The I Love CVille Show With Jerry Miller! - Alex Urpí & Xavier Urpí Were Live On "Today y Mañana" On The I Love CVille Network!

Episode Date: February 6, 2025

Alex Urpí & Xavier Urpí were live on “Today y Mañana!” “Today y Mañana” airs every Thursday at 10:15 am on The I Love CVille Network! “Today y Mañana” is presented by Emergent Financial Services, LLC, Craddock Insurance Services Inc, Matthias John Realty and Charlottesville Opera, with Forward Adelante.

Good morning, everyone, and welcome to Today y Mañana. I'm Alex. This is Xavier. Good morning, everyone, and welcome to Today y Mañana. I'm Alex. This is Xavier. Good morning. We're super excited to have you joining us this morning on what is definitely a café ton leche. Stay inside. Watch Today y Mañana. Yeah, nice warm café ton leche. Yeah, get warm. Get cozy. Watch Today y Mañana. If you're not able to get warm or cozy, I am sorry for you.

I am truly sorry. I know what it feels like because I was up at... That means that they're outdoors. If you're indoors, you most likely are at least warm. You may not be cozy, but at least you should be warm. If you have to be out today, I truly do.

I truly sympathize. I truly sympathize with that situation, but we'll do our best to bring some warmth and illumination to your day. This is, as you probably heard in the opening, this is when Xavier and I did together, and

we have to do a finance topic day. You just get two grouchy guys complaining about you can't see the pot on hot tea. Wait a minute, I'm not grouchy. I only get grouchy. You sound like those old people that, ah, you can't see the pot on the tea. Well, that's different. So this is what you get with us.

Monica Miller joining us this morning from Montana. Thank you so much for tuning in, Monica. Must be nice and warm in Montana. Yeah, I mean, Montana's probably the only place that's colder than here right now. So yeah, we're all here complaining about rain and 38 degrees and they're probably at like minus 10

snow. And so we sympathize too. So I hope Monita is warm. And cozy. And cozy with a taffeta on that chair. Something nice. Or something, yes. So we appreciate that. Be sure to send us any comments. Like, share. Love being here on the I Love Seville Network set.

You stole my line. You know that. I was waiting and waiting. Don't forget to like and share. What's the last thing they have to do? And subscribe That's the key, Xavier I mean, I just skipped that in my head It's like, wait a minute, you just told me Love being here, thanks to Emergent Financial Services

Thanks to our great partners Mattia Sion Realty Credit Series Insurance, Forward Adelante Charlottesville Opera We love them all We appreciate all our fantastic partners. So a lot, I mean, there is a lot to talk about on a finance topic day.

Yeah, I just, and I mean, if you're ready, I just, so there's these three little bits that I had read, right? And, you know, one of them really caught my eye because I'm trying to figure out what was the purpose of this, right? And one of them really caught my eye because I'm trying to figure out what was the purpose of this, right? And so maybe you can enlighten me as to what you think the purpose of this, right? So it says,

so-called ghost jobs, and this comes from the Wall Street Journal. The roles that companies advertise but have no intention of filling may account for as much as one in five jobs advertised online. That's a lot. What's the point of that again? What's the purpose of that?

Because I just don't have the knowledge and understanding of why I do that. That's a strange one. Yeah. Why would you advertise for a job you're not willing to fill? I mean, you want people to think that your business is good and you're growing. That's the only thing they think of is you want to give the impression that you're growing and your business is booming and you just don't actually intend to fill it. So you see that online and you apply and what do they say?

No, it's been filled? Or, gee, we made a mistake. We're not looking for it. I mean, you think eventually you'd figure it out. It's that way to say that this job hasn't been filled in like a year. Yeah. You're telling me they couldn't find any qualified candidates in the entirety of that time to fill this job? So, I mean, that was one of those statistics where I read it.

I said, I can't believe that. I mean, that just doesn't make any sense to me why somebody would do that, right? Yeah. That is a stretch. And then the other one was, this one also is a little bit troubling to me, right? Software fixes, and this comes from the Financial Times. Software fixes made up 15% of U.S. recalls last year, up from 6% five years ago, according to National Highway Traffic Safety Administration.

So what does that mean? That safety and traffic is going down because their software is lousy or no good? I think it tells you, one, it's probably a function of how many more cars have software, like are essentially computers now, as opposed to just a typical, like normal, what you and I think of as a normal car, which is that it doesn't actually have a computer in there.

It just, you turn it on and it runs. And runs, yeah. But I think the more cars have software, the more you're going to see that. And that's not exactly a good sign of like the decline of the quality of the software it's having. I think it seems to me that more and more cars are trying to do too much.

I agree. We see it. Because, I more and more cars are trying to do too much. I agree. I mean, we've seen some of the newer cars and you go in there to test run this thing and there's no more like actual buttons. The whole thing is a screen. And I'm like... Oh, I hate that. That's so... It seems to me... First off, it seems to be just so highly unsafe

that what used to be the air conditioning button is now open up this screen and do the thing. I mean, am I supposed to be just so highly unsafe that the what used to be the air conditioning button is now open up this screen and do the thing i mean am i supposed to be what if someone wants to yeah you're not supposed to be texting but it's okay looking at a screen to try to figure out which is the screen that i need to figure out it's like the air condition the heat or my my my my heated seat is too hot how do i change yeah it's crazy so much more that's on there many more distractions but I think when you do that, right, because I think about it,

a button is pretty simple. If you notice, that's why the most important stuff, like why is the hazard light still a button and not the screen? Because the hazard light is a key safety feature, and a button is safe. You press the button, it causes the hazard light to come up.

If it's a computer screen, there's so many more things that can go wrong. What if the screen's not working? Then what do you do? You're blind. If you were to put key safety stuff on there, which is why they don't do it. If you notice, the hazard lights are never on the computer screen. The hazard

light is still on a button because you can't legally be driving if you can't put on hazard lights. Yeah. It's just a basic feature. But I think it goes to show you that's part of the problem when these cars become more and more advanced. Yeah, and more and more people, more and more cars needed, and it's like the software is like, ah, yeah, don't worry about it. Yeah. Yeah, when I talked about this with, I think actually it was on Jerry's Midday show, the actual I Love Seville show, that we were talking with Judah about the fact that you don't own anything anymore.

