HSA Costs to Watch Out For!

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 Guerrero and it is Wednesday, November 20th, 2024. And it is my pleasure to be here with you as we celebrate being halfway through another week. And although markets were relatively quiet today, it does not mean that they are not changing because that is the natural state of the world. Everything around us is changing.

The seasons change, the economy changes. We are on the verge of political regime change. And so with all that in mind, we have to figure out how those things affect our lives, how those things affect our goals, how those things affect our portfolios, and therefore how we achieve our financial future.

And so because of that, our objective today on this podcast, this radio program, this YouTube series is to focus on what will make you a better and more informed investor. Now, each day, five days a week, except on holidays, we meet here to discuss, to learn. We bring educational items, actionable items, things that we think it's important for you to know for your daily lives in or outside of the investment world.

But most importantly, more important than what we bring to the table, we can't possibly know what is on your mind unless you tell us. And so my favorite part of the show is when you call in directly, but we certainly have some voicemails and all sorts of questions ready to play today as we always do. Now, just a bit, we'll talk about what happened in the market today and what happened after the market closed and run down the show topics that we brought for you. But first, let's tackle this caller question.

Hi, my question is about Target, PGT. It's down big today. Let you guys think about it. It's a good time to buy. Thank you guys for what you do.

So taking a look at the Target Corporation that is ticker TGT, it is down a big today. It's down 21.97%. Why is it down that much? Well, it plummeted almost 22% today, just about 22% because not only did they miss

Q3 results. Well, they also downgraded the full year performance and the Q4 expectations going forward. They missed what the consensus estimate was going to be for next quarter as well as missing, what was supposed to have occurred last quarter. And so as we head into the end of the year, which should be retail's best time, right? Black Friday is only a week away. I don't even know if they actually start that on Fridays anymore. But regardless, we're headed into the holiday season.

And so on top of that, with Walmart a couple days before, maybe the day before, reporting fine earnings, reporting fine for looking guidance, Target coming out and having negativity within their earnings report certainly drove their stock price downward.

Now in terms of revenue growth over the past five years, it looks solid when you look at the five-year basis, right, from 75 billion in revenue, billion in revenue back in 2019 to about 106 billion this year, but still that is essentially three straight years of revenue being flat to slightly down. And so with that in mind, yeah, they still have 7% annualized growth over the past five years, but that's really, really backloaded.

before the pandemic or really coming out of the pandemic rather is when you saw that explosive growth and it's it's kind of fallen ever since then and their margins have fallen as well. We know that retailers tend to operate on smaller margins. They peaked out during the pandemic at about 6.6% margins down to about 4% this year.

They have a bit of debt, but not too much, only about 20 billion, and they have been paying that off. At the end of 2023, they had 21 billion in revenue. This most recent quarter, they had 19 billion in revenue. Now, this is going to be from Q2. I don't believe this is the Q3 data yet, but regardless, they're paying their debt off. Their cash flow is falling. Certainly not something you'd like to see. We've already talked about their profitability falling.

The dividend yield is about where it's been since 2022. But I mean, where Target has been since 2022 is not a good place, right? They've underperformed the market every year by 16, 28, 36%, their industry by 13, 21, 51%. And so when you're looking at this and you see this company falling off, right, you're seeing their forward-looking price to earnings fall below their five-year average.

I don't think now is a good time to buy because from a man in perspective, from a technical perspective, it does not look that good. But also, how is it doing comparatively, right? How is it doing relative to other retailers? And we know, again, from a big company like Walmart.

Fine. They're doing fine. Target not so much. I don't necessarily think now is a good time to buy in when a company tells you that the future doesn't look too bright, at least in the short term. I think it's best to believe him. Thanks for the call.

We've got a lot of ground to cover in the next 45 minutes or so and here is the sum of what I have planned for you. My main focus point concerns this topic, HSA costs to watch out for. When dealing with health savings accounts, HSA's, it's important to avoid common pitfalls and consider factors that can help maximize savings.

