on radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk. Independent thinking, shared success. Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States. Here is KPP Financial Portfolio Manager, Luke Guerrero.
Good afternoon, fellow investors, and welcome back to invest talk. My name is Luke Graham. It is Friday, December 27, 2024. And as Christmas has come and gone and the holidays are soon over, I realized that today is actually our last Friday show of 2020 for
Now, every Friday, we like to sum up what happens over the week and talk about what we need to be thinking about headed into the next week, but also it's particularly important because we're also talking about what we expect to be happening next year.
Before we get to any of that, this show, as always, is about you and your finance and investment questions. So let's tackle our first caller question now. Hi, this is Dan from Walnut Creek. We've got a question with reverse the dollar general, BG. And I have a real small position that's now down 25%. One to get your opinion is to, um, you think this is going to go down much further or just hang on to it for a little bit and wait for a turnaround.
Once again, it's very small portion of my portfolio. Anyway, any advice you can give me. I'd appreciate it. Thanks.
retailer. And they have had a particularly abysmal 2024 down 44% year to date down 43% over the past 52 weeks. You know, the relative strength relative to the S&P 500, it's really dropped off. Well, in about October of last year, it has not recovered since it's only become worse.
That's a $16 billion market cap company that currently has a dividend yield that is twice what it typically is, sometimes even three times what it's been. It's in a 3.1% dividend yield. It has a little bit of short interest out there, about 4%, but the thing that really worries me about Dollar General, or one of the things, because there's a lot of worrying things here when we're looking at Dollar General. It's how much debt they have on their balance sheet. $17.5 billion in debt as of the most recent quarter end.
And earnings have shrunk. Earnings have consistently been downgraded over the past several months and into the next couple quarters. Margins, which honestly were pretty high relative to what you see in the retail space, are compressing as well on a downward trend from a high of 7.9% in 2021.
That margin projected to be 3.1% this year. EBITDA margin stands at only 7% EBIT margin, 4.7% return equity has fallen, return assets has fallen. Every profitability metric you can look at is headed in the wrong direction. Now, the free cash flow has improved, but still the issue here is stalling growth. They were growing at about 8.6% on an annualized basis from 2019 till this year.
But they've only went from 38.6 billion last year in revenue to 40.5 billion. Growth is slowing. And while growth is slowing, margins are, like I said, also contracting. Then you add on top of that, how much debt they have. And that analysts are consistently giving it downgrades. And I think this still has some room to run to the downside. Their most recent quarterly report was not a positive one. And so when you see this type of divergence hold,
When you see a dividend yield almost triple from what it was a couple years ago, that's not a good sign. This thing's down 44% this year. I think frankly, there's a lot more risk to the downside for this company who is not in a good position, but it's dollar general ticker D G. Next to the call.
And we got a lot of ground to cover in the next 45 minutes or so, and here is some of what we have planned. My main focus point concerns this warning. Beware of store credit cards, a hidden path to debt disaster. Consumers need to be cautious as these cards typically carry extremely high interest rates that can quickly turn savings into substantial debt.
Also, we'll touch on as we head towards the end of the year as you are all well aware. We'll talk about the market and how frothy, how high, how potentially overvalued is the market. And what does that mean for next month, next quarter, and next year? We'll also touch on America's big natural gas footprint. And what the Trump administration, beginning January 20th of next year, may do to expand that. And should we have time at the end of the show,
We'll touch on how leverage loans have seen a default rate that is its highest since the pandemic, its highest in four years.
We also have some voice bank questions ready to play, including one on AT&T Inc and one on investment losses, as well as some questions that came in from the comment section in the invest talk YouTube channel. And of course, I welcome your finance and investment questions now or anytime throughout the show. We're going into a break. And on the other side, we'll look at today's market activity and most importantly, answer more of your finance and investment questions here on invest talk.
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The numbers are in. Invest Talk, now with more than 60 million downloads. Justin Klein and Luke Guerrero are ready to answer your finance and investment questions 24-7. Invest Talk, 888-99. Chart.
Let's dive right in and talk about the market today. US stocks ended lower in trading on Friday, a bit off of their worst levels of the day, and this follows stocks putting in a mixed performance in what was an otherwise uneventful Thursday session coming off of the holiday.
