Crypto Crash, ETF Complexity, Dark Pools, Tax-Free Social Security?, Vanguard Greed, Harvard Endowment Doubts, Charity Boom, Manufacturing Labor Gap, Gen Z Spending Drop & Investing in OpenAI?

Fast food restaurants like Wendy’s are experiencing a slowdown in business The fast-food restaurant Wendy’s is planning on closing hundreds of locations throughout next year because they continue to see a slowdown in spending from their customers. They said most of their low-income consumers are cutting spending and making fewer trips with smaller purchases at the restaurants. Wendy’s increased prices after the pandemic at a higher rate than grocery stores and now other fast-food restaurants have begun to add value menus to keep customers coming back, but Wendy’s has held firm and not created any values for their customers. Because of this they have seen their net income decline to $44.3 million from a year ago when it was $50.2 million. Over the past year the stock has declined from around $18 a share down to under $9 a share, which is a decline of 53%. With the reduction in the stock price, the dividend yield is now 6.5% and the company trades at 10 times earnings on a forward basis. This company may be worth looking into as an investment as within in the next 6 to 12 months we could see lower end consumers stabilize. The affordability index for people buying a home is the worst in 50 years People may be excited about buying a home because mortgage rates are around the lowest they’ve been in over a year, but the affordability of a home is still far out of reach for many. The reason for this, and we have talked about this for the last few years, is that the increase in the price of homes has far outpaced the increase in people’s income. The 50-year average for a price-to-income ratio is around four times, and it reached a low in 1999 of around 3.6 times. But with the rapid increase of homes over the last few years, the price to income ratio has climbed to slightly over five times. Also not helping are the increases in home insurance costs and property taxes. Back in the summer of 2019, when looking at households earning $75,000, nearly 50% of those people could afford to buy a home. Today, when looking at those same households earning $75,000, only 21% would be able to afford a home. Back in 2012, the home affordability index was over 200, but it has now been cut in half to just about 100 with no signs of improving any time soon. I believe it will probably take 3 to 5 years to correct itself. If you look back in history, the affordability index does not change overnight. What will happen is probably incomes will increase slightly over the next 3 to 5 years and maybe the price of homes will either stay the same or decline slightly, which would increase the affordability index. What this means for people buying a home today is you should not have any aspirations of a rapid increase in the value of your home. What caused the problem was during the pandemic mortgage rates dropped to lows not seen in 50 years and that pushed up demand and the prices for homes climbed at a rapid rate. I believe this scenario is extremely unlikely to play out again! The brokerage firm Robinhood looks more like a gambling platform than a brokerage firm Robinhood initially went public at $38 a share in 2023 and the stock then fell to under $10 a share. It has recovered nicely since then as it’s now trading around $110 a share. What has caused this shift and the huge increase in the stock price? One big reason is that the company has really allowed major speculation for their investors. Starting off with crypto, they have allowed people to buy coins like BONK, Dogwifhat and Pudgy Penguins. Just when you think there’s no way they could come up with anything more speculative, surprise; they have come up with an investment known as prediction markets and event trading. Somehow the regulators have let this slide or maybe since government agencies don’t move that quickly, it just has not been addressed yet. It appears for investors on their app that you can predict what the outcome will be of a football game, politics, contracts over economics, even if aliens will exist on earth this year. Chief Brokerage Officer, Steve Quirk, says this is the fastest growing business we have ever had. Robinhood stock trades over 50 times projected earnings and is looking for about $4.5 billion in revenue, which is an increase of 53% over last year. The growth appears to be there for the company, but there is so much speculation and insane crazy things there is no doubt in my mind that in the future many people will lose more money than they ever thought was possible by speculating on crazy things rather than investing into good quality businesses. A fallout in those risky "investments" could hurt Robinhood's reputation, which I believe would be bad for long term growth. Financial Planning: The Real Cost of Employer Coverage vs. Medicare When reaching age 65, sometimes there is the option to join Medicare or stay with an employer health insurance plan. This is most common when a spouse retires after age 65 and they have the ability to join their spouse’s work plan. When comparing the cost of coverage, there is a key difference in how each affects your tax bill. Premiums paid through payroll for employer-sponsored health insurance are pre-tax, meaning you avoid federal, state, and payroll taxes such as the 6.2% Social Security, 1.45% Medicare, and 1.2% CA SDI tax in California. This is different from a 401(k) for example where contributions are only pre-tax from federal and state taxes. For someone in the 22% tax bracket, a $500 premium would be around $300 after the tax savings. Medicare premiums on the other hand are paid with after-tax dollars and are only tax-deductible for people who itemize and have total medical expenses exceeding 7.5% of AGI, which means very few retirees actually receive any tax benefit. Additionally, Medicare Part B and D premiums may be elevated due to higher levels of income because of IRMAA. Employer health insurance can vary in coverage and cost so at times Medicare may be a more comprehensive and cost-effective option, but it is necessary to compare the after-tax costs to be sure. What