We will also touch on how Vanguard has joined the ranks of BlackRock and State Street and is expanding their allowance for shareholders to decide how to vote proxy.

We'll also touch on some conflicting opinions out of the Federal Reserve. Various governors giving different opinions on how well they think we're doing relative to the battle against inflation. And should we have time at the end of the show? You know, a big part of the future Trump administration is likely to be tax cuts, but not all tax cuts are created equal. So we'll dive into how we can hope

That policy is used most beneficially and what could stimulate the most growth. We also have questions ready to play, including one on Ulta Beauty, ULTA. We get that one a lot and EnterG Corp ETR as well as some questions that came in from the comments section of our YouTube channel. And of course, I welcome your finance and investment questions now or anytime throughout the show.

Now we're headed into a short break on the other side. We'll touch briefly on today's market activity and play more of your questions. This is invest talk. You know the number 88899 chart.

Invest Talk is made better when listeners add their voices. This is Nick from Seattle. Hey, it's Steve out of Charleston, South Carolina. Could you comment on Barrett's goals? G-O-L-B? And Justin Klein and Luke Guerrero are always ready to provide unbiased answers. Be patient. Don't rush into anything. Understand what you own. I would probably trim here. But I don't see any reason why you'd want to sell out of it.

Voice Bank calls are very important. But so are the spontaneous questions that come in during the Invest Talk live stream. Those pivot over to a live call. We love those. It's like we got our first live call. I love live calls. If you've never called, what are you waiting for? Let's go take another live call. Tell your friends, live a little, live a little. It's like we got a live call. Call Invest Talk weekdays from 4 to 5 p.m. Pacific time. Does that make sense?

Yeah, sure does. I appreciate the advice. 888-99. Chart. This is Invest Talk. Luke Guerrero is here taking your calls live. 888-99. Chart.

Let's talk a little bit about the market today, US stocks. I would say mixed, though, ending near their best levels, the Dow up 32 basis points, S&P 500 flat on the day, Nasdaq down 11 basis points, Russell 2000 pretty flat as well, only up three basis points on the day.

And all this came after stocks finished mostly higher on Tuesday for their second straight day of gains. Max seven, largely lower, including the video ahead of earnings and Google ahead of a detailed antitrust proposal. After the close, NVIDIA reported earnings. They're down just slightly, I think around 2% last time I looked. So nothing too crazy on a name that is prone to various swings. We'll see how it opens up tomorrow.

Other laggards included semis, discount stores, dollar stores, apparel, retail, department stores. Our performers on the day included housing, link to retail, homebuilders, credit cards, managed care, entertainment names. Dollar index was up 50 basis points gold, finished up 80 basis points as well. Crude oil hit in the opposite way, settling down 70 basis points off of some early morning strength.

But overall, no really big directional drivers were in play today. We already touched on target selling off on disappointing results and guidance with the margins, as I mentioned, being a key area of scrutiny. A more important issue for the market is probably Q3 results and guidance from NVIDIA after the close. We'll see how the broad market reacts to tomorrow. Certainly, after hours, it reacted negatively, though not too crazy and negatively.

Financial Times reporting today that Mark Rowan has emerged as a top contender for the position of US Treasury Secretary and will meet with Trump today, which really fits with the narrative that has been reported recently, which is

the Trump administration, future Trump administration, looking for a pick that is liked by the markets, right? I think anytime a new president, new administration comes into office, you have to think to yourself, well, you can't get absolutely everything on planet earth done. So what do they like?

What do they want to focus on? And certainly, market appreciation has always been something that has been a key focus. The first administration is likely to be a focus of the second administration, so this makes sense to me here. But pretty quiet elsewhere, nothing on the US economic calendar today, the obitified speak, which we'll touch on later. Cook said that she saw rates trending downward with the magnitude and timing of cuts could be driven by the data still.