Mac 7 names are down today with the broader tech sector underperforming as well. Dow finished down 77 basis points, S&P 500 down 1.11% NASDAQ down 1.49% Russell 2000 down even more at 1.56%. And because this not a lot was green, but relative outperformers included energy, food, tobacco, marine shipping, and utilities.
On the bond side, treasuries are mixed with the curve, continuing to steepen the dollar index was down 10 basis points. On the day, gold finished down 80 basis points, but still off the worst levels of the day and crude oil, heading the opposite direction settled up 1.4%.
Overall, I would say there's really nothing too specific that caused today's pullback comes after stocks bounced earlier in the week, partly on thoughts that the takeaways from the Fed that were hawkish and the de-risking because of that was a little bit overdone.
We continue to see a backup in rates and that may continue to as we head into the next year be a little bit of an overhang on sentiment. Press reports continue to highlight business uncertainty surrounding the implementation of tariffs and some focus on the Fed as well where they are trying to determine what trade policy, what fiscal policy in a second Trump administration may mean for inflation and therefore may mean for what they need to do to react to that.
Quiet day on the US economic calendar, preliminary November wholesale inventories down 20 basis points month over month versus the consensus for 20 basis point rise in October. 10 basis point increase. Key releases next week include Chicago PMI pending home sales, home prices, final manufacturing PMIs for the month, initial claims and the ISM manufacturing index.
Much busier on the economic front, the week of the 6th of January with the Joel's job openings first to the year ADP private payrolls, December FOMC minutes and non-farm payrolls as well. Looking forward to all of that and rounding out the economic data for 2025 or rather 2024 next year. I hope you've been telling your friends and family members that you know what?
Why not just tell people on the street, too, that we here at Invest Talk are now a video program available over on our YouTube channel to search Invest Talk with two T's. And while you're over there, if you are thinking to yourself, you know, I really need this finance and investment question answered, then we would love for you to drop us a question in the comment section. This one from JG109426 says, hello, Invest Talk. My question is on a P-A-N-W. That's Palo Alto and networks.
I know it just had a two-to-one stock split, even though a stock split changes nothing fundamentally. Glad you know that. Do you think it's at a decent price to buy in slowly for a long-term hold, or at what levels would you consider getting in? So Palo Alto Networks, for those of you who don't know, is a network security solutions company. It is a fairly large company, about $123 billion market cap, and has very little debt, about $1 billion in debt.
Now it has been issuing a bunch of shares over the past five years up from 580 million shares outstanding projected to be about six or rather it's standing in about 680 million shares outstanding this year. And as network security has become a focal point given the rise of technology companies, this company has done pretty well on the revenue growth front over the past five years.
Rising from about 2.2 billion in 2018, projected to be about 8 billion, or rather was 8 billion in revenue this year. That's 22.6% revenue growth on an annualized basis since July of 2018. That's pretty solid revenue growth. But how does that translate into net income? Well, they didn't really make money until last year, July of last year.
where they made $440 million. That's going to $2.5 billion this year. So their margins are expanding at a pretty solid clip from 5.4% in 2023 to 32.1% net margin this year. Their cash flow has been improving.
They do not pay a dividend as many of the companies in this sector do not. But from a balance sheet perspective, other than issuing a lot of shares, which, you know, when they weren't making a lot of money, understandable, they did stop a little bit. They were rather the rate at which they were issuing shares slowed down at the end of 2023. So that's certainly something that we'd like to see. But the big question is, given that we like where this company's balance sheet is, given that we love the growth,
What does it mean, or rather, what do its valuations look like? Well, from a forward-looking price to earnings basis, 57 times, trading at 41 times cash flow, 16 times sales. Now, it's also important to note that this company's price performance has been pretty stellar. You're getting it's up 26%. On the 52 week, it's only up 25%. But in the past three months, it's up.
10%. But as often does tend to be the case with these types of companies, in order for these multiples to be justified, you'd have to continue this incredible growth, which is already showing signs of slowing, because they grew from 6.5% revenue, sorry, 6.5 billion in revenue last year to 8 billion this year, even though their margins are expanding.
