Chinese Stocks, Jobs Report, Job Openings, Recession , Home Title Theft, Warren Buffett, Stock Market Declines, US Dollar, Warren Buffett Portfolio & California Gas Prices

Should you invest in gold for the long term? Gold has been a great asset to hold over the last year, but I remain a skeptic of investing in gold long term. I personally don’t own any gold nor would I recommend buying gold at this point in time. While the recent gains in the price of gold look attractive, given the fact it is up over 20% so far this year in a difficult market, the long-term results aren’t enticing. There are periods of time where gold has been a strong performer, but trying to guess those periods is extremely difficult. If we look at January 1980 gold reached $850 per ounce, but the important number here is that the inflation adjusted price was $3,486 per ounce. This means it was not until recently when gold hit $3,500 per ounce, we see an all-time high on an inflation adjusted basis and essentially you made no real gain for over 45 years. At the end of the day gold is just a piece of metal worth only what the next person will pay for it. It has no earnings, no interest, no rents. This makes it extremely difficult to value and given the added expenses for trading and holding gold, it just does not make sense to me. I will continue to invest in good strong businesses at fair prices as I believe that is the best strategy for long term wealth creation. Why is the government supporting universities with large endowments? I’ve never really thought about this before. I have known that some big universities have multibillion dollar endowment funds, but I did not realize that 658 institutions have approximately $874 billion, which is nearly $1trillion in endowment funds. When I dug a little bit deeper, I discovered that in addition to these universities receiving money from the federal government via grants, some pay little or no income tax and also get a waiver on property taxes. If you’re starting to get a little bit irritated at this point because your hard-working dollars are going to universities like Harvard that has a $53 billion endowment or Yale with a $41 billion endowment, you might be like me and think it’s time that things change. The cost of tuition at Harvard is $57,000 per year and the President makes about $1.3 million a year. The president of San Diego State University has a salary of $531,000 and the cost for one year of tuition is about $8700. I’m sure the students at Harvard do receive a more prestigious education than at San Diego State University, but is it 6 1/2 times better? Do the students that graduate from Harvard make a salary that’s 600% more than a graduate from San Diego State University? I don’t think so. I wondered where money from these endowments goes and basically 48.1% of endowment distributions go to fund student financial aid, 17.7% goes to academic programs and research, 10.8% is used for endowment faculty positions and nearly 17% of the endowment funds are used for other purposes. Wouldn’t it be nice to know what those purposes are? I think we need to take a hard look at what universities have in their endowment funds, their tax benefits and grants, and let’s have more students here in the United States benefit from those billions of dollars to get a good education as opposed to the fat cats in the Ivy League towers of the universities. One other point I found interesting was the investing philosophy for these endowment funds. The goal is to earn around 8% per year and pay out 4.5% to 5% to fund those various expenses. This should then allow the endowment fund to continue growing. A big problem is many have not been able to achieve that goal with only 25% of 152 schools that were surveyed being able to meet the 8% return over the last 10 years. The other concern is if they can’t cut expenses if there is a lack of grants, many endowments are not liquid. Harvard for example had 39% in private equity, 32% in hedge funds, 5% in real estate, 3% in real assets, and just 3% in cash. With all this said I really believe this system should be reviewed to better the entire country, rather than just the Ivy League system. Could the trade wars hurt home prices? We are starting to see some cracks in the housing market, such as the delinquency rate on FHA mortgages, which cater to the high-risk borrowers who can’t qualify for a conventional mortgage because they either have a small down payment or weak credit. The delinquency rate for FHA currently stands at 11% according to the Mortgage Bankers Association, it has not been at this level for 12 years. Unfortunately, and we warned against it, but many people have stretched themselves too far financially to get into a home over the last few years. Because it’s only been two or three years since they bought their home, after fees and commissions they may not have much if any equity built up in that home. Another area of weakness that is being seen is with the homebuilders who have really increased their incentives because they have more completed but unsold homes. The builders are getting a little bit worried because they have not seen this many homes sitting on their lots with no buyers since 2009. The average incentives for homebuilders is usually around 5% of the total value of the home, but we are starting to see some incentives around 13% from big builders like Lennar. The volatility of the 10-year treasury, which mortgages generally trade off of, has not been helpful because it has had a wide trading range lately. This then makes it difficult for homebuyers to lock in a good rate. At this point in time, I think I would be waiting to buy a home until maybe late summer. I think there should be some good deals at that point in time as the tariff war should continue to progress and we should have a clearer picture of the economy by that time. Financial Planning: Why converting 100% of pretax is bad Roth conversions can be a powerful tax planning tool, but like any tool, using it the wrong way can do more harm than good. One of the most common mistakes we see is the idea that you should convert all of your pre-tax retirement savings, like a traditional IRA or 401(k), to a Roth account. Everyone loves the idea of a tax-free retirement. When you convert money from a traditional IRA to a Roth IRA, you're moving it from a pre-tax account to a tax-free account, but there’s a price, the converted amount is considered income and you must pay ordinary income tax in the year of the conversion. Once converted funds grow tax-free. The best way to think about money in a pre-tax account is that it is deferred income. It will be taxed, it’s just a matter of when. When you make contributions to