Palantir Technologies, Big Money Managers, Apple’s Stock, Retirement Income Taxation, Early Social Security, High-End Companies, Hospital Stocks, America’s Top CEOs, College Graduates & Investing

May retail sales look stronger than headlines show After seeing headlines from several media outlets, I was worried May retail sales were slowing to a problem point, but I would say they actually looked quite strong. Compared to April, sales did fall 0.9%, which was larger than expectations for a 0.6% decline. It’s important to point out though that consumer rushed to auto dealers in April to try and beat the tariffs. This led to a 3.5% decline in motor vehicle & part dealers when comparing sales in the month of May to April. Gas stations have also seen declining sales largely due to lower gas prices and actually fell 2% when compared to the previous month. Excluding these two categories, sales would have fallen just 0.1% when compared to April. While the month over month numbers point to a slowing consumer, when we look at the annual comparisons the numbers are impressive. Headline retail sales climbed 3.3% compared to last May, but if we exclude motor vehicle & parts dealers & gas stations, sales climbed 4.6%. It was largely impacted by the 6.9% annual decline at gas stations. Areas of strength in the report included nonstore retailers, which were up 8.3%, food services & drinking places, which were up 5.3%, and furniture and home furnishing stores, which were up 8.8%. Overall, I’d say this report still shows a healthy consumer. I am still looking for the consumer to slow, but I believe people still have the ability and desire to spend in this economy, which should allow for continued growth, albeit at a slower rate. Why are big retailers looking at issuing stable coins of their own? Stable coins seem to be the new buzzword for 2025. It seems at least once a week when I pick up the Wall Street Journal, I see something about stable coins. I recently read that Walmart and Amazon may be looking into using stable coins to get away from using traditional payment systems, which is costing billions of dollars in fees each year. This includes interchange fees that occur when customers make purchases using their credit cards. If you’re not sure what a stable coin is, briefly, it is a coin that is supposed to be backed by a one-to-one exchange ratio with dollars or other government currencies. In other words, reserves of cash and dollars would have to equal the value of the stable coins that were in the market. Who would be hurt most by this? Visa and MasterCard, who collect billions of dollars in fees from the merchants, would likely be most at risk. I believe if the stable coins were to become a reliable source of transactions, you will see huge declines in the stock prices of Visa and MasterCard. Merchants have tried in the past to somehow get around the card-based systems from Visa and MasterCard, but each time they have failed. I personally still don’t have a clear comfortable feeling or understanding of stable coins, which is true of many regulators and others as well, but it does appear new technology is coming and if Visa and MasterCard are replaced, I wonder who will get the benefit of those billions of dollars in transaction fees? Will it be the retailer or the consumers? ChatGPT and Perplexity are hurting the Internet You may not think about it, but Alphabet’s Google search engine is seeing huge declines. This is not just hurting Google, but it also hurts many companies who get their business from people searching on Google. This could have a major impact on companies like TripAdvisor as it gets 58% of its global visits from search. If people get the answer, they need right away from ChatGPT, there’s no need to continue searching and you’ll not see any other ads directing you to other sites that may want to do business with you. Many companies from Netflix to US travel and tourism companies are seeing declines in traffic to their websites by 10 to 20% from one year ago. For example, search referrals to top U.S. travel and tourism were down 20% year over year last month and news and media sites saw a decline of 17%. ChatGPT had 500 million weekly active users in March and that was up almost 70% from the 300 million they saw in December. The reason this is hurting Internet search is since you get your answer from one platform, you close the book and move on. You don’t need to do any more searches on other sites. Google‘s lawsuit for being a monopoly with the federal government will still not disappear even though things have changed as they are being penalized for what they have done in the past. I have noticed when I’m using Google now the AI search function now pops up. The big question is will this help Google retain their search business? This is extremely important considering more than half of Alphabet’s business still comes from Google search ads. For investors, you may want to be aware of how much business the company you’re investing in gets from search off the Internet because there could be a decline in the business if it is a large amount. One company that could benefit from the decline in search is Meta. This would come from the Facebook and Instagram platforms because that’s still a way for businesses to be online and in front of potential new customers and clients. There’s still some concern on copyright infringement from many companies and this could be something that really hurts the advancement of AI. Are you finding yourself using AI more and doing less Google