Right. That like you deal with these sophisticated cars, because I think it was in the news that BMW was charging a subscription for the heated seats in Europe. For the heated seats, yeah. And you're like, the physical heated seat is there. It's already there. Like in other words, they're not charging you to install the heated seat. The heated seat is there it's already there like in other words they're not charging you to install the heated seat the heated seat is in the car so what they've done is installed installed a piece of software that prevents you from using the heated seat that's unless you pay for it

unless you pay a subscription and you're like do i own my car or not i bought this car this car is physically mine and yet you have installed software which prevents me worse than that is what else can they control in your car, right? I mean, I'm pretty sure that if they wanted to stop our cars at any given point in time, they probably could just hacking into our car. Was it Washington State? Washington State wants to mandate. There's a bill going through Washington State that would mandate.

One of those, Washington or California, take your pick. I can't remember which of the states. There's a bill that would mandate that at a certain point, cars have to be installed with the ability to put a speed limit control for people who have, I guess, had a ticket for speeding. So another good driving, you want to go past 60 in a 60-mile an hour, it won't let you. It won't let you.

Well, actually, because you got a ticket for speeding. So no, the driving, you want to go past 60 in a 60 mile an hour, it won't let you. It won't let you. It will actually, because you got a ticket for speeding, the car now turns on a software feature that if you attempt to go more than 60, it will stop you from doing it. And I'm like, I think there's so many reasons why that would be a disaster.

What if you actually, what if there's an actual emergency, and you need to break the. Exactly. What if you actually, what if there's an actual emergency and you need to break speed limit? What if you're in a car, the person next to you in the car has a heart attack and you need to get to the hospital? Say, well, sorry, can't go more than 45 in a 45 mile, this street is 25 miles an hour. But the person next to me has died. Yeah. Too bad. You can't go more than 25.

I can think of so many reasons why you might actually need to break speed limit. But you get stuck behind a truck that's going 58 miles an hour, right? And you can't go more than 25. I think there's so many reasons why you might actually need to break speed. You get stuck behind a truck that's going 58 miles an hour. And you can't pass them. And you can't see around them, so it's like I'd rather be in front than behind them. I want to see what's in front of me, but you can't pass them. Because you've got a speeding ticket and now your car

physically prevents you. I'll tell you, it's only a matter of time before you get the Tom Cruise minority report. He's trying to escape. Right, right. And they turn his car around to make him go back. But I think it goes to that, do you own it or not? And there are some laws I think going through the books which would change the way a lot of businesses work. For instance, you've encountered it now, right? How do printers make money for the company? The printer is cheap.

The toner is expensive. What have they done, though? They've installed software in the printer that will not recognize any toner, even if it fits, that is not registered by that company. And there is something making its way through the courts saying are you allowed to do that or is that an illegal monopolistic practice in other

words if a third-party company can make toner right that fits into your printer is it legal for the printer company to put a software fits that says, no, because we didn't make that toner, we won't allow it to be used in this printer, even though it functionally fits that printer and it would work if you didn't install the software fix. And it's working its way to the Supreme Court because that would fundamentally change the way things work. In other words, who owns, when I buy a printer, who owns the printer? Yeah. Legally, I own the printer. If that printer breaks, the company's not on the hook for that printer. And yet they're doing things

which prevent me from utilizing full ownership of that printer. And so that's actually working its way to the Supreme Court. And that would change the way a lot of these companies function because a lot of them make money by using software to prevent you. They would just have to change the price of the printer, right? They would have to change the price of the printer,

but the price of the toner would come down. Exactly, yeah. Because now, I mean, let's be honest, I realize that. Sometimes it's like we print like 100 pages before notes and we need a new toner. We just bought a new printer for the office that is highly rated in terms of its functionality. The quality is beautiful.

Quality, good. It's known as one of the cheaper toners. The printer was $300. Every toner is $200. By two toners, you've paid double the price of the printer. Holy Toledo. I didn't realize that. Yeah.

But they're all like that now. I've got to stop printing these papers. Our previous printer was like $200 and something. Every toner is $92. One color thing is $92. By the time you buy four toners, I've doubled the printer cost. The printer was cheap compared to the toner, but it's because there's no price pressure.

You can't use somebody else's toner. Maybe they're trying for you not to print so many papers. I think they want you to buy the paper too. But I think it just, it speaks to when I bought that printer, who owns the printer?

Yeah. Me or the company that sold it to me. And I think if that changes, that would change the way that works. That's a good point. That's a good point.

I never thought of it that way. And I think it has applications. They do this for a lot of things. Parts. A lot of computer companies make it so that you can't replace a part unless it's the official part. Yeah. And it's like, but if I own the computer and I'm smart enough to make a part. I bet it's going to happen to cars too if they're using all the software and all these little parts.

Exactly. You can't use it unless you use official. Yeah, unless you buy that with the Audi or the BMW the or the bmw or the porsche or the ford or the gm whatever yeah the software will prevent you that yeah you can't use any part except that exactly which i think a lot of people are challenging that in court saying no if i bought this car if you have transferred ownership of this vehicle how can you restrict me yeah from doing whatever I want to this vehicle? So I've got the right to fix or something. But it is actually working its way.

I don't know if the Supreme Court is taking it up or if it's working its way through the appellate courts to get there. So that's something to keep in mind as to how a lot of these companies make money. Because there may be money on software. Well, I mean, that almost comes down to all the regulations that we see. Remember when we lived in Carmel, right? So when you put in a window, the outside of the window had to be wood. You couldn't have those windows that have the, not the plastic. Oh, yeah, the wood plastic.

Yeah, the covering and all that. You couldn't do that. It had to be wood, right? And you sit there and go, you know, between the fog and, you know, you're by the water, there's tremendous humidity. I mean, you're painting these windows like every two years. Otherwise, they rot quickly. And it's like there was a rule. You couldn't do that.

