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

Alternative Assets Appear to Be a House of Cards I remember using that same terminology back before the tech bust about 25 years ago. I was maybe a little bit early back then, but the house of cards collapsed. The more I read about alternative assets the more I scratch my head and ask how is Wall Street getting away with this? In the end, I believe the small investor will end up paying dearly for investing in these alternative assets. I learned something new over the weekend, a company called Hamilton Lane Private assets can buy private stakes from other holders at a discounted price, but then they can magically increase the value to the net asset value. This also reminds me of the mortgage crisis in 2008 with collateralized mortgage obligations better known as CMO‘s that also had major difficulties. Hamilton Lane Private assets can disregard the discounted price they paid no matter how they paid for it, even if it was in a competitive auction and again mark it up to net asset value. In 2024 there were $162 billion in secondary deals with an average discount of 11%. My question is how can they magically create $18 billion of value on those secondary deals. The incentive fees that private equity firms like Hamilton Lane earn range from 10 to 12 1/2%. If it sounds complicated, it is and if you don’t understand something, you should not be investing in it no matter how simple your broker tries to make it sound. The greed on Wall Street appears to be running rampant, I would highly caution investors to avoid any type of private equity in their portfolio. Tariffs Are Still Not Impacting Inflation The May Consumer Price Index, also known as CPI, showed little impact from tariffs. Headline CPI came in at 2.4%, which was right in line with expectations and core CPI, which excludes food and energy, came in at 2.8%, which was actually below the expectation of 2.9%. The headline CPI continues to remain softer than core CPI due to falling energy prices. Compared to last year, energy prices were down 3.5% and gasoline in particular fell 12.0%. The core prices do remain a little bit stuck at the 2.8% level considering it was at that level in both the March and April reports as well, but considering the concern around tariffs I would say this was a really strong report. It will be interesting to see the coming months as economists are pointing to the fact that companies brought in excess inventory before the tariffs were implemented so they are still working through pre tariff inventory and have not needed to raise prices yet. I do wonder if inflation does not substantially increase at what point will economists say that the tariffs maybe aren’t as impactful as they once thought? My belief remains that we will see a small uptick in inflation in the coming months, but there are other forces reducing inflation in some areas so I think it will be more muted than many believe. Health and Human Services Is Receiving a Major Makeover Back in the 60s, the world looked to America’s health regulators for guidance because they had a reputation for integrity, scientific impartiality and a strong defense of patient welfare. Today and for probably the last couple of decades, HHS has lost trust among many people. This week, a major shakeup of the advisory committee for immunization practices known as ACIP is retiring all 17 of the current members on the committee. In the past, the committee had many persistent conflicts of interest and approved every vaccine that came through. The committee met behind closed doors and without transparency the public had no faith in their decisions. Some of the members had financial stakes or received substantial funding from the pharmaceutical companies. I’m happy to report with all 17 of the committee members being forced into retirement we should see big changes on the approval of vaccines and hopefully in a few years, the HHS and the committee can regain public trust. This could have an impact on some pharmaceutical stocks if vaccines go through a more rigorous approval process. Financial Planning: What If There’s a Recession While in Retirement? With 8 in 10 Americans already changing their spending habits and 58% expecting a recession, it’s clear that economic uncertainty is weighing heavily on people’s minds. But the reality is if you're retiring soon, or already retired, you should assume you'll face multiple recessions, market corrections, and bear markets during your retirement. It’s not a matter of it, but when. Historically, recessions occur about every 6 to 10 years and typically last 10 to 18 months. Market corrections, defined as a drop of 10% or more, happen about once every 1 to 2 years, and bear markets, declines of 20% or more, occur roughly every 5 to 6 years, lasting on average about 10 months, though the recovery to previous highs can take up to 2 years or more depending on the severity. The point isn’t to try and time retirement around these events, it’s to build an income strategy that expects them. A well-structured retirement income plan includes diversified investment portfolio that will provide long-term growth, cash reserves to avoid selling investments at a loss, a sustainable withdraw rate, and flexibility to adjust withdrawals from various sources when needed. By accepting volatility as a normal part of retirement, you can build a plan that weathers it and sleep better when the markets are volatile. Yes, the Rich Are Getting Richer That is how the saying goes