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Investalk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States. Here is KPP Financial Chief Executive Officer, Financial Advisor Justin Klein.
Good afternoon fellow investors and welcome back to invest talk. This is our Thursday, November 21, 2024 edition. Appreciate you all tuning in for this hour. I'm excited to unpack your questions, give you some perspective, go up with over 25 years, invest in experience in order to help you on your path towards your own version of financial freedom. That's what every day is about. You know, you want to do more of what you want to do and less of what you don't have to do.
or what you have to do, right? It's really about creating that flexibility in your life from a financial perspective. And that's what we are here to help build habits towards and the right mind frame mindset to consistently make smart decisions with your money.
And that's by avoiding emotions and focusing more on the facts on the ground, avoiding worrying too much about what what you hope the world will be and focusing more on what the world is. Okay. And so we are here for this hour to do all of those things. And in just a bit, we're going to talk about today's market performance and run down the show topics. But first, let's tackle this color question now.
Just calling to check about eight investors. The ticker simbers play. Just want to get your thoughts on it. The price has dropped pretty dramatically. And I want to see if this is a sort of business that's sustainable during this financial environment. Can we see here? Thank you.
All right, looking at Dave and Buster's PLA Y is the symbol. And this is the name that is down substantially since it's high in April around $70 per share. Now we're down to $34 per share, still off the 29 and change for the 52 week low.
Certainly the technicals are weak. And the big issue here is the debt, and we've talked about this before, that you don't want companies with a lot of debt on their balance sheet. So they have negative free cash flow. Their time's interest earned is only two times, that's too low. And then they sell about a billion dollars, a billion three, excuse me, in long-term debt on their balance sheet. And that is not a sustainable situation.
frankly, when you have negative free cash flow and the long term debt in 2022 went from 431 million all the way to 1.3 billion. And in a rising and straight environment, that becomes a problem. And that's why earnings are expected to fall 27% this year. And once again, free cash flow is negative. So you don't like to see a levered company with negative free cash flow. And, you know, we're in a world where there's a lot of other
entertainment options and I just don't think that this is a great way to invest or get great place to invest. So I'm going to pass on David Buster's PL. A.Y. Now we have a lot of ground to cover over the next 45 minutes and our main focus point will be about how millions of Americans are financially unprepared and the US nearly 14% of retirees rely almost entirely on
their social security check for sustaining themselves. That's only $1,920 per month on average. We are going to look at this problem and how we could solve it for future generations. Many current retirees who are in this situation, they don't have
They can't do much, right? It's kind of time has passed them by and they are, they made their bed and they're, they're, they must sleep in it. But that doesn't mean we can't learn the lessons for younger generations and make sure that they don't repeat them. So we'll look at that story. We also have other topics on the docket as well.
One is in regards to the earnings season, what does it look like so far, as well as what are the worries that the market is currently focusing on? And then lastly, Thanksgiving is one week away from today. That also means that holiday season, it basically is upon us, right? And so what are
Analysts seeing what it comes to earnings expectations or holiday sales, and how will that impact the consumer discretionary sector?
So we'll look at that, but most importantly will be your voice bank calls that we're ready to play. One is on energy and the other is on quan investing. And we also have questions that came in via the comments section over on our YouTube channel as well. And of course, I welcome your finance and investment questions live at any time, but even more importantly now, right? Now, during this four to five o'clock Pacific time hour,
So, don't hesitate to reach out with your questions. Now, we're heading into a short break and on the side, I'll touch briefly on today's market activity and then play more of your questions here in Investock.
Invest Talk is made better when listeners add their voices. This is Nick from Seattle, A, to Steve at a 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. 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 seven. Invest talk 888 99 chart.