It's like, why? It's my house. I should be able to put any window I want on this house, right? That is the trick. It comes down to, I think we're revisiting the question of ownership. Yeah. Who owns it? And I think that's coming into play in a lot of ways with

people. And it's coming into play in some ways in the stock market as well because we see we've seen it in the way that large companies that don't actually own shares control the share prices. We see this where the big fund companies, the Vandals, the BlackRats, and so forth,

are exercising... That's right. They're basically controlling the boards of companies, your Exxons and so forth. They don't own the shares. Individual people in 401ks own these shares. But because they've given their proxy and they don't want to deal with it, because you have a 401k, I don't want to deal with proxy,

these companies have enormous power despite not actually owning the shares to which they have control. But in that case, I case, people have given up the right to vote on their proxies, right? And I'm sure that most people have no clue what they're voting for in the first place. I don't even know that they've given up the right to proxies. It's an automatic thing.

Would they still do it? Would they still do it? And would they just simply say, over here it says vote for all these candidates. Okay, boom, boom, boom, boom, boom, boom, right? Because most people don't do the kind of research that they should be doing. It's an interesting thing that like, oh, the concept of ownership has changed. Yes. Who owns it?

The person that technically legally owns it or the person who actually exercises control? Yeah. Over it. I think we know the answer to that. Yeah. Right now. Exactly. It's actually

reminds me, we saw that Dune movie last year. There's a point where in the Dune movie, the person says, I think it's the main guy, says that the one who can destroy a thing is the one who has true control of it. It's interesting that you don't own it, the one who has true control of it.

It is interesting to say, no, you don't own it, but I have the ability to destroy it. And so it's an interesting concept that who actually owns something? And it's the person who can stop you from using it. That's right, yeah. And at what point, if they can stop you from using your heated seat, do you own the heated seat or do they own the heated seat? They do. No doubt about it.

It's an interesting concept. What was the third thing on your – I know you had three things. Well, this was – I guess this was also from the Wall Street Journal. But, you know, people are tipping less at restaurants simply because, you know, prices have gone so much that they go and they're paying so much more that the full-service restaurants, their tip is down to 19.3% for the three months ending September 30th. But it didn't say what it was before, but it says, you know, that it is down. And this comes from, according to Toast, T-O-A-S-T, which operates restaurant payment systems. So, which is what you would expect, right? When prices of anything go up and you're going out to a restaurant and all of a sudden, you know, you used to pay $10 for a hamburger and now you're paying $15. And you say, if I pay 20%, I'm paying 20% on 15, but it's the same hamburger.

That used to cost me 10. Exactly. So maybe instead of leaving 20% on 15, I'm going to leave 20% on what I think is fair, right? Exactly. Whatever they come up with, right? So, you know, that happens. You would expect that. Which you can see.

It's just, yeah, a sign of where people's discretionary income is... I think it's... And let's face it. I think what happened, you know, is really, you know, how quickly prices rose over the last four or five years, right? So I think that's the key, right? In other words, how quickly, in less than four years, really, how quickly they rose, right?

And by the magnitude. So it wasn't a situation because, I mean, we constantly have inflation. Whether you have inflation of 2% or 3%, that means over time, right, in about 10 in about 10 years, if you multiply by 2, that's 20%. That means something went up. So you see the impact, but it's slow and mature. It's like getting old.

You go from 40 years old to 50, and you look in the mirror and say, what happened? And your wages may keep up in the sense that your wages may be stagnant in the sense that, okay, yeah, every year I did a 3% raise. Every year the prices are 3% more expensive. I don't feel like I've gotten a raise, but at least I can buy the same things I bought last year. But nobody's – Or even if it's 3 and 2, it's only 1% different. But nobody's salary went up 9% in 2022. Yeah.

Well, somebody actually did a study. It's interesting. So someone did a study, the returns over the last four years versus the returns over the previous four years, right? Because when you compare them, they're very similar in reality as far as market returns.

Yeah. So you can't say, oh, last administration outlaws the returns over the previous. You can't say things like that, right? Because the returns were it. But when they adjusted for inflation,

it was incredible how much better the previous four years had done. Exactly adjusted for inflation, it was incredible how much better the previous was, because inflation erodes the value of your money. If you earn, in a year in which you earn 20% in the stock market, and inflation

is 10, okay, you have 20% more money, but when you go to actually use that money, it's worth 10% less, meaning you only earned 10. Your return got cut in half. Yeah. So you take a year like 2022.

I mean, consider, right? Most people look at 2022 and you looked at the negative return in the stock market. You looked at the negative return of bonds, right? What you don't often think to do is add to that negative return minus nine. Yeah. Because that's what inflation was that year. So whatever you return, whatever money you lost in the stock market in 2022, you lost 9% more.

That's right. Because whatever money you had left was worth 9% less. The value of your dollar. Exactly. And that's such a powerful piece. And I think the problem is, and I think what has led to where we are now with the way people's spending behavior has changed and the concern that led to these changes is people –

I mean, if you went to the average person and you said, okay, look, I'm going to employ you again. In other words, you lost your job to China. I'm going to give you this job back, but everything will be 10% more expensive. The person probably says, I'll take that because, yes everything will be 10% more expensive. The person probably says, I'll take that because yes, everything is 10% more expensive, but I went from not having a job to now having a job. Or I went from a job working in McDonald's to a well-paying industrial manufacturing job. So you've increased my my cost of living but you have given me something in exchange right likewise okay you bring all the medicines back you say okay medicine may cost you more expensive but the next time there's a pandemic we will not have a shortage of

you know tylenol yeah right people say okay, I can see that trade, right? Will it cost me a little more to get Tylenol? Yes, but I now have the assurance that I will not be relying on Tylenol from China who may shut down and not give me anything. Any country, and it's not just China. The frustration, yeah, any country. The frustration of the last four years

is people sit there and say, everything is now 25% to 40% more expensive. I didn't get a better job. My job is the same. My wages didn't go up that much. Stuff is still made in China. We didn't bring back anything. So I think the frustration is I got nothing out of it.

