Alternative Assets Crumbling, Tariffs & Inflation, HHS Overhaul, Richer Rich, Retirement Recession, Cybertruck Letdown, California Gas Woes, Bitcoin Surge, Utility Bill Spike & Solar Slowdown

Big bank earnings give a cautious green light on the economy Every quarter we get excited about listening to and reading about how things went for the big banks in the most recent quarter as they release their earnings. I’m primarily talking about JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. We have held a couple large banks in our portfolio for years and they have provided very useful information along with great returns as well. Overall, the big banks were happy with the low rates of consumer delinquencies and writing off debt that was unrecoverable stayed around the same rate as last year. One banker made a comment that with a 4.1% unemployment rate it’s not likely to see a lot of weakness in their portfolio. This is something we have said for quite a while now, but we believe as long as the employment picture stays strong, the economy should do well. Deal making for the banks looked pretty good across the board and all of them had profit increases compared to one year ago. The overall tone from the bankers was largely upbeat, but a couple banks did call out some concern around commercial real estate and office buildings. There are certain cities with economies that are doing well, but there are other areas that are more problematic and the banks generally have commercial real estate in many markets across the country. To summarize, it appears the bankers feel pretty good, but they still remain somewhat cautious as bankers always should. Understanding new legislation on cryptocurrencies Last week new legislation on cryptocurrencies was announced as the Genius Act, which stands for Guiding and Establishing National Innovation for US stable coins, made its way through Congress and to the President’s desk. The legislation is supposed to provide licensing and oversight for stable coins as issuers must obtain licenses through either a national trust bank charter with the OCC, which stands for the Office of the Comptroller of the Currency, or a state level money transmission license. The Genius Act is supposed to provide consumer protection in the case of the issuer of a stable coin becoming insolvent. The solution in the Genius Act is to prioritize stable coin holder claims so the holders of those coins should be able to get their money back. This is nowhere near the safety one has in a bank where your deposits are insured by the FDIC should that bank fold. I feel this law will give people a false sense of security and I don’t believe it will prevent a major collapse of stable coins. There’s also a conflict of interest from President Trump‘s promotion of digital currencies since he himself has a coin and his sons Donald Trump Junior and Eric Trump run a bitcoin mining firm called American Bitcoin and are heavily involved in the crypto space. I believe the whole thing is just adding to the bubble of cryptocurrencies. Keep in mind that a bubble can last 10 to 12 years, if not longer, but the bigger it gets the bigger the financial disaster it causes. What is better for investors stock dividends or stock buybacks? Unfortunately, there’s no hard and fast rule based on performance figures in terms of what is better for stock investors, but I would have to lean towards stock dividends. If you look at the right companies paying dividends over a 10-year period you can find that perhaps the company you invested in is now giving you a yield of maybe 7-8% based on your initial investment. Those dividends can be a really great tool for long-term investing and while companies could always stop the dividend, most companies that have paid a dividend for the long-term do not like to stop or even reduce paying that dividend. This can help stabilize returns during downturns and may help investors be less emotional. A problem with stock buybacks is they can be announced and the stock may see a little bounce, but then it’s possible that management does not fulfill the commitment to buy back all the shares they had planned to. Also, if the company or the markets were to hit a rough patch many times the first thing to go is stock buybacks. It is also possible that the company could do a stock buyback, but within a year or two the stock might drop below the price where the repurchases occurred, which would make those investments a questionable use of capital. Benefits to stock buybacks include the fact that there’s no taxes for shareholders when they occur and they do increase your ownership of that business. While dividends are generally taxed, they are tax favored and depending on one’s tax bracket you may pay very little or no tax at all. And don’t forget about the compounding effect of reinvesting those dividends back into another investment. Unfortunately, it has become harder to find good quality companies paying dividends for a reasonable price. Looking at the S&P 500 index, the yield is now only 1.2%, which is near the all-time low that was hit during the dot-com bubble. Over the long-term history of the S&P 500, it’s yield is generally around the 10-year Treasury and I was surprised to learn that up until the 1960’s, the S&P 500 actually generally yielded more than the 10-year Treasury. Even looking just 10 years ago they were both yielding around 2%, but currently the spread between the two is about 3%. This comes as the S&P 500 has seen its forward P/E based on the next 12 months of earnings expand from 17 to around 22 during that time frame. Could this be another warning sign that the S&P 500 index is overvalued? Financial Planning: New Tax Rules for Tips and Overtime Starting in tax year 2025 and through 2028, the One Big Beautiful Bill Act exempts up to $25,000 in tip income and up to $12,500 in qualifying overtime pay per