Smart Glasses vs Smartphones, Too Late to Buy the Dip, Inflation Spike from Iran War, Backdoor Roth IRA Rules & More

Could smart glasses replace the smart phone as the number one consumer device?

If you’re like me, you probably remember the failure of Google Glass, which ended in 2015. Google may have exited the space early considering in 2025 global shipments of smart glasses hit 8.7 million units, which quadrupled 2024’s level. Meta currently holds 85% of the market but realize that Apple, Alphabet/ Google, and Samsung are expected to launch AI equipped eyewear soon. I do wonder if this will hurt or help Apple since people may be buying more smart glasses and less high-end iPhones? There are concerns about privacy and data collection. Currently Meta is facing a lawsuit in the US that is seeking class action status. Seems like Meta can’t get out of the news or the courtroom, but they do state that what the glasses collect stays on the user’s device unless they choose to share it with the company. The smart glasses can see what you see and hear what you hear. You can have a conversation with the glasses the same as if you’re talking to a person. Which means you may look like a crazy person standing there talking to yourself if people don’t realize you have smart glasses on. Companies that would benefit from an increase in manufacturing of smart glasses, excluding the big companies I already mentioned, would include companies such as EssilorLuxottica, which is the owner of Ray-Ban and Meta’s manufacturing partner, Qualcomm, which provides the central processor or the brains of the glasses, and Global Foundries. which takes care of the display technology. It appears this time; smart glasses may become as common as a smart phone in the next few years.

Is the market too expensive to buy the dip this time?

With the increasing cost of oil and the turmoil in Iran the markets did see a correction, which is a drop of 10% or more from the peak. People have become so accustomed to just buying the dips without knowing the valuations of what they’re buying, and many will probably do the same thing this time. Unfortunately, dip buying does not always work and given the current valuations, investors could be in for a bad surprise. Even with the recent pull back, the forward price/earnings ratio for the S&P 500 sits at 20 and is still 20% higher than the 20-year average. So even with the dip you’re not buying companies on sale at these levels. Earnings can be adjusted and moved around with accounting rules, which means you’re probably paying more than you believe if you don’t understand accounting. Another indicator to look at is the forward price to free cash flow. This indicator takes out all the accounting craziness of how much some tech companies are spending on capital expenditures for artificial intelligence. Often, I find these two measures converge once the accounting catches up to the heavy capex spending and understanding both earnings and free cash flow is an important balance. The index currently has a forward price to free cash flow of 27.4 and that is nearly 40% above the 20-year average. Smart investors really should stop and think. They should realize they’re paying a lot more for the S&P 500 than they thought. Free cash flow is not an accounting measure, and companies are not required to compute it for you. It’s not that hard to calculate though as you start with cash from operations and then deduct all the capital expenditures. This is where the devil is in the details because this is where you will see how overvalued many tech companies are because of the billions of dollars they’re spending. The big risk here is the return on investment will likely not come very quickly and maybe not at all. This doesn’t mean you shouldn’t invest in stocks as you can still find good quality equities that are generating very good cash flow and that you’re not overpaying for the earnings or the free cash flow. Personally, those are the types of businesses I’m looking for when investing for myself and my clients.

Consumer prices spike in March due to Iran war

While it was in line with expectations, the headline CPI rose 3.3% compared to last year. This was the highest annual rate since April 2024, and it was substantially higher than February’s reading of 2.4%. The obvious reason for the increase was the change in oil prices. Energy showed an increase of 12.5%, largely due to a spike of 18.9% in gasoline prices. Month over month gasoline prices climbed 21.2%, which was the largest monthly increase since 1967 when the series was first published. Outside of the energy spike, prices did not look problematic considering core CPI, which excludes food and energy, saw an increase of 2.6% on an annual basis. This was relatively in line with recent months and was 0.1% below the forecast. While the Fed may be able to look through these inflation numbers, if energy remains elevated the concern is it will start to impact core CPI as well. Companies will need to start raising prices to offset their higher expenses due to energy costs. For example, airline fares, which rose 14.9% over the past 12 months would see further pressure. Deutsche Bank estimates that if jet fuel prices stay near current levels for a full year, airlines would have to increase ticket prices by about 17% to offset those cost pressures. Transportation would also be problematic with companies like Amazon, UPS, and FedEx needing to pay more to move goods around the economy. We have already seen the introduction of fuel and logistics surcharges and those will likely climb further if problems persist. On a positive note, the shelter index rose just 3.0% on an annual basis, which was tied for its lowest level since August 2021. As I have mentioned before, I anticipate shelter inflation will continue to decline as the year progresses. Overall, the main takeaway is if this Iran war can be contained and energy prices start to decline, which I think they will, inflation should not be a problem in 2026.  