Eight eight ninety nine chart eight nine nine two four two seven days I get to ask your question on today's show. Let's take a quick look at the market today it was quite the. Positive day overall and what was interesting here was the growth of the market did well. But not the big names not the mega caps.
not your your mag seven names Google was down 5% on more antitrust worries that they're going to force them to spin off their chrome browser and really break up Google in some way shape or form.
ditch effort by the current Biden administration. We'll see if it gets taken up by the Trump administration. So that will be interesting. But you had other names down as well, Amazon down over 2%, Microsoft down about half a percent there, Tesla down as well. You did have meadow only down about half a percent there, Apple down slightly, NVIDIA was up on those earnings, but only half a percent there.
If you look at the rest of the market, it did very well. You had names like IBM up about 3.5% into it up about 4.3%. Costco is up nearly 3% there. Applied material is up 3%. I'm just listing off a bunch of these names. If I'm looking at the heat map, pretty much every sector of the market did well outside of those mega, mega 7 names. So that was very interesting. The bigger the company, the
Kind of worse it did today, and that's a very interesting new dynamic that we're seeing in markets right now. The Nasdaq was basically fine on the day, only up six points there, so not a whole lot of movement. The Dow was up over 1%, the recipe up over half a percent.
So, the quality names did very well. You had names like Snowflake was up 32 percent, Occlo, that's in the Uranium, the small modular reactor space, that was up 20 percent. So, some big movers on that front, Teladoc was up about 15 percent. MicroStrategy, that was down 16 percent. You had some China names like PDD, down 10 percent.
And certainly a mixed bag overall, but generally positive outside of those mega seven names. So pretty interesting start to this week so far after op X last week. And overall you just have to be generally bullish on the markets, but probably not those mega cap names.
Now, I've been telling your friends and family about our free podcast downloads, which you can find available in video form over on a YouTube channel as well. And we get comments. We get questions in the comments section. Excuse me. And let's tackle one of those. Now, CJM says, Hi, Best Doc. What are your thoughts on a high co? I own it and want to buy it. What's a good entry point again?
HEI is the symbol here. Let me pull this up. HEI. There we go. Now, this is in the aerospace defense and it manufactures jet engines, aircraft components, replacement parts, electronic and electro-optical systems.
$38 billion market cap. And this is an interesting one because it's really done well since the election. And the idea is that those in Europe are going to see some funding pulled and they're going to have to invest in their own defense and the demand for
aerospace and defense supplies will get a new major buyer. And I have some sympathy for that, but I think the broader question is will hostilities, current hostilities, how does it come to an end? But will they be tamped down? And will the surge in earnings over the past couple of years, because they made two 11 in 2021.
$2.42 in 2022, $2.86 last year. So let's make $3.65 this year. And revenues aren't just growing gainbusters. Up 37% last quarter, earnings were up 31%. And this is trading at a very high multiple.
So I would not be buying it at these levels. It's just too expensive for me. And I don't necessarily think that this is a trend that will remain durable because we're still the biggest buyer, biggest spender when it comes to military equipment. And obviously our fiscal situation is a bit dire. And I don't think this is a name that I would want to pay extreme multiples for. And this recent move up actually
is not being confirmed by the MACD. So I'm seeing some technical divergence here and high, high multiples. And so I would pass on Heiko. Let's play another caller question now. Hi, Sheila from New York. I have a question about N2G corporation ticket symbol ETR. What would be a good entry point? Thank you. Bye bye.
Enter G, engage in electric powered production and distribution to 3 million customers in Arkansas, Louisiana and Mississippi. This has been booming. Earnings are supposed to go up nicely 7% this year, 7% next year. But I think it's kind of ahead of itself. You know, it's getting to the forward looking mid 20s multiple. I think that's a bit extreme here. And I think you're trying to play the momentum. And I think you missed the momentum.
Okay, if I pull back to a daily chart, this went up on, looks like the, it wasn't the election, actually it was obviously on earnings because this was on Christmas, not Christmas, Halloween on October 31st. And it's been consolidating since, but it's not really holding it that well. And I think the momentum is waning here.
revenues were down 6% last quarter earnings were down 9%. Now earnings are supposed to accelerate into next year, but I'm not going to pay this much for a utility that just really isn't.
that exciting from an earnings perspective. So I think you're barking up the wrong tree. I think you're just trying to chase that momentum. And I think there's better opportunities in the same space. Yeah, they are the second largest nuclear owner in the US. I like that. But I just don't see them. I don't see the valuation here being attractive. So I'm passing on energy.