individual from federal income tax—doubling to $50,000 and $25,000 respectively for married couples filing jointly. The tip exemption applies only to workers in occupations where tips are customary and must be properly reported through W-2s. The overtime deduction applies only to the premium portion of overtime wages—i.e., the extra pay above an employee’s standard hourly rate—and must be paid in accordance with Section 7 of the Fair Labor Standards Act (FLSA), meaning it only covers overtime worked in excess of 40 hours per week under federal rules. Overtime paid under state laws or union contracts does not qualify unless it also meets the FLSA criteria. The full exemption is available to taxpayers with modified adjusted gross incomes up to $150,000 (single) or $300,000 (married filing jointly) and begins to phase out above those levels. To claim the exemption, workers must file a new IRS Form 10324-T with their annual tax return. Keep in mind Social Security, Medicare, and state taxes still apply to the tip and overtime pay. The policy begins with wages and tips earned on or after January 1, 2025, with claims first filed on 2025 tax returns in 2026. Solar panel loans appear to be in trouble You may think this doesn’t concern you because you don’t have any loans on solar panels, but guess again as you might own them through bundled investments known as ABS or asset back securities. They may also be mixed in with private credit that was sold to you with other loans. The problem in the solar loan industry is the overcapacity and the loose lending of creditors. The industry saw substantial growth in 2024 as 4492 megawatts of panels were installed. Compare that to 2019 when only 2864 megawatts were installed. Companies you may recognize in this would be Sunnova Energy International along with Goodleap who packaged loans as a middleman, took a commission and then sold the loans. The companies became very aggressive selling solar panels and gave loans to people who had very low credit and thought the savings on the electricity would be far higher and would cover the cost of the loan. Unfortunately, that was not the case and with the expected slowdown in solar sales there is nothing to continue to feed these loans. It is so important for investors to understand where they’re investing their money. Even though one may think bonds are pretty safe and the broker that sold them to you told you there’d been no market fluctuation, bad bonds have far greater investment risk than many realize because if the bonds aren’t repaid it can result in major losses for those investors. One of world‘s top bankers warns on private credit Jamie Dimon, CEO of JPMorgan Chase, is considered one of the world’s top bankers, if not the top banker and he recently warned that private credit is a recipe for a financial crisis. I have been warning our readers, listeners and viewers of what I see as the building of the private debt bubble, so it was nice to see some of Dimon’s comments validating my concerns. Unfortunately, some people will ignore his warning because he says he will be competing in the space as well. But people should understand that while the bank has earmarked about $50 billion for private debt, I believe Dimon will be the one that comes in and takes advantage of all the wreckage in poor loans. He is in no rush to go out there and simply loan money at rates 2 to 3% higher to higher risk borrowers. With that said, he understands that more corporations are turning to private debt due to its flexibility. Make no mistake private credit is far riskier than what banks will lend, which is why there is private credit. But the explosion of private debt over the last eight years has been crazy, considering it has increased by around 100 times to nearly $700 billion. Jamie Dimon also points out he doesn’t like how some private credit firms are taking the savings from small investors to grow their rapid expansion. These private credit firms are very tricky and some are getting access to small investors by working with insurance companies and using annuities to grow their business. Shame on the insurance companies for doing this as I worry this will be another pot that will over boil in the future. Unfortunately, when the credit boom collapses, I believe there will be many small investors who lose more than they can afford and they will be too close to retirement to recover. The story likely won’t end well, and if investors won’t listen to me, take the advice from a very well-respected banker, Jamie Dimon. Private equity should not be allowed in 401(k)s Most of the time I disagree with attorneys, but this time, I’m glad to see that the attorneys will be going after companies that allow private equity in their 401(k)s for their employees. There is currently over $12 trillion in defined contribution plans like 401(k)s and Wall Street has been pushing hard to get private equity into this fee gold mine that could produce billions of dollars in fees for Wall Street. The attorneys say private equity is not a good investment for 401(k)s because of the high fees and the lack of the liquidity, which makes it hard for people to get out of them. I agree 100% with the attorneys on this statement. Unfortunately, the Trump administration is expected to issue an executive order to make it easier for the private markets to be offered in 401(k)s. Attorneys responded to this by stating an executive order will not overrule the current fiduciary requirements of the Employee Retirement Income Security Act, also known as ERSIA, which governs retirement plans. I’m siding with the attorneys on this because I believe this will destroy many peoples long-term retirement plans. I’m hopeful as the attorneys begin their lawsuits and go after companies suing them for the lack of fiduciary requirements, that employers back off from allowing private investments in 401(k) plans. That