Everything costs more, but I didn't get anything out of this, which is the classic Milton Friedman inflation. In other words, when you print too much money and there's too few goods, you don't get anything, right? You don't get more goods because there's too few goods. There was supply chain issues. So you didn't get more stuff. You didn't get more jobs, right? Okay, maybe you got back the job you temporarily lost in the pandemic, but you're like, yeah, that's the same. You told me not to go to work, and now you're telling me to go're like, yeah, that's the same. You told

me not to go to work, and now you're telling me to go to work. I'm in the same boat. Same job, right? So the too much money chasing too few goods, you get nothing. All you did was increase the price of goods by lowering the value of money. And I think that's what the frustration is that has led to this point, right right and why you see people cutting back so much because yeah okay everything's more expensive but my job has not compensated me accordingly I have to cut back because I am not in fact better off than I was you know it's interesting because I think COVID really um woke up you know the American industrial and the American, maybe even political system, we hope, right? In the sense that, you know, the concept of globalization was a kind of beautiful

idea, right? The problem is that every country has their own kind of goals and not every country has a leader that is willing to kind of do what everybody else is doing, which is sharing, right? So you get a leader that is all for themselves or whatever, right? You're subject to whatever the whims of that particular leader is, right? And the second thing that has always, and I've been talking to this, as you know, for about 10, 15 years, right? The challenge I always had with cheap labor, whether it be China or India or any of the places, right?

Anywhere, sweatshops. Is that you sit here, we say, the labor in this country has to be paid, so we're going to raise the minimum wage to X, right? And they're not great hourly rates, but they're very good compared to the rest of the world. But we're willing to allow companies to go abroad and then hire, basically, labor of 50 cents on the dollar. And if we were doing it here, we would find it. Yeah, we wouldn't let them. So in reality, what are we saying? We're saying, for our people, this is not good, and we got principles.

But for the rest of the world, who cares? Well, you either got principles because it's inhumane, or you don't have principles. But for the rest of the world, who cares? Well, you know, you either got principles because it's inhumane or you don't have principles, one or the other, right? Especially just most of those places, let's face it, the wages, a lot of the places where this is during, those wages are artificially low.

In other words, China's not cheap labor. Sweatshops, like when you do about sweatshops where they do this, you know, fabrics and so forth. All these places, they're not cheap labor because it's an up-and-coming country and prices are also cheap. They're cheap labor because they're artificially held back because the country is ruled by a dictator. It's ruled by a corrupt government that takes all the people's money. It's held artificially low by a communist system. In other words, there are morally repugnant reasons why the labor is so cheap.

It's not like, okay, yeah, no, it's cheap now, but in five years it will be the equivalent of the United States. That hasn't happened. No. I mean they let China enter the WTO, what, two decades ago? Absolutely, yeah. It hasn't – it's not like suddenly – No, it's done nothing. They have a free system where you can speak your mind and do whatever it hasn't transformed anything no it hasn't and and and and i guess you know my feeling is when when you think

about you know how do we bring manufacturing back to this country how do you bring you know you know medicines back to this country and it's in the cost us more and the answer is probably yes but there's one difference today that we didn't have even like 10 years ago. One is robotics and the other one is AI, right? So, you know, AI has its, you know, it's, you know, I'm still skeptical a little bit, but it also can produce efficiencies, right? That we didn't have 10 years ago and robotics is much better than it was. So that which a person did every single day,

I mean, you know, either concept of threading a needle, threading a needle, threading a needle, right? You can basically have a robot do that, right? And that robot may cost you a one-time fee. But after that, that labor, you're not paying any medicine. He can work 24 hours a day. So basically, that product eventually will become cheaper. So my point is, at first, yes, can we see increase in prices in certain products and medicines, et cetera? And the answer is yes.

Second of all, but once that stabilizes, there won't be an increase in price anymore. That price will stabilize. And if there's efficiencies, right, that price should be able to drop. So are we willing, you know, it's like you said, there's a difference between seeing inflation because of, you know, supply and demand where, you know, you're printing money versus seeing inflation because you want to bring back jobs to this country in a form where, you know, and those people are going to be paying taxes,

which is exactly what you want, right? So you bring back jobs, and those jobs, right, eventually those products, they cost you more today, but in five, six, seven years, they won't cost you. We've seen this when we run financial plans, right? When you run someone's financial plan and you pop in a one-time increase in cost and then you make and then you let inflation go back to some super low level you don't often see suddenly the whole plan go out of

whack right right what causes the plan to go out of whack is when you say well what happens if inflation is four percent every year for 30 years it's destroyed. The plan is like your odds of making it plummet. What kills people is a consistent, too much of an increase in the price level consistently over time, which slams you, right? And so that's what causes the problem. Okay, it was up five one year and then we're back to one the next

and it stayed at one, right? It's no, it's nine, seven, six, three, three, three. And that compounds. Which compounds? Just like we love compounding in returns, compound inflation is not good. That's what really kills the plan. And you could see it because when someone is,

when we run a financial plan for someone who's 30 years away from retirement, what's the biggest risk? Inflation. And the inflation stress test we use increases inflation by 1% per year. And it's amazing. It's amazing. Increasing inflation by 1% per year over 30 years, biggest possible

stress on the financial plan. When someone's three years away from retirement or they're in retirement how much of world does inflation play in the it's much less you can increase inflation by one percent and if they were 95 they don't go from 95 to 94 yeah because they're already there the number of years for continued inflation to hammer you is limited. So a one-time bump in inflation doesn't cause that problem. It's the consistent inflation, and it's the inflation which has no other benefit other than you printed money, and you printed too much.

Because you always print it, right? Right. We're always printing money for like 20 years. Japan's been printing money. But I think what we learned is you actually can print too much. You can do a little bit too much in one year, and that throws you out of whack if you haven't accounted for the rest of the economic situation.

