Is Google’s Century Bond a Smart Investment? Big Expenses Ahead for Companies Investing in AI, Don’t Blame Restaurants or Grocery Stores for High Meat Prices, Do Commission-Free Annuities Make Annuities More Attractive? & More

Is investing in Google’s century bond a good idea?

If you don’t want to read any further, and just want the basic answer, for investors it’s a terrible idea. On the other hand, for companies, universities or even governments, issuing a century bond is a great way to lock in low rates for a hundred years. As I said for investors, it’s a terrible idea, here is an example. In 2020, the Austrian government issued a century bond that locked in a yield of 0.85%, which was a great deal for them. But for investors who purchased that bond, it is now trading for 30 cents on the euro. Another example of how things can change is back in 1997, J.C. Penney issued a 100-year bond. Back then no one would have imagined bankruptcy would occur just a little over 20 years later for the company. You may be wondering who would benefit from buying these bonds? Generally, it would be your insurers or pension funds. They both have long-dated liabilities, so long-term bonds give them comfort, knowing what the future cash flows will be. There will also likely be some hedge funds and high-risk investors that will want to trade the bonds as they will have a high amount of fluctuation based on interest rates. In fixed income investing, there is something called duration, which essentially looks at the number of years it takes to recoup a bond's true cost. The longer the duration, the more price volatility for the bond when it comes to interest rate moves. Ultimately, for the average investor I would say to stay away because predicting which way interest rates are heading can be very difficult game and it could destroy your investment returns.

Big expenses are coming for companies that invest in AI

We have talked about this in the past couple years and now after the companies spent roughly $500 billion in 2025 it's estimated they will spend another $3 trillion by the end of the decade. As the companies spend more money on data centers, chips and other items for AI, their depreciation expense will rise each year, which will reduce their income. The big tech companies are kind of sneaky currently with depreciation. Many companies like railroads and other companies report depreciation as a standalone operating expense on their income statement. The reason depreciation is important for investors to understand is that eventually equipment becomes obsolete or worn out and must be replaced. But the big tech companies currently don’t have to break out depreciation until 2028 after new rule changes take effect. Currently, they include depreciation in the cost of goods sold or sometimes in research and development or general and administrative expenses. This makes it very difficult for investors and analysts to understand the true numbers. The big tech companies defense is they currently include it in the footnotes. However, companies like Microsoft have as many as 15-20 footnotes, which are generally not seen by investors or analysts. Perhaps the big tech companies will continue to hold onto their lofty valuations for now, but at some point, the real earnings will come through, and the stocks could take a major beating.

Don’t blame the restaurant or the grocery store for the high price of meat

I’m sure you’ve noticed that if you want to go out and have a good steak, you’re probably going to spend somewhere in the neighborhood of $45-$50, depending on the restaurant and how big the steak is. There’s a big shortage of cattle in the United States and the numbers are staggering. In January, there were only 86.2 million cattle and calves, which is down from a peak of more than 130 million in the mid 1970s. The number of people in the United States far surpasses the number of cattle and supply/demand being what it is, it is pushing the price of cattle to higher levels. The 86.2 million heads of cattle may sound like a lot, but when you look at the numbers it is the smallest herd since 1951 and that’s when the population in the United States was 157 million. The population now stands around 344 million people, which is an increase of 119%. All things being equal, there should be around 188 million heads of cattle available.

There are three main reasons why the price of meat is high and the number of cattle is low. We used to receive about 5% of our beef supply from Mexico, but a parasitic fly larvae called screwworm has destroyed that supply. Another problem is a lack of rain in Texas, which is the largest producer of our beef supply with 12.5 million cows. If ranchers don’t get enough rain, they produce smaller herds because the cost of feed increases. You may be thinking there’s a lot of cows in California as you drive up 15 and you are right because California is the fourth largest producing state for cows at 5 million, but 1.7 million of those cows are dairy cows. The third reason is simply being a rancher is hard work, and it is generally passed down from generation to generation. Most kids when they’re growing up do not dream about working on a ranch in the hot sun in the dirt all day long. Also, with the price of land some ranchers realize they’re better off selling the ranch for a big profit than continuing to work the land. Fortunately, many ranchers love what they do and despite the hard work continue to do it generation after generation. If you know any young kids that like riding horses, maybe they should consider going to work on a ranch and save all that college money?

Financial Planning: Do Commission-Free Annuities Make Annuities More Attractive?