international trip is going to cost you more than you expected According to a recent survey compiled by Deloitte, 25% of US consumers said they were traveling internationally over the summer. They’re going to be in for a big surprise when they are dining out, traveling around, and buying souvenirs. The ICE US dollar index symbol, USDX is widely used for the value of the US dollar against foreign currencies. From January through June, it posted its biggest decline in more than 50 years. Thinking of going to Europe? The dollar against the euro was off 13% and even against the Japanese yen the dollar was down 6%. This will definitely wreak havoc on your travel budget and I don’t see it improving in the near future. While this may sound negative for the US, there actually positives that come with it. The increased costs could lead to less people vacationing internationally and instead choosing to stay here in the US. With travelers spending their vacation dollars here it would help stimulate the economy. Also, people from around the world can now travel to the United States for less and also spend their vacation dollars here. As I talked about six months ago, while the pride of having a strong dollar sounds good, having a weaker dollar can help our economy with continued growth. Mined diamonds versus man-made diamonds, which should you buy? Based on my research, they look the same and can only be told apart by expensive equipment. Man-made diamonds are real diamonds that are created in a lab that can duplicate the extreme pressure and temperature in the Earth that took over 1 billion years to create naturally. Manufactured diamonds are 100% carbon with the same hardness and sparkle of a natural diamond. Walmart is the country’s second largest fine jewelry seller behind Signet and sold its first man-made diamond in 2022. As of today, roughly 50% of the diamond sales at Walmart are man-made diamonds. Signet, which owns Kay Jewelers, Zales and Jared, says it has been adding more lab grown diamonds to its fashion jewelry and this has helped increase sales for the company. Lab grown diamonds when they first came out were close in price to a natural diamond, but since 2016 the price has dropped around 86%. The price of a natural diamond now is about $3900 per carat vs $750 per carat for a lab grown diamond. Due to the increasing popularity, it appears that most consumers don’t seem to care whether it’s a natural or a man-made diamond. Would you be willing to save thousands of dollars to buy a lab grown diamond versus a natural diamond? Who has more viewers, Netflix or YouTube? Netflix just recently reported their earnings per share jumped 47% and their share of US viewers held steady at 8.3%. If you guessed Netflix has more people from the US watching them than YouTube you would be incorrect. YouTube share of US viewers came in at 12.8%, which was nearly a 33% increase from 9.9% last year. YouTube also has substantially higher revenue of $58 billion compared to the recent $39 billion in revenue at Netflix. People are excited about the revenue growth at Netflix as it is projected to climb 15% to $45 billion in 2025, but that pales in comparison to YouTube’s expected revenue jump of nearly 21% to $70 billion. Netflix also has a higher cost for content expenses, as 52% of total expenses were for content in the second quarter. YouTube has much lower expenses because most of the creation expense is carried by the creators of the content. While this has been a positive for YouTube in the past, it could cause some problems in the future as their content creators could be stolen from them by others, including Netflix. As an example, Miss Rachel, who is a children’s entertainer with a very popular YouTube channel, now has a Netflix show that saw 53 million hours of viewing in the first half of 2025. With Netflix owning their content, it cannot be taken away from them. A wild card that is still out there for controlling US viewers time is TikTok, which is currently in limbo, but could be a major disruptor in the entertainment space since younger audiences seem to enjoy the short videos versus longer TV shows and even movies to some degree. Apparently, younger viewers have a very short attention time span and TikTok is capitalizing on that opportunity and maybe even making that problem worse.

Are tariffs impacting inflation yet? The Consumer Price Index, also known as the CPI, in the month of June showed an annual increase of 2.7%, which was in line with expectations. Core CPI, which excludes food and energy, came in at 2.9% and was also in like with expectations. It was slightly above May’s reading of 2.8%, but given all the news around tariffs I think most would be surprised to see the limited change in prices given all the concerns. Some economists that tried to find evidence of the tariffs pointed to areas like apparel that had an increase of 0.4% compared to the month May. My concern with pointing out limited areas like that is prices can be quite volatile when looking at single areas, plus if you look at prices for apparel compared to last June, they actually decline 0.5%. Shelter is becoming less of problem for the report, but it is still the largest reason why inflation remains stubborn considering the annual increase was above the headline and core numbers at 3.8%. I’m still looking for these tariffs to have an impact on inflation, but as a whole they didn’t seem to have a large impact in the month of June. I also want to point out I don’t think they will be as problematic for consumers as some economists have illustrated. Is the market in a bubble? I have been hesitant to use the word bubble when describing the current state of the market, but as valuations get more and more stretched, I must say I believe we are now in bubble territory. Apollo’s chief economist, Torsten Slok, released a graph showing the 12-month forward P/E