Thanks for the call. There are moving no break and still to come. My focus point and more answers to your questions. And the YouTube question as well. So give me a call at 8-8-99
Got a question for Justin or Luke? You're the best person to ask it. I was calling about Intel if it weren't holding on to or should I sell it? I would like to know more about a company which I've been tracking for some time. Curious if you think it'd be better for me to let it go and spend money elsewhere. Invest Talk is ready 24-7.
Well, first off, never take one man's opinion as gospel, including my own. Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks? When you give a recommendation on your show for a buy-in, like an entry point to buy a stock, if I already own it, should I go ahead and be looking to sell it? 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.
Don't forget to call, Invest Talk 888-99-SHART.
Your questions are free. The answers are unbiased. Justin Klein is here now, ready to take your calls live.
Now, I may focus point today concerns the retirement crisis and many older Americans lack financial security for a couple of reasons, poor financial literacy and lack of foresight. And according to AARP, one in seven retirees depend on Social Security for 90% or more of their income.
Now, Social Security was not designed for that. It wasn't designed as a sole source of income in retirement. It was more supplementary, right? In addition to a pension, for example, or 401k, so a defined benefit or defined contribution plan. And this is leaving many retirees, either in poverty or in the brink of poverty.
And really, once again, this is lack of foresight and financial literacy means inadequate savings during their working years. And the inability to work anymore kind of creeps up on people.
And health problems kind of creep up on people. And then eventually they say, Oh, I can't work anymore, or I can't do what I used to do. And now my income's dropping or being eliminated. And I don't have enough money because I thought I was going to be able to work longer. So you can, we can learn from this crisis. Okay. But we have to do a few things. And it starts both on the, the macro level, you know, government on down and then on the personal level as well.
The government level, you have to examine consumer behaviors, explore new policies, and implement incentives to encourage people to effectively save. More schools are implementing financial literacy programs, but more work needs to be done. A study by the CFA Institute found that 23% of Gen Z investors have no formal financial education.
And many Americans are still unaware of basic concepts like compound interest, how to choose the right retirement account, etc. And so both schools, employers, government agencies, they all have to play a role here. Now one promising approach is automatic enrollment.
And I know there are some rules here in California like this, and I think in many other states, that are making work, making employees have a retirement plan, an automatically enrolling new employees in it. But that's probably not enough, especially for low and middle income workers. Those are the ones that have the most time, just savings. Saving. So there's something called the Savior's Credit.
And this helps low and middle income Americans who contribute to a retirement plan by cutting up to $1,000 off their tax bill when they file their annual income tax. So instead of writing it off on their income, it's an entire tax credit. Okay. For $1,000, $2,000 for married couples.
but you have to be, once again, low and middle income people. What about making the entire amount that you put into an IRA, a credit versus just a write off? That's one thing that could change. Now, another layer here is that the type of work is evolving, especially for those low and middle income consumers. And that has to do with the gig economy, right? Uber and DoorDash and et cetera, they're not offering retirement plans.
And so the people that are working those jobs, they're not really realizing that they're missing out on a big part of traditional compensation packages at companies. It's not just the salary, but it's health insurance, it's, you know, retirements, accounts, matching 401k contributions, et cetera. And so finding ways to improve those people's savings mechanisms will definitely help.
Now, younger Americans have grown up hearing social security may not be available in its current form when they retire. And that's encouraged them to save earlier. But even with that, they're not saving enough mainly because of student loans. They don't have the disposal income after paying for life plus student loans to really continue to save. That's kind of on a macro level. What can you do on an individual level? Now, the first is, and I see this all the time,
Do your very best to wait until full retirement age until you take Social Security. It rarely makes sense to take Social Security before your full retirement age, okay? Rarely. Now, everyone's situation's different, so I don't want to say never, but it rarely. And I see this all the time. We had a new client coming aboard and his wife was badgering him to take Social Security. They were 64.