and the rich did get richer in 2024. With the nice gains for many assets during the year, the number of people in North America with at least $1 million in investible assets grew to 8.4 million, which was an increase of 7.3%. This led to the group’s wealth increasing by 8.9%, to nearly $30 trillion. It is important to understand that the ultrarich, which is those with at least $30 million in assets, really provides a lot of the wealth. While this group represents just one percent of wealthy individuals, it accounts for 34% of all the wealth. People that have investable assets of less than $1 million should not despair and they too should continue to invest and grow their wealth. One of the reasons that the rich get richer is that they spend more time understanding investing they tend to buy assets. In many cases they are also more conservative as they don’t want to lose what they have. In my experience, many times people with less than $1 million in assets like to gamble in higher risk investments trying to get rich quick and we all know how that turns out. If you only have $100,000 or even $50,000 one should adhere to a good investment plan of buying good quality equities, and not panic and sell when a drop in price occurs. Any easy way people with lower incomes and investable assets can grow their wealth is in 401K plans and IRAs. This can increase the percent of their investments by a larger magnitude compared to a person with over $1 million because the contribution limits are not as effective on higher dollar amounts. For example, if you max out your 401k this year, which would be $23,500, that would have a much larger impact on the percent your assets grew if you had $100,000 instead of $1 million. I believe If one plans well and invests in good quality equities along with staying the course, it is very possible that they too can pass the $1 million in investible assets. The Disappointing Cybertruck From Tesla I’m not surprised that the Cybertruck is not selling as well as expected. It is selling well under the estimates and when I say well under, I mean it because in 2024 Elon Musk estimated goal was 250,000 sales per year. It did not even come close to that figure last year as sales came in under 40,000. The first quarter of 2025 looks even worse with total sales of only 7,100. Could it be because it is still the ugliest vehicle on the road? It reminds me of years ago when VW had the Thing. Could it be the price of around $100,000 is too high? Interestingly, the price has already been greatly reduced as the company has likely been trying to get sales moving. Or could it be the seven recalls on the Cybertruck? I do know that some of these were software issues, which could be fixed by a download, but there are also issues with the windshield cracking. The windshield is very heavy and very long. Also, what is known as a cant rail could fall off while you’re driving down the road because the adhesive was too weak. Another scary recall was the accelerator pedal that had a rectangular pad can become loose and get stuck under the paneling, which locks the accelerator in the down position, that’s a scary thought! It took years for the truck to come to market and it definitely did not meet those initial claims. It was first announced in 2019 at a cost of $39,900 with a battery range of 500 miles and it was supposed to be able to go in the water. Fast forward to the reality of today and the price as I said is well above $40,000. The battery range at best is 350 miles and the truck needs to stay on land and it cannot function on water. I have seen a few around town and I think the people driving them are pretty proud that their vehicle stands out, but I still think it is one of the ugliest things on the road and you could not give me one. Shocker… California Continues to Struggle With Gas Prices We have discussed how refiners are closing in California due to growing regulatory and cost pressures. Both Phillips 66 and Valero will close two major refineries in the state by next year, but there are already problems with supply and recent outages at refineries in the state have only added fuel to the fire. The state’s fuel imports climbed to 279k barrels per day in May, which was the highest in four years. This meant refiners had to turn to trading partners in Asia to make up for the shortage of fuel. The shrinking supply will likely only exacerbate this problem and I wouldn’t be surprised to see the import numbers continue to climb. The restrictive policies and the high taxes in California have led to gas prices that are far above the national average. Last Friday, retail gas prices averaged $4.68 per gallon in California versus a national average of $3.12 per gallon. This means California prices are about 50% higher than the national average. The Tidal Wave in Bitcoin Continues to Build Bitcoin is trading over $100,000 once again and it has attracted a lot of attention. Public companies are even starting to buy Bitcoin to put it in their treasury to hopefully get a boost in their stock price. It appears about 60 public companies with ties to the stock market are using a Bitcoin strategy for their treasury investments. They are in hopes that Bitcoin will continue to increase in value and ultimately boost their stock price. Some of these public companies are even borrowing or selling shares of their stock to raise money to purchase Bitcoin. I remember back during the tech boom many companies were implementing a similar strategy as they were buying high risk