a pre-tax account, you are not receiving a tax deduction, you are deferring income to a future year. When performing a Roth conversion, you are voluntarily deciding to pay tax on that income, even though you don’t have to yet. This only makes sense if you are able to convert at a lower tax rate than you would otherwise be subject to if you did not convert. This most commonly happens between the beginning of retirement, typically in your 60’s, and the beginning of your required distributions at age 75. During that period taxable income is generally lower which means conversions may be done at a lower tax rate than when required distributions begin at 75. Required distributions can be a problem because if you have too much in pre-tax accounts, your required taxable distributions may push you into a higher tax bracket and trigger IRMAA. Roth conversions help this by shifting funds from pre-tax to tax-free, therefore reducing the level of taxable distributions beginning at 75. However there is an efficient amount that should be converted for every person. Converting 100% of pre-tax funds means you will likely be in a lower tax bracket after the conversions, and will potentially not have any tax liability at all. This doesn’t sound bad, but it means you likely paid too much in tax to convert the funds in the first place. Again, money in a pre-tax account is deferred income that will be taxed. The goal is to have that income taxed at the lowest rate possible. If you convert too aggressively you may be settling for a higher tax rate on the money coming out and not receive enough tax-free income from the Roth to justify it. Instead, structuring withdrawals and conversions to keep your taxable income consistently low all through retirement will result in a higher level of after-tax income. History shows Apple stock performs poorly when margins decline. We all know that Apple is a great company and that the stock has done very well over the past few years; however, history has shown that when the margins get cut, the stock drops and so does the P/E ratio. In 2015 the stock dropped 16% that year as gross margins took a hit and Apple’s forward PE fell more than 30%, which makes sense because why would investors pay up for declining profitability. It was worse in 2013 when the stock dropped by 29% as the annual gross margin fell more than six points due to higher expenses with the new design of that years iPhone. No matter what Apple does this year, even with the talk of trying to move production to India, it is estimated that the cost to build iPhones will increase by 50%. So far, for some reason Wall Street has not put that declining gross margin into their calculations yet. Maybe they’ve been too busy selling alternative investments and have taken their eye off the price of Apple stock. In our opinion, at Wilsey Asset Management this could be far worse than 2013 or 2015 as far as a margin decline and a stock decline is concerned! The world is fearful of a recession! Many countries around the world are preparing for a slowdown in their economy and why is that? It’s because the biggest consumer in the world, the United States, is saying it wants equal and fair trade. The administration is essentially saying if you make our exports more expensive to your consumers, we’ll make your exports to us more expensive for our consumers. Central banks in countries like India, New Zealand and the Philippines have already cut their rates and I believe more countries will do the same going forward. South Korea announced a multibillion-dollar package of emergency support measures to help support the auto sector, which will likely see a big drop off in car sales as US consumers will not want to pay 25% more for their cars. The peoples bank of China, which controls the Chinese currency, has continued to let their currency decline against the U.S. dollar, which makes their products less expensive for US consumers and our products more expensive for Chinese consumers. The Bank of England recently delayed selling UK government bonds as they wanted to wait for a better time because of the volatility in the world bond market. With more than 70 countries around the world wanting to talk with the US about making a deal before they see more tariffs in July, countries like Vietnam are talking about buying more liquid natural gas and agricultural products from the US. Other countries seem to be preparing for a slowdown as well with Canada making it easier for their workers to apply for unemployment insurance and Spain recently rolled out a $16 billion aid package. I continue to remain confident trade deals will start to come through considering the fact that the US is the world’s largest consumer and many other countries don’t want these tariffs to persist as it would be devastating for their economies. Trade deals with the US are starting to blossom It’s only been a couple of weeks since the major tariff announcement but some countries are working with the US to come up with trade that is more balanced. We do believe this process will take months, but it is nice to see some progress. Vietnam said it will buy nearly $300 million in new Boeing jets. Thailand said it will purchase corn feed and Europe said they would boost soybean purchases. South Korea is talking about participating in a $44 billion liquefied natural gas project in Alaska. The EU, which currently gets about 45% of its LNG from the US talked about boosting the amount they import. They currently get 20% of their LNG from Russia. Wouldn’t it be nice if we took all that business from Russia and we exported to the EU 65% of their LNG. India said its target is to increase their current trade with the US fourfold to $500 billion. The Prime Minister of Israel has promised to get rid of the countries $7.4 billion trade surplus for goods with the US. It is more difficult for some lower income countries to purchase US goods and they have either promised to not fight back or pledged to remove their own tariffs on US imports. There is still a lot more work to be done and remember some of these trade deals are very complex and could be up to 50 pages long. While there hasn’t been the announcement of a major deal, it is nice to see some progress and we believe we will see things continue to develop over the next few months. Will US tourism drop in 2025? Recently Goldman Sachs estimated a possible decline in US tourism would hit GDP by 0.3%. It is not a huge amount of a decline in the GDP at about $90 billion, but it would be nice to see that increase not decrease. What I believe the Goldman Sachs estimate is missing is that the ICE US dollar index has declined close to 10% so far in 2025. One would have to go back 40 