Financial Planning: Reporting a Backdoor Roth IRA

Normally when income is above $236k for joint filers or $150k for single filers, the ability to make Roth IRA contributions is phased out.  A backdoor Roth IRA is a strategy that allows high-income taxpayers to fund Roth IRAs, but it needs to be done correctly.  It is a two-step process that involves making a traditional IRA contribution and then converting that contribution into a Roth IRA.  This can only be done if the account holder does not have any other pre-tax IRAs.  When the initial contribution is made to the traditional IRA, it needs to be reported as a non-deductible contribution.  When the funds are converted, a 1099-r is generated, and as long as the initial contribution was reported correctly, the conversion is not taxable.  The end result is a Roth IRA that can grow tax-free.  While this can be a benefit, it is crucial that everything is reported correctly to prevent filing errors, overcontributions, and amended tax returns.

Why finding a financial advisor is so confusing

I was disappointed that a rule to protect retirement savers has been blocked and leaves investors on their own. The rule made it so investors would have to use a fiduciary in 401lk rollover transactions, but the rule has been shut down. It was a very complex rule, but the concept made sense that when it comes to retirement money, you should only be working with a fiduciary. RIAs are registered with the Security Exchange Commission, and are held to the strongest standard, which is known as the fiduciary standard. Brokers registered with FINRA, have a lower standard called best interest. It is kind of silly because the standard requires them to act in the client’s best interest only at the time of a particular recommendation. There’s no duty to follow up after the paperwork is signed. They simply wash their hands of any duty to you and you’re on your own. With a true fiduciary, they have a constant obligation to do what is best for you. It’s very confusing for people looking for financial advice because many people say they’re financial advisors, but they are just really selling insurance, high commission mutual funds, or other products that pay them a big commission. There are also some advisors that are known as a hybrid and when you ask them if they have a fiduciary responsibility to you, they can say yes. The problem is they can also sell you products that pay them a big commission because of that hybrid status. If you’re dealing with any type of advisor, ask them if they are dealing with you as a fiduciary 100% of the time. If they say no or don’t answer the question be careful, they could sell you a product, that is not the best for you in the long run.

Will private credit defaults be a major issue for the banks or the economy?

Blue Owl Capital, an alternative asset management company, said some their funds have continued to receive elevated redemption requests with one of them seeing requests top 40%. The company said they will stick to their stated redemption amount of only 5% of the fund. We have continued to talk about the concerns we have in private equity and private debt and while the news sounds bad, I don’t believe it will destroy the economy. There have been comparisons to the Financial Crisis of 2008/2009, but I just don’t believe it will have a similar effect on the overall economy. Some estimates for defaults have come in around 15%, but they still appear to be limited to just a few sectors. Fortunately, the banking system is not directly exposed to private credit like many of them were to the mortgage crisis. When compared to the Financial Crisis, the balance sheets for the big banks are much stronger. Banks are far better capitalized, and while it will hurt a little bit, major problems in private credit would not destroy the banks because of their strong capital position. What is even more amazing is private credit is still growing and in the first quarter of 2026, sponsors raised $40 billion. That is less than half the $86.8 billion a year ago, but unfortunately, there’s still some people putting money in this risky area. This problem is nowhere near as widespread as the mortgage situation during the Great Recession and what we will probably see is a slow decline and markdowns in the private credit industry, which will hurt those investors that were over exposed to the private industry. 

USPS could be increasing their fees on package deliveries

It really shouldn’t come as a surprise that the United States Postal Service has been struggling financially for years, and even the new Postmaster General, David Steiner, has said if something isn’t done, they will run out of money in about one year. The USPS has never done a fuel surcharge before, but both Federal Express and UPS have had fuel surcharges for years along with other charges and fees. The charges that are expected to go in effect on April 26th would be approximately 8.1%. An example is a flat rate box is currently at $22.95, and on April 26th it will be $24.80. There will be no change in the $.78 for a first-class stamp. The USPS is facing the same difficulty as its competitors with rising fuel prices. Most trucks run on diesel, which has risen more than gasoline, and it is up about 50% from a year ago to around $5.38 per gallon. I have seen diesel over seven dollars a gallon at some of the gas stations I go to. Adding to its problems, the post office’s biggest customer Amazon is going to further reduce the volume of packages with the USPS, which amount to a loss of billions of dollars of revenue. Not long ago UPS dropped Amazon because while the revenue was good, the profitability was very low. The same could be true for the USPS. The USPS does deliver to over 170,000,000 addresses six days a week. With that many routes it is estimated that 71% of the delivery routes are unprofitable. It was also notable that only two out of five post officers can cover the cost of the operations. No one knows exactly how much the post office is draining from the federal government, but I would not be surprised if the current administration tries to turn it around and save billions of dollars by making the post office run more like a business. They don’t even need to make a profit; they just need to break even.

