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

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podcast where we talk to our friend and sponsor of

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the show, Zach Abraham from Bulwart Capital Management. Zach, it's

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been a very busy week in the financial market world,

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and on Monday we saw stocks and the Dow and

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the NASDAC tank and then a bit of a recovery

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on Tuesday. What is your prediction for what's next and

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how should we be feeling about all this?

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Speaker 2: And what are we calling it? We're calling it the

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Kamala crash, right.

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Speaker 3: Yeah, yeah, So, first of all, we've been talking about

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so I kind of think you need to look at

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this from a couple of different angles, right, So, we

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were prepared for this. We had raised a lot of

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cash and even had some short positions, which for what

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that means is stuff that goes up when the market

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goes down. Nothing crazy, but the way markets work. And

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it's always funny to me because people always cheer market

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dysfunction when it's working in their favor and they forget

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about the flip side of it. Right. So, right, so

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we were looking at this record divergence unlike really anything

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we've ever seen in history between the popular tech names

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the NASDAC and virtually every other index. Right. So, and

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why that's a tell is because if you have and

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everybody's like, well, AI, and you're like, okay, but why

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is AI so popular? It's so popular because everybody believes

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it's going to transform the world and we're going to

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do things with robots instead of you know, people from

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now on. So if AI is what everybody is making

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it out to be, then the whole market should be rallying,

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not just that one group of stocks. Right. It's kind

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of this underlying thing that doesn't fit the narrative, right

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where you're like, wait a second, And those are kind

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of tells you look for where if something is so

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benefit for this that it's you know, you in that

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AI run up alone, those tech companies just off that bump,

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you know, you increase the value of the stock market

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by like three to four trillion dollars. Okay, So if

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that's possible, then that must mean that those companies are

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delivering that level of value to the overall economy. So

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why aren't other companies rallying with it? Right? So that's

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kind of a tell. And then you looked at how

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extreme that got, like everybody was virtually selling everything they

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owned and piling all of their money into Nvidia and

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these AI type stocks. Well, markets are like a boat,

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so when everybody gets on one side of the boat,

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it becomes unstable and pretty soon people are going to

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start running back to the other side. Right, So a

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it was something that we knew had to happen. You

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couldn't just keep loading up in this one sector without

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seeing things slashed back to the other boat. So that

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part of it, to me, is just mechanical. The other

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interesting part about that is that this market is still

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partying as if everybody's seeing stimulus checks and everything is

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growing great. Now. I think the people out there saying,

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oh my god, the economy is in free fall now,

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and that was the first salvo. That also isn't true.

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But you know, if you look at the economic numbers

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just on balance, they don't look bad. They're slowing, you

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see signs of economic weakness. But where I think the

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breakdown is is it's not that everything looks horrible and

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stock market's about the crater. But if we look at

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the underlying data of the market, we look at earnings trends,

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revenue trends, price, and reality have just gone in the

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opposite direction. Right, this market is still priced even now

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after the turbulence we've seen this week, it's still priced

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as if we're in the go go days coming right

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out of COVID, and we're not. It's just not at

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all cost. The living's gone way up. You're seeing employment

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fall down, job openings down deeply. You're seeing substantial wage

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decreases for construction jobs. Right. You're seeing all the signs

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of a slowdown. And it doesn't appear to me that

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investors really want to take those signs. So, you know,

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I think that there's and and that's always the case

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in markets. It's so funny. It's like politics in life. Right,

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everybody wants to pick out a silver bullet and go, oh,

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this is what that means, or this is what happened,

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And it's just never that simple.

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Speaker 1: It's it's but are we in a recession or not

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at all?

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Speaker 3: No? I mean so by any and all definitions. No, okay,

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but that doesn't mean like we were talking about, we

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also need to take into consideration that the numbers we're

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dealing with here. So you know, and we've said this before,

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but if you think back to eight oh nine, the

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Great Financial crisis, right, biggest financial issue that we've had

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in this country since the Great Depression. That whole nasty

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sequence carved three point eight per sent off of gross

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domestic product. The government is currently spending six and a

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half to seven percent of the size of the economy

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in deficit spending. So I think what you're going to

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continue to see is things that look very recessionary, right, Like,

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for instance, I think if you look at manufacturing, I

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think it's a really hard argument to make that manufacturing

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hasn't been in a recession for the last twelve to

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sixteen months. I mean, the numbers are recessionary. You look

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at other sections of the market, especially those that are

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more closely positioned to all the spending coming out of Washington,

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and they don't look recessionary, and so I think you're

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kind of in this in between area. That on the

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concerning side to me though, would be the turbulence. One

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of the most concerning signs I thought I saw this

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week personally was the incredible turbulence you saw on the

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price of the yen dollar swap, so the value of

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those two currencies, and then the nie k, the Japanese

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stock market being down twelve percent in a single session.

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That could be a byproduct of what was going on

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in our markets that imbalance. But we were just having

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our investment meeting and one of the things I closed

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the meeting with was, Hey, everybody, everybody in the general

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media is going, oh, you know, the panic of twenty

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twenty four is over. Get back in there and buy stocks.

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And I'm sitting there going, eh, you don't usually see

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major indexes like NIEK dropped twelve percent in a single

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day for no reason.

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Speaker 2: So you would tell, would you? So you would tell

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somebody like if I were I just didn't look at

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anything yesterday when it came to stocks or anything like that.