years to find such a decline this early in the year. This could actually be a positive for tourism because it makes foreigners currency much stronger, allowing them to buy more here in the United States. This would make travel to the United States more reasonable. This would also be a positive in the cost of our exports and could make them more attractive to other countries. While it may sound like a negative, the decline in the dollar does come with some benefits. The important part is the decline can’t turn into a freefall as that would be problematic considering our reserve currency status. I don’t believe you will see this happen though since the United States is still one of, if not the strongest economies in the world. I personally will continue to invest in the United States as we go through these difficult few months of uncertainty. I believe we will see much better times going forward that could come by early to late summer. Bitcoin is back above $90,000 I always hate writing about Bitcoin and cryptocurrencies, but I do stay up to date on it and it still makes no sense to me. I would still rather have a US dollar backed by the taxing authority of the United States government than Bitcoin that is backed by speculation of hopefully a higher price in the future. For a currency I would like to have a relative stable value not the 3 to 4% daily moves up or down that can occur with Bitcoin. With that said, Bitcoin has risen over the last few days apparently because crypto is pushing deeper into the banking system. There are crypto firms such as Circle and BitGo that are looking at applying for a US bank charter. They’re looking at a national trust or an industrial bank charter so they could take deposits and make loans. I think this could be a situation to buy the rumor and sell the news because when a crypto firm obtains a bank charter, they would then be subject to far stricter rules and regulations. This could expose many concerns in the future. It was only just a few years ago when we saw the downfall of Silvergate Capital and Signature Bank. If you remember, that was a rather scary time and the federal government had to step in and cover bank deposits well above the insured limit of $250,000. It is hard to tell what direction cryptocurrency or Bitcoin is going, but I still put it in the highly speculative category where investors can make a lot of money, but also lose their shirt as well. We still recommend that investors stay away from cryptocurrency unless you view it as a gamble, but I still think Vegas is more fun if you are looking at gambling. Is the curtain closing on the Magnificent Seven? In case you’re not sure of what these seven stocks are, the list is: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. As a group year to date, they are down around 20%, nearly double the S&P 500’s decline. Like all great things, eventually the curtain comes down and the show comes to a close. I am not predicting the end of the seven companies, but rather the excessively high valuations on their stocks that should come down to more reasonable levels. Only at that time would I recommend to buy these companies. Each one of these companies have their own headwinds and some of them are facing multiple headwinds. Just to give you some idea, starting off with Alphabet, also known as Google, for a second time in eight months a US judge has labeled Google an illegal monopolist. Keep in mind that they also pay $20 billion a year to Apple to be on the Safari browser default engine. From all that I have read on this case, I do have to side with the judge here. Amazon has been somewhat flying under the radar, but within the next few months, you will hear more about Amazon maintaining a monopoly as they are accused of using strategies to maintain its dominance. This includes price inflation, overcharging sellers, and stifling competition. The Federal Trade Commission does have a lawsuit against them, which will start ramping up within the next few months as a trial is scheduled for October 2026. Apple, in addition to headwinds with China and tariffs, has a lawsuit from the United States Department of Justice alleging that it monopolized the smartphone market and used its dominance to stifle competition. Meta Platforms is fighting with the Federal Trade Commission in court currently after being accused of purchasing Instagram and WhatsApp to fend off competition in the social media arena. This case from the FTC looks a little bit weaker to me. I would say there is probably a 50-50 chance it goes away, but if Meta were to lose, it could cost them 50% of their advertising revenue from Instagram. Microsoft appears to be in the clear from any government lawsuits for now, but their forward price/earnings ratio is still around 24 to 25 times and the amount of capital expenditures they have spent on artificial intelligence will likely cut into their forward earnings. There are also concerns with the lack of innovation in AI and the potential growth prospects. Nvidia was the do-nothing wrong company of 2024, but now people who thought the growth on their earnings could grow 50% for years to come have been rather shocked by the 34% decline in the stock from a high $153 to around $100 a share. We have talked about this in the past, but it appears that many companies that have over ordered chips for artificial intelligence have now backed off on buying more going forward. Lastly, Tesla has seen its stock drop from a high of $488 to around $240 per share, which is over a 50% decline will be hit hard by not only the tariffs, but also declining sales in China. Some US consumers are not happy with what Elon Musk is doing for the government and they could also weigh on US sales. This large drop in the Magnificent Seven reminds me of 25 years ago during the tech boom and bust. If history repeats itself, do not expect to have a 20-30% gain at year end if you are buying these stocks at these levels. I do believe you’ll be disappointed, not only over the next 6 to 7 months, but perhaps for the next few years to come.