The growth seems to be unrealistic for the long term. And because of that, I think that this company is overpriced. It remains overpriced. There are certainly risks within this space. I'll a crowd strike if you recall that earlier in the year where large breaches, coding issues in that case can cause widespread ramifications for a company's stock, for a company's revenue stream.
when CTOs are worried that continuing with their current software stack is threatening their job. And so with all this in mind, with the risks associated with this subsector, and with the fact that this is just too expensive of a name for my taste on Palo Alto networks, even with the stock split, though you do recognize that that doesn't mean anything except for how many shares are outstanding on paper, even with that price fall relative to the stock split, I'm going to have to pass on Palo Alto networks that is ticker P A N W.
Now we're headed into a break and still to come my main focus point, an important one, and honestly, some of the most important ones we bring you are not just about the investment ideas, but how you can protect yourself from scams, or in this case, protect yourself from something that a lot of people fall prey to, which is an unreasonable, unexpected, and unmanageable amount of debt to deal with, something that can really hamstring your financial future. So when we come back from the break,
We will talk about all of this more and give you advice as only we can here on Invest Talk.
Luke Guerrero is here and ready to tackle your questions. I would like to know more about a company which I've been tracking for some time. Quick question on a very risky play. It is a company that caught my attention because the ROE is like close to 100%. Invest Talk is ready 24-7.
And I was just wondering, are there any investment accounts with different banks that you would recommend? Something that may offer good resources.
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The weekend is here or almost here, but you've got finance and investment questions, so step up and call in. Invest Talk, 888-99, chart. As promised, our main focus point concerns a warning about store credit cards because they could really be a hidden path to debt disaster.
So what am I talking about? Well, I'm talking about deferred interest. Deferred interest could cost you big time this holiday season. While store credit cards may tempt shoppers with flashy 0% introductory rates, 0%. There's often a catch because nothing in life is free. And that catches deferred interest.
So how does it work? Well, if you don't pay off the full balance by the end of the promotional period, you'll owe interest on the entire original purchased amount, not just what's left. Let's say that you bought something for $100 and you paid off $99 of it. You have a 12 month period with 33% interest. Well, if you don't finish paying off that $1, the second that period is over, you're going to get charged $33 of interest.
And these aren't small fees, right? Store credit cards often have interest rates over 30%, far higher than general credit cards. Wallet Hub reports that 85% of store credit cards with 0% interest offers include this deferred interest, yet 61% of consumers don't really understand what this clause means. And it's pretty costly oversight. Deferred interest is like a debt mom, right?
What can you do? Well, here are four tips to really help guide you away from the trouble that deferred interest can create. The first is understanding who is issuing the card.
Retailers like Costco, Target, Nordstrom, they don't really use deferred interest. But 95% of cards issued by Synchrony or City or Comerica, they do. So always ask before signing up and making that purchase, how interest is going to accrue and be charged on your credit account. Second, if you need to use
or rather you require that 0% introductory rate in order to make a purchase, well, maybe you want to consider using a general credit card instead. Many banks offer 0% introductory rates without any deferred interest at all. Plus their standard interest rates are far lower than some of these 33, 35, 40% cards, far less than those cards. The biggest piece, well, maybe you need to think more realistically.
If you can't pay off a purchase within the promotional period, frankly, it's just not worth buying. Nearly half of Americans are still paying off last year's holiday debt. And so what you don't want to do is add more on to that pile. The last piece of advice, if you do make purchases like this, well, you should probably automate your payments. Listen, I know all of our lives are incredibly busy. People have families, people have kids.
I have a nephew that likes to keep me occupied around Christmas and run around and chase me with little dinosaurs. But because of this, it's important to make sure that you make those payments. So you're going to want to divide your purchase total by the promotional period. So say you have that $100, right? You have $120 purchase and you have 12 months to pay it back. Well, set up an automatic payment that will pay $10 a month to clear that balance on time.
Listen, store cards can be great. They can be great for rewards. They can help people who haven't really used credit, build that credit, something that is very important in today's financial system. But frankly, they have some pretty terrible financing. So as always, stay informed, plan wisely, and avoid falling into the deferred interest trap, this shopping, or any shopping season.
Let's keep things moving and roll in another listener question now. John here from Lakeland, Florida. My question is that is it better to take a loss and sell the stock before it goes to zero or is it better to allow the stock to go to zero or does it really matter either way? Just trying to figure out the best way to recoup as much of my losses on these stocks as possible. I hope I made some sense here. Look forward to hearing your insight. Appreciate you guys.
