Is There Light at the End of the Tunnel? (FvF Ep. 181)

In Episode 181 of Facts vs Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, dig into one of the most consequential geopolitical developments in recent memory, the ongoing Strait of Hormuz crisis, and what it means for oil markets, global supply chains, and your portfolio.

They break down what it would mean if the U.S. exits the conflict without reopening the strait, why Iran could emerge as a de facto regional hegemon, and how a potential toll system on tanker traffic could reshape global energy economics. They also explore why crude oil remains stubbornly elevated despite ceasefire signals, the growing "air pocket" in global oil supply as floating storage drains, and the long term instability risks including nuclear proliferation that could keep an ongoing risk premium baked into energy prices.

On the markets side, Ryan and Sonu make the case that this pullback is unlike any bear market on record, with the S&P 500 taking an unusually long time to reach even a 5% decline from its peak. They walk through why the year to date drawdown is almost entirely explained by multiple contraction and not deteriorating earnings, and how forward EPS and profit margins continue to hit new highs even as headlines stay grim. The duo also examine the dramatic drawdowns in mega cap tech names, why the market may be pricing in a recession that isn't materializing, and why diversification across sectors, styles, and geographies is paying off in ways many investors haven't seen in years.

The episode wraps with a Disney and Universal trip report, Sonu's allergy update, Ryan's eye health journey, and a big congratulations to his daughter Susanna on her college commitment to Penn State.

Key Takeaways:

• Trump withdrawing without reopening the strait could establish Iran as the dominant regional power
• A tanker toll system could generate $100B+ annually for Iran, reshaping Middle East geopolitics
• The S&P 500 decline is 100% multiple contraction; earnings and margins remain strong tailwinds
• Forward 12 month EPS is up 7% in Q1 alone, with half of that gain coming during the crisis
• No bear market since WWII has started with such a slow initial 5% decline, a historically unusual pattern
• Mega cap tech stocks are down 22 to 35% from highs, pricing in a recession that hasn't arrived
• Diversification across value, international, commodities, and small caps is quietly working

Jump to:

0:00 – Welcome and the Great Kit Kat Heist 

2:10 – Trump's Potential Pullback and Hormuz Control 

5:50 – Iran's Toll Scenario and Global Leverage 

9:10 – Why Oil Stays Elevated Despite Peace Signals 

11:55 – Energy as a Strategic Hedge Trade 

16:10 – Hedging Activity and Encouraging Market Breadth 

18:45 – Tanker Traffic Slowdown and Supply Time Lags 

22:05 – Floating Storage Drawdown Explained 

35:23 – Mega Cap Tech Drawdowns and Recession Pricing 

41:10 – Slow Burn Selloff and What the VIX Is Telling Us 

48:05 – Diversification Lessons From Lost Decades 

56:50 – Final Thoughts and Listener Requests

Connect with Ryan:

• LinkedIn: https://www.linkedin.com/in/ryandetrick/

• X: https://x.com/RyanDetrick

Connect with Sonu:

• LinkedIn: https://www.linkedin.com/in/sonu-varghese-phd/

• X: https://x.com/sonusvarghese?lang=en

Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com

Transcript

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SPEAKER_02 0:02

Welcome to the Facts versus Feelings Podcast. I'm your host, Ryan Dieter, and I'm joined by my co-host, Sony Varke. Cutting through the noise, we have Ryan Dieter, Chief Market Strategist, and Sony Varke, Chief Macro Strategist, taking out the board and helping investors focus on what really matters.

SPEAKER_03 0:32

Is there light at the end of the tunnel? Everyone, welcome to episode 181 of Facts versus Feelings. Ryan and Soto as always. We what's the time we're doing this, Sonu? There might be some light at the end of the uh what the Iranian Hormuz tunnel is that we're gonna call this.

SPEAKER_00 0:45

Yeah, the Hormuz tunnel. Yeah, that there was no light, there were no ships flowing, and now maybe, maybe, maybe.

SPEAKER_03 0:51

Yeah, you're you're telling me there's a chance, you know. Um now, first things first. Last week the rumor was you were at Disney. Is this do we have pictures that confirm this? Like, like you can prove you were there, right?

SPEAKER_00 1:03

I have plenty of pictures. I just probably look tired and expected. Here's one go with it. All of them.

SPEAKER_03 1:08

So do so do is like so does like so no no. So does like, what's this guy going with? So do there was a kit cat. You hear about the kit cat? Um oh yeah, yeah. I've read about that. Yes, I saw that so quite the highest. I've you are so you are suspect number one, son. 413,793 Kit Cats were stolen, and the truck is gone too, by the way. Somewhere between Italy and Poland. Now, I mean, we both love our chocolate. You I'm I'm a Kit Kat fan. I'm a big kit.

SPEAKER_00 1:38

I like it cold.

SPEAKER_03 1:39

I like oh interesting. I like Take Five. Take five, I think, is very underrated. Um, kind of like this. I still think we're bull market, underrated bull market. Uh but Kit Kat. Um, but you didn't you didn't steal, you didn't do it. You're not the Kit Kat thief. You're innocent.

SPEAKER_00 1:51

I wish. I wish I had a lot of Kit Kats. I do like them cold. Sometimes I put them in the freezer. Should try it out. It's it's nice.

SPEAKER_03 1:58

Well, I bought some Girl Scout cookies from your daughter, and uh we we we froze them. But all right, well, let's let's uh we'll we'll do this whole talking a little bit. We definitely want the update of of Disney, but I know we don't want to start with that. We'll we'll get to that more in the middle when we have a little break. Um, Sody, let's just start with it. Um, and I we were kind of kicking it around before we start. I said, no, hold that thought because I want this to be live. You know, um, you were like, I guess what I what did I ask you? I said something along the lines of what's the difference. If Trump just walks away, if we just walk away now and Iran controls the whole move straight. I said to you, didn't they control it six weeks ago? You're like, not so fast, Ryan. Go there and what's the latest with all this drama?

SPEAKER_00 2:33

Not quite, because six weeks ago, or I guess five weeks ago, before February 27th, yeah, there were about a hundred tankers, 150 tankers going back and forth, you know, east to west, west to east, no problem, no issue at all, right? And the Gulf countries had always, I guess safe to say, assume that they are under the American defense umbrella. Right? That's the other thing, right? Because they're the big exporters, whether it's UAE, Bahrain, Qatar, Saudi Arabia, all of these countries, right, that need the strait for the most part. Uh and the world needs the straits. I mean, especially Asia and Europe. I mean, even America, 2% of oil imports come from the Middle East. East Coast refineries use Middle Eastern crude, heavy, sour crude, right? And that's partly because we don't have the pipeline infrastructure to take oil from the Gulf, Gulf Coast, all the way to the East Coast, right? And maybe it's time to start building these, but we don't have it right now. And so we get oil from all these other places. But it's less of a uh shortage issue for the US, but it is more of a shortage issue for Asia and Europe, right? So, what do we see coming back to the light at the end of the tunnel? We saw BRC, as we speak, a big rally. Futures are up last night, Monday evening, after the Wall Street Journal reported that Trump is willing to, now that is, I think, a key phrase, willing to, not going to, is willing to end the war without reopening the Strait of Hormos, right? So it's like a unilateral pullback. Remember a couple of weeks ago, I think last week or a couple of weeks ago, we were talking about how it takes two to tango.

SPEAKER_01 4:14

Right?