tech stocks in an effort to boost the value of their own stock price. We know how that ended. Based on research, if Bitcoin would fall below $90,000, roughly half of the public companies that invested in Bitcoin would then have a loss on their investment. If the company stock price began to fall, the companies may elect to unwind their investments in Bitcoin, which then could create an avalanche of selling. Who knows where the bottom would be? The only reason Bitcoin is being bought now is because it continues to go up, but we know that cannot go on forever. Bitcoin does not pay dividends, interest or anything else, it is just a gambling chip. As I mentioned in the title, this is a title wave where the wave continues to grow and get bigger and bigger until at some point in time it collapses and wipes out everyone involved. I don’t know where we are with the Bitcoin tidal wave, but I would not want to be holding any of it finally crashes on the shores. A Hot Summer Is Going to Lead to Higher Utility Bills The temperatures for June, July, and August are expected to be higher this year than last year and that’s not the only thing that could be going higher. It is projected with lower supply and higher demand that natural gas prices could also be higher. Natural gas futures are currently around $3.80 per million British thermal units and are expected to rise with estimates of above four dollars and some estimates even hitting five dollars by August. For the past two years there has been a glut of natural gas and prices have stayed on the low side. But now with demand for LNG, which is liquefied natural gas, and power producers requiring more energy, natural gas prices will likely push higher. The biggest natural gas demand is still in the winter months, but because of the warmer summer, the demand is picking up with power plants accounting for 41% of US natural gas consumption. There’s also a lack of natural gas piping on the East Coast, which really slows down the transportation and is adding to its cost. Other countries around the world need natural gas as well, and the United States has now become a big producer and exporter of LNG, which takes away from our supply here at home. The natural gas market in the US has now becomes a global market. We need to correct the pipeline matrix and develop more natural gas to meet the increasing demand and keep prices low. The Sun Is Setting on Solar Companies The tide has definitely turned-on installers of residential solar companies, which have been hurt by higher interest rates and now the tax and spending package passed by the House of Representatives includes eliminating certain tax credits for rooftop solar and battery storage. This has crushed companies like Sunnova Energy International, which at one point had a market capitalization of $5 billion and over 400,000 customers. The company was started in Texas in 2012 to provide affordable residential solar products across the country. The stock is now a penny stock after falling 93% and has a market cap under $30 million. The company cannot pay its debt or attract new investors and will likely file bankruptcy. They are not alone as SunPower, Lumio, and Solar Mosaic filed for bankruptcy last year. Titan solar also just closed the doors, leaving their residential customers nowhere to turn. Sunnova being the biggest was probably hurt the most last year. The company lost $448 million and probably has very little chance of ever being a profitable business again without the tax credits as many consumers will forgo solar energy. Because of the high cost of energy in California, there may be some room for a small operator to offset the high cost of electricity in the state. Another well-known company in the solar industry is First Solar, which has seen its stock drop nearly 50% in the past year may have a chance to survive since they sell and manufacture solar for businesses rather than residential customers. The fundamentals of the company look pretty good and it appears since they manufacture solar in the US they will continue to receive some tax credits, but the future for this company is just too fuzzy and while they may pull through, I don’t think the risk is worth the reward.

Jobs market remains in a good spot Headline nonfarm payrolls increased 139k in the month of May, which was above the estimate of 125k, but below April’s reading of 147k. A big negative in the report was the fact that March and April saw negative revisions that caused payrolls in those month to decline by a combined 95k versus what was previously reported. Even with that, if you zoom out and look at the big picture the economy is still adding jobs at a healthy rate given the fact that the unemployment rate has remained at 4.2%. I would also say it was a big positive that the private sector saw good growth since federal government payrolls declined by 22k in the month of May and are now down by 59k since January. I still expect losses to accelerate in the coming months for government payrolls since employees on paid leave or receiving ongoing severance pay are still counted as employed. Areas that saw major growth in the month included health care, which added 62k jobs and leisure and hospitality, which added 48k jobs in the month. Many of the other major industries saw little change. Wages were also positive in the month for workers as average hourly earnings grew 3.9% compared to last year. This was above the forecast of 3.7% and last month’s reading of 3.8%. I believe this is a good