Can the heartland states save our country? The heartland states are 20 states pretty much in the center of the country. They have been regaining economic strength over the years and currently about 39% of the US population lives in these states, according to the census bureau for 2024. The population growth in this area was above the rest of the country for the last five years with numbers that have not been seen in over 65 years. Employers in this area grew by 13.2% between 2020 to 2023 and business capital expenditures totaled $76.9 billion in 2023 and have seen an average annual growth of 9.43% since the beginning of Covid. These 20 states on average have established more business-friendly policies along with tax incentives and grant programs that draw businesses to their area. The East and the West Coast just can’t seem to compete with the affordability of states in the middle of America. These mid America states have lower cost for land and utilities are far less being as much as 1/3 less than the rest of the country. This is according to the Energy Information Administration (EIA). The overall cost of living is lower, so wages can also be lower and still provide a good standard of living for their employees. In my opinion, states like California and others need to wake up and realize that perhaps stats in Middle America are on to something with policies that are attracting new residents. It would appear that foreign companies coming to the United States would build and prosper in one of these 20 states rather than states that are against business or have high taxes and other costs. Consumer actions aren’t matching their words We continue to see negative surveys about consumer confidence and sentiment, but you wouldn’t think consumers feel bad after looking at the recent retail sales report. March sales climbed 4.6% compared to last year and if gas stations, which fell 4.3%, are excluded the report was even more impressive as it climbed 5.3%. Some of this is likely due to concerns over looming tariffs as consumers pull forward demand before expected price increases. Some areas that are likely more impacted did see large gains as motor vehicle and parts dealers saw an increase of 8.8% and sales at furniture and home furnishing stores climbed 7.7%. With those said gains were quite widespread in the report and areas that would not see a pull forward in demand like food services and drinking places still saw a nice gain of 4.8%. If people were truly worried about the economy, they would not be spending money at restaurants, especially considering the fact that dining out has gotten quite expensive. While I am expecting the tariffs to have a short-term impact on the economy, we must remember the consumer is coming from a point of strength with relatively low debt levels, a low unemployment rate, and balance sheets that have seen asset prices significantly increase over the last several years. I continue to believe that our economy and the consumer will be able to whether this volatility, but the numbers will likely decelerate from here. We will continue to watch these reports closely, but I again remain confident we will get through the concerns about these tariffs. Are TV networks tapped out on sports deals? Last year Disney signed a $2.6 billion a year deal with the NBA; however, ESPN said goodbye after a 35-year relationship with the MLB where they were paying $550 million a year for their package of games. One area of growth that surprised me was Formula One car racing as over the last six years it has seen viewership double to 1.1 million viewers in a season. Liberty Media, who owns F1, is trying to get a rights package between $150-$180 million a year and all they’re hearing is crickets. Research firms estimate that it is worth over $100 million but it is not at the $150-$180 million that Liberty wants. Netflix, Warner Bros. Discovery, Fox, Amazon and NBC are not showing much interest in the asset. Netflix will probably not bid since there’s no real gain for them considering the estimate that 75% of F1 fans already have Netflix subscriptions. With so many people having Netflix, multiple big dollar sports packages probably don’t make much sense for the company. In a couple of months around June, Warner Brothers is distributing an Apple film called F1, starring Brad Pitt. If you want to watch this movie, which is projected to be a blockbuster, you must subscribe to Apple TV. I almost feel like I want to add Apple TV to the five or six other subscriptions I have, but I can’t watch everything I have access to now, so I should probably resist. Financial Planning: Why Life Insurance Is a Poor Retirement Vehicle (And What to Do Instead) Cash value life insurance is often pitched as a tax-free retirement strategy. On the surface it sounds great. You get tax-deferred growth, tax-free loans, no contribution limits, and a death benefit, but when you look under the hood the numbers often don’t work out. First, the returns simply don’t compare. With Indexed Universal Life (IUL) or Whole Life, your cash value growth is limited by caps and participation rates, and you miss out on dividends. Add in the cost of insurance, admin fees, and other hidden charges, and the actual return on cash value often falls well below the market. Second, the fees get larger over time. The older you get, the higher your cost of insurance becomes which directly eats into your cash value. If you’re taking policy loans and the policy lapses, you could even get hit with a massive tax bill in retirement. Third, the opportunity cost is huge. The high premiums needed to fund a policy could instead be invested in assets with better returns, more liquidity, and lower fees. Meanwhile, better tools for tax-free retirement income already exist. Most 401(k)s now offer a Roth option, allowing you to contribute after-tax dollars and grow your money tax-free, exactly what cash value life insurance offers. You can pair this with a Roth IRA or even a Backdoor Roth IRA if your income is too high to contribute directly. Together, these vehicles allow for substantial tax-free retirement savings without the complexity, high fees, or risk of policy lapse that come with life insurance. Don’t let marketing hype cloud your long-term strategy. Run the numbers and stick with what works. The Apple credit card is up for bids. Goldman Sachs has been the credit card provider for Apple for a while now, but they have found being in the consumer lending world is not profitable enough for them. This has sparked the beginning of a bidding war with Visa offering roughly $100 million payment to be the exclusive credit card provider for Apple. Also looking at bidding are two other major players, American Express and MasterCard. If you’re wondering why a company would bid $100 million, understand that the Apple credit card program has about $20 billion in account balances and remember every time a card is swiped, credit card companies get paid a fee. Apple is one of the biggest co-branded credit card programs along with Costco who also brings in a lot of fee revenue to the credit card company. This could be a small boost to Apple and it comes at a good time considering the difficulties they are having with the tariffs, dealing with China in the trade war, and struggling with rolling out AI. At this time, it is unclear if Goldman Sachs will