SPEAKER_00 4:14

That was the title of our episode. You need Trump to pull back and you need the Iranians to pull back, or both of them to work on a deal. This is just Trump saying, you know what, I'm getting out of here. Maybe I'm willing to, right? He didn't say he is going to. And I think this is probably the best option right now. And kudos to the president. I mean, it's easy to get into in economics, there's something called a sunk cost fallacy. I put so much time and money and effort into this. I need to see it through the end, whatever the end is. And that's why you get mired into all sorts of things. In this case, you know, you don't want to get into that sunk cost fallacy. And Trump was like, you know, maybe, and and you mentioned it earlier, it's a midterm year as well. And the goals don't look good. You pull out, you don't buy into the sunk cost fallacy. You're like, you know what? Viva achida objectives, set aside the politics around, you know, we've decimated their uh air force, their navy. Of course, the Iranian Revolutionary Guard Corps is different, I would say, from the Navy. And that gets to the fact that look, uh, let's be clear what this means. Trump is disengaging while leaving the strait closed. This means Iran is essentially being recognized by the US, and the US is what matters here, right? As the de facto regional hegemon that controls the strait. Now, ending the war will be a necessary condition, I think, for Iran to reopen the strait, but that's not going to be the only condition. Iran's probably going to try to make a comprehensive deal with the US. You say remove the sanctions on us, things like that, prevent no more future strikes with the US and Israel. Now, Israel's also part of this, but set them aside for a moment, right? And that's because Iran has the leverage they have in the form of control over the strait. And that essentially works as a veto over the global economy. And the US is not immune to this. We've talked, we can talk about jet fuel and you know, fertilizer costs and helium for chips and things like that. But Trump walking away is essentially saying, you know what? We have oil, it's not our problem. The rest of the world, it's your problem. You need to figure it out. And they will. I think some of the commentary I see is that the rest of the world needs to go in with military forces and reopen the strait. No, it'll be easier than that. They'll pay Iran a toll. Iran's likely to charge a toll for ships crossing the strait. Let's say at $2 million per vessel, let's say it's a $1 extra per barrel of oil, assuming 150 vessels a day. That's about $300 million a day, about $100 billion a year, that's equal into 25% of Iran's GDP. This is on top of all the money that would be, you know, that they get from regular oil revenues, right? And they're going to use that money to rebuild. Asia and Europe, Ryan, I think will probably just pay the bill. They'll pay the toll to Iran to ensure petroleum flows. Look, Brent at $80 plus a small toll, maybe one or two dollars per barrel, to Iran is better than no toll and no flows. Now, the problem is the Gulf states, Saudi Arabia, UAE, Bahrain, Qatar, Kuwait, Oman to an extent, will be subject to Iranian hegemony. That is the big difference going back to your question.

SPEAKER_03 7:21

What is different from five weeks ago? Yeah. How's I mean, listen, you grew up there. I mean, I know it's dangerous, but that doesn't sound like people are going to be too crazy about that. No, I mean that is that is a reality. That's just gonna cause more conflict in the Middle East potentially. It's what it feels like.

SPEAKER_00 7:36

That's the longer-term instability in the region, possibly nuclear proliferation. Iran's getting a lot of money, and let's be clear: this is not like this is a terrifying ideological ideology that the Iranian regime has, right? This is a regime that sent little kids into battle in the 80s Iran Iraq war, right? Saddam had gone to Iran asking, okay, let's have a peace deal. And the Ayatollah Khomeini at the time had said no, because of his ideology, like, no, we're going to continue this, we're going to take over Iraq. And they sent little kids into battle as well. Like, this is the ideology that is so it's terrifying without getting too caught up in the politics of all this. So, yeah, no, the other Gulf countries don't want this, right? So I think it leads to longer-term instability in the region and you know, possible nuclear proliferation. Look, if Iran's rushes to get the bomb, now they are going to get a lot more oil revenues and maybe tolls and things like that. And maybe Saudi Arabia thinks, oh, we need a nuclear weapon too. And then you get counter-responses by the US and Israel thinking, you know what, Iran's getting close to the nuke, we need to attack again. And then Iran says, sorry, we're closing the strait once more. And the world economy is taken as a hostage. So that's the longer-term instability here. Despite short term, I think this is probably the best possible solution without sending American troops to the ground. And if it that's a problem, you send American troops and to open the strait, they need to stay there.

SPEAKER_01 9:05

Yes, right?

SPEAKER_00 9:06

They need to stay there indefinitely, right? The moment they come out, Iran's back in control. What do you do?

SPEAKER_03 9:11

Well so we just covered a lot there. I guess the reality is Tuesday morning, Tanya and I are doing this. SP is a one and a half percent solid day, but listen, it's down nine percent, you know, from the late January peak. So it's probably very oversold. We'll talk more markets in a second. Um, but the reality, Sono, then you look crude oil's higher today. Crude oil's higher. Um rent is higher, gold's up, silver's up, literally. I mean, everything's up today. But I guess I would have assumed that crude oil and Brent would have been lower today on this news. That's not the case. I mean, do you have any feeling there?

SPEAKER_00 9:42

Uh, I think it gets to the fact that what is Iran? The ball's now in Iran's court. What do they do now? Right? Do they now I'm I imagine they're going to try to come to the negotiating table with Trump and say, you know what, we want a deal, take sanctions off, we'll let the oil flow. Trump will be like, screw you. Like, that's not our problem. You got enough oil, right? It's the rest of the world's problem. Then Iran will go to the rest of the world and say, you know what, pay us a toll. They'll probably pay the toll, right? Yeah. And now, then we are, let's say, three, four, six months, eight months later, Iran's getting a lot of money, but there's always a big risk premium built into oil now. Oil cannot go back to $65, $70 a barrel. Like I said, there's long-term instability. You know, what if Iran gets closer to the nuke? They rebuild their missiles and you know, missile capacity and all of that. Then the US and Israel decide to strike again, and then the strait could be closed again. So you build that risk premium into oil. Now, I am a little surprised that crude oil WTI is still at, you know, last night when the news broke, it did go down by about, I think I'm looking at my charts. I think it went by down by about 4% or something like that. Right. So it's a big move down. It went down from about $105 a barrel down to 102, but it's back up. It's retraced that. And I think this gets to the fact that we don't know what Iran's going to do. That's the next step in this stage. And of course, all this I should say, going back to the Wall Street Journal report, it just said Trump is willing to get out without reopening the strait. He it doesn't say he's going to. This could all be a head fake while he sends troops into the region, right? Catch Iran off guard. I have no idea, but that's there too. That's a possibility as well.

SPEAKER_03 11:30

Boy, there's a lot there, Sony. There's a lot there.

SPEAKER_00 11:34

I admit, I don't know where this is going. You know, like, you know, we've exchanged texts and things, and you know, or text by I mean, you know, on our teams message.

SPEAKER_03 11:44

Fix what you just said, Sony. We did not compliance. We did not send a text. It was a text on teams. If we send text, it means to write on teams. That's a disclosure for both of us, so we don't get data.

SPEAKER_00 11:55

Yeah, because the smartest for portfolios, right? Like, what do you do? Like, you know, do you get into energy? You had some good charts that you shared yesterday. And like nobody is talking about energy three months ago. Everyone is selling energy. Well, yeah, we are right.

SPEAKER_03 12:07

Uh yeah, the Global Uh Bank of America Global Fund Manager Survey, uh, you know, it's better at extremes, right? And in November, we saw data that literally nobody wanted to own energy companies. I mean, large hedge funds and large institutions, and it makes sense, hadn't gone anywhere for a very long time. Was there two percent of the overall SP 500 or something like that? And obviously, energy stocks have soared, so it's you know if everybody's thinking like somebody's a thinking journal patent. There was some opportunity there. I know I said on this very podcast started the year, I thought crude oil would probably go up this year, not because of some major war, but listen, that's what happened. Because most commodities have gone higher and crude oil hadn't gone yet. I just thought crude oil was going to play catch-up, and yeah, well, that that's obviously played a big part of it. Um, let's just stay there.