level for wage growth as it is healthy for workers, but not overly concerning on the inflation front. I would say this jobs report did little to change the narrative on the economy as it showed it remains healthy, but it definitely appears to be slowing. Office space may be harder to find in the coming years For the first time in at least 25 years, office conversions and demolitions will exceed new construction, which means there will be less space available. CBRE Group found that across the largest 58 U.S. markets, 23.3 million square feet of space will be demolished or converted to other uses by the end of this year while just 12.7 million square feet of space is expected to be completed by developers in those markets. We do have an office REIT in our portfolio and they recently talked about how leasing has continued to exceed expectations. I continue to believe the office has a valuable place in business and we have continued to see more and more companies implement return to office mandates. With less supply out there and demand remaining strong, we should see owners of office space benefit from stabilizing rents and increasing prices in the coming years. On the other side of coin, I have continued to express concern about the long term dynamics for multifamily housing due to the construction boom in the space and potential oversupply. It’s not just the new construction though as developers have another 85 million square feet of office space being readied for conversion in the next few years. This comes after office conversations to multifamily residences that have generated roughly 33,000 apartments and condominiums since 2016. It is estimated by CBRE that each conversion on average produces around 170 units. As a contrarian investor I many times like to go against the grain. With that being said I am definitely much more interested in the office space over the residential space at this point in time. Facebook scams are out of control There’s no way of tracking the exact number of scams or the dollar amount lost from scams on Facebook and Instagram, but JP Morgan Chase said between the summers of 2023 and 2024 they accounted for nearly half of all reported scams on Zelle. An internal analysis from 2022 found that 70% of newly active advertisers on the platform are some forms of scam or low-quality products. Meta, the owner of Facebook and Instagram, does over $160 billion in advertising and is hesitant to put any restrictions that could prevent growth in their ad business. In 2024, the Wall Street Journal discovered documents that advertisers can be hit with anywhere between eight and 32 automated strikes for financial fraud before their accounts are banned. On top of that, Facebook Marketplace, which is its online secondhand market, has now passed Craigslist as the most heavily used platform for free classified ads and it has become a great place for scams. The scam that most people fall for is the sale of pets. This comes even though Meta bans the peer-to-peer sale of live animals. Meta has as argued in court it is not their legal responsibility to deal with the issue. Section 230 in the US telecommunications law relieves platforms like Facebook and Instagram from liability of users who create their own content. This is currently being tested by an Australian mining billionaire because Facebook failed to remove fraudulent investment advertisements that used his image and AI cloned voice. Hopefully he wins the case. In the meantime, I would have to recommend that people stay away from using Facebook or Instagram for buying from advertisers on their platforms because you could be dealing with someone from China, Vietnam, or the Philippines, who have stolen pictures of a familiar company that you think you know, even including its address. And once you give them your credit card information or any other financial information, they have you and your problems will begin. Financial Planning: Retirement Savings Rate Hits Record High; How Do You Compare? The average 401(k) savings rate, including employee contributions and employer matches, has reached a record high of 14.3%, nearing the widely recommended target of 15% for a secure retirement. This milestone reflects growing awareness of the importance of long-term financial planning, especially as traditional pensions continue to disappear. However, the ideal savings rate isn’t one-size-fits-all. Individuals who begin saving in their early 20s may be able to retire comfortably with a lower contribution rate, while those who delay investing until their 30s or 40s often need to save well above 15% to catch up. Starting early allows compound interest to do more of the heavy lifting, highlighting the value of consistent, proactive saving from a young age. For example, someone who starts at the beginning of their career might be okay saving as little as 7% of their income and still retire on time. This means if they save the minimum necessary to receive the full company match (5% contribution + 4% match = 9%) they likely will be fine. However, waiting until their 40’s may require a savings rate of 25% or more to produce the same retirement income. Sell gold and buy platinum I thought you might be thinking you’ve done so well buying gold and you may think it’s still going higher so just stay the course, but platinum has been left behind for the last 11 years. Back in 2014, platinum was at $1500 an ounce compared with gold at $1300 per ounce. Fast forward to today and gold is around $3300 per ounce and platinum