to do before the spouse who manages the investments passes away In most relationships either the husband or the wife takes on the primary role of managing the financial affairs, including the investments. Not always but most of the time the husband is the one who takes on the primary role of investing the couple's assets when they are seniors. The problem with this is that women generally live longer than men, and it’s very possible that when he passes away the wife is clueless on what to do with the investments and she could be open to scams or just bad investment advice. This does not mean that one spouse is smarter when it comes to investing; it just many times is due to one spouse having no interest in understanding investing or wanting to spend the time to learn about it. If someone has no interest in learning investing, they will not do it. I know some people like to manage their assets and their investments themselves, but this can be very difficult for the surviving spouse who is left with a spreadsheet and account statements, and they have no idea what to do. The best thing to do is when both spouses are alive is to find a financial advisor they trust and found together so that the spouse with less interest in investing knows that the spouse that knew investing felt good trusting this advisor. It may be hard for the primary spouse to give up control of investing, so I don’t recommend to give the advisor 100% of the assets, but at least a third to a half of the assets to get a good feeling of what that advisor will do when that spouse passes away. Don’t wait a few months before you die to find the advisor, it should be done when you’re both doing well and also have an experience with that advisor for at least 3 to 5 years. Since no one knows when they’ll pass away, it is better to do it early rather than to wait until it’s too late! Do you know who the beneficiary is of your retirement accounts? I’m sure many people say yes of course I do, but unfortunately, things change in life and the beneficiaries you have may not be the ones that you want. You could have also deleted the beneficiaries with the intent to change to new ones at a future date but forgot to do so. If you have parents that are still living, it’s important to remind them as well to check to verify that the beneficiaries on the retirement accounts are the ones that they want to receive the retirement funds. Whether the funds are in a workplace retirement plan like 401(k) or an IRA, you could be giving a lot of money to people you did not intend to. Some important reminders when it comes to beneficiaries, be sure to list both primary beneficiaries and contingent beneficiaries. This can be very helpful if your primary beneficiary passes away, and you forgot to update your beneficiaries. If you list multiple beneficiaries, be sure to make it clear what percent each beneficiary receives of your retirement account. It is also generally a mistake to list your estate as a beneficiary because your heirs could lose the benefit of deferring taxes over a 10-year period and could instead have a large tax bill all at once. Another tip is to be sure if you or someone you know gets divorced that they update their beneficiaries. You probably would not want your ex-spouse to receive your retirement account. With the holidays coming up, it’s probably a good time to verify your beneficiaries to make sure the people you have listed are the ones who deserve your hard earned money when you pass. Check your coins, they could be worth a lot more than you think! With the price of silver now averaging around $50 per ounce, there are quarters and dimes that you may have that could be worth far more than the currency value. For example, if you have a quarter that was minted in 1964 or prior, the silver is worth about eight dollars. While a dime is only worth $.10 when you spend it, if it’s the same year or older as that quarter from 1964; it is worth roughly 35 times that amount or around $3.50. 1965 was an important year for coins because that’s the year when the coinage act ended the use of silver in dimes and quarters. Half dollars also saw the percent of silver in the coin drop from 90% down to 40%. If you do find some of these coins that could be valuable, don’t run to your local pawnshop or jeweler to cash in on the silver price. You’re far better off going to a coin dealer because there could be more value in the rarity of the coin than even the silver value. Due to the increased use of silver in electronics, medicine, solar cells, water purification, and other high-tech needs consumption is now double what silver production is on a yearly basis. What this means is the demand is real. It’s not like when the Hunt brothers back tried to corner the market on silver in the early 80s and it rose to $50 an ounce before regulators stepped in as demand now comes from real use cases. If you factor in inflation since the 80s, silver would have to exceed $200 an ounce today to be the equivalent of $50 an ounce back then. And people wonder why we prefer investing in businesses over commodities over the long-term. I believe public companies will far outperform the price of gold and silver in the long run. The chicken wars have become intense, and Colonel Sanders is losing Colonel Sanders, who I think everybody knows, is the star behind Kentucky Fried Chicken or better known as KFC. A little history lesson goes back to the 1930s when Harlan Sanders was serving his chicken in Corbin, Kentucky. The famous red and white buckets that hold 14 pieces of chicken came out in 1957. For many years this was an easy dinner for an American household. I’m sure many baby boomers don’t forget the joy of seeing that sturdy red bucket of chicken brought home by mom or dad when they were a kid. But now competition is tough in the chicken space with companies like Chick-fil-A, Dave’s Hot Chicken and newer to the scene Raising Cane’s. KFC, which is owned by Yum Brands, has experienced six straight quarters of same store sale declines and is now in fourth place in chicken restaurant sales and Wingstop could take fourth place next year. The reason for the change is that Americans now seem to not enjoy eating chicken off a bone and prefer