And the sad part is that taxes are, I mean, inflation basically is a tax on the middle class and the poor. Because in reality, when you are very wealthy, inflation doesn't have as big an impact. Because the thing about what I was going to say about financial plans, the second part that you have to consider is that by the time somebody retires, their nest egg has grown to the point where it's a large nest egg, right? And so now you are compounding that by the returns of the market, which is large, right? When you're starting from zero and you've got 30 years, you're trying to build a nest egg.

Inflation is eroding constantly, right? That means that your salary has to literally continue to rise at the same pace or more in order for you to eventually get to the place where your nest egg, right, won't be impacted as much by inflation. So it's a double-edged sword in the sense that when you're younger, you don't have a nest egg yet. You're trying to build it. And that inflation continues to erode your ability to do that, right? Exactly. Well, we've talked about it before, right? It's the reason why we've talked about low interest rates,

which typically occur in a low inflation environment, right? Who do they benefit? They benefit borrowers and they hurt savers. Right. Borrowers tend to be younger. Savers tend to be older. Older. By definition.

But savers meaning people who have saved money. In other words, people who have have saved money in other words people who have already saved money as opposed to people who are either borrowing or attempting to save right so now inflation just reverses that right if you are already if you already have the nest egg and inflation goes up and interest rates go up to compensate for that okay well now i'm earning my seven i was earning two on my bonds. Now I'm earning seven. Right. This helps me compensate.

If you're in your 20s, you don't have $300,000, $400,000 sitting in that you can put in bonds. Well, that's okay. I'm going to earn my. You're trying to build it, which you now can no longer do. Right. You're trying to get into the real estate market, right, which you can no longer do because you can't get in. And if you do, you're paying a lot in interest, right? Exactly. So you're saving. You're paying seven now when

it would have been a lot easier for you to get in if you were only paying three. Right. So it's the flip side of that classic low interest rates help debtors but by definition high interest rate hurts people who are borrowing and helps people who have saved already.

They say help savers, but in reality, when we say help savers, what it means is people who have already saved. Because if you are attempting to save based on current income, it doesn't help you. Exactly, yeah, exactly, yeah. So that's the, and I think that's the challenge here here is that, okay, looking forward, we will see a different kind of inflationary environment.

It doesn't mean we won't see – I don't think we can promise people that the inflationary environment is over. But I think we will see – we may see a different kind of inflationary environment. The things which are inflationary may change. In other words, we saw a lot of food inflation over the past several years. If we end up in a trade war with China, the food

part is not really what we're going to be looking at. We're going to be looking at inflation in other areas of the market. Televisions. Television is one of those things that television is cheaper now than it was four years ago. Does that help people? Not really.

You know what I mean? Most of your budget is not spent on television. Exactly. Right? One area you could potentially see improvement, energy. Energy is a large part of people's budget. I think energy is a large part just – I mean, think about it. In everything we do, whether it be a corporation or you as a working person,

you heat your house, you put gas in your car. I mean, so much involves energy one way or the other, whether it be oil, gas, nuclear, whatever it may be, you know, and think about, I mean, obviously, if you believe in the AI and everything that is being accomplished by that, those data centers require an enormous amount of energy, right? So energy is critical, right, at this point in time. And without any doubt, when energy prices stable come down, everything else, right, begins to do the same thing, stable come down. Because it impacts everybody. I mean, if you're a trucker and it's like, I'm paying for gas and the gas goes up, I'm

going to charge you more to deliver the product. Well, that means that product's going to go up in price. There's nothing else you can do about it. It has to. It has to. And what's interesting is that, I mean, I think from most people, which we try to explain to people is that unfortunately, inflation for the most part is a one-way street. In other words, you take a look at most things when you see inflation and the prices of things go up, they don't usually go backwards.

The area, I think the places where you can potentially see prices actually go down is one gas prices and people have known this for a long time of gas prices go up to three dollars down they can go back down to 250 right right we do see them fluctuate it's not like oh no it'll never go back to 295 because it now hit three right one place to two percent as you see it obviously the housing market housing prices we've seen is obviously the housing market. Housing prices, we've seen it before. Housing prices can come down. Sure.

Right? Does it mean they'll do it in every market? I mean, in Charlottesville, not necessarily, right? But it is possible for housing prices to come down. So I think there are areas, and I think food, but only to a certain extent. In other words, we're seeing ed prices die rocket because there's less chickens. They all died, right? When the chickens come back, the prices will go down. I think they killed them all. Well, some of them died and some of them

killed, yeah. But in other words, you bring back, you get more chickens, ed prices come down. In other words, if there's a bird flu that makes prices go up, ed prices can come down. In general, though, the overall price level of food is probably not going to turn around and come down. In general, though, the overall price level of food is probably not going to turn around and come down.

So there are areas where you can potentially see them come down. And energy, like you said, the one thing about energy is that you can... Can it make inflation go negative? Probably not. But it can certainly drop inflation. It can drop it from 3 to something else if the energy component manages to go down in there.

So there are areas where you could see prices come down. It's just the overall price level is not likely. Yeah, it's very sticky. It's very sticky. In most products, it's pretty sticky. It's rare for a company to say, oh, gas prices are down and our salaries aren't really kept up with inflation, therefore I'm going to lower the price of the product. No.

Because let's be honest. I mean, it's, again, supply and demand. If the demand continues to be strong for what you're selling, why would you then drop the price? You can sell it and then go ahead, right? And that's how companies work. If I raise the price, are people buying less? They stop buying? If the answer is yes, then obviously that price was too high. And that's how companies work. If I raise the price, are people buying less? They stop buying? If the answer is yes,

then obviously that price was too high. And that's how it works. So as long as people are buying what you are selling, you're not going to lower the price. That's just how it works. Which, I mean, it's funny. I think people,

like, for the most part, now monopolies may be different, but for the most part, companies do not set prices by sitting around saying, okay, who can I screw today? Who can I – okay, I'm going to steal some money from average Joe today by raising the price. No, no, no. The company is going to basically use the market to determine what the price is. It's like, oh, man, if I raised it and people bought less, got to lower it.