has gone down in value to about $1000. Platinum actually has real demand as about 40% of the demand comes from catalytic converters which are a hot commodity, we just recently wrote about how April car sales were up 10%. Platinum supply is about 7 million ounces on an annual basis, but it is predicted by the world platinum investment council that in 2025 it may only be 5.4 million ounces. Compare that with gold which will have about 100 million ounces mined this year. Perhaps platinum could be the next shiny metal that performs well. There is even talk that Chinese buyers who are priced out of gold are now starting to invest in platinum. If you like precious metals, you may want to do some research on platinum. It could be on sale for now. To be clear I don’t buy these precious metals, but given the choice between gold and platinum, platinum definitely seems more interesting at these levels. Job openings report shows there is still plenty of work out there The Job Openings and Labor Turnover Survey, also known as the JOLTs report, showed job openings remained strong as they increased 191,000 from the month of March and totaled 7.4 million. This also beat the expectation of 7.1 million and provides further evidence that the labor market remains healthy. Job openings did decline by 228,000 or about 3% compared to last year, but there are still 1.03 available jobs for every unemployed worker. As we have discussed, we are looking for the labor market and economy to continue to soften, but that does not mean it is weak, it just means we could be progressing at a slower rate. As with other hard economic data, the next few months will be more telling about how the tariffs are impacting business decisions. This JOLTs report was from the month of April, when tariffs were just beginning. I still believe the data will hold up alright in the coming months even in the face of these trade negotiations that are occurring across the world. Computers in our brain may not be that far away It’s a scary thought, but there are already people with brain computers and interfaces that have been installed. It is currently less than 100 people to date and it is estimated that will double within the next year. Businesses in this field are called neurotech companies. It is projected in the next 15 years or so this will be a $1 billion a year market. Some of the designs are an implant of a tubular mesh of electrons that will run through a major blood vessel in the brain like a stent. There are different designs by different companies and some have over 1000 electrodes spread across 1.5 centimeters. The benefits of having these installed in your brain will be figuring out which medication works best for that particular brain chemistry. Going beyond that are thoughts to control vehicles, limbs, and exoskeletons along with generating speech directly from thought. There are about 12 small companies now working on this and I believe most will go probably go broke before they make it big. I’m sure some will be acquired by big medical technology companies or device makers that will take it to the next level. Don’t let the future scare you as it’s going to come anyways, but I do wonder with all the positives of this technology what negatives will there be as well? Will cybercriminals be able to hack into your brain? Or on the bright side will your spouse really know what you’re thinking. I think that’s a good thing, right? The growth in gambling might become a problem Gambling has been around forever, but you always had to go to a casino or have your own bookie to take your bets. This mostly occurred in person. Now with companies like DraftKings and FanDuel it is far too easy for people to get addicted to gambling on their phone. In 2024 the revenue from gambling was $71.9 billion. Now with the ease of cell phones, 48% of American men under 50 have an online gambling account and wager about $150 billion a year on sports alone. It’s now been seven years since the Supreme Court ruled that nationwide sports betting is legal. It’s no surprise the problem of gambling addiction is starting to appear and the journal of behavioral addictions says smartphone apps carry higher addiction risk than traditional gambling at casinos and horse tracks. That’s no surprise to me because of the ease of holding in your hand this gambling tool. For someone that has a gambling problem, it takes about seven years for them to start to realize they have a problem. The numbers now show this explosive growth as companies like FanDuel saw its revenue jump from $2.8 billion in 2019 to nearly $17 billion today. DraftKings is also seeing huge growth as revenue was $432 million in 2019 and now it is at $6.3 billion. I had a feeling the stocks would do well but would not invest in them because of the nature of their business and also, they had no earnings at the time. For those that did gamble with the stocks, DraftKings shares are up 156% over the last three years because of the massive growth in this industry. Unfortunately, in the next few years, problems could start showing up in the healthcare industry. This belief is based on an 11-year study that ended in 2016 from the National Council on Problem Gambling that showed 20% of gamblers with this disorder attempted suicide. According to the Journal of Gambling Business and Economics just under 6% of those who gamble on US sports generate 80% of the betting revenue. As the growth of gamblers grows, more people will be betting and that 6% number will likely rise.