receive any payments or profits for giving up exclusive rights to the Apple credit card. I do know that Goldman Sachs is a very a smart investment bank, and I find it hard to believe that they would receive no financial compensation of any kind for giving up this deal. The consumer will probably not notice any difference other than the change of the name on the card. Visa does have a great reputation for service so I would not expect any problems with the changing of the guard on the Apple credit card. Buy Now, Pay Later loan volume sky rockets If you’re not familiar with the term buy now, pay later I’m sure somebody else that you know is using it. It is also known as BNPL which is what you will see many times in print. In 2019 the BNPL loan volume was only about $1 billion. Fast forward to 2022 and it has increased roughly 30 times to over $30 billion. It is a way of getting short-term credit so if you buy something you can pay for it over a short period of time. In the past, the short-term loans were not showing up on your credit history, which in my opinion was a mistake because one could buy an expensive luxury item and have high payments, but yet still go into a car dealership or apply for a credit card and get themselves into a negative cash flow situation since their real debt and monthly payments are not revealed. Retailers love using BNPL and sometimes you see it right at the checkout stand. In 2021 there was 180 million BNPL loans for roughly $24 billion. The next year that was up nearly 50% to 277 million loans with a value around $34 billion. Since no one was reporting these loans there were people that would stack the loans and in 2022 just under two thirds of the users had more than one loan. I’m happy to report that those offering these short-term loans like Affirm are now sending to the credit bureaus the balances and the payments so it will show up on people’s credit reports. I know some people are going to disagree with me but I do believe it will help prevent consumers from getting in over their heads. Is Cathie Wood still worth listening to? Over the weekend, I read an article that contained opinions from seven market pros on Wall Street about the recent extreme volatility. Three of them stood out to me as good long-term investors. Mario Gabelli has been managing money for 49 years. Michael Cuggino, who runs the Permanent Portfolio has always made sense to me, even though I don’t always agree with his decisions. Lastly, Chris Davis runs investments for Davis Advisors and is the son of Shelby Davis who began value investing probably about 75 years ago. Who was part of the panel that I thought should not be there was chief executive officer of ARK Investment Management, Cathie Wood. I say that because her investments ideas in my opinion have always been overly aggressive and over the last five years her flagship ARK Innovation fund is down over 10%. Since the peak in early 2021, the fund is down more than 70%! Back in June 2021 when investors were buying many crazy things, she was managing $25.5 billion. Today it is at around $5 billion, about 1/5 the value just four years ago. She still has the crazy ideas like before, I’m just surprised that she is still relevant enough for anyone to follow her. There is so much information out there for investors, I feel an investor has to be selective on what they read and listen to. They should make sure there is experience and wisdom behind the thoughts on paper or whatever avenue the information was delivered on. Employers are still wrestling with paying for weight loss drugs Insurance companies say that going forward employers and employees will be fighting over paying for weight loss drugs like Ozempic. Some companies have already ended coverage for the weight loss treatments known as GLP-1s. Although it’s a nice benefit for the employee, it has been discovered that some employees go to work for a company that will pay for the drug and then leave that company eight or nine months later after they lost the weight that they wanted. It is also suspected that the benefit of paying for these weight loss drugs does not offset enough of the cost. The added costs are really difficult on small businesses and it appears they are either cutting out the drug completely or restricting it to people with diabetes or they require that employees on the drug also join a weight loss program. It appears the cheaper copycat weight loss drugs from companies like Ro and Hims and Hers Health, who is charging around $200 a month for the same service, is coming to an end. The reason for this was the FDA allowed these companies to offer their knock off drugs while the name-brand drugs were in short supply. That is now changing and that special allowance from the FDA is coming to a close. On the bright side, the FDA did approve its first generic GLP-1, which could be priced between 60 to 80% lower than the current drugs. Unfortunately, it appears that is still about two years away. That lower price for the new generic brands would likely be somewhere between $150 to maybe $200, and I believe it will be a big problem for the major drug companies that have seen their stocks skyrocket due to the big profits from these weight loss drugs. A big benefactor of the drug has been Eli Lilly, their symbol is LLY. The stock peaked in August 2024 at around $948 a share, it is now trading around $740 a share. I’m not sure what else they have in the pipeline, but I think you could see more air let out of the balloon as we get closer to 2027 and these generic weight loss drugs are released. Weight Watchers has slimmed down way too much! Weight Watchers, now known as WW International, has seen its stock fall from $92 a share back in mid-2018 to a recent price of around $.15. With the new weight loss drugs, I’m not sure why anyone was buying the stock over the last couple years. They just can’t compete with the success of weight loss drugs like Ozempic. In January, they took out the remaining $120 million on their credit facility and now have over $1.4 billion of loans and bonds that come due in 2028 and 2029. S&P Global Ratings downgraded the stock just a couple months ago and stated the subscriber base has aged and its brand is not in favor, especially among young consumers. What lifted the stock in recent years was the endorsement from Oprah Winfrey, but she stepped down from the board about a year ago. It had something to do with avoiding a conflict of interest over a TV special she was making about weight loss drugs. If you’re thinking at $.15 a share, what have you got to lose? I will tell you your entire investment. It was reported on April 9th by the Wall Street Journal the company was preparing to filed for