So that's a good question because I think oftentimes people get a little bit confused about the benefits of tax loss harvesting, right? And so yes, if you were to wait until a stock goes to zero, you could write that off as a bigger loss. And you would have bigger losses that can offset your gains for tax purposes. But I think we all agree that taxes should be the secondary concern. The primary concern should be, in this case, preserving
Your money, right? It doesn't do you much good if your brokerage account goes down to zero, but now you got a million dollars and losses, losses for what? And so if you have a situation where you have a stock that you don't believe in anymore, the things that got you to believe your investment thesis have changed.
that for any reason other than taxes, you're going to want to sell. Don't wait to sell it because the losses could become greater, right? Our primary concern as investors is growing money. And in order to grow money, you need to still have money. So if you're thinking to sell in this name,
Don't wait till the loss goes down to zero. Get out of it now. Take the loss now. Have it offset whatever it can in terms of the gains that you've had this year. But either way, no, I do not ever advise waiting for it to go down to zero. This is Invest Talk, and we thank you for listening.
The most important part of the show, as we always say, is your live calls, your voicemails, your YouTube caller question questions, rather. And you're actually going to be questioned. So give me more, give me live, give me a call at 888-99-CHART.
I would like to know more about a company which I've been tracking for some time. Luke Guerrero is here and ready to tackle your questions. And I was just wondering, are there any investment accounts with different banks that you would recommend? Something that may offer good resources. Don't forget to call, InvestTalk 88899 chart.
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Your questions are free. The answers are unbiased. Luke Guerrero is here now ready to take your calls live. Invest talk 88899 chart. It's Robert from Central Wisconsin. A longtime listener. Appreciate what you guys.
Do for us, I got a question about AT&T as wondering what you thought of this stock is just a long term old income producing stock. Yeah, I just curious to see what you guys think of AT&T as a holding in your portfolio. Thanks, guys. So AT&T Inc is a telecom company, right? They have phone plans, they have TV services, telecommunications.
And recently they divested from Warner Brothers and direct TV. And on the back of that, the stock has seen a pretty significant uptick this year, up 36% year to date, 36.23%. Now, if you're looking at home, if you're viewing this rather than listening to this, you can kind of see the relative performance.
or the strength of AT&T going back to 2018 compared to the S&P 500, you see an abysmal 2020 where it underperformed the S&P 500 by 42% underperformed the industry by 110%. And because of this,
It really hasn't fully recovered. Sales have fallen at about 6.4% on an annualized basis since 2016, though they did start to stem the bleeding in 2020 when revenue started to grow a little bit. Their income has fallen about 6% on an annualized basis. They actually lost money in 2022 and in 2020. Now they're projected to make 10.3 billion this year. And their margins are kind of all over the place.
Though they had a pretty good uptick to 21.8% last year, it fallen again to 8.4% this year. And because of this, the dividend yield is pretty high. You said you're an income investor and 4.83% dividend yield is high, though lower than it's been over the past several years.
Cashflow, though, falling consistently from 2020 to 2023, has started to head in the right direction again as well. Now, they got a lot of debt, 146 billion on 164 billion dollar market cap company, but, you know, telecom companies just carry a lot of debt. They're very capital intensive businesses.
Now it's trading on the upper end in terms of forward-looking price earnings of the five-year range, but I mean, look at those five years, pretty terrible five years. So it's trading at 10 times forward-looking earnings. One thing of note is, well, they just announced, I don't know if they just announced it, but they recently announced a $40 billion program for dividends and stock buybacks, including an initial 10 billion stock repurchased by 2026. So that's something that can certainly float the equity price moving forward.