today versus where we were in 2000 and other 5-year increments. The forward P/E for the market as a whole is higher than it was back in 2000, but Torsten raised further concerns that valuations for the top 10 companies in the index are now more stretched than during the height of the tech boom. This is problematic considering these ten companies now make up nearly 40% of the entire index. Even looking at just the top 3 companies: Nvidia, Microsoft, and Apple, those now account for nearly 20% if the index. I recently heard a gentleman say on CNBC that valuations don’t cause bubbles to pop and while that may be true, when a catalyst comes the larger the bubble, I worry the larger the pop. All I can say at this time is be careful if you are investing in the index as a “safe”, diversified investment as I believe it is far riskier than many people believe. Retail sales show another strong economic data point Even though people remain concerned about a slowdown in the economy, their fears haven’t showed up yet in their spending habits. In the month of June, retail sales climbed 3.9% compared to the previous year. Due to the lower price for gasoline, gas stations were a large negative weight in the month and actually declined 4.4% compared to last June. If gas stations were excluded from the headline number, retail sales grew at a very impressive annual rate of 4.6%. Strength was broad based, but I was surprised to see areas like health & personal care stores up 8.3% and food services & drinking places up 6.6%. These are two areas that show me people are still getting out and spending money, which generally wouldn’t happen in a weak economy. There are some areas where consumers may be trying to get ahead of tariffs like motor vehicle & parts dealers, which saw an annual increase of 6.5% and furniture & home furnishing stores, which saw an increase of 4.5%, but it has now been a few months of strong sales in these categories. It will be interesting to see if there is a slowdown in those specific categories in the coming months as there could have been some pull forward in demand with consumers trying to beat those tariffs. Even if that is the case, spending still looks strong in areas not impacted by the tariffs, so I anticipate the consumer will remain healthy. Given the current state of the consumer, I still believe the economy is in a good spot overall. While I’m not looking for blockbuster growth, I’d be surprised to see anything close to a recession given all the recent data. Financial Planning: What’s the Deal with These “Trump Accounts” for Kids? Under the new One Big Beautiful Bill, children under 18 are eligible to open special long-term savings accounts, nicknamed “Trump Accounts”, with a unique blend of benefits and caveats. Kids born between 2025 and 2028 will receive a $1,000 seed deposit from the U.S. Treasury, regardless of family income. Parents, relatives, and friends may also contribute up to $5,000 per year in after-tax dollars. The account grows tax-deferred, and extra contributions (but not the Treasury seed or earnings) can be withdrawn tax-free. However, like a non-deductible IRA or non-qualified annuity, withdrawals of earnings or seed money are taxable at ordinary income rates, and early withdrawals (before age 59½) face a 10% penalty unless used for qualified purposes like a first-time home purchase or education. While the free $1,000 should be taken advantage of, families may find that 529 plans, Roth IRAs for teens with earned income, custodial accounts, or even accounts in a parent’s name offer better long-term flexibility and tax treatment for ongoing contributions. Why are the markets hitting new highs? The markets, which are heavily based in technology, still continue to hit highs, even with uncertainty with interest rates, the economy and world trade. I’m not sure who is doing all the buying, but I know with our portfolio when new money comes in we are being very cautious and only investing 20 to 25%. We are being patient and waiting for the right opportunity to invest the new money strategically. We will be ready to invest when there’s a pull back and we can find companies to buy at much more reasonable prices, which should enhance our investors long-term returns. Some warning signs away from the regular stock market would be M&A activity in the second quarter did less than 11,000 deals and that was the lowest level since 2015, excluding the pandemic. Also, when wealthy investors feel good, they generally invest in art and it appears they are concerned as well. Based on sales numbers from the three big auction houses Christie’s, Sotheby’s, and Phillips, there was a decline of 6.2% in global sales for the first six months of 2025. Experts who analyze art investors say concerns include inflation, growth and geopolitical tensions. Another concern in the art world was the percentage of artworks sold at auction with negative returns has increased to 50%, which rose dramatically since 2008 when the percentage of artworks sold at auction with negative returns was only 11%. I will keep ringing the bell for investors to be cautious and day by day you may see some tech stocks rise but we seem to be at a tipping point. Diet drugs known as GLP-1 are hitting some headwinds Diet drugs, along with stocks like Eli Lilly, have done very well especially considering their stock has more than doubled since the beginning of 2023. In late August 2024, the stock of Eli Lilly was as high as $970 per share, but there has been push back in 2025 because of the high costs for these drugs. Today the stock is around $800 per share. Medicare and numerous state benefit plans have declined to pay for the new weight loss drugs because of the high prices and CVS’s pharmacy benefit manager Caremark recently said it is removing coverage of the drug. The company said this will save their clients 10 to 15% year over year. If other