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I just didn't look because I mean people like us

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were just like I just don't la la la, right, okay, right,

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So look because you think, okay, I'm just going to

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ride it out. Is that what you would tell somebody

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like us, Like you would just be like, okay, just

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don't worry about it. Just everything ride out. Nothing to

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see here, nothing to be concerned about. It's gonna be fine.

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Everything's gonna be fine. Is that?

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Speaker 3: No? Not at all, Not at all. And I'm not

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saying this to be hyperbolic at all or even talking

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my own book. But what you saw just happen is

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something that we've been talking about for almost a year,

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which is everybody in their mother think back to the

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tech collapse in late nineties, think back to eight oh nine.

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Everybody was loaded up on banks because how could you

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go wrong? Okay, well what is that today? It's the

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big tech companies in the AI play right, Well, what

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you saw and the what the what lesson? And this

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is what we've been talking about now for six months

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in our in our inflation seminars that we're doing and

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all that saying, guys, you are historically overweight the most

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expensive stuck stuff stuff in the market, and you are

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historically underweight virtually everything else. At the very least, you

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need to balance out your portfolio because you are. And

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look here, I feel like the message that everybody needs

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to learn. Okay, Apple, it's safe, right, buy Apple. It

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can't go down. Did you see what Warren Buffett did

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over the weekend? He sold over half of it? Okay, well,

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you guys have heard me griping constantly about how Apple's

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price is a joke, their growth is stalled out, and

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that multiple on the stocks blown out. I just think

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people are ignoring a lot of normal warning signs. Yeah,

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everybody goes, why did Buffett sell Apple? Why do you

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think it's why he sells everything that gets too expensive?

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Like you're selling a company that has zero growth over

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the last eighteen months at thirty five times earnings. I'd

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be hitting that bid all day long. As a matter

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of fact, we sold out of the last of our

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Apple last Thursday for the same reasons, right, like the

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other thing, And this is the part of it where

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you know, you don't ever want to be dominated by

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greed or fear, But I think these investor changes in

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the way people are positioned should be sponsored both by

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fear and greed. Meaning not only has this stuff gotten

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to a point where it's really hard to justify the

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price based on you know, what's really going on underneath,

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But the flip side is is you look at a

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bunch of stuff on the other side of the market.

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It's just been completely ignored because everybody and their mother

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is levered up to their gills and this tech stuff, right,

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So I don't think it's just about avoiding disaster. Here's

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the other thing that nobody's really thinking about you're about

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seven percent away. If the market pulled back another seven

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to eight percent, you'd have a market that was flat

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over the last three years. Wow, right, nobody. You don't

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hear anybody saying that, right. There's still this attitude of oh,

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you can't lose in the market and get in there

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while the getting's hot and all that. And I'm sitting

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there going, eh, guys, you got to You got a

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market that's trending sideways. And what that usually tells you

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is you have too much exuberance priced into a market

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and the underlying reality isn't keeping up right. So that's

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that's the that's the issue you've got. And I think

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in an inflationary period of time, which we are most

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certainly dealing with, a portfolio that isn't growing is a problem. Now.

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What's one of the ways. There's a couple of ways

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to get to get around that. A have stocks that

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actually pay you to own them right by way of dividends.

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Right where think over the last three years. If I

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have a stock portfolio that's flat too, So let's say

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it hasn't outperformed the market, but it's paying me six

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percent dividends. Now I'm up twenty percent over the last

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three years on a compounded basis as opposed to being

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flat right, Well, how many people do you hear run

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around talking about dividends nowadays? Nobody? Right, They talk about

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how they just triple their money in Nvidia and all

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this kind of stuff. And it's just one of those

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anecdotal signs too of what should you be buying in

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the market. You should be buying the opposite of what

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all your buddies are talking about. And nobody's talking about

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their big dividend pair, you know what I mean.

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Speaker 2: Everybody needs a Zach that's done right, and they need

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to They need to be paying attention to you on

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your radio show.

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Speaker 1: They need to be going to your seminars. Tell people

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how they can find you and do those things.

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Speaker 3: Yeah, pretty easy to find I me. You just google

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Know your Risk Radio or Bullwork Capital Management. We do

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our daily show twenty to thirty minutes updates of everything

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important that goes on in the markets, in the economy,

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and politics as it relates to finance, and then we

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do our weekly show. Got a great a great interview

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coming up this week with a PhD economist that worked

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at the Treasury, but also has run a hedge fund

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and got some really interesting insight into what's going on

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on a policy level and things like that. So it's

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gonna be a little wonky.

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Speaker 2: But good stuff.

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Speaker 1: All right. Well, thank you as always, You're always helpful.

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Speaker 3: Thanks, all right, thank you, ladies. And by the way,

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my wife has really been loving your content. She's she's

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laughing out loud multiple times a day following your Twitter feeds,

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so love it.

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Speaker 2: Glad to have her. Yeah, that's awesome.

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Speaker 3: Yes.

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Speaker 4: Investment advisory services offered through Trek Financial llcn SEC registered

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investment advisor. Information presented is for educational purpose is only.

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It should not be considered specific Investment advice. Does not

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take into consideration your specific situation and does not intend

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to make an offer or solicitation for the sale or

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purchase of any securities or investment strategies. Investments involve risk

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and are not guaranteed, and past performance is no guarantee

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with a qualified tax professional before implementing any strategy discussed here.

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Speaker 3: In