SPEAKER_00 12:48

Like, I I like that's a like energy is always a tough one, right? You almost always want to get in when nobody else is talking about it, when the chart kind of looks horrible.

SPEAKER_03 12:59

Apparently, midterm years, too. It's a well-plastic midterm year, yeah.

SPEAKER_00 13:03

Then you're like, you know what? It's cheap. This is the time to hedge. I mean, you buy the hedge when there's no issue, when the hedge is cheap, yeah, right? And and oil works as sort of like a strategic edge. Now, of course, going in and buying oil now. Now we've owned managed features and things like that in our oil adjacent companies and our portfolios for a long time. We've been preaching that for the last several outlooks, not just a tactical play, but even a strategic play. You want to diversify your diversifies, you want to have commodities, things like that, right? And that involves a big part of that is obviously oil and natural gas and things like that. But uh going back to right now, oil's already 106. Somebody looking ahead, that's a tough problem. Like if this whole thing ends, like let's say everything comes to a really peaceful end here. I don't know, but fingers crossed, maybe that happens, right? Or let's say the worst happens, and then the US decides, you know what, we're gonna put export controls. That'll crash energy prices, at least for these firms, right? So there's two big policy tail wrists here for energy right now. But again, maybe going back to what you said, buy energy when it's cheap.

SPEAKER_03 14:32

Yeah, we did our social hour, our third social hour on Friday, uh, Frank Capillary, founder of Cap Thesis, and Sam Rowe, founder of Reticker. And I just re-listened to it um when we did it. And and Frank, technician, great one. I'd definitely go back and listen to that if you didn't get a chance yet. He said energy to him looked a little bit like gold and gold stocks at the start of this year, kind of like just gone vertical. Yeah, I mean, you probably don't want to go all in energy now. I don't think it's anything too crazy to say. But when Frank said that, it's like, ooh, interesting. Kind of show I'm not using the word bubble, I think Frank said that, but it's extremely overbought and it makes sense. Now you mentioned the word edging. Can we get a drink of water? I've been like, How you doing, weather? This weather, how you doing? You're doing television.

SPEAKER_00 15:12

This is like my worst season. Spring season is I mean, Orlando is very green, which is great, but not great for my allergies. And I back backed here to Chicago, and it's a nice balmy 55 degrees, but everything's starting to bloom, and I'm like, this is horrible. The next month and a half is going to be horrible.

SPEAKER_03 15:33

So I went to a special eye doctor yesterday in Indianapolis. I've had eye issues, I have cataracts, I have glaucoma, I've got a couple other things, and my left eye just didn't all that great. So with this really good doctor, we did like 11 different tests, and you know, you sit there and supposed to stand still, and you're supposed to stare into the thing. I'm like coughing, I'm hacking, my eyes all watery. It was just uh, but hopefully, we've got some plans for plans for attack. It turns out, so no, I have a very long eye. My eye is like way longer than it's supposed to be. So, what does that mean?

SPEAKER_00 15:59

Does it go back into your head long, or like I don't know what it means.

SPEAKER_03 16:04

It means this my eyes, especially my left one, are shaped like a football. All right. So, like, like when I wear contacts and stuff on the left eye, the contact doesn't fit right. I wear really expensive special sculpt lenses. Anyway, like I can see okay, but it's getting like worse. And um, this doctor's good though. He's got some he's got we got some stuff. We we didn't run all these tests, or hopefully I'm gonna have some eye surgeries coming up. It'd be nice to be able to see on my left eye. So, anyway, I don't know. Uh where I was doing this. Oh, hedging, hedging. That's what I was doing. My throat starting to get dry. You mentioned the word hedging. I think it is fascinating though, because if all you knew were the headlines and crude oil just did what it did the last month, honest to goodness, I bet I would have said we're down in a bear market in the SP 500. Honestly, I mean, like that it just we're down nine percent. SP's down only nine percent.

SPEAKER_00 16:49

And in fact, even oil I would have said would have been close to $150 a barrel, $100 a barrel.

SPEAKER_03 16:54

That's that's a good point, too. That's a good point, too. You know, JC Correttz does really great work. He mentioned that there's less new lows last week than the week before on the um on the New York Stock Exchange, a number of stocks on Monday. Yeah, the market was down on Monday, yes. But you actually have more stocks making new highs. You had the number of the stocks both are 200 moving averages up. There's some baby steps, there's some baby steps that are some improvements taking place, maybe light at the end of the tunnel. But hedging, here's where I was going with this. I'm I've mentioned on this very podcast for several weeks, and I get it. Market's gone down, so this has not necessarily worked, but there's been so much hedging out there, whether it be huge put volume, the skew, which is what people are willing to pay for defense versus uh you know for puts relative to calls, um, lots of short, I mean huge shorts out there. Everyone's expecting this big crash. And listen, we haven't had it now, it hasn't been fun. I want to be very clear, it hasn't been fun. But as long as we had this crash, I think all the hedging that we've had out there in a weird way has kind of made it harder for the market to maybe do what we would expect. And when you see the headlines, and now you get some news today. We'll see. Um, you know, on Monday, financials are up a lot, right? Um, we talked private credit, and then Sam Rowe gave a great description on Friday about private credit, what he's seeing, what he's reading. Private credit stocks are actually hanging in there. I'm not saying they're doing great, I'm just saying they're actually starting to show a little bit of improvement. So that those are some things that have my have my uh have my attention here. And by the way, look at the last couple of years, right? March and April, yeah, March, February, March, that banana pill period. Then you get a low in April. Now, listen, who knows if this year is gonna do the same thing. Um, but I think I'd be open to that, is what I'm getting at, especially in this news-driven world, and one tweet can change a lot. What do you think of that stuff?

SPEAKER_00 18:30

No, I I think so. I think we are at this pretty crucial juncture in the crisis as well. Yeah, right, from a seasonality perspective, sure. But even for the crisis, right? And the crisis started about four and a half weeks ago, right? Uh 28th of February, I think, is when we got the news that the US and Israel had attacked.

SPEAKER_03 18:51

That's Saturday, yep.

SPEAKER_00 18:52

Right. Uh to so basically one month, that's where we are. And I I think, you know, one thing I look at, you know, with respect to like what does it all boil down to? If I had to look at one thing, and in terms of where the markets go from here, maybe Drew, we can put this chart up showing tanker traffic. Is the oil flowing through the strait or not? Everything else is you know secondary to that, right? A week or two later, if you start seeing more ships cross the strait, that's a good thing. Right? It doesn't have to go back to normal. Normal would be 200 ships a day, tankers going east to west, 200 ships going west to east. Right now, it's maybe two or three ships a day. All right, that's a problem. But if there is light at the end of the tunnel because of what's happened, maybe happening, if that gets to 10, if that gets to 50, that's light at the end of the tunnel. It doesn't have to go back because markets will be like, okay, the crisis is over, right? But the other issue is, and Jay, we can put this chart up. JP Morgan had this nice chart uh showing how long does it take for Middle Eastern oil, and by the way, it's not just oil, it's products as well, to get to the rest of the world. It takes about three to four weeks for Middle Eastern oil and products to get to Asia. So think about that. The crisis started about a month ago. They're still receiving oil and gas products that left the strait just prior to the crisis. Next, there's nothing behind that.

SPEAKER_03 20:28

So I can I can I can top you for a second. Let me just so both my boys play spring basketball, and um the jerseys aren't any. I'm like, where are the like season started weeks ago? I go where are the jerseys in primetime? I ordered all these jerseys from Europe. They said everything is delayed, like the shirts are stuck in like Holland. Like this I'm talking, it's making like a month for the shirts. Now, maybe there's more to it, maybe just CYA. I don't know, but but the the reality is our basketball shirts for this whole program, like 300 kids, are delayed because of all this stuff. I mean, that's that's real world stuff that we're dealing with, you know.