pharmacy benefit managers or insurance companies follow the same path, it could be a big hit to the diet drug industry. Some medical professionals and drug companies are complaining that insurance companies should not be dictating what drugs their patients have access to. I have been concerned that if insurance companies covered these drugs, insurance premiums, which are high already could go even higher as more people want an easy way to lose weight. Some people who are on the diet drugs will be upset, but most people that pay for health insurance will likely be pleased not to see their insurance premiums rise. I personally believe health insurance premiums are high enough already. A FICO score is no longer the only game in town After years and years of pretty much being a monopoly, the FICO score, which is run by Fair Isaac Corporation, has competition. Mortgage lenders can now use what is known as VantageScore 4.0. This model was developed by a joint effort between Experian, Equifax and TransUnion. VantageScore has already been adopted pretty well with credit cards and auto lending, but is having a hard time breaking into the mortgage lending business. FICO says its scoring model is used for over 90% of mortgage credit decisions in the United States. Fair Issac has seen its stock dramatically increase in value over the years largely because the fee that FICO charges credit bureaus has increased from sixty cents seven years ago to almost 5 dollars today. VantageScore 4.0 appears to be a little more thorough as it incorporates alternative data like rent, utilities, and even telecom payment history, while the traditional FICO models have ignored these types of payments. It makes sense to me, but it could make it a little bit harder for some consumers to have a good credit score. Fair Isaac’s monopoly appears to be doomed in the coming years, which should benefit consumers but shareholders of the stock will probably suffer because it will likely hurt the growth in earnings for the company. Even with tariffs, producer prices have seen little increase After seeing little lift in prices in the Consumer Price Index, I thought it was possible producers might be covering part of the cost from tariffs. That wasn’t the case as the June Producer Price Index, also known as PPI, showed an increase of 2.3%, which was below the 2.7% reading in May and marked the lowest level since September 2024. Core PPI, which excludes food and energy, came in at 2.6% on an annual basis, the smallest gain since July 2024. Perhaps one thing we continue to discount in the US economy is the fact that it is driven by services rather than goods, which could help reduce the burden of tariffs. As I said with CPI, I am still looking for inflation to increase in the coming months, but it definitely was not a problem in the month of June. China should not own any US farmland I was happy to see that Brooke Rollins, who is the US Secretary of Agriculture, is working with state lawmakers to prevent any US farmland from being bought by the Chinese or other countries of concern. Through the back door, the Chinese already own some farmland through a company that does not sound Chinese at all, Smithfield Foods. 93% of Smithfield’s stock is owned by WH group, which is a Chinese pork company. The Chinese are very sneaky in how they do things because I’ve heard of Smithfield Foods before and from the name, I had no idea that they were majority owned by the Chinese. The Chinese also have other entities that own roughly 300,000 acres of farmland that supplies food for our nation. It is not a big amount yet, but I believe it should be stopped immediately. If the Chinese had more ownership in our food supply from farmland, they could use it as a weapon against us by either stopping food production or increasing prices rapidly to cause inflation across the country. I hope that all the politicians will work together on this to prevent and hopefully even try to reverse what ownership the Chinese have of our farmland. Should interest rates be lower? There are some good reasons why here in the US interest rates should be lower. The current fed funds rate in the United States is between 4.25% to 4.5%. We are the strongest country in the world, but yet there’s other countries that aren’t as strong like Japan that has an equivalent rate of 0.5%, Cambodia has a rate of 0.45%, and Switzerland has a rate of 0.25%. We have the largest economic powerhouse to pay our debt so it makes no sense to me why those countries have lower interest rates than the United States. Unfortunately, the interest expense on the national debt is just about to top $1 trillion. With lower interest rates, the interest expense would decline and it would in theory leave more money to go to principal. The key would be to make sure this money goes to pay down the principal and not to other government programs, which unfortunately has happened in the past. The concern from the Federal Reserve is if they lower rates, we’ll see an increase in inflation. I continue to believe that the tariffs might cause a one-time price increase rather than imbedded inflation, so I believe it would be a mistake to hold off on cutting rates much longer. A major reason I believe this is the tariffs would not stoke a major demand increase, which would be problematic if that increase occurred. What generally causes inflation is too much money chasing too few goods, so if there isn’t a huge surge in demand, I believe long term we should be alright. A big question on the other side though is how this would impact supply. If supply was drastically cut, I do see how inflation could become problematic, but I personally don’t see that concern at this point in time. One other area to consider is these tariffs are helping with the government’s budget as they are bringing in roughly $30 billion a month to the United States. What are your thoughts? Do you think the Federal Reserve is way behind on reducing interest rates?