Thursday brings initial claims, Philly Fed Manufacturing, and existing home sales, Flash PMIs, and Final University of Michigan Consumer Sentiment, as well as Inflation Expectations. We'll hit on Friday. Next week, as I want to remind you, is a holiday shortened calendar. And because of it, it looks fairly uneventful, new sales, and Richmond Fed Manufacturing on Tuesday, GDP initial claims dribble good orders PC and petting home sales on Wednesday, and Chicago PMI on Friday and that'll pretty much round out the month of November.

Now, we like to bring you all information on...

via various mediums, right? We do it via audio through our podcast, through our radio show. We also do it via video in case you're interested in seeing all of the charts and whatnot that Justin and I look at as well as the information, the fundamental information that we're looking at. And so when you leave your questions over on the Investalk YouTube channel comment section, we like to get to those as quickly as we can. So let's tackle one right now from handle jog shift.

And it's about to ticker CRH. And the question is, I came across CRH stock when using my screener. Do you think it's a good company and where would a good entry point be?

So take a look at CRH. There's a global construction materials company and manufacturers and supplies of a variety of products and services for the construction industry, including cement, lime, ready-mix concrete, asphalt insulation, pretty much anything you would need to well build major public roads, infrastructure projects, houses, all certainly things that are likely to be occurring in mass going forward.

Now, it is a relatively large company, $68 billion market cap with very little debt, only about $15 billion in debt. It's interest coverage ratio 11 times. So not overly levered either pays a dividend consistently right now. It's at 1.4% dividend yield. It's usually range between two and three and the reason why it's 1.4. Well, it's 1.4 because the company is up 70% over the past year, up 44% year to date.

Now let's take it recently was...

reported earnings. Oh, no. Yeah, recently reported earnings. Those were pretty solid. So all this looks pretty good to me, right? You have cash flow improving. You have profitability. It looks like it's improving. You have revenue growth that is slow, slow, but steady about 2% on an annualized basis. Though again, right? Coming out of the pandemic, they did particularly well. You see good growth here, about 10% growth here, but it's, it's tapered off a little bit. But a lot of that growth rate over the past five years has to do with the fact of the, the fall from 31 billion down to 27, coming into the pandemic.

And so with all that mind, how does it look on a valuation basis? Well, it's kind of expensive, but you'd expect that, right? You'd expect that given where it's traded over the past year, about 16 times, we're looking price-earnings, about 3.1 times price of the book value. It looks like it's on overall the upper end of its range. I think that this is a company that looks like it has, well,

a track record without performance, certainly, generally over the past, you know, five years. It was a period of underperformance of 2021 relative to the industry, but it's been a great year over the past couple of years. And because it's been a great year, because they've been able to write the ship from the following trend of revenue down into 2020, and then upward back into what's going to be 36 billion as of this year, it looks a little expensive to me. And you can tell because of how it is relative to its ranges, given what is honestly

Not that exciting of growth. Now I do wonder where a lot of its business comes from. Well, it looks like 80% of it comes from, I'm sorry, 60% is the United States, the rest of it externally. And so this could have a negative impact from tariffs, right? And so given all of that, given where it's currently priced, I'd keep it on my watch list for now, but I would have to pass. Now I'm going to do a break and still to come my main focus point. More answers to your questions.

And Will from San Diego, hang on because your question will be next.

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. It's got a will from San Diego calling in live. I've been a question about FMCC. Do you own it? Are you looking to buy it?

I own it. I'm just speculating on it because I know it's a penny stock and I'm up a little bit so I'm wondering if I should take my profits since it was downgraded today. Yeah, you know, this is an interesting one. And did you buy it before? It rocketed off into space by chance.

Yeah. Oh, well, congratulations on that one. For those of you who don't know, Freddie Mac, FMCC. It's a government sponsored enterprise. It's currently in conservatorship, essentially what it does. It's the federal home loan mortgage corporation.