SPEAKER_00 21:01

And a delay is better than a price increase.

SPEAKER_03 21:05

That's true, right? Honestly, Sonu, I'd pay extra, just get me my shirt, and that's that's yeah, honestly. But to get serious, that's the added to pay 120 bucks. Get my kids their shirts, like what's going on. But that's how the market clears ultimately.

SPEAKER_00 21:16

You pay a higher price. You want it sooner, you pay a higher price, and that's literally what's happening.

SPEAKER_03 21:20

Preferably before the season's over.

SPEAKER_00 21:23

Yes, call me old-fashioned. No, so basically, we are in this we're hitting that air pocket now where there's no more ships coming. Because you need the stuff, you need crude oil for refineries in Asia, and refineries can't just oh, we'll shut down and open two weeks later. No, they have to maintain some minimum level of activity, usually 50-60 percent. If they go below that, restarting takes a long time, right? Yeah, and within two weeks, that air pocket will hit Europe and eventually it'll hit the US. And that's when if if big if the crisis continues, WTI is going to bid up, get bid up even more. WTI has been much lower than Brent, but that's because Brent is a global benchmark. There's oil, you know, in tankers and places like that across, you know, the Indian Ocean and the Atlantic Ocean and even the Pacific. And, you know. People are taking that, and that gets to where we are today is not where we were a month ago. A month ago, oil was oversupplied, and that was a reason oil was WTI was below $60 a barrel for a good part of the year, was slightly going up from mid-January onwards. But I think part of that was maybe there would be some activity in the Middle East. This is essentially what we call floating storage. This is oil floating around the oceans in massive tankers. Just from the Middle East, oil, quote unquote, stored on water, amounted to about 750 million barrels before the crisis started. That's well above the five-year average. Five-year average is about 500 million barrels or so. But this oil on water started to get drawn down immediately because you know it's lost production and oil isn't flowing across the Strait of Hormuz. It fell to about 550 million barrels by March 20th. And now it's pulled below 500 million barrels, right? That amounts to a draw, Ryan, of about a quarter million barrels in a month. That's just massive. By the way, floating storage is not going to go to zero, right? But this gets to the fact that, you know, uh I think uh Rory Johnson, who at commodity context, uh he's fantastic. He said a barrel lost anywhere is a barrel lost everywhere because prices are set globally. Asia and Europe, once they hit the air pocket, they're going to bid more for US barrels. Yes, the US produces a lot, but that means our costs also go up, right? And that's why this period, I think this week is probably crucial for the crisis to see where things go. And hopefully there's light at the end of the time.

SPEAKER_03 23:54

One chart that the great stuff, one chart that Sony sent Drew, so but you can put it up, is just earnings, right? Forward estimates on 12 months earnings on SP 500, so it's gone like vertical. Like for all according to the Wall Street Journal, since the war started, all 11 sectors' earnings estimates are higher. Now, listen, not by a lot, but technology's actually gone up a ton. Yeah, as you laid out. Well, tech's one area has kind of been hit too. But on a relative basis, I mean, tech's about as cheap as it's been in years. One of the problems, if I mean, literally, we talked about this two months ago, three minutes ago with our outlook. Yeah, market is a little pricey. You know, market is a little pricey. Well, now the SP down nine percent, you have four estimates each going higher. I mean, the market is quote unquote cheaper. I'm not calling it cheap, but my goodness, it is cheaper. And then you look at like technology, you look at like financials, these groups' earnings have stayed solid. And listen, we get it. The stocks have gone lower. Um, but the way that works is there are some nice values out there. Um, what's your take on how tech has had a just a huge jump in earnings the last four weeks, uh expectations, yet the stocks have struggled.

SPEAKER_00 24:52

And and that's where we'll we'll get to the what's happening on the tech front because I think that's an underlying story here. There's a crisis story, which isn't on top of everyone's mind. But there's like the other story, like what's happening in tech stocks. But that's been happening since October, right? But coming back to like SP 500 earnings, most of it is obviously tech, so tech plays a big role. You look at the SP 500's next 12 month EPS per share, $329 a share. That is up, Ryan, 7% since the end of last year. In Q1, it's up 7%.

SPEAKER_03 25:24

Now, which year is that? That's 20, which year did you say that was?

SPEAKER_00 25:26

And this is the next 12 months, looking looking at okay.

SPEAKER_03 25:29

So just the next 12 months, up 7% for the year. And the SP is down 9%, give or take.

SPEAKER_00 25:34

I mean, and and exactly, you're getting to what I'll show a chart on that. But half of that 7%, 3.5%, came over the past month.

SPEAKER_01 25:43

Yeah. Wow.

unknown 25:44

Right?

SPEAKER_00 25:45

Since what happened the last month? Exactly. So, in other words, half of the gain in the next 12-month EPS over the first quarter has come in the past month while the crisis was raging. Now, keep in mind, next 12-month EPS is dependent on two numbers: the 2026 EPS. That's right now about 317, and 2027 EPS. As we go forward in the year, you know, 2027 starts to get more heavily weighted. So 2027 EPS is at $369 a share. As long as 2027 EPS doesn't fall, we should see next 12-month earnings continue to go up. And that that's a good story, right? And at the end of the year, next 12-month EPS will just be 2027 EPS. Mechanically, that's what uh that that's the way it works. 2027 EPS Ryan, as I mentioned, $369 a share, that is 16% above 2026 EPS. 16%. That's not changed. And I think that is the underlying story. The profit outlook hasn't changed. And that gets to, you know, the SP 500's year-to-date return is about negative. This is as of last Friday, negative 6.7%. Okay. Earnings growth contribution is about 6.2%, like we talk about. Earnings, you know, forward-looking earnings have gone up. Dividends add another 0.3%. That's 6.5%. What's dragged? Multiple contraction. Multiple growth or multiple contraction has dragged down the index return by 13 percentage points, right? And so, which goes to show the year-to-day pullback is entirely about multiple contraction. The forward PE, and uh Drew, we can put this chart up showing the SP 500 forward PE. That's down to 19.4 X. It was 22X at the end of 2025, three months ago. By the way, that's cheaper than where we were three months ago. No, obviously, because the multiples come down, but it's also cheaper, Ryan, because earnings have held up, it's cheaper than where we were after Liberation Day last year. Last year, during Liberation Day, the forward PE multiple didn't go down as much. And that's because earnings estimates went down a little bit. But this year that's not happening. Earnings expectation has gone down, so the index has actually gotten cheaper. In fact, you know, the only back COVID bear market, 2022 bear market took the forward PE to under 16x. The average over the last 30 30 years, 1995 to 2025, is about 17x. We're at 19x. So is it expensive? Yes, but it's a lot less expensive. It's cheaper than where we were end of last year. It's cheaper than where we were even after Liberation Day. So if you had any FOMO or anything like that, if you've and I'm not saying valuations, you've shared the chart before, it's not a timing tool. We shouldn't use that for timing, especially over short-term periods. But if you were a strategic buyer, you're like, you know what? I'm gonna hold this stuff for a long time. Hey, it's cheaper now than it has been in a long time.