One of the primary downsides of annuities has always been the layers of fees that drag on returns, along with upfront commissions that create conflicts of interest in how they’re recommended. Commission-free annuities attempt to address these concerns by eliminating the embedded commission and often lowering internal product expenses, which in theory should improve transparency and net performance. However, these products are typically sold by fee-based advisors who charge ongoing advisory fees, meaning that while the conflict of interest may be reduced, the cost savings inside the annuity can be offset by the advisor’s separate fee. Even with improved pricing structures, the fundamental challenge remains, annuities generally offer lower expected long-term internal rates of return compared to investing directly in diversified market portfolios. While annuities provide guarantees such as downside protection and lifetime income, those guarantees come at a cost that often outweighs their benefit. In many cases, investors can generate greater long-term growth and higher income from a well-diversified portfolio. The returns may not be technically guaranteed, but it can still be done in a conservative and sustainable way.

AI is not as good as we are led to believe

We continue to hear about how smart AI is and how it’s going to replace a lot of jobs. So far, it has replaced some of the more repetitive jobs, but AI is not ready or even close to ready to replace all the software companies that are currently having difficulties from a stock perspective. I believe there is a misunderstanding when it comes to how large language models like Claude and ChatGPT operate. Remember, these are probability machines that make predictions about the most probable next word or sequence of words based on human language and its training data. These large language models are trying to sound like a human, and sometimes it seems like they're using reasoning and feeling, even though they are just probability machines that have no reasoning or feelings. Because of a new word that has been assigned to the industry called hallucinations, where basically you are receiving the wrong answer, there are warnings in tiny print at the bottom of the Claude chatbot. Anthropic warns “Claude is AI and can make mistakes. Please double check cited sources." Anthropic also adds, “user should not rely on Claude as a singular source of truth and should carefully scrutinize any high stakes advice given by Claude." There’s a gentleman named Damian Charlotin, who is an HEC business school researcher, and he’s keeping a list of incidents where lawyers filed AI written briefs that contained fabricated precedents and quotes. So far, he has discovered 355 incidents, and many of these have caused the attorneys to become liable for fines and professional discipline. This can also lead to malpractice lawsuits from their clients. The lesson learned here is that you cannot depend 100% on AI. It still takes a human brain to complete the task accurately

Robots will be here someday, but just not tomorrow

There’s a lot of talk about robots and when you read or hear about some of the hype, you feel like it’s right around the corner. There are currently a lot of robots being used, but they are mostly for manufacturing or industrial robots where they’re attached to the ground and do such routine tasks such as handling parts, cutting metal, and welding. Some companies are now trying to take the next step in commercializing robots, and they are trying to make the next generation of robots look more human, so people will accept them. However, most projections from experts in this area are looking out to 2050 when they’re projecting about 350 million robots will be sold and cost somewhere around $25,000 each. They’re also saying this will be a $9 trillion market, and companies like General Motors, Ford, and Tesla could become the manufacturers of these robots. Tesla has already discontinued its model S and X EVs so they can use that capacity for robot manufacturing. Personally, I still am not on board with having a robot in my house... Are you?

Will Bitcoin rebound?

It’s been about four months since Bitcoin hit the peak of $126,000, and it has now fallen almost 50% to around $67,000 depending on the day. It has now been 17 years since Bitcoin was created, and people thought this was a new financial frontier as the speculation and excitement grew. But now that excitement seems to have left the building, and speculative investors seem to be more interested in metals, such as gold and silver. Hype around AI has also likely taken attention away from Bitcoin and other cryptocurrencies. It seems a collective belief that Bitcoin was different and could someday become the world currency led to the high price, but now that capital has become a little bit harder to come by, investors and companies are walking away from crypto and instead looking for other speculative investments, or perhaps more sound investments with strong fundamentals that actually produce earnings and cash flow. Maybe people have grown tired of waiting for 17 years for something big to happen. Bitcoin did benefit a couple years ago from a strong political tailwind which, as usual, increased enthusiasm. Unfortunately for Bitcoin holders it seems the enthusiasm disappeared just as fast as it came leaving Bitcoin to trade on its own value. Bitcoin could drop another 50% or rise 50% from here. No one knows for sure, but there are a lot of hard facts that are now out there showing that Bitcoin may be yesterday's speculative investment.

Does AI give good financial advice?

Obviously as a financial advisor, I’m happy to report that the answer to that question is no. There recently was a small survey completed by 11,000 individual investors in 13 countries, and it revealed that 19% of individual investors are using ChatGPT – style AI tools to manage their portfolio. That is an increase from 13% in 2024, but I think they’re using it for research and not strictly investment advice. People may not realize this, but large language models are not good at math. Also, a human financial advisor will have empathy, humility, and a sense of fairness, something that the AI financial advisor will be lacking. It has been pointed out by experts that people who are now trying to use AI in place of financial advisors can be dangerous because of the biases and inaccuracies along with the other limits of large language models. AI financial advisors also will not have a fiduciary responsibility, meaning it will not always put the client's best interest first. They also may not tailor the advice to the client's particular needs and likely won't be able to handle and understand the emotional side of investing. So, until AI can develop emotions and learn to do math, the human financial advisor that is a fiduciary is still your best option.