nuggets and eating their chicken in a sandwich. A market research firm says people’s eating habits have changed tremendously and nowadays 26% of consumers eat their fast-food orders in their car. I also think they eat while they are driving, which I have seen unfortunately on the freeway. US fast food restaurants have seen menu listings for bone and fried chicken meals drop 72% in the past four years, but the Colonel is not taking this standing down as KFC has brought back its original honey barbecue sandwich which came out in the late 90s and is now at a discounted price of $3.99. KFC went head-to-head with Chick-fil-A saying our sandwich is bigger than yours and you can get ours on Sundays. For those who don’t know, Chick-fil-A is not open on Sundays. I don’t think we will see a big return of the 14-piece bucket of chicken, but I do think we’ll see a heated war for your dollars when buying chicken and the consumer should benefit. Has big government gone soft on big corporations? On Wednesday, I saw a headline that read “Meta wins FTC suit alleging it is a monopoly”. Andrew Ferguson, the FTC chairman, took on the case and took it trial. He said he was confident his agency would win, and the FTC stated, even though Meta doesn’t charge for the service or raise their prices, it could extract more money from its user's personal data by serving them with targeted ads. The judge ruled against the FTC and said it was easy to ignore those ads. The FTC was also going after Meta saying it had a campaign to buy upstart rivals rather than to compete with them. The judge ruled that Meta was shifting its emphasis because of competition. After Google won their recent case in court, which also benefited Apple, it seems to me that the courts are going easy on big business. November 14th was a big day, and no one noticed November 14th, 2025, was the day that Cisco reached $78 a share. Why is this a big day? 25 years ago, was the last time Cisco was at $78 a share during the tech boom. At that time in the newspapers and the media there were warnings like there are now about the exorbitant valuations of tech companies, but many investors chose not to listen. Looking back, the well-respected Barons magazine, which has been around for over 100 years with its first publication in 1921, was attacked for questioning the value of such a great company. At the time the cover story explained that the valuation stood at 130 times estimated earnings. Barons turned out to be right as by October 2002, the stock traded under $10 a share. So, congratulations to Cisco for reaching its all-time high of $78 a share, but investors should take note that there are many articles coming out these days about valuations of AI companies. Maybe some of them will not reach these highs again until the year 2050.

No surprise to me that there’s a glut of apartments on the market I saw the potential for this oversupply happening in San Diego a couple of years ago. It seemed anywhere you drove within a short distance you would see the construction of new apartment buildings. It is not just here in San Diego though as the glut of apartments is happening around the country. With the dynamics of supply and demand, if you’re looking for an apartment today, you’re in for a treat. In September rental rates had the steepest drop in more than 15 years. Landlords are now offering months of free rent, gift cards, free parking and some are even paying for your moving expenses just to get you to sign a lease. You may want to play hardball because in some areas they’ll even cut the rent on top of all those incentives. In September, 37% of rentals agreed to concessions like months of free rent. What caused the problem for landlords is during the early years of the pandemic, developers could not begin building apartments fast enough, especially in the Sunbelt area where there was a major population migration. It became the biggest apartment construction boom in 40 years, but because of the delay of construction permits and labor shortages, development took much longer than they had hoped. It seemed no one looked around to see all the apartments going up, and now they’re all competing with each other for renters. The landlords are hoping they can raise rents by the end of 2026 or at least sometime in 2027, but I don’t think they are factoring in how many apartments are online with more still to come. Based on the current apartment inventory and new apartments coming online, renters could be in for lower rent maybe perhaps until 2028. This will not be good for the housing market because rent for houses will be the next to fall and then people will have to factor in the affordability of renting vs buying a home. This would also likely hurt the demand for buying rental properties as an investment if you can't get as much rent as you thought. Are the large hyperscale companies like Meta, Microsoft, and Alphabet inflating earnings? Michael Burry, who was made famous by "The Big Short", made the claim that some of America's largest tech companies are using aggressive accounting to pad their profits. He believes they are understating depreciation expenses by estimating that chips will have a longer life cycle than is realistic. Investors are likely aware of the huge investment these companies are making in AI, but they likely don't understand how the accounting of the investments work. If a business makes an investment in these semiconductors/servers of let's say $100 B, that doesn't hit earnings when the money is spent as under generally accepted accounting principles, or GAAP, they are instead able to spread out the cost of that asset as a yearly expense that is based on the company’s estimate of how rapidly that asset depreciates in value. From what I've seen, these companies are generally depreciating their Nvidia chips for over 5 to 6 years. This seems to be a stretch considering Nvidia is on a 1-year chip production cycle, and the technology is changing quite rapidly. Burry estimated that from 2026 through 2028, the accounting maneuver would understate depreciation by about $176 billion and if Burry is correct, hyperscale's will have to write off AI capex as a bad investment, due to depreciation-useful life mismatch. This