SPEAKER_03 28:46

So earnings continue to be strong, profit margins. That's the other story, right? Drew, Drew, you can put the profit margins chart to Sony sent profit margins. I know I sound like a broken record, but I'll do again. The dual tailwinds to the bull market that putting these out for three years now. When profit margins and earnings estimates continue to go higher, it's hard to get extremely bearish. There are reasons to be cautious. Maybe you can even argue there's reasons to be bearish, although I want to talk stock markets here soon. I got some cool stats, I think. Um, but those are some positives, right? Light at the end of the tunnel. I will say though, on like the earnings one sodium, I mean, it is like it's getting vertical. I mean, I guess that's one thing, like earnings. This next upcoming earnings season, which literally starts in like a week or two. I mean, there's gonna be some maybe not, maybe there's not gonna be optimism, maybe it's gonna be pessimism with everything going on. I guess we'll be interested. What do you mean?

SPEAKER_00 29:32

Well, they may lowball, right? This is what companies do. They may lowball things, and then when Q, you know, Q2 earnings come about in July, August, like, oh, see, we beat estimates a lot, right? But everyone has that job owning, and you know, but I I think to your point, margins have expanded a lot over the last three years, right? That's what the you know, that's what we were staring at basically coming into this crisis, coming into this year. Forward margins are about 12% at the end of 2019, pre-pandemic. That expanded to about close to 13 by the end of 2022, then margins expanded to about 14 and a half percent by 2025, and now in just one quarter, it's gone from 14 and a half to 15 percent. That's that vertical line you were talking about.

SPEAKER_03 30:18

Just like everyone has said, margins would go up the last three years. That's a joke. I mean, we've heard nothing, but margin compression was coming, and clearly hasn't been the case. Um, especially last year. Yeah, last year when we had the uh Liberation Day and worry about nothing on the shelves and massive inflation, massive recession. Yep, profit margins and profits continue to go higher. So go ahead.

SPEAKER_00 30:38

And that that's what confounds, I think, a lot of people like, oh, we're going to have inflation, and then because we're gonna have inflation, we're gonna have deflation because you know it's amazing. Oh, prices are going up, and because the prices are going to go down, and then we're going to have a recession. I'm like, hold on here. Like, you know, like that's that's too many dots that you're connecting out into the future. Let's just stay first order here. Prices go up. Why are prices going up? Companies are increasing prices. One person's margin ex one company's margin expansion is yours and my inflation, right? Your boys want a basketball t-shirt. The shipping company is like, okay, you pay up more, and they'd be like, okay, because our input prices have gone up, but I bet they'll they're going to increase or take that opportunity that you're willing to pay a little bit more and say, you know what, we're gonna boost our margins here. And I think that's what we see. We saw that in 2022. I think we'll see that this year as well. And like I said, uh Drew, we could put this chart up showing the SP 500's return breakdown. The SP 500, as I said, is down 6.7 percent for the year. Earnings growth has contributed 6.2 percentage points to that EPS growth, dividends another 30 basis points, so we had six and a half, but multiples have come back 13%. Wow. EPS growth can be broken into two pieces sales growth and margin expansion, right? Sales growth is if you have nominal GDP running, let's say five, six percent, which is probably where we're going to be this year. Real GDP growth, 2%, maybe slightly under trend, plus three to four percent inflation, maybe get five to six percent nominal GDP growth, which is good for sales, right? So you'll see sales growth. We saw that in 2022 as well. Question is what happens to margins, as we just talked about, margins expanding. So if you break the EPS growth into sales growth and margin expansion, 2.8 percentage points is coming from of the total return for the index is coming from sales growth, but 3.4 percent more than that is coming from margin expansion, right? That's a very underrated story here, I think.

SPEAKER_03 32:38

Well, I'd call it underrated because no one's talking about it. So, yeah, I except us except you. I mean, that's not a lot of people talking about it.

SPEAKER_00 32:45

I mean, you you've you've been putting this in the outlook for the last what five outlooks, something like that.

SPEAKER_03 32:50

I mean, duo tail wins, just dust it off and change a few numbers, and it's like a joke to myself. I literally have like the same three paragraphs that I just change a couple numbers, and you know, um, so a couple other things here. Um, remember back in the day, Thursdays were like the day like Friends was on and Frasier and uh Thursday was a big night, right? A big night, like in college or whatever. Thursday go out, Thursday's a big night. Well, Thursdays are terrible now, Sonu. The SP 500 is down nine Thursdays in a row. Uh, Drew, you can put this one up. Now, listen, there's some playfulness to this, maybe some randomness, but maybe not, because we've been down nine Thursdays in a row. Now, Mondays had been pretty strong. This Monday, yesterday. We are recording this on Tuesday, the last day of the month, by the way. So, wow, we should have done an April Fool's joke. I wouldn't even think I screwed this all up. It's today. Oh, you mean I guess tomorrow is when the episode will be out. People listen to it. We we messed this up.

SPEAKER_00 33:42

Did you pull one on me sometime back?

SPEAKER_03 33:45

I'm sure I did a couple of years ago. That was a good one. I forget what it was. I can't believe this. I am slipping like this is what it was. You you you sprung this at me.

SPEAKER_00 33:56

We finished recording the episode, and then you tell me, Oh, we didn't hit record, and my jaw just dropped. That's what it is. You add me on that one.

SPEAKER_03 34:06

That was a good one.

unknown 34:06

That's good.

SPEAKER_03 34:07

Well, don't trust anything I say tomorrow, then, because it's I gotta I gotta get even. Um, that's funny, anyway. I uh yeah, I don't know. What was I talking about? So I got I totally lost my train of thought there.

SPEAKER_00 34:16

Uh Thursday, Thursday's uh oh thank you, yeah. Weekday seasonality, yeah.

SPEAKER_03 34:21

So what we've been seeing though, Monday's been strong because over the weekend, optimism, some potential good news, and then it feels like by the time you get to Thursday, especially the last nine weeks, so dude, it's just a bloodbath. Now, I half joked last Thursday and Friday, I was traveling, you were on vacation, Barry's on vacation. Grant had some stuff going on on our team. So I said that there's a few things more certain that we're gonna have a big sell-off when all four of us are busy doing something. And yeah, Thursday and Friday was really ugly, specifically Thursday. Um, you know, I I guess we'll see. I mean, I will say this much. I know I'm on I'm going to New York tomorrow to do some media stuff. I'll be on uh oh which one are we on? On Power Lunch. I'll on Power Lunch on Thursday, Thursday. So hopefully we'll have a bloodbath. I like that we lunch. I'm heading to New York too, but I'm going up to Greenwich to see some friends. Okay, there you go. That'll be fun. Yeah, just a quick one for me in doubt. Um, but yeah, the reality is Thursday's been very weak. Maybe there's some randomness to it, but just something to be aware that um as this week goes on, we decided like today with optimism. It's Tuesday, okay. Maybe by the time we get Thursday or Friday, you kind of loose the football, you pull it back a little bit more. Um, what else did I want to say here? Um, what do you what do let's talk markets for a little bit? I mean, let's talk we talk macros up. Well, what um what in what is uh what's it what's standing out to you in terms of some of the market action that we're seeing the last week or so?

SPEAKER_00 35:36

I mean, the weakness in tech, like I said, I think there's two stories right now happening in the market. One is obviously the one everyone's talking about Middle East, oil, etc. We know that set that aside. But the weakness in tech that we've seen since October, it's not a new thing. Yeah, so Drew, we can put this chart up, and this is not a recommendation for any of these stocks, anything like that. This is the chart showing them uh it's from FinVez, the uh visualization, you know, website showing a heat map, and this is drawdown from 52-week highs. Okay, and these numbers are just you know incredible. Honestly, I I mean I you know, I follow markets, I don't follow stocks that closely, but still I'm aware of it. I wouldn't have guessed these numbers if you told me to guess it. Microsoft from its 52-week high is down 35%. Wow, NVIDIA is down 22%, Broadcom is down 29%, Google's down 22%, Meta down 33%, Tesla down 29%, Amazon's down 22%, Micron, which was a big story along with the the it's a memory chip thing, and then South Korea, things like that. Micron's down 32%. Now, Apple, last year everyone was poo-pooing Apple. Again, not a recommendation, nothing like that, right? I know you're not an Apple guy. I mean, you know, like, no, I I don't mean to be, I'm not a shill for Apple stock, anything like that. I like I like my iPhone, but that's about it. Yeah, but Apple's down, quote unquote, only 15% from its eye. It's still down. It's a loud stock out there. And that that's what interesting. Last year, like, oh, Apple's missed the AI train and things like that. But exactly it's done relatively better than everyone else.