They also have some pretty aggressive plans for the expansion of their fiber. And so with all that in mind, taking a look at where they are technically over the past year, if you're a dividend investor, if you're an income investor, you see something being the ship being righted here. I kind of like AT&T here. So keeping in mind that they do have a lot of debt. They do have a lot of debt issues. I think there is a good
Avenue for growth here, certainly cash flows headed in the right direction. And so I would cautiously say that AT&T is something that I would be okay with you by. I'm not incredibly excited about it. But if you're an income-focused investor, I mean, their payout ratio is only $56. They've announced dividends and share buybacks for the foreseeable future. And so at $22,
I think I'm okay with this. That is AT&T ticker T. Thanks for the call. Now, it is by many accounts.
the most wonderful time of the year. They should make a song about that. And for US investors, really, it's no exaggeration. Stock market has delivered a stellar 2024. The S&P 500 soared 54% over the past two years. That's one of the biggest streaks since the index's inception in 1957. And while a recent dip in December, 3% on December 18th, caused a little bit of market jitters, it's really stabilized, right? Optimism remains pretty high. And this whole rally
aside from being driven by a handful of stocks is really being driven by one theme this year. And that was artificial intelligence.
Much like the dot-com boom of the late 90s, hopes for these transformative profits from AI have really fueled investor enthusiasm, even while many had anticipated recessionary risk. But with soaring prices come soaring questions, right? Is this rational exuberance or a bubble irrational exuberance? And there are some signs that do point a little bit towards the latter. First, an investor sentiment is incredibly high. It's at record highs.
A conference board survey found that 56% of Americans expect stock prices to rise in the next year. The most optimistic results they've ever seen. Professional traders are also betting on call markets as evidenced by low volatility measures coming out of the mix. Another thing is while money is pouring in US stock funds, attracted a record $450 billion this year, with another $30 billion flowing into small cab funds.
They'll necessitate that equities now make up nearly half of global non-bake portfolios, just shy of levels last seen in 2007. Meanwhile, cash allocations, all time long. So there's a little room for additional buying power. And lastly, apologies for that helicopter flying over my house if you can hear it. Valuations are sky high.
The cyclically adjusted price to earnings ratio, the CAPE ratio, pretty popular valuation metric, is at levels surpassed only during the .com bubble era. Historically, such of elevated valuations, wealthy signal, pretty poor, forward-looking long-term returns. When the KPL, the inverse of the ratio, is as low as today's 2.6 percent, the S&P 500 has never delivered positive returns over the next decade.
And the risks don't stop there. Corbett bond spreads are their tightest since the lead-up to the 2008 crisis. And US stocks now account for a staggering 70% of global developed market value. Within the S&P 500, the top 10 firms make up 40% of the total market cap by its concentration since 1980. So will the bubble burst in 2025?
Well, that's a little unclear, right? President Trump's return to the White House with promises of tax cuts and deregulation could fuel further gains, right? What is stock market appreciation other than expected increases in profitability of companies? Earnings growth.
That could drive earnings with AI might also deliver earnings with profits that investors are banking on, but with valuation stretched and exuberance incredibly high, it's important to know the risks. The one thing, you know, this is not all doom and gloom. I'm not saying the market is going to crash here, but it's important to understand the dynamics of what is happening. And more important to note that because most of the gains have been focused on a select number of companies,
It means that market breadth, the widening of a rally towards the names that did not see the massive expansion could provide incredible opportunities for investors in 2025. Now, today is Friday, my favorite day. And we generally make time to fit in a key benchmark number rundown on Friday. So let me hit you with that list right now.
The two-year treasure yield was at 4.314% today. For perspective, last week it was at 4.308%, 21 weeks back. So 3.882%, 59 weeks ago was at 5.05%, 157 weeks ago was at 64 basis points. The 10-year treasure yield was at 4.609% today.
For perspective, last week it was 4.5, 1.8%, 17 weeks ago. That number was 3.9 to 1%. 59 weeks back, it was 4.63%. And 153 weeks ago, it was 1.762%.
Gold was priced at $2,616 per ounce today. Sorry, $2,626. 59 weeks back, it was $1,935. And 147 weeks ago was $1,806. Silver today was priced at $29.41 per ounce. Last week it was $29.55. 45 weeks ago, it was $22.80. And 140 weeks ago, it was $23.94.
Oil was selling for $70.32 per barrel today, that is an 86 cent increase since last week. 13 weeks ago was 67.79, 55 weeks ago was 74.30, and 155 weeks ago was 66.62. The national average for a gallon of regular gasoline is $3.03, a two cent decrease from last week.