Crypto losses increase 66% in 2024 At first you may be saying I thought Bitcoin has been increasing in value? While that is true, you have to remember that is only one of the many thousands of cryptocurrencies that are available. According to the FBI in 2024, there was 149,686 complaints for total losses of $9.3 billion. It was somewhat surprising to learn that people over 60 years old, who I thought knew better than to gamble with cryptocurrencies, was the most with losses totaling nearly $3 billion. If you live in California, Texas or Florida that’s where the most complaints came from with a cumulative loss of $3 billion. Mississippi was also largely impacted as the number of crypto scams per thousand was the highest at 42.1. Even though there are a far higher number of investors and larger dollars in stocks, the SEC reported nationwide just 583 enforcement actions for stock scams or stock complaints in 2024. These complaints included charges against advisors for untrue or unsubstantiated statements. Interesting to note there’s now something called AI washing, which charges firms for making false or misleading statements about their use of artificial intelligence. It is hard to make a comparison of stock scams and fraud versus cryptocurrencies, but with the far higher number of people investing in stocks vs cryptocurrencies I think it is safe to say that your risk of being scammed in stock investments is far lower than being scammed when dealing with cryptocurrencies. So not only are you taking a higher market risk by investing in cryptocurrencies, but you are also taking on the risk of being ripped off as well. Have ETFs become too complicated? The first ETF, which stands for exchange traded fund, was launched about 30 years ago. They were simple in design and you generally bought them because they held a set group of stocks or bonds using an index and charged a low fee. Today, there are now over 4000 ETFs that are listed on the New York Stock Exchange. This is more than the 2400 individual stocks listed on the exchange. In 2024 alone, 700 new ETFs were launched and 33 of those tracked cryptocurrencies. The assets have ballooned to $11 trillion and now account for 1/3 of money invested in long-term funds. Some of that growth has come from open end mutual funds, which have lost $1.2 trillion in the past two years. There are now 1300 active ETFs, which actually manage the portfolio for you like a mutual fund. A big difference is those funds can now be sold during market hours. With open ended mutual funds, you have to wait until the close of the market and then sell at the closing net asset value for the day. Nearly half of the 1300 active ETF were launched last year. It gets difficult for investors with over 4000 choices to decide which is best. Back in 2020, Cathie Wood grew to fame with her actively managed ARK Innovation ETF. The fund shot up 150% that year and assets hit $28 billion. Today, the NASDAQ composite has a five-year cumulative return of 108% and the ARRK fund has seen a decline of 2% and the assets are now under $7 billion. If you’re investing in an ETF to benefit from commodities, understand generally they use future contracts to track the underlying commodity. Commodity futures are not a perfect vehicle and they generally work better for speculators that do short-term trading. One exception to this is the SPDR gold shares which is a trust that holds the actual gold. In my opinion, it is far easier to analyze one company to invest in and then build a portfolio rather than trying to understand some of these ETFs that can use leverage or future contracts or whatever. I worry investors could be blindsided when they least expect it. What is a dark pool exchange? A dark pool exchange is an off the exchange platform where institutions can trade without broadcasting their buying or selling intentions publicly. People wonder why when we invest at Wilsey Asset Management we buy a company with the intent of holding it 3 to 5 years. For those who think they can do better by trading you are taking a toothpick to a gun fight. Exchanges and market makers make up nearly 87% of the daily trading volume, but these dark pools are trying to step in and do more of the trading, which I believe will leave the small investor in the dark and they might not know what certain stocks are trading at. I’m getting rather disgusted with how Wall Street is acting like the Wild West. FINRA another regulatory body seems to be OK with this and will be collecting fees from the dark pools. Fortunately, for the past two years, the SEC has not approved this form of trading, but with the new administration and the new SEC chairman, who seems to love the Wild West of trading, I’m sure we’ll see more of this craziness going forward. This does not mean that investors on Wall Street cannot do well. To be frank, I don’t care if we miss a penny or two on a trade since we are looking down the road 3 to 5 years, but if you’re doing multiple trades per day that penny of two adds up. This also seems to be adding a lot more volatility to the markets. This volatility will scare investors out of good quality investments because of what they are seeing on a daily basis and not understanding what is going on behind the scenes. Remember if you are investor, you are investing in a small piece of a large company and there are millions if not billions of shares that are trading so don’t worry about the short-term movements. Instead, make sure the investment you made was of good quality with sound earnings and a strong balance sheet that can weather any storm, even these dark pools. Financial Planning: Is Social Security Now Tax-Free? One of the major topics surrounding the One Big Beautiful Bill (OBBB) was the taxation of Social Security. Now that the bill has been signed