SPEAKER_03 37:18

Oh, well, Alpha Band, I still call it Google Fashion. But like that stock's like doubled, that stock's like doubled the last year, and all we were told was AI was gonna eat them, eat them alive. By the way, I just literally you can see it on YouTube channel. Uh, four days ago, I got a new Google watch in my first time on a Google. So it's pretty cool. There's one thing about my phone that aggravates me. I don't ever have it on, it's always on vibrate. It's in my pocket, whatever. I'll get I'll miss calls, I'll miss calls, and it's supposed to be on vibrate, it doesn't vibrate enough. Now this thing connects to it, so this thing starts shaking. I know when a phone call comes. So I like that. There's a lot more it does. I'm learning. Uh, but it's pretty cool. Interesting. Yeah, we got now. My thrill is getting dry. Can we get drinking water?

SPEAKER_00 37:53

I still like my analog watches with the you know, uh that's something to be yeah, I I like those. But coming back to tech, I think the tech story. So tech obviously tech and tech adjacent. So we're talking about consumer discretionary, comp services, things like that. I I think uh I'm looking at my chart. Where is Netflix? Next Netflix is down 31. Disney. I was just at Disney. Disney's down 24. And then, okay, so that's a big part of the index, maybe 40%. Then you look at financials, right? JP Morgan down 16% from all-time highs, Visa down 20%, American Express down 23%, Wells Fargo down 21%, Bank of America down 18%. It's as if all this stuff is pricing in a recession. I'm like, I don't to be clear, I don't see a recession yet. I am not ready to call for a recession, nothing close to it. Um, I mean, like I said, I think nominal GDP will actually be on the higher side this year, right? Now, where it comes from inflation, set that aside, but yeah, I just don't see the recession. And I I I guess my question to you is our outlook is still positive. I still strongly believe that. I mean, ask me in two months or ask us in two months where we'll be, and we'll give in our official midterm outlook, but it's still like 12 to 15 percent of the year. This stuff has to come back, yeah, right?

SPEAKER_03 39:14

You would think, yeah, or it needs to. If uh if we're gonna hit low double digits, like we think is possible, which is a better than average year, yeah, you're gonna need those come back. It is I was thinking, though, you just listed the biggest, most influential companies, you'd argue, in the world, let alone.

SPEAKER_00 39:28

Tech and finance, right?

SPEAKER_03 39:29

Tech and finance, the two largest groups. Um, maybe not anymore because they keep going down. But the reality, we haven't even had a 10% peak to trough pressure on the SP. I mean, what does that tell us? Well, that tells us why we stay diversified, why we don't like Chase this Johnny Object. I mean, this time six months ago, right about when tech peaked right around Halloween, late October. I mean, you and I meet lots of clients, we're some of the best financial advisors, five financial advisors in the industry. And the questions that I know clients were asking, I don't blame them because why in the world would I have anything but these seven companies? Why in the world would I have anything but large cap tech? I mean, it's done great year after year. I get it, but this is why, right? This is why when you see the second week of December, the time person of the year, the AI architects with all those companies use listed, all their CEOs sitting up there, kind of like masters of the universe. I remember I saw that and I said it many times. You said it, yeah. That's a high bar. That's a really, really high bar. Literally and metaphorically, it was a high bar. Exactly. And maybe they're just due for a pause. And my oh my has that happened, but then you flip it around, you look at materials, you look at energy, even industrials are hanging in there. Yep, um, you know, there's there's some other groups that have clearly taken the baton. But the reality, what you just said, we're not getting the low double digits this year. If tech doesn't, I'm not saying tech has to lead, but has to stop going down. You know, communication services was crushed last week because of meta Facebook. You you need those to stop going down, tech adjacent. Um, and financials, but honestly, financials it was some baby steps in the right direction. Again, new lows made on Monday, financials are higher. Those where it all started, private credit, even before when was it? We started talking about private credit stuff like September, right? The cockroach stop. I mean, we had Kate on our team. She's not here anymore. Kate uh enjoy hopefully Kate's enjoying her uh retirement. Retirement, yeah. But Kate came on, we talked about these things, and so this is like nothing new. I mean, Jeff DeGraf, Ren Knack, big fans of Jeff. I mean, he's been saying, listen, if you're surprised that you know tech is underperforming, it started like last year. I mean, it really is still like it was a slow motion thing that a lot of people missed, and then now here it is. Now, yeah, I want to uh take a second though to share something I thought was pretty cool. Bear markets usually hit down five percent quickly. I was watching C no, I was listening to CNBC because I was driving back from my eye doctor yesterday for two hours with Indianapolis. Uh, Dr. Price, shout out Dr. Price. Hopefully you can help me see. Um, but driving to listening to CNBC, and my buddy Sam Stovall over at CFRA, Sam Sam's awesome, listening to Sam, and he pointed out something I'd never quite heard before that since World War II. Well, how do I put this? It took 50 calendar days. It took 50 calendar days for the SP from the January 27th peak to March 18th. That's down five percent. So it took 50 calendar days to be down five percent. And Sam noted, looking at history of bear markets back to World War II, I believe there's been 13 of them. No bear market ever had started. Usually they happen fast, usually have a five percent really fast. He said no bear market even had 40 days of a pause without that. Um, now Andrew Thrasher, I guess, has done some really cool work channel. Andrew, I didn't quite know that, but he's done some work on this. But on the on the YouTube channel, I did my own data because you know I get the ideas from everybody. What's this thing? Um, you take it from one person, it's stealing, but you take it from everyone, it's called research. I live by that. So shout out to um to Andrew and um to Sam for the idea. But I looked at the actual trading days, Sonu, and the reality is it took us 35 trading days. That's about seven weeks. It took about seven weeks to go from that all-time high to down five percent.

SPEAKER_00 42:51

And that was around January 28th or so, I think. Yeah, 27th. Something like one of those. Yeah, yeah.

SPEAKER_03 42:56

Then then March 18 is definitely the day we cracked five percent. Okay, looking at the 11, but I looked at 11 bear markets since this SP probably became 500 stocks back in the mid-50s. The average Sony is about three weeks, it's about three weeks later, you're down five percent. This one took seven. The shortest any of them went ever was about five weeks back in 1968. So, this is usually it's rare, I guess, to say you're gonna have a bear market start right now because normally they happen fast. I mean, this is wild. Maybe it's not wild, actually, maybe not. February 2020 took four days, four days. We all time high to be down five percent. That was right before COVID. We get it. Six days back in the late 80s. Uh, there was one that took eight days after 87 peak in August, and then you know, very quickly later. But you tend to see weakness really fast. So, maybe again, class half full by nature. But I thought this was interesting that it took a long time to be down five percent. And if we were to go to a bear market, which is not our base case, uh, this would be the first time ever it happened without a very quick move down five percent. Um, I don't know. I thought it was cool. Anything you want to add to that one, or what else we want to talk about?