82 weeks ago was $3.56. 130 weeks ago was $4.25. And 150 weeks ago, it was $3.57. In California, it was averaging $4.34 per gallon, a 3-cent increase from last week. We don't like that. 59 weeks ago was $5.32, 135 weeks ago, $5.87. For comparison, in Florida, gas was averaging $3.09 per gallon a day that is $1.25 less per gallon than gas in California.
It's like we got a live call. You know, I love live calls. Let's go to Will in San Diego, who has a question about PFE. Do you own it? Are you looking to buy it? I own some and I'm looking to add to it if you think that's prudent.
So PFE is Pfizer, Pfizer Inc. I think we all know Pfizer, it's a leading pharmaceutical company. They have pretty diversified base of products. People probably know them more recently for the COVID, one of the COVID vaccines, one of the major COVID vaccines, but let's dive in and take a look at Pfizer.
Again, very large, $154 billion market cap, only about $67 billion in debt, so nothing too crazy there. Their cash flow did, though, fall off coming out of the pandemic, understandably, right? You had a lot of money going into pharmaceutical companies that had developed COVID treatments, COVID vaccines. And so that fell off, right? Their revenue in 2022 was $100 billion down to $62 billion this year, though notably you're supposed to grow from last year.
margins, absolute gangbusters during the pandemic, right? 37.4% in 2022. Well, that came back to reality last year at 7.2%. But this year, that even margins projected to be 32.7 net margin of 28.5. So margins are certainly headed in the right direction. Now, year to date, they're down about 7%. The rest of the market, we know up over 20%, right? Over 25%. And
They've also had a pretty bad last three months probably in the wake of the election and what that might mean for the Department of Health and Human Services for pharmaceutical companies broadly.
And so the question is, is there risks to the downside here? And certainly there are. You know, I think a lot of people, justifiably or unjustifiably, no matter what your opinion is, have ire towards Pfizer. They've hired towards pharmaceutical companies. I think that's incredibly justifiable there. And there is the potential for a lot of regulatory legislative change headed into 2025.
Now, I would say that the market has really priced a lot of that in, right? I think that the null hypothesis now for companies like Pfizer, for Merck, for a lot of these companies is an adversarial executive branch of the government. And so if you're willing to take the risks right now, right with Pfizer only trading at nine times for looking earnings below its five year average, it's only trading at 1.6 times its book value. Well, then you have a lot of gains that you could see.
From my perspective, I think we get a lot more clarity on what to expect from a regulatory perspective, honestly in the next two months. And so I would keep it on my watchlist. I wouldn't buy into it now. I wouldn't necessarily sell it now. I think, again, there's been a pretty decent run down relative to what the rest of the market's been doing. But I just think that the clarity is so close on the horizon.
that I would just keep it on my watch list for now, wouldn't add any more to it. Does that make sense? That makes a lot of sense, right? Thank you, and I wish you a happy new year. Happy new year to you too, Will. Thanks for calling. Let's keep things moving and pivot back to the Voice Bank for this call that came in earlier. This is Mike from Detroit asking about ticker symbol here, PBI, the simple dynamic income fund. Looks like it's closed and fun.
but I'm a downtrend here lately for the past few months. Just wondering what you think would be a good entry point for this close-ended fund. I'm attracted to the dividend. I think that's paying out of 14% dividend right now. I know there's other things that should be considered, but just wondering what you think a good entry point would be. Thank you. So the PIMCO Dynamics Income Fund, it is a closed-ended fund, as mentioned. Looks like it has about $6 billion in terms of its assets under management.
And it's been ranging between about 18 and 19 over the past year.
As always is the case with some of these funds, the key is in how they decide to allocate specifically within these income funds, which are generally going to be invested in bonds. PIMCO, one of the largest bond managers on the planet, one of the most successful bond managers on the planet, is certainly the type of company that I would trust to invest in bonds here. So let's take a look at the PIMCO, oh, I'm sorry, this is PIMCO dynamic credit and mortgage income fund.
Everything that I said about the company still stands. But when we come back from the break, hopefully, I find this ticker in the break. I got three minutes to do it. And when I do, we will talk about the correct fund that is the PIMCO Dynamics Income Fund. We're headed into the last weekend of 2024. This is Invest Talk. I'm Luke Gere. We have one goal here to help you achieve your financial freedom. And our work continues after our final break. So get your questions in now at 888.99 chart.