And what it does is it helps to ensure that the US housing market really has a reliable, affordable liquid supply of mortgage funds. So it purchases the loans from lenders, it pools the mortgages into securities, it guarantees payment, all sorts of things that help keep the US housing market moving. And so it rocketed off into space, as I said, right before the election in October.

We're really after the election from about $1.20 to about $3.30, right? That's why year to date it's up 243%. But today it was downgraded. It fell about 10%. And the reason why is because it took off, because a lot of people rightly thought that the company could be potentially privatized.

Now the downgrade today is related to the mechanism by which legally it might have to be privatized and what that could mean for the profitability of the company and the structure of the company. And so for me, I see a lot of legal uncertainty here, which could move the price either way, given what chartered has to operate under if it were to be privatized. And so if you're up a lot, you're speculating. It looks like you won the speculation game.

I would take profits here. I would get out of the name. We don't know where it's going to go from here because there's just a lot of legal uncertainty on if it's even going to be privatized or what the mechanisms for privatization might be. That all sound good? Yeah, that sounds good. I think I'll take your advice and get out of it. Well, fantastic. Have a wonderful day. You too. Thanks for the info. Let's go for two in a row. This one came in earlier from 888.99 chart.

Hello, Justin. Hello, Luke. Really enjoyed the show. I really appreciate the show. The question is about Ulta Beauty. I think it was maybe second quarter of this year. Berkshire had said that they had purchased and took a position. And then when they just released 13Ks, I think they said that they had released or sold a majority of that position.

I like the sores, the products that they sell, and the valuation is good, but just it's been taking, uh, beating the last three days since the news that Berkshire sold. So just wanted to get your take on Alta. I have a position currently. Thank you.

It was the name we get questions on a lot, Ulta Beauty, ticker ULTA. And it's had a rough year, down 29% year to date, down about 6%, 7% over the past three months, only down 15% though on the 52 week. And the reason why this has not been performing particularly well was a perception of a diminishing consumer and what that could do to companies like Ulta and Ulta specifically.

And so every time somebody's called in about this name, what I've mentioned is that consumers will recover. Consumers will eventually recover. There are some good growth prospects here. It has a very modest valuation. They're expanding stores. They're loyalty programs. They repurchase shares. From a fundamental basis, the company does look solid. It's got $1.9 billion in debt on a $16 billion market cap company.

It's not really levered in a crazy way. It's cash flows improving. It's profitability. It looks better. It's buying back shares, which is certainly something we like. But I just think in the short to medium term, Ford-Lincoln Guiness doesn't necessarily look good, but headed into mid 2025, into 2026, 2027. Their strategy of expansion, plus being able to capture more dollars from consumers who will potentially have a looser purse strings, right?

can be beneficial for this company? This just seems to me and has seemed to me for the entire year to be a situation of the company that is fundamentally fine with a good strategy that is just cyclical. It's just a cyclical company, right? Revenue growth, 10% on an analyzed basis over the past five years, but over the past three years, it's only grown about 10%, right? Or about 1%, right? And so it's down even on the past year. And so

I think there are certain situations where companies are down because they're poorly performing. There are certain situations where companies are down because they are cyclical. Yes, Warren Buffett may have sold some of this. Berkshire may have sold some of this. But Berkshire's also been raising cash. We talked about it the other day, why they might be doing that. It doesn't necessarily mean it's an indictment on this specific company. Currently, this company's trading at 15 times, afford-looking earnings well below its five-year average price to book, about 6.9 below its five-year average price, cash for 11 times below its five-year average.

And so I think, and I've thought for some time that these are the types of levels where you can get a pretty good discount on a company that has a great strategy and is likely to succeed for the coming years, though maybe for the not, not the next couple months or moon to break. My focus point is still coming up. So hang on.

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. Call Investalk 88899 Chart. Investalk, your questions are free. The answers are unbiased. Luke Guerrero is here now 88899 Chart.