Oh, I lowered it and people bought more, I've got to lower it. Oh, I lowered it and people bought more, I've got to raise it. In other words, they're trying to find the equilibrium, which every single person does. In other words, if I told you tomorrow, you know you can go to your employer and ask for $10,000 more a year and he'll have to give it to you

because he can't find someone else. Who would say, I can't do that to my boss that would be a terrible thing to do he's paying me good I couldn't knowingly I can't hold him up for more money you would do it right

and you would do it up to the point at which I say if you ask your boss for another $5,000 he's going to say no and hire this guy instead. Yeah. Right? Then you say, okay, I'm not going to ask him for the $5,000. But if I told you, you could ask him for another $30,000 and he'd give it to you because he has no choice,

because his demand is unchanged. Yeah. You do it. You say, well, he can obviously afford. And if you're a nice guy, you ask for $29,000. Yeah, exactly. But you'd sit there and say, well, he can obviously afford. He's making, remember, there's two ways.

There's where profit is what we call supplier surplus. In other words, profit is the difference between what the supplier gets and what he could still sell you the product at and still be in existence. Right. Consumer surplus exists. It's the difference between what you paid for this thing and what you would have paid for it. So if you're sitting there,

now we all often think of it that way, right? If I'm buying a television and the television costs $300, but deep down I would have bought it for $500, then I have a $200 surplus, consumer surplus, because I would have paid $500. But instead, the market price because of everybody else was $300 and I made the money. We don't call ourselves greedy and say, I would have paid $500 so I probably should have paid $500 because I would have been willing to do that. Nobody like Milton Friedman said, I'm never the greedy one.

It's the other guy who's greedy right right so we don't think that's how the whole market works and that's why inflation is sticky because if the demand still stays and the supply and the supply is still there the price is not going to go down until people buy less yeah so the one place where it's not sticky is energy because they're actually i think what people don't realize there's it's funny the one place where it's not sticky is energy because they're actually i think what people don't realize is it's funny the one place where people assume there's no um that there's collusion and there's no market is the one place where there's the most there's the most actual competition because you all always hear people tell say you've heard the story right oh man the gas companies

they collude with each other because if you look down the street, everybody's selling DAS for the same price. Right? And I'm like, you do realize that's the opposite of collusion. Like, the reason that when this guy is $2.97, that guy is $2.97 is because if he was $3.05,

Nobody would go there. You can see both of them. Exactly. You would be like, i'm not gonna buy his gas when this dude is 297 because he's cheaper right i'm gonna go to his so it's literally the one so what happens he lowers his price to 297 and so it's literally the one industry where you can't there's so much competition that the prices have to converge at the actual price level so that's the reason the guy for 297 has such long lines he says i'm going to raise it to 299 right exactly because when a bunch of people don't order 297 now he's like okay can i get away with 299 right

and because and it's because and that's the reason why it's an industry where it can actually go down but as the price of oil goes down if suddenly there's a bunch more oil they can't get away that your gas station can't get away with 305 to somebody somebody's gonna he's gonna say well if i go down to 295 i'm still making money and all his customers will come to me instead so it's the one place you can't get away with it because there's literally four of them on a street yeah exactly so it's it that's why you can see it because it's not sticky it's very elastic because and it's elastic because it's identical nobody cares who they buy their gas from i mean with the exception of you know you probably got the one or two listeners that are like not shell shell is way you know it's the premium gas

right for the most part i was gonna say the difference is you know there's a gas station that says cheap gas and the other one says shell you know know, or Exxon, or whatever it may be. It's like, yeah, I'm not sure I want to go to cheap gas, you know, the five cents cheaper, because is there water in there? What kind of gasoline? Yeah, but you know what? 99% of people go to cheap gas. It's like, oh, I'll tell you, yeah, no, Exxon or Shell, I don't care that the Shell looks nicer than the Exxon. But if you're driving a BMW, probably not. Exactly. But I'm saying, for the most part it's not it's elastic exactly no no doubt about it and so that's why it's able to come down the way that it does yeah you know why is it hard so hard for

rent to come down because for the most part it's not elastic right it costs you to move so okay if if i'm paying 1600 bucks a month for rent and i find out that the guy down the street is 1550 a month am i really gonna move yeah that's a lot of work and effort for 50 a month yeah so he has no incentive to go to 1550 because i'm not moving so he's gonna stay at 1600 my guy's gonna jack me up to 1700 he's that you're says, ah, you're probably still not going to move. Yeah. And that's why it's so much harder for that to come down. So I think people don't realize there are places where we could still see prices come down

despite tariffs, and there are places where you probably won't see prices come down, because it's not reasonable to expect them to come down in those industries. Yeah. And, you know, let's be you know, we also forget, I mean, there were tariffs during those four years of that administration, right? They kept the China tariffs.

And so inflation was still low, right? I mean, we didn't have high inflation. So, again, it depends on the tariffs. It depends what you're putting the tariffs on. It depends on what you're getting back for it, right? And so, and as you very eloquently indicated, oil prices, gas prices, energy prices are the key to just about any economy. So when that goes down...

We had China tariffs, and Biden kept the China tariffs. We didn't drop them. They've still been around. So now the question is, okay, can you get even more to come back by upping that by another 10%? That is what the term situation is. It's very similar to the

supply and demand. In other words, how much can you increase tariffs before your pain is greater than the other guy's pain? Yeah, because it's true. All of a sudden you come here and say, wow. I mean, so that product is $9, but it's made abroad, and that product's $10, made in the U.S.,

and I'll pay the $10 because it's made in the U.S. So all of a sudden, he's sitting there going, I can't charge $9 anymore. I've got to charge less, right, because nobody's buying my product. And at that point, it's like we can't make any money. So, you know, you begin to negotiate. How can we make this work? Well, remember point it's like we can't make any money so you begin to negotiate how can we make this work it's always harder

the pain is always greater on the exporter than the importer because let's say the product now costs 10% more if that causes me as the consumer to buy this American one that's now 10% more, right?