into law, we know that the method used to tax Social Security remains unchanged—but many seniors will still see their overall tax liability go down. Most states, including California, do not tax Social Security. Federally, between 0% and 85% of benefits are reportable as income, meaning at least 15% is always tax-free. The taxable portion is based on a retiree’s combined income, which includes adjusted gross income, tax-exempt interest, and half of their Social Security benefits. This formula was not changed by the OBBB. However, the standard deduction is increasing substantially, which reduces taxable income and, in turn, lowers overall tax liability. Prior to the bill’s passage, a married couple aged 65 or older would have had a standard deduction of $33,200 in 2025 ($30,000 plus $3,200 for age). Starting in tax year 2025, that deduction can be as high as $46,700—a $13,500 increase. This results from a $1,500 increase to the base deduction for all filers, plus an additional $6,000 per person for those over age 65. Importantly, this extra $6,000 per senior (up to $12,000 per couple) is not technically part of the standard deduction—it is an above-the-line deduction that can be claimed even by those who itemize. This add-on begins to phase out when Modified Adjusted Gross Income exceeds $150,000 and is fully phased out above $250,000. As a result, taxpayers in the 10%, 12%, and 22% brackets are most likely to benefit. So, while Social Security is still taxable, more of that income may now be shielded from taxes due to the expanded deductions. Additionally, the bill prevents the federal tax brackets from reverting to higher 2017 levels in 2026. The brackets will now remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, instead of increasing to 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. For retirees with taxable Social Security or other ordinary income, this means lower effective tax rates moving forward. In short, Social Security is still taxable—but seniors will likely pay less, or even nothing, thanks to these changes. Wall Street greed hits Vanguard mutual fund company Vanguard made its mark by charging low fees to investors, so I was disappointed to see that they are now looking at offering private investments to their clients. Private investments have become a booming business, not necessarily because investors are making a lot of money from them, but because the fees are far higher than regular investing and Wall Street loves higher fees. Vanguard is looking at developing with Blackstone an investment that mixes public and private assets. The exact fee was not disclosed, but I know it would be far higher than what they charge on their current mutual funds. I’m sure the founder of Vanguard, Jack Bogle, who was big on low fees will be turning over in his grave. Unfortunately, it’s not just Vanguard as other mutual fund companies like Franklin Templeton and Fidelity are hiring fund managers to build private investment teams internationally. Franklin Templeton already has a private investment fund that charges a 1.25% management fee and a 12 1/2% fee on all profits above a 5% return. Unfortunately, investors get sold these private investments with the hopes of higher returns and less volatility, but many times they don’t realize that their money could be tied up for as long as 10 years. They also don’t understand that the reason for the low volatility is that the investments are not marked to market on their true value, so no one really knows what these private investments are worth. I believe it is even more frightening that these will be allowed in 401k plans. Jamie Buttmer, who is a chief investment officer at Creative Planning, which handles over $350 billion for individuals and 401(k)s, stated with private equity how it is great for someone who wouldn’t in their wildest dreams qualify to invest in private equity can do so in their 401(k). I couldn’t disagree more as many times there’s a reason why they shouldn’t qualify for private investments due to the lack of liquidity and the high risk of loss. Unfortunately, those who benefit from private equity are expecting to see fees increase by $1.5 trillion by 2033. This will come at a cost to investors and I believe it will blow up with many investors losing more than they can handle. My advice as always is to stay away from private investments, no matter how good your broker makes it sound. Harvard may not really have $53 billion in their endowment fund Thanks to private equity, the $53 billion endowment fund for Harvard University may not really be worth $53 billion. It is estimated that nearly half or approximately $23 billion is in private equity funds. The problem for Harvard, which is the same for all investors of private equity is the valuations that are placed on private equity investments could be far off the true value. Harvard said it uses the net asset value, also known as NAV, and this is reported by the outside managers that manage their private equity. To me that sounds like the fox guarding the henhouse. I may always be a little bit skeptical of the greed on Wall Street, but there’s such a huge incentive for the managers to mark up the value of their private investments because their fees are based off of that investment value. This is a problem for the entire private investment sector because if the SEC could command and enforce proper valuations of the stated NAVs, they’d probably find so many that were overvalued and it would likely hurt the entire industry. I still would love to see the Securities Exchange Commission step in and force private investment firms to show real market values. Would investors want to own private investments if they realized they couldn’t legally depend on the numbers that they are being shown? I personally was glad to see that some universities are starting to reduce their exposure to private