searches? Financial Planning: The “Widow’s Penalty” When a spouse passes away in retirement, the surviving spouse typically transitions from filing taxes jointly to filing as a single taxpayer in the following year, a shift that often triggers what’s known as the “widow’s penalty.” This penalty arises because single filers face higher tax rates at lower income thresholds and receive a smaller standard deduction, which can significantly increase their tax liability even if their income stays the same. To make matters worse, household income often drops after a spouse’s death. For example, if both spouses are collecting Social Security, only the higher of the two benefits continues. This combination—less income and higher tax rates—can lead to a surprising and painful spike in effective tax burden and reduction in cashflow. To mitigate this risk, couples can take proactive steps such as performing Roth IRA conversions while both spouses are alive to lower future taxable income, carefully coordinating Social Security claiming strategies to maximize long-term benefits, and planning pre and post death retirement withdrawals to keep cashflow consistent. Thoughtful retirement planning can help soften the financial blow and preserve more wealth for the surviving spouse. Small Business Owners Are Optimistic In a recent survey by the NFIB, a small business survey revealed small business owners are looking optimistic going forward. I think this is a huge indication of a good economy going forward because small businesses account for 99.9% of all businesses in the United States. There are 33.2 million small businesses in the United States that employ roughly 62 million employees, which is almost half of the private workforce in the United States. Small businesses also account for roughly 2/3 of job creation in the United States. The health of a small business is very important and from the survey 14% reported the business was in excellent health and 55% reported their business was in good health. 28% said that their business was in fair condition and only 4% reported that their business was in poor shape. They do point out that the single most important problem they’re dealing with is labor costs. 26% are raising compensation for their employees and 20% of small businesses say they plan to raise compensation for their employees in the next three months. 56% of small business owners reported capital outlays in the next six months with 40% spending on new equipment and 26% acquiring new vehicles. 15% of small businesses spent money to improve or expand their facilities while 10% spent money on new fixtures and furniture. People are uncertain of the economy going forward and many are still concerned about how the tariffs will play out. This small business survey and the recent jobs report gives me optimism going forward and while we are still somewhat cautious on investing in the broader based stock market, we believe things are looking pretty good for the economy as a whole. Airlines Will Take Your Miles When You Pass Away I guess many people don’t think about the value of how many miles they have accumulated and what happens to them if they pass away. I’ve heard of some people having a half million to 1,000,000 miles and they probably don’t realize that when they pass away the airline will cancel all those miles. When you think about the value of a large number of miles you are probably talking about tens of thousands of dollars. It is estimated that over 2% of Americans 55 and older do have more than 500,000 reward points or miles to their name. If you read the fine print in regards to your airline miles, you’ll see the terms and conditions don’t allow miles to be treated as something you own. Some airlines like American and JetBlue reserve the right to approve point transfers after a person‘s death, but they don’t automatically permit them. The best way to allow your family to use your miles is to give them your account login information while you are alive. Once you pass, they can still use your airline miles as long as the airline is not notified that you are deceased. If they find out that you have passed away, they will cancel the miles, but I doubt that the airlines are reading the obituary pages every day. I would tell people to not let the miles get too high since your points don’t earn interest or grow in value. Sometimes you may get special perks for a large amount of miles or points, but they are not an investment or a retirement fund. Why this is a fragile stock market There are three main reasons why I believe the stock market is in a fragile position. You could say four if you include the fact on how quick the stock market rebounded from lows just set a couple months ago. The most recent reason is obviously in the Middle East with Israel and Iran as we are seeing rockets and drones flying through the skies blowing up pieces of each country. Not to call a winner, but it appears at at this point in time Iran is suffering the most. A war is never good for the stock markets and we did see oil prices rise over 7% on Friday, which if it holds that level, this could be passed along to US consumers who have been enjoying lower gas prices. That would come to an end and could cause inflation to reverse course and start increasing. The Federal Reserve met on Wednesday and did not cut rates. The President once again expressed his frustration and there could be more talk about relieving the chairman of his duties. I do not think he will ultimately be removed before his term ends, but it still