My main focus point today is about something that is commonly used by, I would say, a lot of people. And that is HSA's. But more specifically, HSA costs to watch out for. Now, health savings accounts or HSA's are widely regarded as valuable tools for managing health care costs and saving for retirement. However, a new report from the Consumer Financial Protection Bureau wants consumers to watch out for hidden fees that can chip away at these benefits.

HSAs do offer significant tax advantages, contributions, earnings, and withdrawals for qualified healthcare expenses are all tax-free, and unlike flexible spending accounts, HSAs don't require you to use the money within a year, making them a powerful retirement planning tool. Today, there are more than 36 million HSAs in the United States, holding over 116 billion in assets, a 500% increase since 2013.

But these accounts do come with potential downsides, common fees, including monthly maintenance fees, transaction fees, and paper statement charges. According to the CFPB, fees can significantly impact smaller accounts. For instance, let's think of an account that's $1,000 in balance, and it could generate just 15 to 50 cents in annual interest while occurring maintenance fees of around $45 or more. Over time, this erodes savings, especially for underfunded accounts.

Now, while fees are concerned, it's important to point out that HSAs still offer considerable value. And that's because tax savings from HSAs typically far outweigh these costs, reducing state, federal, and local tax liabilities. As HSAs mature, having been introduced only in 2004, it's likely that fee structures are going to evolve, right? That's the same thing that happened with 401ks after being introduced in the 1980s.

Another thing, going for fee compression may reduce costs in the years ahead. But for now, account holders can take a few steps to minimize fees. First, for example, you're going to want opt for electronic statements because that'll eliminate your paper fees. And growing account balances through consistent contributions can also offset costs as a relative thing, right? If you have a larger account, you're paying $45 in fees. That's less significant than having a $1,000 account with $45 in fees.

CFPB highlights that while fees have a larger impact on smaller accounts, most HSA balances are significantly higher than the $1,000 example that we used. The average HSA balance is about $4,300 and consistent funding can make fees less impactful over time. For those using HSA's over decades, fees often add up to a relatively small fraction of total savings.

In short, HSA's remain a highly effective financial tool, despite some fee-related challenges. And so by staying informed about the amount of terms and making strategic contributions, consumers can maximize the benefits of their health savings accounts while keeping costs in check. Let's bring back to the Invest Talk Voice Bank and play this listener question now.

Afternoon, Justin and Luke, Chuck from Clayton. Love the show. Got a question about SoulVentum. S is in Sam, O is in Ocean, L is in Lincoln, V is in Victor. It's a spinoff from 3M. I got a bunch of stocks based on a one for four spinoff. Reading about the company, I kind of like the medical aspect of it because I don't have much medical in my portfolio. But right now it's about 1% of my portfolio and I'm debating new company. Do I sell it and look somewhere else?

Do I up it to 3%? I just sit on it for a while and see where it goes. Again, whatever you can give me on, soul, victim and your thoughts on a new spinoff. Thank you for your time.

So SolVentum Corp, ticker S-O-L-V, is a healthcare company that develops manufacturers and sells products and services to improve healthcare. They have healthcare information management, they have filtration and engineering, patient and consumer division, material science division and a data science division. And so their products are used in healthcare, medical care, dental care, dialysis, all sorts of things. Now I think there's a broader question here.

And the broader question is, how do you deal with spin-offs? And so as if you recall, I and Justin generally advise not investing in IPOs for a year. The reason why? Well,

New companies haven't traded before, haven't been public companies before, lock up periods for insiders, lock up periods for people to participate in deals. And so all that can kind of distort pricing volume. And generally speaking, empirical research has just shown that IPOs tend to underperform over the first year of trading in aggregate. Now, spinoffs are different, right? Spinoffs are

if they're from publicly traded companies, divisions of companies that have been publicly trading, divisions of companies that have had public accounting, public scrutiny, all sorts of things such that it really is a different category from IPOs. And so I don't really have the same qualms and hesitations for investing in spinoffs that I do for IPOs.