Las Vegas needs a reality check

Las Vegas used to be a great deal. People would receive free parking, inexpensive meals, have fun gambling and see some great shows. After the pandemic, it appears that the casinos are trying to make up for lost revenue and are charging for everything including the parking, resort fees, and there’s really no deals unless you go to the local Denny’s. Even gambling as become more expensive as many roulette wheels now have three zero spaces instead of two and blackjack tables often offer $6 payouts for every $5 bet rather than the former 3:2 ratio. Visitation to Las Vegas in 2019 was 42.5 million people and by 2024 it pretty much reclaimed the same number of visitors at 41.7 million after visitors were cut in half by Covid. There’s no doubt that online gambling and the Indian casinos are taking away visitors from Vegas. There are also difficulties with Canadian visitors as they dropped by nearly a quarter last year or about 200,000. This marked the largest annual decline in half a century, excluding Covid. South Korea saw an increase of about 25%, but that was not enough to replace the loss of Canadian visitors. The city is also struggling with the younger crowd as the number of travelers in their 20s is roughly half prepandemic levels. To reclaim its popularity, Las Vegas needs to go back to the great deals that people would brag about. Las Vegas still does have glamour and the excitement, but until they start giving deals that people brag about their visitors will likely remain about the same even after the recent introduction of a pro football team and a baseball team on the way in a couple of years.

Is the market too expensive to buy the dip this time?

With the increasing cost of oil and the turmoil in Iran the markets did see a correction, which is a drop of 10% or more from the peak. People have become so accustomed to just buying the dips without knowing the valuations of what they’re buying, and many will probably do the same thing this time. Unfortunately, dip buying does not always work and given the current valuations, investors could be in for a bad surprise. Even with the recent pull back, the forward price/earnings ratio for the S&P 500 sits at 20 and is still 20% higher than the 20-year average. So even with the dip you’re not buying companies on sale at these levels. Earnings can be adjusted and moved around with accounting rules, which means you’re probably paying more than you believe if you don’t understand accounting. Another indicator to look at is the forward price to free cash flow. This indicator takes out all the accounting craziness of how much some tech companies are spending on capital expenditures for artificial intelligence. Often, I find these two measures converge once the accounting catches up to the heavy capex spending and understanding both earnings and free cash flow is an important balance. The index currently has a forward price to free cash flow of 27.4 and that is nearly 40% above the 20-year average. Smart investors really should stop and think. They should realize they’re paying a lot more for the S&P 500 than they thought. Free cash flow is not an accounting measure, and companies are not required to compute it for you. It’s not that hard to calculate though as you start with cash from operations and then deduct all the capital expenditures. This is where the devil is in the details because this is where you will see how overvalued many tech companies are because of the billions of dollars they’re spending. The big risk here is the return on investment will likely not come very quickly and maybe not at all. This doesn’t mean you shouldn’t invest in stocks as you can still find good quality equities that are generating very good cash flow and that you’re not overpaying for the earnings or the free cash flow. Personally, those are the types of businesses I’m looking for when investing for myself and my clients.

Could electric vehicles make a comeback with a new type of battery?

Electric vehicles have really lost their allure for many people because of higher prices and the fear of losing the charge along with the long wait times to recharge the battery to 100%. That may all be changing because of company called Donut Lab, which produces solid state batteries for cars. By the way I did not get this information from some crazy website on the Internet or some far reaching science journal, this was actually in the Wall Street Journal recently. Donut Lab is a start-up company located in Finland, and they claim they have the first production ready solid-state battery for electric vehicle production. The numbers look rather attractive with charging times for a maximum charge at 4 ½ to 7 minutes. A problem with lithium batteries is they don’t work that well in the cold, but the solid-state batteries are unaffected by cold temperatures as low as 22°F. What is very attractive is the range for a midsize sedan is 870 miles. In addition to that, they use no rare earth or precious metals in the battery. Vantage Market Research estimates the global market of stainless-steel batteries in 2024 was around $1 billion but just nine years from today in 2035 the global market could be around $56 billion. One thing I did not like seeing was Chinese interests claim about 44% of the solid-state battery patents. That could be a problem down the road if these batteries are as good as Donut Lab is claiming.

Those wrinkles in your neck could be from your iPhone!

You probably never thought about it, but if you’re like most Americans who are spending 5 to 6 hours a day on their cell phone, you probably have something called tech neck. Tech neck creates those horizontal lines that develop across your neck with age and because of the increased use of cellphones, they are appearing earlier and are becoming deeper. It is mainly being noticed by women between the ages of 40 and 65, but even young woman in their 30s are starting to notice them and want something to fix the problem. If you are worried about it, the American beauty industry will likely be happy to come to the rescue and could make millions if not billions of dollars off this new problem. If you go into your local beauty supply store like Sephora, I’m sure you will find neck lift treatments to fix the problem. I love the new slogan from a Procter & Gamble brand that shows a woman applying their product to her neck with the tagline “tech neck got you down, give it a lift.” I’m curious after reading this or hearing this information how many people will run to the mirror to check their neck?