And I said, you know, unfortunately, they had our data in consult with me before. It's something we do for clients is figure out when they should take Social Security. Is it full retirement age? Is it at 70 or is it earlier? This is part of, you know, having a financial advisor. And so unfortunately, he turned to me a little late. But, you know, it was one of the things where somebody who, you know, they just feel like they need the money, but it's, it's, it's, you have to make that decision in the full context of your, of your, your, your, your financial plan.
So that's number one. Number two is maximizing contributions to your IRAs, your 401ks, take advantage of ketchup contributions. Then consider working beyond your traditional retirement age, beyond 65, if you can, even if it's part-time. It's not only good for your pocketbook, but often it's very good for your mental health and longevity as well. And then once again, sit down with an advisor,
Figure out your healthcare costs, your housing needs, your long-term care expenses, et cetera. And something we do for clients. And you need to make sure you are focusing on those things as well, in order to avoid the pitfalls that many current retirees have already made. Then the next to the best talk, we'll look into this question. How much life insurance do you need that depends on various factors, including annual income, outstanding debts, future expenses, and more? Best story tomorrow, but for now, I'm Justin Klein, I'm ready to take your calls at eight to eight, 99 Shark.
Every investor is working to build a secure financial future. The more you learn about how the market works, the better your chances for success. Invest talk 888-99 chart. Hello, this is David from 10. My question is about natural gas. Natural gas seems to be nearing its historical lows.
So does an investment in UNG directly make sense. Thank you. Are looking at natural gas and I am a bit bullish this winter on natural gas. One chart I saw was the average temperature in Antarctica. And it was below the long term average well below, which pretends to likely a colder winter. And a colder winter means more people are cranking those
Uh, those, those heaters and burning more natural gas and that tends to be bullish for natural gas. So I like what you are thinking. I do think a natural gas in the short to medium term is likely hit higher, but.
Make no mistake about it. You do not want to buy UNG for this, okay? And just go look at a longer term chart of UNG. UNG is the United States Natural Gas Fund and they're using futures to bet on natural gas. The problem is when they roll those futures, there's costs there. And that's why if you go back to 2007 when this was, when this came out, split adjusted, it came out at $6,600 per share. Now it's at $15 per share.
Has natural gas gone down 99.99% since then? No, it's the cost of rolling the futures. So it's interesting. I look at you and G kind of daily sometimes day to day basis to see, you know, is natural gas up or down on the day or the week?
And, you know, kind of gives you a good sense of direction. But that's it. You don't use this as a way to invest in natural gas. If you want to play the upside of natural gas, go buy a company that the vast majority of their production is coming from natural gas. That's the way you play it. You don't buy you and G. Thanks for the call.
There's another question that came in via our YouTube channel. Randy23 says, thoughts on CL looks like a good value by with upside. Good value by with upside. CL is Colgate, Paul Mulliv, your standard blue chip consumer staple company. You know, sell toothpaste, toothbrushes, dishwashing liquid, fabric softener, shampoos, et cetera. $77 billion market cap.
My issue is when you say it's a value play, I don't know where you see that, okay? It doesn't really look like a cheap stock to me. If you're looking at four looking earnings of $3.58 this year, $3.87 next year, and it's a $94 stock. So, you know, a mid 20s multiple,
That's not very cheap in my books. Now, they do have a pretty good balance sheet. That's a positive. But if you look over the last 10 years, it's enterprise value to EBITDA is average run 18. And that's where it's at now, 18 spot 42. So I wouldn't say it's cheap. I wouldn't say it's expensive.