First Time Homebuyers Hit a Record Low With the high cost of housing and higher interest rates, people trying to get their first home dropped to a record low around 23% in 2024. The average age of the first-time homebuyer has increased 10 years over the historical average to 38 years old. The median income is now $97,000 and the first-time home buyers are coming up with an average down payment of 9% of the value of the home. Many of these young buyers are using FHA loans, which require a very small down payment and according to research roughly 30% of all FHA mortgages have a debt service ratio of over 50%. This means more than half of these buyers’ incomes is going toward servicing debt. This could be a hard pill to swallow for young buyers with not much money left over for luxuries like vacations and new cars. However, if when they buy the home, they understand that if they really tighten their belts for the next three to four years, they will probably be fine. New home builders are doing what they can to try and get rid of the largest inventory of unsold homes on their lots since 2009. The median price of a new home is currently less than one percent higher than the median price of existing properties, which historically has seen a 17% premium. The home builders are using profits from their homes to buy down mortgages. Even though the 30-year mortgage was recently around 6.8%, home builders can buy these mortgages down which led buyers of new homes to a rate around 5%. Buying down these rates has cost home builders about 8% of the purchase price of the home. This reduces their profits but better than the alternative of sitting on unsold homes with a carrying cost for the builder. I don’t see this situation getting better anytime soon because I’m not looking for a large decrease in mortgage rates and incomes over the next year will probably increase somewhere around 3 to 4%. We continue to believe the rapid increase in the price of homes over the last few years will not last and it will now take some time to get back to normal market. Maybe we will see a better real estate market in 2027 or 2028. Is Bitcoin coming to your 401k? I have been concerned with bitcoin and crypto as a whole for several years for many reasons including fraud, illicit activity, and the fact that there is really no way to derive an intrinsic value for it since there is no earnings, cash flow, or anything really backing the asset class. I was disappointed to see the current Labor Department removed language that cautioned employers to exercise “extreme care” before making crypto and related investments available to their workers. They cited “serious concerns” about the prudence of exposing investors’ retirement savings to crypto given “significant risks of fraud, theft, and loss.” While this isn’t necessarily a full-on endorsement for placing crypto in 401k plans, it definitely seems like the administration is continuing on its path to try and normalize crypto as an established asset class. Even with this change in language I would be surprised to see a huge surge in cryptocurrencies within 401k plans. Ultimately, ERISA bestows a fiduciary duty on employers and company officials overseeing 401k investments and that means legally employers must put the best interests of 401(k) investors first and act prudently when choosing which investments to offer (or not offer). Given the extreme volatility within crypto I believe it would be a huge risk for these companies to offer it as it could open them up to lawsuits if there are major declines. We’ll have to see what other changes are made as time progresses, but I don’t believe crypto has any place within a 401k plan at this time. Inflation report shows continued progress The personal consumption expenditures price index, which is also known as PCE and is the Federal Reserve’s key inflation measure, showed an annual increase of just 2.1%. Core PCE, which excludes food and energy, showed a gain of 2.5%. Both results were 0.1% below their respective estimates. Overall, inflation has continued to cool and is now quite close to the Fed’s 2% target. The question that remains is how will tariffs ultimately impact inflation? An economist from Pantheon Macroeconomics said that he believed core PCE would peak later this year between 3.0% and 3.5%, if the current mix of tariffs remained in place. I would say it is difficult to forecast the tariff impact since we don’t know what will ultimately be passed on to the end consumer. It will definitely be interesting to see what numbers look like in the coming months, but ultimately, I believe most of the concerns around inflation are overblown and even if the rate for PCE is around 3%, I don’t see that as being problematic for the economy. Financial Planning: What it Means to be an Accredited Investor An accredited investor is someone who meets specific income or net worth thresholds—such as earning over $200,000 annually ($300,000 with a spouse) or having over $1 million in net worth excluding their home—and is allowed to invest in private securities offerings not registered with the SEC. These investments, which include private REITS, private equity, hedge funds, and startups, often promise high returns but carry significant risks such as illiquidity, limited transparency, and the potential for total loss. While many of these offerings are only available through fiduciary advisors—who are legally obligated to act in their clients’ best interest—investors must still exercise caution. Fiduciary duty applies only in certain contexts (such as investment advice) and may not extend to related areas like insurance or commission-based products. Additionally, what qualifies as “acting in your best interest” is often subjective and open to interpretation. Working with a fiduciary does not guarantee protection, and investors should remain vigilant, ask questions, and independently evaluate any recommendation. Also, private investments aren’t necessary better than public investments, so just because you qualify as an accredited investor doesn’t mean you should be investing in private securities. Is a buyer’s market coming to the housing market? Interest rates on mortgages have stayed pretty much above 6% since September 2022 and it doesn’t look like they’ll be falling anywhere close to 6% anytime soon. But for those looking to buy a new home, we could be looking at a homebuyer’s market soon. It’s not here yet, but there are signs that the number of homes