Luke Guerrero is here and ready to tackle your questions. I wanted to pick your brain about apples. What did you think about their earnings call? It's a good time to add to my position. Call Invest Talk 888-99-Chart.
Your questions are free. The answers are unbiased. Luke Guerrero is here now ready to take your calls live. Invest our 88899 chart. So before the break, I was struggling to find the PIMCO dynamic income fund ticker, PDI, but you know what? We found it. And so the fund seeks current income as a primary objective. And the way it does that,
Is it utilizes a dynamic asset allocation strategy, where it looks at multiple sectors in the global credit markets, including corporate debt, which is, you know, not just fixed debt, but also variable debt floating rate bonds. And also takes a look at US and foreign corporations, business entities and government and sovereign debt as well.
Now, it is a $5 billion fund, very large fund, again, from PIMCO Pacific Investment Management Company, one of the largest debt managers on the planet. But 98% of it comes from the US, so you're not getting a lot of interest rate risk out there. That's certainly something that is probably good in this type of environment. It is a levered fund, it looks like, in terms of how much fixed income assets they have. And looking at the top companies, top buys, right, JetBlue Airways, first brands group,
The credit quality doesn't seem to be crazy bad. Now that being said, it probably is not the highest credit rated.
uh, securities or rather companies, right? If they're giving the type of yields that they are giving here and they do it at a pretty expensive clip here. 1.1% is the management fee net expense ratio 2.64%. Why does it tend to be higher with something like this? Well, it's because bonds are a high touch market, right? It's not as easy as buying and selling equities. It's more peer to peer broker.
And so with all that in mind, I just think that if you're looking for income here, if you really want income, if you really want income from the bond space, I think this is a good way to do it. But I think that generally speaking, when you get these funds that are buying a lot of these bonds that are not necessarily junk, but not necessarily the best corporate rated bonds, it's gonna be incredibly expensive. So yeah, you're getting a high yield, but you're also paying a high price here.
Three months, funds down about 5%. Year to date at 18%, though. That's impressive. But either way, I think you got to understand this is a really expensive fund. So honestly, I would look elsewhere for getting income. Thanks for the call.
Now, our last story is about something that we've been talking about pretty frequently, and that is the natural gas industry. And how the industry, despite what our politicians say, has really shifted its focus. Drill baby drill is what it used to be, but now it's more built.
Right? This change comes as companies look to infrastructure expansion for growth. Following a year of historically low prices and challenges for profits, and one of the companies on the forefront is EQT. Their CEO Toby Rice is really leading the charge pushing for the construction of more pipelines and also importantly export facilities.
He and the industry broadly argue that political and regulatory hurdles have stymied market forces. And so natural gas investors are understandably optimistic about the incoming administration, which is pledged to fast-track infrastructure and expand that LNG export capacity.
These facilities critical for shipping that supercooled natural gas to global markets are seen as key to maintaining America's position as the world's largest LNG exporter. However, there are some warnings from the Biden administration that suggested that unfettered exports could really raise domestic prices as well and drive global emissions higher yet rice and others within the industry.
believe that American LNG is essential for replacing Russian gas in Europe and really reducing that coal reliance in countries like China and India. So for now, while the industry sees opportunity, it's important to note that even if there are new projects, it takes a while for them to come onto line. So as they are saying, as we have been saying, the key to success within the energy sector isn't necessarily drill, but instead built.
Now, we're almost out of time, but I still want to briefly mention the newest KPP premium newsletter, which will be distributed tomorrow. This week in the KPP Insight section, we're going to give you an update on the current market environment as we end 2024 and head into 2025. The stock ideas section, we talked about a chemical company and a medical devices company. And you know what? We also give you tips on portfolio management. So if you're interested in learning more, visit us at invest stock.com and subscribe. The newsletter will hit your inbox on Saturday mornings.
I'm Luke Guerrero. This completes another Invest Talk program. We thank you for listening. We encourage you to tell your friends and family members about our free podcast downloads. Get yours anytime at iTunes, Google Play, and Spotify. And please be sure to leave us a rate and review while you're over there. Remember, we can help you better understand your portfolio dynamics and calculate your investor risk number. Just go to invest.com and click the portfolio review button. This is a free and confidential service. And you know what? If you have a 401k and you want to get that optimized, we can help you there as well.
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