The technicals are okay, but remember, this is one of your typical value plays, not value plays, dividend plays. And if interest rates are going up, their dividend is going to become less attractive. And it's now broken below the 200M moving average. It's just headed lower on those higher interest rates. So I am passing on Colgate. I don't think it's cheap. I want to wait till you're in an uptrend right now. It's in a downtrend and I want it to be cheap, not kind of fairly valued.
is now. Thanks for the call. Let's talk a little bit about earnings, earnings season. About 75% of companies in the S&P 500 have beat expectations on earnings so far this earnings season. It's pretty much over. That's slightly below the five-year average of 77%. On the revenue side, 61% of companies beat. The five-year average is 69%.
Now, that's always interesting, but what's more important is how is the market reacting? Are they punishing companies more? Are they rewarding companies more than average? And the answer there is yes on both, actually. According to the fact that the average price gain for expectation beaters was one and a half percent.
two days before the earnings release through two days after. So a lot of times there's kind of leaks and bidding up into the report and then the market adjusting a couple of days after. So I like using kind of those four days of trading, two before two after. The average dip for companies that had negative earnings surprises was 2.9%, both slightly larger than their historical average. So just saying is a bit more market volatility.
Now, what about the MAG 7 names? And this is where it gets even more interesting. Why? Because number one, earnings for outside of the MAG 7 is actually growing again. The 4973 companies outside the MAG 7 have positive or aggregate earnings growth in the last two quarters. It had been in decline.
And so the rest of the market is delivering growth. It's not the only game in town. Maybe that's why you're having a days like today where more money is flowing to those names versus the megacaps, the max seven. Now Microsoft, Apple and meta, they be earnings and revenue expectations, but they still saw their stock fall. And Microsoft and Apple was really because of disappointing forward guidance. Once again, oftentimes it's not just about the beat, but it's about the guidance.
and Metafell because they had declining user growth. And when it comes to capitalizing on AI, really only Google and Amazon have a decent case at it. The rest, Meta, Apple and Microsoft are spending a lot of money on it, but they have little revenue to show for it. And so that's one of the issues that's making a lot of those names and attractiveness a lot murkier. Okay, so that's what the current
earnings season has looked like so far. Now, what about the proverbial wall of a worry? And there are three main worries I think the market should be paying attention to, or investors should be paying attention to, that the market might wake up to. Now, number one would be the 10-year treasury rate. It's gone up since basically the start of the market pricing in a Trump victory, and it continues to hold its ground here.
Okay, the 10 years now at 4.43% at the close today. If you look at the end of September, it was at 3.6%. I guess that's mid-September. So that's a pretty big move. Nearly 100 basis points in the span of two months.
without with the Fed cutting rates, right? So we know that eventually there's financial gravity here that sets in, that multiples contract if rates go up too much, and higher rates tighten financial conditions, tighten liquidity conditions, and you get some sort of correction, kind of like you saw in 2022.
Now I do think that comes at some point in the next, let's call it two years, but it may be from much higher levels from here. It's all going to depend on liquidity. Liquidity remains relatively robust. And so far as long as liquidity remains abundant, it's hard to get a major correction in markets. Number two, the credit cycle. What part of the credit cycle are we in?
Credit spreads are tight right now. And so the worry is that if credit spreads move up, well, that's a risk off scenario and equity markets react and react accordingly to the downside. But, you know, so far, once again, liquidity is fine and
you aren't really getting a catalyst. Yes, that will be the next move, but it could easily be a year, two years from now, and you could have plenty more price appreciation for asset prices. Me too now and then. So far, the credit cycle is not looking ready to turn.
Let's say that. Now, going into the end of next year, I think that certainly could be a different dynamic. But for right now, everything is just fine. Now, the last one to be is AI a bubble. And the simple answer is, yeah, it's a bubble. But once again, I've said this before, it takes liquidity to move the other direction for those valuations broadly to correct like in 2022.