would then produce a major hit on earnings. While I remain a believer that AI is here to stay, I do believe there will be some big-time losers in this space given all the money that is being spent. Be careful chasing the hype as I do worry the fallout for some of these companies could be larger than many things possible. Burry has also warned this year that AI enthusiasm resembles the late-1990s tech bubble and recently disclosed options betting against Nvidia and Palantir. He also stated that "more detail" was coming November 25th, and that readers should "stay tuned." I know I'm definitely curious what other information he has! China is no longer just manufacturing; they are also beginning to innovate. For many years innovation was generally done here in the US, and we would have the products manufactured in China. China is no longer happy with this arrangement, and its research and development spending is up nearly 9% a year well above the 1.7% here in United States. In 2024, China filed 70,160 international patents which was about 16,000 more than the 54,087 patents the US filed. China also seems to be more advanced in robotics installing 300,000 industrial robots in 2024 compared with roughly 30,000 industrial robots in the US. It also has been noted that when it comes to worldwide sales of electric vehicles, 66% came from China. While these developments seem positive for China, the country is still experiencing problems with a slowing economy as they have seen fixed asset investment decline and a slowdown in retail sales. The population of China has also declined over the last three years, and the real estate market after four years has really taken away a lot of household wealth. China’s public and private debt continue to climb rapidly, which is becoming a problem for them as well. It is estimated that China is spending around $85-$95 billion on AI capital spending yet their economy is struggling as noted by the China Merchants Bank which talked about a 11% decline in consumption among customers and retail loans are now under pressure. China’s exports to the US are down 27% because of the tariffs, but worldwide their exports are up 8%. It was recently reported that Beijing banned foreign AI chips from Nvidia, Advanced Micro Devices and Intel from government funding data center buildouts. Currently, China cannot pass the US and its allies in producing the most advance semiconductors, but they’re making very good progress in developing mid-level chips and parts of the AI ecosystem. The US must continue to forge ahead because if we rest, China will be the world dominant power Financial Planning: 50-year Mortgage: Helpful or Hurtful? A 50-year mortgage is being discussed as a way to reduce monthly payments and help with affordability, offering borrowers slightly lower costs that could help them qualify for homes otherwise out of reach. Critics argue that these loans would saddle buyers with far more interest paid to banks and that many borrowers would never pay off such a long mortgage, but those arguments often miss the bigger picture. Paying a low rate of interest to a bank is not inherently bad if it allows someone to invest money elsewhere at higher returns, just as today’s homeowners with 30-year mortgages at 2% benefit greatly from not paying them off early. Also, most mortgages today are never fully paid off anyway because homes are sold, or loans are refinanced long before they reach maturity. A 50-year loan would be no different, especially since borrowers could always pay more than the minimum if they wanted to accelerate payoff. In practice, savvy investors would likely use the freed-up cash flow from 50-year mortgages to invest in higher-return opportunities, but most borrowers probably wouldn’t resulting in slower wealth accumulation for the masses without addressing the root cause of housing affordability. If used correctly, this loan could be a useful tool, but I fear the overall impact could be damaging. Does the US need Strategic Petroleum Reserve? In 2022, over 200 million barrels of oil was used to keep gasoline prices low in the US after Russia invaded Ukraine. Since then, very little oil has been replaced in the reserves. There are roughly 60 caverns at four sites between Texas and Louisiana. The caverns are roughly 1500 feet deep, which would fit the Chicago Willis Tower inside. To bring the reserve to full capacity of about 714 million barrels, the government would need to buy about 375 million barrels of crude oil. If the price was $60 a barrel, the cost would be $22.5 billion. But the big question is, do we really need to have that much oil in reserves? The Strategic Petroleum Reserve was established in 1975 shortly after the end of the Middle East oil embargo that ended in March 1974. Much has changed since then as back in the mid 70s; the United States was very dependent on foreign oil. Today, the United States is producing on average 13.5 million barrels per day. While our consumption is 20.3 million barrels per day, we are not at the mercy of anyone nation or region for oil like we once were. If we needed more oil, there would be the capacity to produce more than 13.5 million barrels of oil a day. So based on the numbers, I don’t think it would be worth $22.5 billion to fill up the reserve. Trying to fill up the reserve probably would also increase the price of oil as there would be added demand from the government. What are your thoughts? The new Paramount Skydance loses money maker Taylor Sheridan It’s only been a couple of months since David Ellison took over Paramount, which is now referred to as Paramount Skydance. Paramount was probably saved by what they call the billion-dollar man, Taylor Sheridan. He really climbed to fame after he created the hit series Yellowstone, and Mr. Sheridan seems to be a creative genius. When Paramount asked him to create new content for Paramount+, in a three-year timeframe he created seven new scripted series for Paramount, which really pushed the production teams to the limit. He created top of the line series from Tulsa King to the Lioness, and all have been big hits. Mr. Sheridan is waving goodbye to Paramount Skydance because apparently the new CEO, David Ellison, and he does not get