SPEAKER_00 44:02

Yeah, it's it feels like it's been a slow burn and goes back to the point that you know what you everybody's hedge earlier. Everybody's hedge. Maybe everyone's hedged. I mean the fix continues to go up. I mean, now today it's down, but it was sitting under it's only sort of crept up that the Usually to your point about fast pullback, the VIX immediately shoots up to 30 or 40 or 50 or 60, like liberation days 60 or whatever, right? And then it immediately pulls back down. But this time it's just been a grind up, as much as you can call the VIX going up being a grind. But relatively speaking, it's just gone up, up, up, up, up, and today's down. We'll see where it lands. But yeah, no, I I think that gets to what we talked about already. Given the nature of the crisis, the potential for this crisis, we'll we're talking not just crude oil not flowing through the strait, petroleum products, jet fuel across the world, shortages across the world, things like that, right? Thailand has told people to wear short sleeves when they come into work, so that they use less gas for air conditioning and electricity and fans and things like that. So there's that that's your demand destruction in some form, right? So given the nature of all that, you think, oh, maybe oil should have been at $150 a barrel, and maybe the SP 500 should have been down 20%. But maybe not. Right? And that gets to it's been a bit of a slow burn. I think part of it is also the market is like, yes, this crisis could get really bad, but we were oversupplied coming into this. Plus, there is always the possibility that you know Trump can just call it a day. Right? And good for him for doing that. He gets into something like I said, all of us fall for that some cost fallacy, and maybe he's good at not doing that, and just saying, you know what, I don't want to be stuck here, and I could really get stuck. So hats off to him if he does that.

SPEAKER_03 46:01

Well, well, uh, one other thing. I look at my scribbled my notes here for what I want to bring up. Uh Powell on Monday said that he sees no private credit threat. And maybe that was some of the reason financials bounced a little bit, but you know, I know Bernanke said something like a famous quote uh you know, subprime is contained or fairly contained. 2008 may yeah, yeah. So anyway, we'll we'll we'll see. But that's uh that's something there.

SPEAKER_00 46:24

Um I will say on private credit, yes, it's gone down a lot, that's hit financials. I don't think it'll, you know, I mean famous last words, but I don't think it's going to be a systemic issue here because what made subprime a systemic issue was that leverage on top of that.

SPEAKER_01 46:41

Yeah, exactly.

SPEAKER_00 46:42

Right? And then cutting it up into tranches and things like that. Here, yeah, maybe I'm not saying private credit will be great or anything like that. I like set that aside, right? But in terms of a systemic issue, because you're not levered more on private credit and things like that. I I I I just don't think it will be a systemic issue. Again, but famous fast last words, maybe somebody listening to this is like a year from now, Sony, you said this is not going to be an issue. But you know, I look, I I they do have a lot of exposure to software firms and things like that. I sure I forget who it was. The Financial Times and the Wall Street Journal had a nice piece on that showing how they were sort of over leverage to those types of companies. So yeah, that could be a hit, but we're seeing that in that chart for tech companies, right? The map, like all these tech companies being down a lot. And that also gets to uh there was this interesting video clip that I saw on I think it was LinkedIn, Josh Brown, our friend Josh, right? He and he talks about uh how a lot of young people haven't gone through a big long bear market, like he was talking about the 2000s being a you know a lost decade. And then I was thinking, and Barry mentioned this. We do our Monday morning calls, you were not there yesterday. So Barry talked about how'd it go, by the way. It was good. I think it was good. Yeah, it was fun.

SPEAKER_03 48:01

I was so busy, I was dilated, I couldn't see.

SPEAKER_00 48:03

We always have a lot to talk about. I mean, just like you and me. And oh yeah, he mentioned something interesting. Small value through this crisis has been doing really well when you think about the style box.

SPEAKER_03 48:13

I mean, small cap tech, small cap tech is up three weeks in a row. No problem.

SPEAKER_00 48:17

Yeah, I mean, yeah, so and then when you think about the last decade to 2000s. I mean, of course, there's a timing thing, like the peak is it just happened to coincide with the decade, right? The peak was a dot-com bubble top 2000 and then all the way down to 2009. So that hence the last decade, especially for the Nasdaq. Small caps did pretty well during that decade. International did well, developed markets did really well, EM did well, gold did really well, value did well, and this gets back to I think as individual investors, you have two edges. One is time, you don't have to play the game of oh, what's going to happen tomorrow or next week or next month. Uh, you and I talk about it, we have to think about it as portfolio managers. But an individual investor doesn't have to play that game. Like you you shared this chart like over five five-year rolling periods, 10-year rolling periods, the odds of a positive return is pretty high, right? Oh, yeah. The other edges, you don't have to put all your eggs in one basket, you can diversify, even within equities, you don't have to be concentrated to tech, even though the SP 500 is. You can do value, you can do international stocks, all of that, right? And I think this may be the time to not just diversify diversifiers like bonds and gold and commodities and things like that, manage features, but also within your equity bucket, think about diversifying.

SPEAKER_03 49:37

Yeah, well, no, great stuff there. You always think about like your first love, right? Your first true love. Well, I was from a markets point of view, my first true love was the tech bubble because I was saying university, Cincinnati. So I just thought the only thing you invested in were tech stocks because that's how I grew up, that's what I saw. Yeah, then it crashed, and like you said, this whole decade, I'm thinking, oh man, when these networking stocks are gonna go up, and then you realize all these all these other areas. We live and learn, we make these mistakes, we live and learn. But I will say this was someone who started working in uh this would have been November of 2021. I'm sorry, no, November 2001. November 2001, investing, doing the 401k thing, doing all that stuff. You want to talk about a lost decade? August of 2011, when the market crashed like 18 in four days after the US debt downgrade, I was down. So literally for 10 years, I've been putting money into my 401k. And I remember looking at it that day when the market crashed or whatever. I said, Oh my goodness, all this money I put in, I'm like down. I'm like, even I'm like, why am I doing this? You know, sure. But then you realize trust me, at the time, it's very aggravating.

SPEAKER_00 50:38

Then you realize doing the SP 500, or like this is a 401k 401k.

SPEAKER_03 50:44

401k, it's different funds. Probably back then you did like different stuff. Um, but anyway, I don't even honestly know what I was doing. But I was investing, you know, just sticking with the plan, you know, sticking with the plan. But even then, I mean the market didn't do anything for a decade, and then you crashed, and there you go. I literally remember looking, I was down over a 10-year period when I put in from what I was worth that day, and that's that's disheartening. But then again, for the longer-term investors, and honestly, this is gonna be popular with a lot of people, and I get it. But if you're a younger person, that's the best thing can have. I know that sounds like what are you talking about? Because you're gonna buy a lot of good companies cheap for a while, and eventually it's gonna come back. And I get it. If you're close to retirement, they happen again. Nobody wants to see that happen. I I understand that, but it's all about your time frame. But like you just said, being diversified, look at other areas, it makes a lot of sense. Um, yeah, what's the other saying about like getting rich? You know, put your eggs on the basket to get rich, but stay rich, you diversify. I paraphrase something like that, which um which makes some sense too. Um, well, Sonu, you want to talk about Disney for a little bit? We've probably gone funny long. How was your Disney trip?

SPEAKER_00 51:41

It was exhausting, dude. I mean it was so we did six parks in six days. He did universal studios as well. We did the tour. It was it was fantastic. It was fun to see the kids. My son built a lightsaber. I'll put up a picture of that, you know. He was so excited, it's not cheap, which is why only he did it. I did, but what was interesting is Star Wars is such a geeky thing, it's it's full of adults. The average age there of folks building lightsabers was probably like 45 or something.

SPEAKER_03 52:11

Yeah, they well, they can afford it, yeah.