So that's the earnings season. That's the current market worries that are there. They're on the horizon, but you don't want to react too soon because like I said, there can be plenty more upside until there's some sort of major market inflection. Let's keep things moving and play another question from the 24 seven boys bank at 8 to 8, 99 chart. Hi, Justin and Luke. I wanted to ask you a question. I retired early and I'm now enjoying life abroad in the Philippines with my family.
I'm in my 40s and exploring ways to generate passive income. I'm particularly interested in quant investing and wanting to get your take on it. Do you think it's a viable way to create consistent passive income? Understand there's a deep learning curve, but I'm ready to put in the effort. If you have any advice, resources, or key things to watch out for as I begin the journey, I greatly appreciate it. Thanks again for all the great work that you do.
All right, so he's talking about is quant investing. You're basically using numbers and investing completely based on the numbers. Here's the issue is that quant investing has been around for a long time. The most famous one is the long-term capital management and that blew up in 1998.
Quants investing is just what's going to be using numbers and no emotions, know what I call qualitative analysis in order to make your decision. You know, for a good example is right now qualitative analysis is extremely important. Why is that? Because if you're just using the numbers,
You're ignoring this new administration that's going to come in, probably make a lot of changes to the way the economy is run, the way different departments are run, how the way regulations are applied and rolled out. And if you're just looking at the numbers, you're ignoring all of that.
And so, you know, it can be a part, it's part of our process, right? Is understanding the numbers. But to us, it's just one piece of the puzzle. And so, and you're also, it's very broad, right? What do you mean by quant investing? It's too broad of a term for me to say yes or no. It depends on the strategy you're applying, as well as, you know, is this the only way you invest?
Probably not. It could be part of your strategy. It could be a certain portfolio you're running with a certain algorithm or certain quantitative analysis. That's fine. But to say, this is all I'm going to do. A, it's too reliant on just the numbers. And B, you're not giving me any context here. What algorithm are you talking about? Thanks for the call.
2024 is moving fast and proof is that it's just a handful of quarters left Thanksgiving is one week from today. And the big question is, are you prepared for 2025? It's going to look different than 2024. We know that we have a new administration coming in, new trends that are emerging.
liquidity dynamics that are likely to be very different by the back of 2025, then the first half of 2025, what does that mean for portfolios, what asset classes are likely to underperform or outperform is your portfolio aligned with these trends. These are all things that we track for our strategies and something that we go over in these free portfolio review assessments.
Once again, via telephone or Zoom meetings. And this is where we really dial in your risk tolerance level, see what type of risk you're taking in your portfolio. And then, are you taking the right type of risk? Not just risk in general, but the right type of risk, exposure to the right sectors, the right parts of the market that are likely to outperform with the shifting administration, with the shifting
Quiddedent Dynamics both next year and beyond. And from a financial planning standpoint, are you on track for your different goals from retirement to maybe it's paying for a daughter's wedding or sending a kid to college or maybe it's health care expenses. Maybe it's downsizing your home or buying that second home. Maybe it's vacationing in retirement.
Whatever it is, these are things that you need to lay out all the data, model that out five years, 10 years, 20 years down the line, so you know what type of Social Security, when you take Social Security, when you should do Roth conversions, all of these are important.
planning exercises that we do for clients and that we can do for you. So don't hesitate to head over to investtalk.com and click on the portfolio review button on the top right hand part of the screen. Now, let's invest talk now with more than 60 million downloads in our history. Now, let's play another question now. I was calling you about to get your opinion on oral pool. The symbols are WHR. See what a good entry point is for the stock. Thank you. I'll be listed.
World pool. I don't think I need to tell you what they do. They make household appliances, washers and dryers, refrigerators, dishwashers, et cetera. 6.3% dividend yield, but the earnings have been coming down. Earnings have gone from $26.59 in 2021. When everyone was at home remodeling their homes, you know, hey, I want to upgrade my kitchen, my bathroom, et cetera.
