to get

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to your point, all of this is about. This is

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not about the failure of AI. This is not about

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America losing pace in the AI. This is about a

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Chinese firm used several lower quality or not the most

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expensive chips that in Vidia makes. They used stuff that

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was two or three generations old, so way cheaper, and

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they got outstanding results, which calls into question all of

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the tens and hundreds of billions of dollars that we

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thought so many of these tech companies were going to

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have to spend on these chips. Now, personally, I think

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the market is overreacting. What's hard about it, though, is

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the market has already way over reacted to the upside

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of AI sow reality in here. I don't really know,

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but for the majority of these companies, today is a

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perfect example of why we've just said, we don't buy

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stuff that that's insane, that's that insanely expensive, because it's

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impossible to know what it's really worth.

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Speaker 1: Oh my gosh. Well, and when we say today, by

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the time this podcast airs, will have been talking about

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Monday the twenty seventh, which is when everything was so

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crazy with the market. And by the time this podcast airs,

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you will have done another webinar, which I know our

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listeners are huge fans of. So what can people expect

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out of your webinars and where can they sign up?

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Speaker 2: Well, so we're going to walk through our general you know,

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our process and show you how we do things and

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you know how it's all about trying to minimize risk

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but maximize upside potential. And in this one we're going

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to show some specific charts. They don't necessarily, you know,

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tell you exactly what's going to happen, but people need

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to understand where we are and how how far out

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there we are in terms of historical norms, and it's

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not just about fear and risk, but it's also about opportunity. Right,

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if we're buying things that are overpriced, it means that

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we're not buying things that aren't right. There's opportunity costs

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to investments. So we just want to show them some

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of that stuff, show them what we think the risks

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are out there, and then also show them what we

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think there's some unbelievable potential investments that people are ignoring

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the best way to do that is go to Know

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your Risk radio dot com, Bulworkapitalmanagement dot com. Sign up there.

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Speaker 1: Awesome, Thank you so much, Zach. We appreciate it as always.

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Speaker 2: All right, thank you, ladies, thanks for having me.

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Speaker 3: Thanks Sach. Reservices offered through Trek Financial loc and SEC

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Registered Investment advisor. The opinions expressed in this programmer for

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general informational purposes only, and are not intended to provide

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specific advice or recommendations for any individual or on any

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specific security. Any references to performance of security so are

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thought to be materially accurate, and actual performance may different

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investments involved risk and are not guaranteed past performance doesn't

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guarantee future results. Track twenty fourth Throe zero