Now take a look at this company, it's about 11.5 billion in market cap, 8.5 billion in debt, so a little bit of debt on the balance sheet, but not too much, I would say.

Now, the problem here from my perspective, right, is even though I think it's fine to invest in spin-offs rather than IPOs, I just don't have a lot of information to make a determination here. I do have three years of revenue growth and revenue looks pretty flat right from 8.1 billion to 8.2 billion. I do have margins which have been falling from 17.9% three years ago to 12.6% years ago.

Sorry, it's supposed to be 12.6% this year. I do have free cash flow that has fallen as well. And so even though, generally speaking, I don't have a problem with investing in spin-offs. I just don't have a lot of information here that tells me that this is a good company to hold.

And more importantly, is it what you want your primary healthcare exposure to be? I think it's taken on a lot of rights. Now, it's 1% of your portfolio. If you want to hold it at 1%, I think that's perfectly fine. But if you have no other healthcare exposure, I don't think you should necessarily double down on a name that if anything else has just really not exhibited.

much growth at all over the past three years. And so keep on, hold on to it, completely fine. Make it your primary healthcare exposure by investing more. I would have to advise against that. I don't think that's necessarily a good idea. Let's talk a little bit about Vanguard. Vanguard is expanding its program that allows retail shareholders to have a direct say in proxy voting decisions.

Nearly 4 million investors controlling up to 250 billion can now choose how their votes are cast on key corporate issues.

Among the options is a new profits above politics approach, reflecting feedback from shareholders who prioritize financial returns over environmental, social, and governance, or ESG factors. Those move comes as vanguard and other large asset managers are navigating growing political scrutiny. Conservatives argue that major fund managers are pushing woke capitalism

While progressive criticized Vanguard for voting against all environmental and social shareholder proposals this year, the introduction of new voting options highlights the tension these firms face in balancing competing demands. Investors in eight Vanguard funds will be able to choose from five voting strategies, letting Vanguard decide is one of them. Voting with company management is another, prioritizing ESG factors, voting present, or focusing purely on profits.

The program will not yet include Vanguard's largest funds, like those tracking the S&P 500 or the US total market, but Vanguard plans to expand access to investors who hold shares through retirement accounts, potentially broadening the program significantly.

Competitors like BlackRock and State Street are also rolling out similar initiatives. BlackRock's voting choice program now includes retail investors offering 16 voting policies to choose from. And we certainly will not be getting into all 16 because we just don't have the time to do that. So far, about a quarter of eligible assets have opted into the program. Meanwhile, State Street's initiative plans spans 1.7 trillion, 1.7 trillion in assets.

With 10 different voting options available, again, I don't think we have the time to get into all of those today. The pressure on these asset managers really extends beyond proxy voting. Regulators, including the Federal Deposit Insurance Commission or FDIC, are examining whether firms like Vanguard and BlackRock require additional oversight due to their large stake in U.S. banks.

The FDIC is considering tighter rules when index funds own 10% or more of a financial institution, and so for Vanguard, the early response to its voting program has shown mixed results, nearly half of the participant investors have opted to let the company use its own judgment. Whether these programs will alleviate regulatory scrutiny still does remain uncertain, but still, by handling more control to investors,

I think Vanguard's moving in the right direction. You're handing more control to shareholders. And so Vanguard and its rivals are really hoping to address here this dual criticism, to remove their hands from the situation. And so I certainly believe for them, they are hoping that in the future, shareholders will have more of an active role in deciding what to do. But either way, I am always in favor of putting more power in the hands of shareholders.

It's like we have another live call Brandon from Houston has a question about CED. What are you looking to buy? I put in a half position, whatever it dropped to 90 bucks. I've been looking to put a chemical company in my portfolio for a while now. And I know it was a name that you guys had mentioned in the past. By the way, I love the show. Love you guys. Been a long time listener. And so when it dropped to 90, I've been looking at the valuation metrics.