bankruptcy in the coming months. If this does come to fruition, shareholders would then likely lose everything. If the company desires to stay around they will then need to it by recapitalizing. I don’t believe this would be a wise move though as I just don’t think weight loss companies like WW International can compete with the weight loss drugs. Are you thinking about raising your own chickens to save on the cost of eggs? With the recent market decline and all the talk about tariffs, discussions around the price of eggs seems to have fallen off the radar, but the price of eggs are still rather high. I say rather because it depends on what area of the country you live in. If you thought about getting a couple of chickens for yourself to produce your morning breakfast eggs, you’re not alone. In 2018, there were about 5.8 million American households with backyard chickens. But now with the doubling and sometimes tripling in the cost of eggs, 11 million households have backyard chickens, nearly a 100% increase. It sounds like a good idea, but be aware like anything in life there are pros and cons to it. You will absolutely get fresh healthy eggs on a regular basis every morning for free. but the word for free comes with the caveat that there is work involved. It will take some of your time and obviously investment in housing and feeding them. And don’t forget that you have to provide some type of predator protection because you’re not the only one that likes chickens. There’s a lot of wildlife around that could find your chickens and have them as a tasty meal. Don’t forget that wild birds do carry the bird flu and your chickens could contract that disease as well. As a chicken farmer, you will also have to put up with the noise of the chickens, the odor and what goes into a chicken must come out the other end. If you have a big family or even a family of four, you may need a few chickens because a chicken only produces one egg every 24 to 26 hours. So, if you think you might save a few dollars raising your own chickens as opposed to paying five dollars for a dozen of eggs, you may discover that raising your chickens is not for you.

Why I’m so excited about the tariffs You may be thinking I’m a little bit crazy or blind to what is happening now, but I really wish people would be a little more patient and give this a few months to see the benefits. I want to remind people that the path we were on could’ve led to a collapse just like the great Roman Empire in 476 A.D. The United States in 2024 helped other countries grow their economies by sending them over $1 trillion in trade, not even close to fair trade and that is money we will never see again. Also in 2024, we saw our national debt climb to $35.5 trillion, an increase of roughly $2.5 trillion dollars in just one year! If that continued for the next 10 years, we would have debt of nearly $60 trillion, which would be unsustainable. Let’s not even talk about the interest payments on a debt level that high. What is already starting to happen is not the foreign countries, but rather the foreign companies themselves want to continue to be profitable and understand they must produce and be located in the United States. Companies like Siemens from Germany, Taiwan semiconductor and Foxconn along with others have already made huge financial commitments that will benefit their companies and also our country as well. As the days, weeks, and months pass along, I believe you will be hearing about more companies coming to the United States. I believe immigration will also change because we simply do not have enough workers to fulfill all these new jobs. This could lead these foreign companies to bring their workers along, which would make them part of the US consumer base that buys houses, cars, and simple things like go to the grocery store and go out to dinner and even get haircuts. This is quite a bit different from the problems we have with immigration now as it has become a big burden on the US economy. I believe this would create a major win for our country, please be patient! Good luck if you are trying to time the market If you have sold out of strong companies at good valuations during this market pullback, I believe you have made a huge mistake. As I have said there will be positive news that comes about and moves the market higher, which then leaves you with the question of what do you do now? Get back in? Wait for it to pull back? These trading mistakes can cost you immensely in the long run. I was surprised to see that going back over the last 20 years, seven of the top 10 days in stocks came within a two-week period of the worst 10 days. Which means many people that sold during the worst 10 days likely also missed those great days and the eventual recovery. A great example showing how quickly the tide can turn came on Wednesday after the announcement that there will be a 90-day pause on the full effect of tariffs since more than 75 countries have contacted US officials to negotiate a solution. There was also news that there is an “on the water clause” for cargo entering the US ports. This means any cargo “loaded onto a vessel at the port of loading and in transit on the final mode of transport on or after 12:01 a.m. EDT April 5, 2025, and before 12:01 a.m. EDT April 9, 2025, and (2) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. EDT on May 27 2025, are subject to the 10% additional rate in lieu of the country-specific rate of duty.” This is important as it will give companies more time to plan for elevated tariffs. These announcements led to a huge gain in stocks with the Dow climbing 7.87% on the day and the S&P 500 climbing 9.52%. The thing that surprised me was many companies that have China ties also rebounded substantially, but the tariff charged to China will be 125%, effective immediately. I’d be careful buying the dip here on all companies, but the important point I want to show is that the tide can turner quicker than you think! How does the United States collect tariffs? It is quite the system and it’s not as simple as a country/importer sending a check to the United States. The US doesn’t do the calculation for every shipment that comes into the country. No matter how it comes in, if it is by truck, plane or ships the country doing the importing is the one that calculates the tariffs and sometimes they use what are known as customs brokers to do the calculation for them. It may surprise you that it is somewhat on the honor system. Before a shipment approaches the border, the importer or the customs broker files electronically the paperwork and says what they are bringing and how much they owe. When the ship pulls into port, the information is reviewed by customs