along very well. You still have a few years left to watch the creativity of Taylor Sheridan on Paramount Skydance but beginning in 2029 after his contract expires, he’ll be working with entertainment company NBC Universal for a contract that is worth somewhere around $1 billion. It’ll be interesting to see what Mr. Sheridan does for content over the next few years at Paramount Skydance, as I wonder how engaged he’ll be. Ford’s electric truck known as the F-150 Lightning may be coming to an end Since 2023, Ford has accumulated $13 billion in losses on electric vehicles. Ford spent a lot of money on marketing and promotion of their electric truck known as the F-150 Lightning. Probably the nail in the coffin for this vehicle was the end of the Federal EV tax credit which caused sales in October to drop 24% in the US compared with a year ago. This was the first month without tax credit. It is not just Ford ‘s truck that has struggled, but sales of Tesla's Cybertruck have dropped dramatically this year and Rivian, who also makes electric trucks, has been cutting back on expenses including job cuts to maintain their cash. I remember concerns about electric trucks when they first came out as buyers worried that the electric pick-ups would run out of juice in the middle of a job or a long haul. The range for these EV trucks on a single charge is reduced dramatically when towing or carrying big loads or operating in cold weather. Ford's electric F series trucks have sold the most so far this year at 24,577 vehicles sold. That is about 7000 more than the Tesla Cybertruck. It appears this could be the end of EV trucks and big electric SUVs. For smaller electric cars, the demand is there from consumers, but it appears within the next 6 to 12 months you’ll probably witness more auto makers dropping their big electric vehicles. The president of Microsoft sells over 38,000 shares of his stock On Monday, November 3rd, Microsoft's Vice Chair and President, Brad Smith, sold a total of 38,500 shares of his Microsoft stock. It was done in two separate transactions. The first transaction was a sale of 30,411 shares with an average price of $518.49 and the second transaction that day was for 8,089 shares with a price of $519.21 for a total sale value of just under $20 million. He still owns 461,000 shares a value around $237 million, but could he have some concerns that are causing him to lighten up his position a little bit? After the most recent quarterly report, the stock sold off because of the high amount of money they’re spending on AI. In the most recent quarter, capital expenditure was $34.9 billion, which was above expectations. The stock closed last Friday at $496.82, which marked the first time since September 8th that it was below $500 a share. Like many tech companies, their stock trades at high valuations with a price/earnings ratio of around 35 times. We have been concerned with the high valuations of tech companies. Could this be a sign that even the top executives have some concerns about valuations? Protect yourself from AI scams with a code word Generative AI has become so good that it can mimic people’s voices like your son or daughter, and you can’t even tell the difference. To prevent you from being scammed by someone imitating your son or daughter that claims to be in need of money, you want to establish a family code word. The code word should be simple, but something not well known that you may put on social media like the name of a pet or the street you live on. You may want to come up with a code word that is something unique to your family and is easy to remember. You should keep the circle that has the codeword small and pretty much only in the immediate family. It may sound silly, but it would be a good idea to bring up the codeword with the family in private, so no one forgets it when it is needed. This isn't high tech where you have to change passwords frequently, it is lower tech and the only time you would have to change the password is if by chance someone in the family got divorced or someone accidentally told someone else that is not in the family about the code word. It kind of makes you feel like the old days of the spy world where before you can talk or send money you ask what the code word is. The job market still looks strong You may be wondering, how would one know since the major government data has not been released due to the shutdown? It is important to realize there are other sources that can be used to get some idea of where the job market stands. For instance, the Chicago Fed, which is separate from the federal government and still producing data, estimated that last month's unemployment rate was at 4.36%. This is remarkably close to the estimate in September of 4.35% and the BLS jobless rate in August of 4.3%. It does appear the job market is continuing to hold steady even with all the noise. Another source is ADP, and they said in the month of October private payrolls increased by 42,000. While September did drop by 29,000 jobs, that is still a net gain of 13,000 jobs over a two-month period. The Bank of America Institute also said there was no further slowdown in employment in October, based on the tracking of internal deposit flows. They found that payrolls were up 0.5% from a year earlier. Will the shutdown finally come to a close this past week? We should start seeing economic data from the federal government soon. Goldman Sachs estimates the Bureau of Labor Statistics will put out an updated schedule of releases in the early part of next week. We are now missing the September and October job reports and while we should see the September data soon, October's survey that is used to produce the jobless rate wasn't completed. This means we will not get a complete October jobs report, and other survey-based data like the October CPI will not be produced. Hopefully, the Fed can get more data before the December meeting on the 9th and 10th, as it is a coin flip as to whether they will cut rates or not. It has been quite a change since just a month ago when the market assigned a 95% probability that there would be a rate cut.