And they still look pretty good. I know their projected demand is looking to slow. And the earnings have dropped a little bit, but they're still going up slightly next year. When I look at it in Finviz versus a lot of other companies like Eastman, Chrono, Solen, Westlake, et cetera, a lot of the metrics look better. So I just wanted to see now that it's dropped to 70, it looks like it's maybe at another support level.

Would you look at this as an opportunity to put it in the other half position or am I missing something here? Yeah, well, Calone's corporation tickers CE. It's a materials company.

It focuses on chemical, special materials, produces and supplies products for really a wide range of industry and consumer uses. And taking a look at its geographic segments here, this might be an issue, right? 20% of its revenue comes directly from China. 26% is from the US. 23% is Germany. And so maybe aside from the fact that they missed earnings in early November, aside from that fact, there could be some

issues with potential trade tensions between our European partners and a more adversarial relationship with China, which really makes up the bulk of their business, right? The bulk of their business is international and that could certainly hurt going forward. Now, we did see from their forward-looking guidance that along with missing profit and sales forecasts, they did adjust down their forward-looking guidance and talk really about focusing on cutting costs, right? And companies that want to cut costs,

of a

Margins are compressing, right? They had, they peaked out and they're not margin 35% during the pandemic. Let's not count that aside from that 13% is the lowest that they had. Well, this year's projected to be 8.9% their cash flow looks to be falling off a little bit. They are buying back shares, which I do like, which has contributed to their dividend yield increasing to 3.8%, which is the highest it's been in five years. But the biggest driver of that is really that it's down 53% a year to date.

And so, you know, even with that in mind, you know, it is trading still not at the lower end of its five-year average, right? The lowest trading at price rating was 4.9, it's only at 7.7, it's below its average here, its five-year average over this time frame, yes.

But, I mean, technically, there's nothing to suggest given that this falloff is really pretty recent, right? It was coming into November when they reported earnings. I don't necessarily think that this is a buy signal here. This seems to me more like a price to skip everything. We got a lot going on here. We have poor forward-looking guidance. We have that poor past performance, and we have an uncertain partnership

or uncertain relationships with trading partners that could impact this company. And so I don't necessarily think that it is a sell signal at this point, but I don't see anything that tells me right now is the absolute time to buy. So I would kind of be in a holding pattern right now to see what happens in terms of this price discovery phase because it broke below all of its support levels and it's trying to find some new support right here. Does that all make sense?

Yeah, would there be a price or any metric or any new development that you would be looking at to say, okay, maybe this is another chance to look at this again.

Yeah, I mean, if you look at it over the past six months on a pure momentum basis, like from a sector momentum perspective, historically speaking, down momentum names tend to keep being down, right? Be it herd behavior or just, you know, for fundamental reasons. Up momentum names seem to be to continue, at least for the short term to continue their momentum upward as well. And so I think that you have some real bad technical signals here, right? Some people call it technical factors. I like to call it momentum.

until the down momentum subsides where it's probably going to be right now in the bottom 5% of the sector, until it breaches back above the bottom 25% and cuts that down momentum significantly. I don't think there's any reason why you should buy the same. Okay, right on. Awesome. Yeah, have a wonderful day. This is Invest Talk. I'm Luke Gray. We have one goal here to help you achieve your financial freedom. Our work continues after this break, so get your questions in now at 888.99 chart.

We've got a question for Justin or Luke. You're the best person to ask it. Quick question. What are some signs that a recession is coming? Is there any lesson for people who own stocks, even if they don't short a stock, that the stock they own, they should know whether it's been heavily shorted? Invest Talk is ready 24-7.

If this gets to 170 to 175 in that range, that's where I'd pick it up. Awesome. Thank you, Jeff. I appreciate it. I'm hoping you'll give me your cake on Ormatt Technology, O-R-A. Curious if you think it'd be better for me to let it go and spend money elsewhere. I'm a new investor and your podcast has helped me out a lot. Call InvestTalk 88899 Chart or post your questions on the InvestTalk YouTube channel.