I switch from imported product to domestic product. Now, domestic product is more expensive. So how much did this hurt me? It hurt me the 10% because now I have to buy a domestic product, which is 10% more expensive than imported product. Right. From the perspective of imported product, how much did he lose? He just lost 100% of my money. 100%, yeah, because he didn't sell anything.

Yeah, so he was selling it to me, and now he made $0 from me. So the switch hurts imported dye more than domestic dye, as long as there's a domestic alternative. Obviously, if you put a tariff on Italian olives, and there's no domestic olives, then it doesn't matter. I'm still buying Italian olives and there's no domestic olives then it doesn't matter I'm still buying Italian olives but obviously the theory here is

you're putting it on products for which there are domestic alternatives, that's the point and so the question is who's paying, what's the price point the tariff point at which my pain is too great my pain is, that 50% more is too much for me to handle it,

even though the other guy is making no money. He holds out long enough that the pain is too great. So where is the magic point where his pain is greater? Do I rather swallow a 10% loss than a 100% loss? Exactly. His pain is greater where he says, all right, I'll do what you need me to do. I might even take some tariffs off your stuff in exchange for you taking it off mine

because I need you to buy my stuff more than you need to buy my stuff for cheap. So that's where I think we're going to find out where that point is. Yeah, that's an equilibrium, right? And it takes time. That's the whole point So, you know, and it takes time. That's the whole point. It's not immediate. It takes time. And, you know, we'll find out.

We'll find out. We certainly will. But it's not the end of the world, I don't believe. I did want to touch on it. I know that you said that you had quickly talked about this last week a little bit. But, you know, the drop in NVIDIA when all of a sudden DeepSeek came out, and although we found out DeepSeek is really not as... Yeah, absolutely.

It's not what everybody expected. You realize that NVIDIA dropped 20% when that news came out. It's still down 15%, right? So we were talking about this where there are a number of companies whose valuations are extremely high. And you sit there and go, they just, you know, their price is such that any news, anything that comes out can deflate that price rapidly, right? And whether or not it goes back to where it was, it may, and I'm not saying it won't, but it may take some time.

Because when you look at the markets, right, I mean, the S&P 500 is still up since 123, which is when this happened, right, since January 23rd. I think the S&P is down about 1%. An equal weighted S&P is down a half a percent, right?ed S&P is down 0.5%, right? So those top, like, four or five companies, right, they're very, what was the word I was looking for? Expensive? Well, they're expensive, but they're so, it's like a balloon.

They've expanded so fast, so quickly, especially the last two years, that anything can burst them, right? And NVIDIA is a perfect example. And again, NVIDIA is in a very strong position because they still have a chip that nobody else has. Eventually, I'm sure they'll have competition, but right now they don't, right? I mean, the demand for the chips is greater than the supply, and therefore that makes our company extremely valuable. And remember, D, which we actually didn't touch on this, actually didn't touch on this. I didn't touch on this last week, but

I had done some further research since then. DeepSeed still uses NVIDIA chips. It uses the cheaper, the older model of chips. The reason it doesn't use the newer model of chips is because as a Chinese company, it's not allowed to get them. The United States has

restricted the sale of those chips to Chinese companies. In other words, it's not Chinese company. It's not allowed to get them. United States has restricted the sale of those chips to Chinese companies. So in other words, it's not as though Deep Seat was like, oh, this is the model of the future. We figured out. We should be using these older model chips. Nobody's going to want,

no other company's going to want to use the older model chips. There's a reason they're the older model. Right. So going forward, it's not right right so going forward it's not as though other ai it's not as though open ai is going to be like wow we should use these older nvidia chips too because we can do it for six million dollars it's like no why why on earth would you do that they did it because they legally couldn't get their hands on it some people even question whether that's true in In other words, if they are

lying and they have the newer chips but don't want to divulge that they have them, then that makes this whole thing complete bonus. In other words, if DeepSeat actually did have newer NVIDIA chips, which they legally are not supposed to have, would they

say it? Would China be like, yeah, actually we are getting shipments of... But somebody's subsidizing, so that means the government's subsidizing because the company won't be able to do that. No, well, it means they're legally acquiring them. They legally can't get their hands on them. Oh, you mean they're quote-unquote... Yeah, in other words, if Deep Seat had...

What you're saying is they're stealing them. Yeah, exactly. If Deep Seat had the type of chip that they're not allowed to get... I thought you were saying they kind of bought them underneath the table. No, no, no, what I'm saying is, what I'm saying is they basically... Yeah, in other words, if DeepSeat had into their possession,

if their servers are running on a chip that they legally are not allowed to possess because supposedly China can't get them, and they did possess them, would they say it? Be like, yeah, we're running on NVIDIA 500 chips. It's a way to send that. Don't we ban those from you?

So there's a lot of question marks there. But like you said, it's not really an indictment of NVIDIA, except to the extent to which NVIDIA may have been slightly overvalued because of a little bit of euphoria. Yeah. I mean, those stocks, I mean, they've just been, they skyrocketed. And, you know, we've talked about this. I mean, when the top 10 stocks in the entire U.S. stock market represent over 30% of the value, that says something. That's a lot. That's 10 over, like there's 3,700 or more stocks, right, in those universes.

That says something, right? So the question is, can they continue that pace? And it's questionable. We've seen that before. Back in 1963, you had Exxon, IBM, General Motors. Who was the other one? If I had to look at all of those companies, you've been to those companies. Did they continue their pace?

Are they still growing by, what, 10%, 15% a year now? Yeah. I mean, granted, we're several decades later. They're solid companies. They're big companies. But they don't grow. They're not growing at the 20%, 25% pace that they were growing to get to where they were. Exactly.

That's the whole point. Exactly. So that changes the calculus there. Yeah, yeah. And the thing is, that's what I would say. So the thing is, you have so many investment funds out there that have these different names, and you're thinking, oh, that's a great name.