investments. Charitable organization did well in 2024 Both individuals and corporations felt very charitable in 2024 as they increased their donations over 6% to an all-time record of $592.5 billion. This generally happens when people feel that their wealth is increasing, which they saw in 2024 with a rising prices in the stock market and real estate. The growth did slow down, but overall it still remained positive. I have never heard of this type of donation before, but there’s something called mega gifts which are for those individuals who donate more than $600 million. In 2024 the mega gifts from individuals totaled $11.7 billion. This was an increase of over 40% from the mega giving total in 2023 of $8.1billion. The organizations in the US that received the most were religious groups, who received $146.5 billion. Humanities saw a 5% increase to $91.1 billion. Education, which could come in many forms saw a double digit increase of 13.2% to $88.3 billion. I think in 2025 we could see a reduction in charitable giving because of the uncertainty in the markets and a slowdown in real estate, which has largely been caused by higher interest rates along with the higher price of homes that have caused an affordability. There are a lot of manufacturing jobs that need to be filled I say it all the time, but not everyone needs to go to college because there are other jobs that can pay well and provide a good living for a family. I have talked about plumbers, electricians and carpenters, but people who work at a manufacturing plant should also be included in that realm. Across the country the average annual salary for manufacturing jobs is $88,406. This is according to the National Association of Manufacturers and the number does include both pay and benefits. According to another source, ZipRecruiter, manufacturing salaries range from just under $70,000 to over $100,000 and top earners can make as much as $110,000 annually. No surprise if one is just starting out with no experience the entry-level manufacturing positions will pay you somewhere between $15-$20 per hour. Going forward some of these jobs will be replaced by automation and robotics, but I believe there will still need to be humans to work with and run the machines. It is important for anybody in virtually any job to continue training going forward to keep up with changes in their respective field of employment. Just because you’re not a doctor or an attorney doesn’t mean you should not continue to learn and keep up with advancements in your field. If you do not continue to train and learn new things for your job, you could be replaced and have a hard time finding a new job with updated technology. 18 to 24-year-olds are spending less At first glance, it could be a good thing that this young age group is spending less and based on online and in-store spending it was down 13% from January to April of this year over last year. The hope would be that they’re spending less and putting more into their 401(k)s, but unfortunately that is not the case. From the year 2022 to 2024 this group experienced a 25% increase in difficulty paying expenses. They claim they are buried with debt which includes credit card debt and auto loans from over extending themselves trying to live an expensive lifestyle and buying cars they can’t afford. The Urban Institute shows 16% of those in this age group with a credit record have debt in collections because they can’t meet their financial obligations. The high cost of housing for this young group has been a tough hill to climb since many are still just starting out in the workforce and have not seen wages large enough to handle all their financial obligations. It is interesting to know that 39% of parents with children ages 18- to 24-year-old are still paying their children’s cell phone bill. Some of these young adults do work very hard, but some do not. I tell people who are struggling, there are 24 hours in a day, if you sleep eight hours in a day that gives you 16 hours to be productive, not including weekends which is another 48 hours. If you work eight hours in the day, you still have roughly eight hours left perhaps for a part-time job or some type of gig employment that could improve your financial situation substantially. They are still young at 18 to 24 years old and should have more energy than someone in their 50s. Can you invest in OpenAI and SpaceX on Robinhood? Robinhood made some big news when they announced a new “Stock Token” product on June 30th. They claimed the product would give investors the opportunity to buy shares in the form of blockchain-based tokens, even for privately held firms like OpenAI and SpaceX. The first problem here is that this is currently just for users in the EU, but even more troubling is it is not clear how this is an investment in these companies. OpenAI came out and said, “These ‘OpenAI tokens’ are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it.” The company also said, “any transfer of OpenAI equity requires our approval- we did not approve any transfer.” They then warned users to be careful. I don’t know how it could be clearer that these so-called tokens have nothing to do with an ownership stake in these businesses. Even the CEO of Robinhood, Vlad Tenev, said, “It is true that these are not technically equity. In and of itself, I don’t think it’s entirely relevant that it’s not technically an equity instrument.” So, the big question is … What the heck are these things? Is it just a cryptocurrency that uses a company’s name? To me this truly exemplifies the state of the market and the fact that prices are distancing themselves from the actual fundamentals of these businesses. I would say this is just another concerning product in today’s world of investing. I wouldn’t necessarily say we are in a bubble at this point in time, but there are so many assets that appear to be approaching that level.