listed for sale this spring has increased, while sales have actually decreased. Nationally, existing home sales are down 2.4% through April while the number of properties for sale has increased by 5.1%. Unfortunately for buyers, prices for homes are still high and mortgage rates have increased which has led to affordability still being a major problem. On a national level about 20% of home sellers cut prices on their homes in April, which was the largest amount of price cuts since April 2017. Zillow expects a national drop on average of 1.4%, but areas where there is higher priced homes and rising listings, the drops could be larger. Areas where there are second home owners could also see declines as many of them are sitting on a lot of equity in that house and they may not be using it as much as they thought they would. This could lead them to take advantage of that equity and sell at a reasonable price. Unfortunately, for the entry-level homebuyer competition is still fairly high and supply remains quite low, but that could change in the future as well. If you’re a buyer waiting to buy a home, I would be patient and keep your down payment in a high-yield money market, which should pay you around 4% while you wait to get that home that you want. Patience pays off in investing and home buying. The U.S. is far ahead of Europe in Business People love to travel to Europe to see history and maybe drink the French or the Italian wine, but when it comes to growing the economy Europe is far behind the US. Going back 50 years the US has created 241 new companies worth more than $10 billion, Europe pales in comparison creating only 14 new companies of that size over the last 50 years. Europe continues to fall behind the U.S. in productivity, 35 years ago the average EU worker produced 95% of what Americans did. Fast-forward to 2025 and Europeans now produce less than 80% of an American worker. It’s surprising that even though Europe has 449 million people, which is over 100 million more than the US, their economy is now 1/3 smaller than the US economy. Investors and entrepreneurs in Europe say the obstacles that prevent growth are a timid and risk adverse business culture, strict labor laws, regulations that stifle any type of growth and a smaller pool of venture capital. It is estimated that European businesses spend 40% of their IT budgets on complying with regulations. Also, many of these companies are confused as 2/3 of European businesses don’t understand their obligation under the EU AI act. I suggest to take this as an important history lesson for younger people who may think that more government is good. More government does not produce a growing economy and if you and your children want a higher standard living going forward, it takes hard work and competition, not government regulation and control. Crypto Exchange Kraken is going to offer digital tokens backed by stocks I can’t believe that this is happening, but it is and crypto exchange company Kraken said it would occur within the next few weeks. The company will be rolling out digital tokens that are supposed to be back by stocks such as Apple, Tesla, Nvidia and other popular companies. This also includes ETFs, like the SPDR S&P500 and the SPDR gold fund. These will not be available to US investors, but it is instead for other countries around the world to invest in US stocks. This is supposed to be easier than the current way of investing in US stocks through local brokerages. These digital tokens will be referred to as Xstocks And will be on the Solana Block chain platform. It is expected that Kraken’s partner, Backed Finance, will acquire new shares of stock as these tokens are sold to back up the value of the digital tokens. Trading of these digital tokens will be allowed 24 hours a day seven days a week. I’m concerned this could cause extreme volatility for some of these stocks as they may need to be purchased in large quantities each week day morning based on the activity that occurred while the market was closed. I think some crazy things could happen. I see huge concerns here and lots of room for fraud as it could be discovered the digital tokens are not backed by the correct number of shares. Maybe my thinking is old-fashioned but just seems to me if I’m going to invest in a company, I want to actually hold shares in that company not have someone acting as a middleman. I think unfortunately people trading these digital tokens don’t care about true investing and it’s just going to be more speculation. I do hope they fail like the crypto company Binance did when they tried the same thing back in 2021. The regulators around the world felt like Binance did not have the correct licenses to do this. But don’t worry, Kraken is regulated by the Wyoming division of banking and has a special purpose depository banking license. Well, that should make investors feel a whole lot better, right? The History of FICO Most people have heard of a FICO score, however I’m sure most have no idea how it was established and also that it is a public company that has performed very, very well over its history. The company was started back in 1956 by an engineer named Bill Fair and a mathematician named Earl Isaac. Each put in $400 of startup capital and it took two years to sell their first credit score. The name of the company is Fair Isaac company, which is where they came up with the FICO score. 31 years later on July 1987, it went public and sold 1.4 million shares at $9.50 per share. The stock now trades around $1650 for a total return of about 17,200%. There are very few investments that could come even close to that type of return. The company does not collect money directly from the customers who receive their credit score, it generally comes through application fees and is paid by the lenders. The company has what is known as inelastic demand, which unlike many other companies they can raise prices and the customers will still pay for their service. Sounds like a little bit of a monopoly to me. They are used by 90% of US lenders and do over 10 billion credit decisions a year. They do over $30 billion a year in sales with only 3700 employees. The free cash flow of the company increased by 30% to $607 million last year and it bought back $822 million of stock. The company sounds very attractive; however, it trades it around 40 times forward earnings, which is rather pricey and the slowdown in the real estate market could hurt the company going forward.