SPEAKER_00 52:13

Yeah, that yes, exactly, right? And then my daughter did the whole Harry Potter thing, she got a wand, she was selected for the wand experience at the wand shop. And no, I I must say they know how to do this stuff right. I I I know I just said Disney's stock is down, you know, I don't know, 24%, something like that. But you know, set that aside, not a recommendation thing, but they know how to, you know, there's a I there were a lot of crying kids, and you know, my kids are cranky in between, things like that. But there's a reason they call it the happiest place on earth. So you know, you cannot look back and not smile at the time you had that. Good memory.

SPEAKER_03 52:54

No, I remember we took our kids there, it would have been 2013, maybe 2014, January 2014. We had a super sick kid. I don't remember which kid was which it was, but we had to go to like one of those 24-hour urgent cares, and it was just visible. The kid was sick. We literally go with one sick kid, and then my other son throws up. And I don't remember it was Gus or Sebastian. So we go with one sick kid, and all of a sudden the other one gets sick. So yeah, then you written look back, and like at the time it was pretty miserable. I'll be honest, it was pretty miserable. Oh, that's kind of fun, you know. Um, you we live and learn. Uh, what was your favorite ride? What was your favorite ride that you did?

SPEAKER_00 53:25

Oh, uh, in Universal Studios, I did the not even Disney, not even Disney.

SPEAKER_03 53:31

Not in Disney.

SPEAKER_00 53:31

I mean, Disney was good. I at Disney, I think two things. One was the the Mount Everest expedition ride, the one you recommended. I like that. And then there was the Tron light cycle, and it's just that you're like sitting on a motorbike almost, and maybe it's just a posture that was really good that was that made it more fun. And then you're sitting like that, and then you're going upside down. But my favorite ride was the the Jurassic Park Velocicoaster in Universal Studios. It was nuts, dude. That thing is like I like coasters, my kids love them now. And they were it that was the one ride I felt, yeah. I think I want this to be over. You know, but you're going 70 miles per hour, you're going upside down for a good 10 to 15 seconds, your butts your butt's off the seat as you're flying down. It was crazy, but that that was a lot of fun. I would do that one again. And I don't know if my kids will. My wife skipped it. She's like, I'm not doing that. That looks insane. I'm not doing it. There's also the incredible Hulk coaster. I mean, you know, read uh listeners of who have been to Disney probably and Universal probably know what I'm talking about, but yeah, no, it's a lot of fun. I mean, we like coasters, and I try to sit right in front as well, so which is fun. And uh I'll I'll put a couple of pictures. I'll Drew, I'll send you a couple of shots.

SPEAKER_03 54:52

Yeah, um, well, let us know on the YouTube channel. We have comments turned on. Give us uh your favorite coaster. Uh, let us know that. That's that's fun.

SPEAKER_00 55:00

I will say my favorite was the Mount Everest one, right? Yeah, from what I remember.

SPEAKER_03 55:03

Yeah, I know that's a pretty fun one. I thought that was pretty good. Maybe because it's kind of flying under the radar, so to speak. You didn't expect the one at the Animal Kingdom to be really good. That was good. Um, say something. Oh, King's Island, that's our big one here in Cincinnati. Yeah, you know, you guys you guys come to Columbus and stay with the Modest off. You ever sneak down, your kids would love King's Island for a day.

SPEAKER_00 55:20

So and I can watch tennis while they do it. Yeah, exactly.

SPEAKER_03 55:23

Right across the street, right across the street to Tennis and Mason. So all right. Well, anything you want to finish with, Sony? We've gone plumbing long.

SPEAKER_00 55:30

What do you think? I mean, like I said, I feel like this is a fairly crucial juncture for markets, and hopefully there's light at the end of the tunnel. I'd like to think there is because otherwise we are in a bit of a mess here because of that air pocket I talk about. But this is also a time when given what we've seen in the market already, not just over the last last month, or the last three or four months with tech and all that, I think you know it's a cliche, but it pays to be diversified, literally.

SPEAKER_03 56:03

That's true. Yo, so April 2nd was Liberation Day, so the next two days after that, last year, last year. Um, and after that, you know, the market dropped 10 and that percent in two days, down nearly 20%, hit intraday 20% early April last year. Uh, that felt pretty bad, also. You know, and again, I understand what's going on with the headlines this time. Definitely could say it's worse. But but from a market's point of view, you know, I think we're gonna get through this one too. Maybe get some good news, a lot of negativity. I saw a really cool stat, uh, Goldman Sachs Prime book, uh, the selling from hedge funds last six weeks is in line with co last 10 years, in line with COVID and after Liberation Day, and right now, you know, it's kind of like okay, that's uh that's a lot of there's a lot of hedging, there's a lot of selling, there's a lot of fear out there, maybe rightfully so. With any good news, get some uh again. The economy's still solid. We'll talk probably more macro next week. I know there's more macro data coming out, a lot of earnings coming out, so we'll do that probably soon enough. Uh also with a lot of spring break. I'm technically on spring break next week, but I'll be I'll be around. I'm gonna go down the shard with my voice for a couple days because Emily and Susanna are going to um destined for Susanna's senior year. Oh, by the way, I can probably announce it on here. Susanna's officially committed. Uh committed is the right word. It's not like she's like an it's not like she's an athlete or something, but she's um applied and been accepted and all that stuff to uh Penn State. So congratulations, which is with she's kind of hard as an Ohio Ohio State guy.

SPEAKER_00 57:24

That's got to hurt your this is not Michigan, but I I bet you didn't you you come and let her apply to Michigan.

SPEAKER_03 57:29

Well, she's not no, there's certain things son that you're just not allowed to do in life. Uh that is that is rule number one. They know that. They know that. Uh, but yeah, so she's she really enjoyed Pennsylvania. That's a fantastic campus. Barry Gilbert, Barry Gilbert on our team. Yeah, he he kind of helped a little bit, uh pushing her there a little bit, explained it. So thank you, Barry. He was a teacher there and did some things, but it's an awesome campus. So yeah, so that's good. So that was that was stressful. We we like for six weekends a row went to a different college and did all that, and it's just I get it, everybody goes through it.

SPEAKER_00 57:56

Um, but four years football will be interesting, even more interesting.

SPEAKER_03 58:00

Yes, exactly. Yeah, I guess if you've given a school a lot of money, you kind of got to root for the football team. But as an Ohio guy, I don't I just don't think I can do it. I don't I don't know. It's okay.

SPEAKER_00 58:09

You know you gotta go watch a game there, but yeah.

SPEAKER_03 58:11

Oh no, we yeah, absolutely, absolutely. So all right. Well, everybody, this was episode what 181. Is there some light at the end of the tunnel? We think they're very well cleared. Fingers crossed. Um yes, fingers crossed. Yeah, we're drifting a little a little bit lower since the time we started doing this, but still green across the board. So we'll see where we finish up. Um Art Sono, welcome back. Um, hopefully everybody's allergies are hanging in there. My throat is so scratchy. We got through that. We've gone for 56 minutes, whatever it is. I'm I'm shocked I've made it. My throat is so scratchy. I've had to mute stuff. Oh, I've I've been muting and coughing stuff. So if we did cough, we forget to mute. Sorry, everybody. Um, we were fighting through this. Like we do every week. We will continue to fight through fight through this. All right, Sono, I'll talk soon. Thanks, Drew, to Drew and Podbony, our producer, for helping us with all this stuff. Thanks to all the listeners out there. Uh, give us likes, give us follows, give us all that stuff, um, comments, all the all the stuff you're allowed to do. Give us dislikes, give us negative comments. I can't leave the witness. We just like interaction. So feel free to do anything you want there on those fronts. We appreciate it. Everybody, see you next week. Fuck soon, see you soon. Thank you.

SPEAKER_02 59:10

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