Invest Talk. Tell your friends they can listen live, download the free podcast, or watch Invest Talk on our YouTube channel, and they can leave their finance and investment questions anytime on 888-99 chart. Hello there, Luke and Justin. Matt from Minneapolis Calling, longtime listener of you guys. And I have a question here for the show, please.

I hear you talking a lot about energy stuff and how that could prosper here in the future. And hopefully under new presidency and stuff, it'll still have growth. What I'm looking at is a ticker symbol, X-O-P. And that ETF is in oil, which looks like it should be going up in the future with all the drilling.

Also with natural gas is always a good thing and I think it also includes some pipeline stocks to have heard Justin say are the big money making thing and gas is the pipeline. So I'll listen to your thoughts about this fund on the show and have a good day. Thank you.

So Tigger XOP is the Spyder S&P Oil and Gas Exploration and Production ETF, say 35 basis point cost fund that essentially takes the S&P total market index.

takes all the oil and gas, oil and gas exploration and production, oil and gas refining and marketing names. And then equal weights them. And anytime you have an equal weighted fund, that essentially is overweighting smaller names and underweighting larger names. And that's exactly what you see here. It's about 44% in large caps, about 45% in mid caps, 8.7% in small caps and a tiny 70 basis point in micro caps compared to

their benchmark, which is 91% in large caps, 7% in mid caps, 1.1% in small caps. And so although I don't typically like equal weighting because, you know, I think it's a two simple explanation for how we try and wait towards the names that historically do outperform small mid cap names.

I think it at least gives you better exposure to the things that typically drive longer term expected returns. And so for 35 basis points, I think that's completely fine. You're looking for now. I think that the benefits to natural gas are probably going to outweigh the benefits to oil.

I've talked about this on the show before is 2018 is when the US became the largest producer of oil in the world. And the amount of oil we've been producing and exporting has only gone up during the Biden administration. Exxon came out and said, you can tell us we need to drill, but you can't force us to drill. We're in a situation where there are permits that have been issued that are not being used.

Just because we are encouraging the oil industry to drill doesn't mean we necessarily will. And oil prices have been lower, right? They've been lower because certain countries in OPEC plus have been ignoring quotas. They're lower because Chinese demand has been lower and that has been a big driver of downward pressure.

They're not so much lower because we're transitioning. It's really the other factors that have driven them lower. And so I would contend that within the energy space, I don't think oil is going to do as well, I'm not saying it's not going to do well, as well as others think it will. And that's why if you actually look back post-election, oil producing names, oil and gas exploration names have not done that well comparatively to the rest of the market.

In aggregate, right? Market cap weighted. This, this, this fund has done 9% a month to date. The reason why? Well, it's under overweighting those small cap names, but you know, pull that back quarter to date of 8% year to date of 6%. Rest the market is up a lot more.

And so if you were looking in the energy space, I would probably focus more on that natural gas segment, unless on that oil segment. But if you're looking to get into the segment broadly, I think a market cap weighted fund is definitely a fine way to do it. And this one is not too expensive. Before we head off, I wanted to briefly mention an interesting thing about the Federal Reserve that is conflicting statements, right?

Michelle Bowman, speaking in West Palm Beach, Florida, expressed caution about lowering rates too quickly while Lisa Cook presented their views on inflation and monetary policy and essentially said that, you know, we are doing a better job than a lot of people assume we are.

And so this just adds more and more to the uncertainty surrounding the Fed, and the uncertainty is why we meet here each and every day. And I'm Luke Guerrero, and this completes another invest stock program. We thank you for listening, and we encourage you to tell your friends and family members about our free podcast downloads. Do yours anytime at iTunes, Google Play, and Spotify, and please be sure to rate and review us on iTunes. Remember, we can help you better understand your portfolio dynamics and calculate your investor risk number,

We also can help you optimize the potential of your 401k. Head over to invest stock.com if you're interested in either or interested in both independent thinking shared success. This is invest talk. Good day.

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