Apple CEO Tim Cook pulled three rabbits out of a hat Pulling a rabbit out of a hat is a pretty good trick, but pulling three out of a hat is nothing short of a miracle. In the spring of this year, Apple stock fell below $170 a share as it was faced with enormous tariffs on iPhones, the potential loss of a $20 billion per year payment from Google, and sales for iPhones seemed to be stuck in the mud. To handle the tariff situation, Tim Cook promised US investments of $600 billion over four years. This was not bringing iPhone production back to the US, but it was an investment of making AI servers in Texas and offering manufacturing training for US businesses in Detroit. Apple also announced a $2.5 billion commitment to make iPhone cover glass in Kentucky with Corning and a $500 million partnership to produce rare earth magnets in the United States. After this investment pledge, the President said Apple would be exempt from tariffs on imported electronics. To save the $20 billion yearly payment from Google, Mr. Cook sent Apple’s senior vice president in charge of services Eddie Cue to testify. He convinced the judge that technology shifts are so powerful that they can take down even the most massive companies. In other words, the judge didn’t need to impose harsh penalties, and the market would essentially take care of itself. And somehow consumers have been convinced that the new thinner smart phone called the iPhone Air is a must for any consumer. The marketing on this must be phenomenal because the iPhone Air has a weaker camera, a single speaker, a smaller battery with a shorter life and a higher price tag. Apple also convinced consumers that the rest of the iPhone 17 lineup was worth an upgrade. Apple is predicting up to12% revenue growth in the holiday quarter, twice what Wall Street estimated. So, in roughly 6 months the stock, after dropping to a low around $169 a share, it is up roughly $100 and somehow supports a price earnings ratio of 36. Congratulations to Tim Cook and shareholders of Apple stock. If anyone said they knew Apple would be fine either they have a crystal that really works, or they didn’t understand the problems Apple was facing. Going forward the road is still bumpy with operating expenses coming in slightly over $18 billion for the December quarter, a 19% increase year over a year and well above the 10 to 12% revenue increase that Apple's projecting. We don’t see any big drops in the stock coming up, but I still can’t justify the share price or see any reason why the stock will continue to climb going forward. In 2026 you could be buying stocks on the Texas Stock Exchange Businesses and CEOs are getting tired of the high taxes in New York City and the regulations that are costing them billions of dollars. Texas, which is known as a pro business state will be opening in Dallas the Texas Stock Exchange (TXSE). This has already been approved by the Security Exchange Commission (SEC). It is expected to see operations open for trading in the first quarter of 2026. The Texas stock exchange has the backing of JPMorgan Chase, who just invested $90 million into the new exchange. Large companies like BlackRock and Charles Schwab are also on board. It is backed by many businesspeople including billionaire Kelcy Warren, cofounder of Energy Transfer Partners, and billionaire Paul Foster, who founded the investment firm Franklin Mountain Investments. This could be a heavy blow to New York and New York City, who have been unfriendly to business because they felt like they have the only place in the country to trade. Now that New York City has elected Zohran Mamdani for mayor, it will be interesting to see how businesses respond since he says he will go after business and the wealthy to pay more taxes. The state of Texas has no income tax, but if you live in New York City you could pay a state tax of 10.9% plus a city tax of 3.9% and it doesn’t take long to get to those levels based on your income. Public companies that bought Bitcoin are getting worried The craziness of public companies riding the Bitcoin wave as it increased in value caused many of their stocks to jump even more than the increase in Bitcoin or other cryptocurrencies. But now that Bitcoin has pulled back from its all-time high slightly over $126,000 and has dropped about 20%, those public companies that bought Bitcoin are seeing their stocks drop far greater than the decline in Bitcoin. Roughly 25% of the public companies that bought Bitcoin as a treasury strategy now have a market cap valuation below the total value of their Bitcoin value. What companies were doing was they would invest in Bitcoin then sell their shares at a premium as their stock increased in value and then used those proceeds to turn around and buy more Bitcoin. Now that Bitcoin has declined, there’s no reason for crypto buyers or traders to buy those stocks and instead it looks like they have been selling them. As an example, CleanCore Solutions is now down over 80% since investing in Dogecoin and even a larger player like Japan’s Metaplanet, which is a top five publicly listed Bitcoin holder, has seen its stock decline around 60% over the last 3 months. If Bitcoin were to continue its decline, the company could be forced to sell assets, which could cause Bitcoin to fall even further. So far, this has not affected the company who started this craziness of buying Bitcoin in their treasury. I'm referring to MicroStrategy, which has changed its name just to Strategy and still trades under the symbol MSTR. Really all this company does is buy Bitcoin. Strategy owns roughly 640,000 Bitcoin and at today’s price it is worth roughly $70 billion. It is estimated that Strategy's average purchase price for Bitcoin is $74,000, so they seem to be safe for a while. However, stock investors in Strategy are probably crying the blues since in July the stock was around $450 and as of today it trades around $240, close to a 50% decline. As we have said for years, no one really knows what direction Bitcoin is going, it could be up or it could be down. But one thing is for certain, if those companies that bought Bitcoin and pushed the price higher, now need to sell it that will probably cause Bitcoin to fall further. Financial Planning: The Conflict of Interest around Universal Life Insurance Universal life insurance is often presented