I can diversify my portfolio by buying that particular ETF or mutual fund or whatever. And you buy 10 different ETFs or mutual funds. And if you look deep inside and say, wait a minute, every single one of those ETFs has Nvidia, has Tesla, has Amazon and Meta. And you say, so if that's the case, then my portfolio is heavily weighted greater than the market and so that's what that's where i say you have to be careful because you want to be the market and have 30 that's fine you know there is the market and and if that market crashes you're crashing along with the

market but if you're now 45 50 and those funds eventually start declining, not declining, but reducing their growth from 20, 25 to maybe 10, and the market's still growing 20, you are devaluing. You're not keeping up with the market, right? Exactly. Just to show you, right? Because I think most people would say

ExxonMobil is still a solid company, right? It's paying a dividend and so forth, right? Its price-to-earnings ratio is 14, right? NVIDIA's trailing PE, now this was as of... It was like 55. Yeah, I mean, it's now... It dropped 20%. Yeah, it's now 49.

Yeah, okay. Right? So in other words, at a certain point, it's not so much that NVIDIA ceases to be a good company. Exxon still makes money. Exxon makes money. It pays their dividends and so forth. But at some point,

can your price-to-earnings ratio remain 50? Two debt dates down the road, are you really going to be still at a price-to-earnings ratio? Meaning, in other words, what you're paying for the stock is 50 times the expected all the 50 times the dividend meaning 50 years worth of dividends you don't make your money back yeah all right so at some point because and then you can be a good company and a successful company

and still have a 14 pe ratio, but because you're just a solid company. What's probably not sustainable is 50, 60, 70, 80 indefinitely. You can have it for years, but you probably can't do it indefinitely. I mean, you look at those, I mean, let's face it. I mean, you look at those big companies like the Costco's of the world, the Exxon's. I mean, Exxon and ExxonMobil, et cetera, they're also subject to oil prices. When oil prices come down, the value of those companies is reduced, right?

But things like Costco, Pepsi, Coca-Cola, et cetera, PG&E, Procter & Gamble, those companies are huge, right? They have very strong dividends. So when you look at them, yeah, they're not going to grow at 20%, 25%. But they may be growing at 10% to 15% per annum or somewhere between 8% to 15%, right? Total 26. So when you look at them, the thing is, at what point in your investment cycle are you in? And there's a certain point where you say, I want that consistency where I know I'm going to be between 8 and 15, because as you've said so many times,

at 7%, every 10 years, you double your money. At 10%, every 7 years, you double your money. So if I can double my money between 7 and 8 years, right, every 7 and 8 years by buying these solid companies, right, then that's a great, you know, I mean, that's a great strategy, right, every seven, eight years by buying these solid companies, right, then that's a great, you know, I mean, that's a great strategy, right? So the other ones, you just sit there, you go, they've had a great run, hopefully you own them, right? The question is, is this the time to go all in on them, or is this the time to say, I need to do the research and find out how exposed I am to all those particular companies, right? And again, they could have another magnificent year this year,

but sooner or later, it's impossible to continue to have that kind of growth rate. Exactly. So it's something to keep in mind. Yeah. As we were kind of saying last week, it's not so much that you need to panic over this news, but I think this is a good wake up call for people to say, OK, how much you buy the S&P 500 thinking you own 500 stocks, not realizing that 30 percent of your investment is in 10. Yeah. Well, in that case, it's in five.

Five, right. 30 percent of your investment is in five stocks so i think it's it's a good thing to people be aware of that because what that means is if one of those five stocks goes down 15 in a day it is dragging down your entire portfolio even if the other 499 went up yeah i mean that's what happened i I mean, NVIDIA was down 15%. The S&P is down 1%, right? And I guarantee you that a lot of that is NVIDIA, right? And it's fine.

I mean, it's an index, and therefore, at the same time, you are diversified because you didn't go down 15%. You went down one. Exactly. My point is not so much just on the S&P 500, but when you say, I'm going to buy the S&P 500 and this particular ETF and that particular ETF, and you think, yeah, I'm diversifying. You need to look into these funds and saying, what do they own? And make sure that their top stock isn't the same one, Apple and NVIDIA and, you know, made up. Especially, I would say, actively managed funds. Yes.

Because the problem is a lot of actively managed funds, you think, okay, I'm paying 2% or 5% front load because this guy is picking stocks. He's not just doing the indies, he's picking them. Okay, he may be picking them. Is he really going to bet against... Those five stocks. Those five stocks. Is he really going to bet against those five stocks? And if he's not betting against them and he's weighting them the same way that they are weighted in the market,

then you are going to be overexposed. Yeah. And you're paying a lot more for the same return. You're paying a lot more for the same, for very similar exposure. Because is he really going to take the risk of intentionally underweighting those stocks? And if he doesn't do that, your actively managed fund is taking the same risk or not an extremely similar risk to the passive funds that are already in your portfolio. And you could be doubling down on some of these things.

We found people who 4% of their portfolio was Microsoft. And they're like, no, I've got 20 funds. I'm like, yeah, but every fund has Microsoft. So it's important to keep in mind. All righty. So that's our... We filled an hour. We filled an hour.

Always. Always enjoyable. It's easy. Always good to chat some finance. It's been great. Thanks, everyone, for tuning in this morning. Definitely appreciate all our people, all our fantastic viewers. We'll be back in – so we're on our new schedule, so we'll be back in a couple weeks.

Two weeks, that's right. And we'll look forward to seeing everyone then. Until then, it's been good. Thanks, Judah, for making us look good. Thanks, Xavier, for being here with me. Thank you. I haven't been on with you in like over a month. So that was fun.

Yeah, I don't think we've been on this year. Probably not. Probably not. I don't know, really. It's only two months. And then thanks, of course, to Isle of Seville Network, to all our fantastic partners, to Matias Yon Realty, to Credit Service Insurance, to Charlottesville Opera,

of course, our fantastic presenter, Emergent Financial Services, always appreciate that, and all our viewers. We appreciate all of you. We hope you stay safe this week and also next week if a winter storm comes through. Stay safe, stay dry, try to stay warm. We look forward to seeing you in a couple weeks,

but until that time, as we like to close it out, hasta mañana. Well done, fellas. That was a fun one. ¡Suscríbete!