agents before they allow the goods to be unloaded and released. It is kind of like when we file our tax returns. It is on the honor system that you put in all the correct information and just like you may be audited on your tax return, customs do perform random inspections to verify what is being brought in and that the tariff amount is correct. Importers have an account with customs and pay the duties to them. If they use a licensed customs broker, then that broker would make the payment. After all this is completed, whoever imported the goods has 10 days to pay the duties. The penalties are pretty hefty if the importer does not pay within 10 days as they will be hit with admin fees, interest, and other penalties along with the biggest concern which would be suspension of deliveries to the United States. I would definitely say it is in the best interest pf these importers to pay the United States customs within 10 days. China may look at other avenues to hurt the US in this trade war I’ve said this before, but the tariffs on Chinese goods hurts them more than their tariffs on our goods. The simple math on it is the U.S. exported $143.5 billion of goods to China in 2024, while importing products worth $438.9 billion. Trade is way more important to their economy considering the fact they are a net exporter and a large one at that. In 2024, China exported roughly $3.58 trillion worth of goods, while importing just $2.59 trillion worth of goods for a surplus around $1 trillion. This makes trade a huge part of GDP as net exports contribute around 20% of GDP. The US on the other hand is a net importer so our trade deficit actually subtracts from GDP. What else can China do to harm the US? China did issue an alert warning its citizens of the potential risk of traveling to the US and attending schools there. Although there were approximately 1.6 million Chinese tourists that visited the US in 2024 and more than 250,000 students enrolled in schools, I don’t see this advisory as too problematic especially considering there was an estimated 77.7 million people from other countries that visited the US in 2024. The big concern people have is China selling our debt to drive up borrowing costs. I was disappointed by an article that said China could crush our housing market by selling mortgage-backed securities. Seemed a little dramatic to me considering foreign countries only owned 15% of the total outstanding mortgage-backed securities. Top owners did include China, Japan, Taiwan, and Canada, but I don’t see those other players selling at this point in time to harm US markets. It appears China holds just around 2-3% of these mortgage-backed securities and has been selling them over time with holdings down 8.7% year over year in the month of September and down 20% by the start of December. Even looking more broadly at U.S. treasury securities, China owned just $760.8 billion as of January 2025, which would represent about 2.2% of the total U.S. federal debt. Be careful falling for click bait, as I don’t believe China has the ability to “crush” our housing market. It would likely cause interest rates to increase slightly, but an outright crash would be extremely unlikely. Overall, while this trade war may hurt us, I still firmly believe it will have a far larger negative impact on the Chinese economy! Why You Should Never Buy a Certificate of Deposit (CD) Again For decades, certificates of deposit (CDs) have been a go-to option for savers looking to earn a little extra interest while keeping their money safe. However, in today’s financial landscape, CDs have become nearly obsolete, offering little to no advantages over more flexible and higher-yielding alternatives. One of the biggest drawbacks of CDs is their lack of liquidity. When you lock your money into a CD, you typically agree to keep it there for months or years. Withdrawing early results in penalties, often forfeiting several months' worth of interest. High-yield savings accounts, on the other hand, offer similar or even better interest rates while allowing you to withdraw funds at any time. Many online banks now offer savings accounts with yields that rival or exceed CD rates, giving you the best of both worlds: competitive returns and unrestricted access to your money. Another option is U.S. Treasury Bills (T-Bills) which are one of the best alternatives to CDs, offering higher returns with even greater security. Backed by the U.S. government, they are virtually risk-free and often yield more than CDs of similar durations. Additionally, T-Bills offer tax advantages, as the interest earned is exempt from state and local income taxes—something CDs cannot provide. Money market accounts provide another strong alternative to CDs. They often have rates similar to or higher than CDs but come with added flexibility and liquidity. Additionally, money market funds that hold federal or municipal debt come with some tax-exempt income as well. CDs may seem like a safe, simple choice, but in reality, they are an outdated savings vehicle that rarely makes financial sense anymore. Whether you choose a high-yield savings account, T-Bills, or money market funds, there’s always a better alternative that offers higher returns, more liquidity, or better tax advantages. Even a little screw is getting hit with tariffs You probably don’t even think about all the screws and fasteners that go in so many different products. We have said many times that there’s a much bigger range of import products that are going to have tariffs placed on them when compared to 2018. This time around, the plan with tariffs is to hit it fast and hard and hopefully it will be over in a few months and not drag on for years. Some manufacturers were smart including a company in Michigan called Great Products as they switched most of their screw imports to Taiwan in late 2018. The company uses about 17 million screws a year as they build parts for appliances. They imported about three million screws last year and made about 14 million screws themselves. Even if a company can make the screws themselves, they will still find themselves paying higher prices for the steel and aluminum to make those screws. At the current time there seems to be no easy answers for many companies. It will be interesting to see how companies adapt to this environment as I do believe these trade wars could last several months with China in particular dragging on longer. Gold is currently a hot commodity According to Morningstar, over the last couple of months, investors have put about $11.4 billion into gold ETFs. The funds are on pace to have the highest monthly inflows since July 2020. If that year rings a bell, that was during Covid when fear was high. Fear