as a hybrid policy that combines features of term life and whole life, marketed for its perceived benefits of tax-deferred cash value growth and the potential for tax-free income through policy loans in addition to a permanent death benefit. However, realizing these benefits typically requires significant overfunding, meaning the policyholder must pay premiums well above the minimum needed to keep the policy in force. Universal life offers flexible premiums, but there are ongoing fees and costs of insurance, which increase with age, required to maintain coverage. Only premiums paid beyond those costs build cash value that can be invested. The problem is that agent commissions are usually based on the “target premium”—the minimum amount needed to keep the policy active, not the funding level required for it to perform as illustrated. This creates a conflict of interest, where many agents are incentivized to sell the policy but not to ensure it’s structured or funded properly. As a result, many universal life policies become underfunded, fail to accumulate meaningful cash value, and ultimately function as expensive term insurance. While some advisors structure these policies correctly, they are the exception rather than the rule. Because the life insurance industry is easy to enter and highly lucrative, it attracts many underqualified or self-interested salespeople. For most people, term life insurance combined with disciplined investing remains a more transparent and cost-effective approach that will outperform even the most efficiently structured life insurance, especially since the need for a death benefit typically declines by retirement. It’s important to regularly review existing life insurance policies to ensure they’re performing as intended and not quietly eroding in value over time. Sales of electric vehicles killed Porsche‘s profits Like other car makers, Porsche thought it was a good idea to come out with electric vehicles for their consumers to buy. Unfortunately, the Porsche buyer rejected electric vehicles, and this has destroyed the profits at Porsche, which had been known for financial stability and for over 10 years generally had double digit operating margins. The most recent quarter they reported a loss, which was the first quarterly loss in years. The numbers got worse from there. For the first nine months of the year, the profit was only €40 million. The company also reported €2.7 billion in one-time costs and write downs. Unfortunately, they believe by the end of the year that write-off could rise to €3.1 billion. The company is also dealing with a difficult Chinese market and tariffs from the United States. In my opinion, some cars should not be electric, which includes Porsche and the recent announcement by Ferrari to do an electric vehicle. I think that could have the same results as what Porsche experienced. New estimate show in 2033 retirees will lose $18,000 a year in benefits There are many misconceptions about what happens when Social Security becomes insolvent. Benefits will still be paid, but since there’s no money left in the plan, it will only be able to pay out what it brings in. In a recent survey by Allianz, 55% of Americans admit they don’t know much about Social Security or how it will fit into their retirement plans and 66% worry that Social Security will not be there when they retire. The $18,000 loss per year would be for the average couple, not per individual. Another issue that is not discussed as much is it is predicted that the Medicare hospital insurance fund will also be empty in 2033 and when that happens Medicare payments will fall by 11%. So, people getting less benefits are going to find it hard to find a doctor or medical facility to accept less. Social Security is a big part of household income for adults over 62 years of age accounting for roughly half of all their income. To fix the problem, either benefits have to be reduced, or taxes need to go up, or perhaps both. It’s important to realize that Social Security came out in 1935 when the average life expectancy in the United States was 61.7 years old. With the retirement age at 65, not many people were collecting Social Security. Today people in the US are living 16.7 years longer with a life expectancy of 78.4 years. This has not been taken into account over the last 90 years with Social Security and that’s why we’re in the mess that we are in today. As life expectancy improved over the years, the retirement age should’ve also increased at a proportionate amount. The best way to fix the problem is to extend the retirement age by five years or so, but only for the rich. The reason for this is American men born in 1960 that are in the top quartile by income are expected to live 12.7 years longer than those in the bottom of quintile. This is because they have more money and are generally in better health with better access to a healthier lifestyle. Also, since rich Americans live longer than poor Americans, they collect more from Social Security so they should have to work a little bit longer, which would reduce the length of time that they would collect from Social Security and also add an additional five years putting into the fund. Being in the top quintile myself, I would not have a problem with this and believe it is the fairest way to solve the problem. I’m sure some will disagree with me and unfortunately, I don’t think the problem will be resolved until whoever gets in office in 2032 is forced to come up with a solution. No President or Congress would want to make such an unpopular decision until they absolutely need to. Job losses are increasing in white-collar jobs What do Amazon, UPS, Target, Rivian, Molson Coors, Booze Allen and General Motors have in common? They all have recently been laying off white-collar jobs to improve efficiency. AI is partly to blame for these job losses, but also executives are putting more pressure on mid-level managers and employees to produce more per employee. On the opposite side, there are many opportunities in front-line, blue-collar jobs for those who have specialized work abilities. That would include jobs in various trades, healthcare, hospitality and construction. It has been difficult for the graduating