stirs up concerns in the stock market on the negative side. We also can’t forget the extension of tariffs, which ends on July 9th, is now only a few weeks away and that too can start to scare investors as the back-and-forth in negotiations is not all going to be positive. Could we see another extension? Could we see the full tariffs implemented again? Or will we see agreements with most of the nations and tariffs become less of a concern going forward? At our investment firm, we still remain cautious. We did invest 6% of the portfolio in a great investment a little over a month ago, but we remain patient with the cash we have left and as much as we would like to invest into a great company at a great price today, we are still looking for a better opportunity. I recommend investors proceed with caution as well. What happened to those alternative meat companies? In 2019 the alternative meat companies were all the rage and Beyond Meat, which trades under the symbol BYND, was over $200 a share. Today, you can pick up a share of the stock for about $3. The other popular alternative meat company was Impossible Foods and even though they never went public, it still raised around $2 billion in the private market. Still to this day, the company has not made a profit. The CEO, Peter McGuinness, says he still sees profits just a few years away along with maybe an initial public offering. They are still fighting to try and build their companies and they are now focused on what is known as flexitarians, which are people who occasionally include meat in their diet. They’ve also changed the packaging colors from green to blood red and they even hired a hot dog eating champion as a brand ambassador. They’ve added to their meat alternatives and now have steak bites, hotdogs, and chicken tenders. The CEO admits that the biggest problem is their taste and they are currently on their fifth edition of burgers and he feels they probably are going to need at least a couple more versions to perfect it. He does mention that there are still concerns about the health effects of highly processed foods as well as higher food prices. In my opinion, those are two big ones and I don’t see how they will overcome them. Avoid watching a show called Going Public The show is now in its third season and can be viewed on X for the final episode, which is supposed to be on June 24th. In my opinion, the show is very dangerous because the reality show is about entrepreneurs doing some crazy things trying to raise money for different types of startup businesses. It appears to be more about entertainment and excitement rather than looking at the truth and fundamentals of investing. Since X is a social media company, they do not have to comply with normal media broadcast disclosures. What is even more dangerous about the show is that there will be a click to invest button where viewers can invest in the business as they’re watching the show. I don’t see how anything can be more dangerous when it comes to investing than seeing the hype of somebody talking about their investment who has paid handsomely to be on the show. I have seen that some of the guests have paid a half million dollars to be part of the show. X and the show producers don’t seem to vet their guests very well. A couple of the guests on the show, Dutch Mendenhall and Amy Vaughan have been under investigation by state and federal regulators. Apparently, they had a private real estate investment trust and investors appeared to have lost all their money and no one knows where the money went. Now they’re on the show promoting investing in golf courses across the United States. I know some people will watch the show and get excited and click on the invest button because of their emotions. The show is so full of hype that the producers on June 3rd sent out a promotional email via a mailing list that began with F*** CNBC, forget Bloomberg and ignore Fox, we are rewriting the rules. It was just last week when I wrote about the high risk of alternative investments in private equity and private real estate and here, I see this show promoting to probably 1million people these risky investments. Unfortunately, some will probably take the bait, don’t let it be you. Retailer At Home files for bankruptcy I was so disappointed to see this week that one of my favorite retailers, At Home, is filing for bankruptcy. I had a love-hate relationship with them because I would go there and find so many good things for our house and even though they weren’t expensive the quantity of what I would buy would be over the top. The problem for the company is it amassed nearly $2 billion in debt and is facing declining demand along with uncertainty about the tariffs from China, which will come up in talks about a month from now on July 19th. The company apparently receives most of its products from China and as we know those products have been hit with 55% tariffs. This will definitely increase the price of their products, which is one of the main benefits of going to their stores. The company will be taken over by a group of lenders that will provide $600 million in financing to fund the bankruptcy proceeding and use $200 million of that for fresh capital. The company plans to close 26 stores in 12 states. I have my fingers crossed the At Home store in Carmel Mountain Ranch is not one of them. This is not the first time the company filed bankruptcy since its beginnings in Texas in 1979 as in 2004 it filed for bankruptcy reorganization.

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.