is once again running high and unfortunately investors generally chase returns and get stuck buying investments on the high side. Looking in the rearview mirror, gold is up 57% over the last couple years and people are even selling their cryptocurrency to buy the precious metal as it is hitting all-time highs. Over the last 50 years, gold has compounded at roughly 8% per year. That compounded return has increased because of the recent rise in the price of gold. Maybe gold will go higher and maybe it even hits $4000 an ounce. No one really knows but the problem is if you’re buying gold now you are really helping push the price higher and what happens if in the next let’s say 3 to 6 months the tariff war is over? More than likely, what drove gold up is fear and if that fear subsides you’ll probably see a decline in gold prices. Investors who chase excitement on anything whether it is gold or the next hot stock, generally don’t see the returns last. In modern times I never really got the idea of buying gold because of fears over things collapsing. You can’t eat gold, you can’t make clothing out of gold, there’s not much you can really do with it. If you think it would be the new currency, remember gold was used as a currency back in 550 BC in a country called Lydia, which is now part of Turkey. I’m sorry, but do you really think you’d be driving to the gas station to fill up your car with gold or go to Albertsons to buy food with gold. The only reason people buy gold is the fear and the speculation that it will go higher. If it makes you feel good to buy some go ahead and do it, but long-term you’re not going to have the best returns. And don’t forget about the selling commissions on gold are very high, somewhere between five and 10%. This is not a good time to buy a Mercedes You may have been dreaming about getting a beautiful Mercedes-Benz and you’ve finally reached the point that you’re going to pull the trigger. Well, you may want to wait a little bit longer because they’re going to be hit pretty hard with the tariffs. In 2024 Mercedes shipped roughly 324,000 vehicles to dealerships throughout the United States. This includes the popular GLE and GLS models, which have been helping fill the appetite for Americans desire of luxurious SUVs. You may be thinking they won’t be hit with tariffs because they have an assembly plant in Alabama, but only 1/3 of the 324,000 vehicles that were shipped to the dealers were made in the Alabama plant. You may now be thinking the ones built here won’t have tariffs on them, right? Wrong! Unfortunately, Mercedes-Benz ships from Europe engine sand transmissions, which will be hit with the 25% tariff. It is expected to cost Mercedes about $1.7 billion. A big concern for the business is they are not in a position like Ferrari where they can pass along the full tariff onto their customers. They are stuck in the middle because they are not as big as Toyota where they can shift assembly of vehicles to different parts of the world, but also can’t increase price as easily as an elite supercar like Ferrari or Lamborghini. So if you’re thinking of buying that Mercedes, you may have to hold off for the next six months or so, or else you could be paying a rather high price for that luxury. Give the tariffs some time It’s only been a few days and there are protests across the country of people complaining about these tariffs. I hate to say it, but most of these people likely do not understand how tariffs even work. I will admit it is a complicated agenda and if you don’t understand finance or how economies work, the fear of not knowing can be scary. Those that understand investing and the economy, realize that making such a large shake up in global trade will not be resolved in a couple of days. With that said we have seen companies like Siemens from Germany say they would increase their investment in the US by $10 billion. Taiwan Semiconductor set a plan to invest at least $100 billion if not more in chip manufacturing plants in the United States over the next several years. Also, other Taiwanese companies like Foxconn, Compal and Inventec are looking for land in Texas for AI server manufacturing that could be larger than their existing operations in Mexico. Remember these tariffs will have a larger impact on countries that export more than they import and the US is a net importer, which means they will have a smaller impact on our domestic production. In 2024 we sent over $1 trillion to other countries around the world allowing them to grow their economies while they charged tariffs on US products. Also understand that in 2024 government debt grew by $2.3 trillion to $35.5 trillion. This is only April, just imagine how many more billions perhaps trillions of dollars will come into our country by June or July. I know it may feel hard now, but be patient and gosh waiting just three or four months shouldn’t be that challenging. I believe we’ll continue to hear negative news over that time frame, but it should also come with positive news including new trade agreements with countries and the additional investment by foreign companies that I discussed. With all the noise, an important inflation report seems to have gone unnoticed Tariffs and trade continue to take center stage, but the consumer price index (CPI) came in with very positive news on Thursday. The CPI showed an annual increase of 2.4% for the 12 months ended in march. This was down from February’s reading of 2.8% and came in below the expectation of 2.6%. Core CPI, which excludes food and energy was also impressive coming in at an annual rate of just 2.8%. This was down from February’s reading of 3.1% and also came in below the estimate of 3%. This also marked the lowest reading for core CPI since March 2021 when it was just 1.6%. I don’t think we’ll see a level like that again for quite some time. There is of course some negatives in the report with eggs prices in particular jumping 60.4% compared to last year, but overall I’d say this was a great report. Shelter, which we have been talking about for what feels like years now, was up just 4% compared to last year. This was the smallest gain since November 2021. The deceleration in shelter costs continues to put less pressure on the headline numbers and it appears to be on a glidepath lower, which should mean more promising reports in the coming months. The big question mark is of course the tariffs and how the trade wars will ultimately impact inflation. I am still in the camp that it will be less problematic than many fear. Be patient as I believe these concerns will persist for the next few months, but I still am looking for a lower inflation rate as we exit 2025 when compared to this March report.