class of 2025, who according to the National Association of Colleges and Employers have submitted more job applications than the class of 2024, but are receiving less job. The sad part is I don’t see this changing going forward even though the economy is doing OK. Businesses will continue to look for ways to increase profits by using artificial intelligence and forcing employees to work harder and perhaps more hours. The jobs that pay more and require a bachelor's degree could be the ones that are more likely to be replaced by AI than other positions. If you’re in a white-collar job, you may want to do everything you can to increase your production to prevent being a white-collar employee who is easily replaceable by AI. If I wasn’t a value investor, I would consider putting Tesla stock in our portfolio As a value investor, when we invest in a company, it must have earnings, and we refuse to pay more than 10 to 12 times the future earnings for any business. This automatically kicks out a company like Tesla because it trades for over 250 times this year's estimated earnings. I always say if you don’t stick to your discipline and find an excuse to break it, then you have no discipline. However, on November 6th Tesla shareholders voted on stock bonuses for Elon Musk, which would nearly double his share in the company from 13% to 25% if he hits very high goals. The market cap of Tesla, which is currently around $1.5 trillion, would have to hit $8.5 trillion in the next 10 years, more than likely an impossibility of very high goals. I do believe Tesla could see a stock decline in the near future because of the big buying spree in September before the expiration of tax credits for electrical vehicles. I've seen predictions by experts that Tesla will see a 40% or more decline in electric vehicle sales going forward. This could cause a nice drop in the stock, giving investors a buying opportunity. The reason why I would be looking at investing in Tesla is three-fold. First, Elon Musk always seems to pull a rabbit out of the hat. I also believe they will have robotaxis and autonomous driving vehicles in the future. Another futuristic thing that is probably closer than we think is humanoid helpers in homes and businesses that will be a growing industry. Both of these innovations will be under the Tesla name, unlike some other innovations that Elon Musk has come up with that are under different companies. Investors investing money in Tesla have to be prepared for a wild ride over the next 5 to 10 years, sometimes experiencing a drop of perhaps 50% or more. But there is no doubt in my mind that Tesla will make some good profits off Robotaxis and these human-like robots. The big question is at the current levels has the valuation priced in these lofty expectations? Have some retirees become too comfortable with gains in the stock market? Over the last 10 years, the S&P 500 is up around 237%. Unfortunately, there are some retirees who don’t understand the risk they’re taking and believe this will go on forever. If you follow us at Wilsey Asset Management on a regular basis, you may know we have done well investing but also at the same time are very cautious based on many factors which I will not get into today. We do tell people that you can still be investing in stocks when in retirement, but you have to look behind the scenes and see what you’re investing in and understand that all stocks are not equal. Some retirees are probably spending more money than they should based on their past performance and are taking extra trips, flying first class and getting locked into lavish retirement homes that require a large down payment of hundreds of thousand dollars plus high monthly fees. What people don’t understand is that yes, the S&P 500 is up about 237%, but there could be a 20% pullback at some time that actually lasts more than a few months. That does not mean that the 237% gain will fall to just a 217% gain, no it will drop your gain over 10 years to only 169%. Also, the emotional distress that will happen when the markets fall will probably cause some people to sell their investments because they don’t understand what they have and then invest the money in something very conservative. Never getting back what they lost for perhaps as long as 20 years or more. It is great that retirees are enjoying their retirement, but they have to understand the risk they are taking, and this is why a good financial advisor with many years of experience that understands how to value investments is the best path for success in retirement. There are some signs that the job market is breaking down, but it’s not all bad We have been watching the job market for quite a while, and it still looks stable. There has been bad news from some companies like Amazon, General Motors, Paramount Skydance, and UPS that collectively laid off 65,000 people. But it’s not all bad news as there is some good news to balance out the bad. Small businesses revealed in the latest National Federation of Independent Business survey that they are planning to hire new employees. Also, people are still traveling and staying in hotels along with eating out and this has helped the hospitality sector, which posted the strongest rebound in hiring for October when monthly payroll growth was up 13.8%. Normally, October shows a decline in the month. With the government shutdown occupying so much of the negative news, there are other companies doing well like Homebase that provides employee management software to 150,000 small businesses which employ roughly 2,000,000 people collectively. It’s important to remember that small businesses in the United States accounts for nearly 50% of all the US private sector jobs. While small businesses do remain cautious, many are still optimistic going forward. Also on the positive front, ADP reported last Tuesday that the four-week moving average of 14,250 jobs for the week ending October 11 is higher than the previous four weeks with only 10,750 jobs. The government shutdown does make accessing data about the economy a little more difficult, but with everyone in the business world trying to find information to run their business there’s some interesting companies providing worthwhile data.