And that's what they're making. The margins were big. But earnings have continued to fall since, those to make $11.97 this year and $11.42 next year. And pre-pandemic, they're making $16 per share. So that was kind of a flash in the pan kind of.
environment and things are certainly getting worse overall. And they have a ton of debt on their balance sheet, $7.3 billion in long-term debt and a $6 billion market cap. And I don't think that this dividend yield can be sustained.
Proof is they were increasing it consistently until 2022 and it's been flat ever since. So they see it as well that this is not a sustainable level dividend payout. So I would not be buying this. I don't like the trend in earnings and definitely don't expect that dividend yield to be sustained. Thanks for the call. Now we're moving into our final break. So if you're going to give me a call, you might do that right now at eight to nine chart.
This is InvestTalk made possible by KPP Financial, where they implement a very practical investing philosophy, independent thinking, shared success. Learn more anytime at investtalk.com. And now, Justin's here taking your calls, so step up with your questions 888-99 chart.
All right, let's pivot over to a question that was submitted via our YouTube channel. And Charles says, I'd like your take on FRHRH. It is an ADR for Fairfax Financial Communication. Sure, and holding company, got it by.
Prem Watson and somewhat like Berkshire Hathaway in nature, it was grown very large. It's holding at four and a half percent. I plan to hold for a long term. Thanks in advance. In this suggestion, a steep, easily reprised show sometime would be great. That's not a bad idea.
We'll definitely think about putting one of those together. Fairfax Financial Holdings, out of Canada, like you said, revenue $30 billion. Good profitability, return equity about 15%, nice 1% dividend yield.
I like the profitability. They're buying back shares consistently in 2018. They had 29 million shares outstanding. Now only 22 million shares outstanding. So they're certainly using their robust cash flow to buy back shares. Let me take a look at the chart here and see if I can glean anything. Let's pull back to a five year chart.
Yeah, I mean, I don't really have any issue with this, to be honest with you. I would continue to hold it for an half percent of your portfolio. There's nothing wrong with the valuation. There's nothing wrong with the cash flow. Like you said, it's an insurance business, a boring business, but it's a good business, right? It's in the reinsurance market. So yeah, I would continue to hold Fairfax Financial.
Thanks for the call. Now, lastly, let's talk about the holiday season and Target just had pretty weak guidance and earnings mainly because higher margin items such as home goods and electronics are not selling as well. Consumers are spending less on non-essential items and industry analysts expect a deal heavy holiday season going forward.
And according to the National Retail Federation and Deloitte, overall holiday shopping is expected to grow at its lowest pace in six years. One of the contributing factors though, only 26 days between Black Friday and Christmas. Last year there were 31 days. So a lot of this is calendar related because if you look at expected number of shoppers, those shop in store online between Thanksgiving Day and Cyber Monday this year,
That's going from 82 million last year to 80, sorry, 182 million last year to 183.4 million this year. Okay. Now, what's interesting is mobile phones are expected to account for 53% of online shopping from November through December.
And online spending growth expected to jump to 8.4% from 4.9% last year, mobile spending expected to grow 12%. So most of that growth is coming just what you're going to do on your phone. And that's because younger consumers are continuing to drive a lot of the growth in demand. And so that is the expectations for this holiday season.
Lot less time, but more promotional in order to pull forward a lot of that demand. I don't know if you've seen a lot of already black Friday deals being touted. That's because they're saying they're not waiting that just because the calendar says black Friday is on the 29th doesn't mean that they're waiting that long and they're already getting to those promotions. So,
That's what you should expect from a lot of these retailers and the trends and obviously that feeds into profits and margins. And we'll see low expectations so far and that will make the potential beats, I think a lot easier as we head into 2025. Remember the consumer overall, it's in good shape.
low unemployment as well as a balance sheet on average that is in better position than it was in 2019. Now, yes, lower income consumers, middle income consumers, a lot of them are hurting, but that's not where most of the spending is happening, right? Most of the spending is coming from upper middle class to the wealthy and they are doing well. Even though it has assets, they're doing fairly well.
Now, I'm Dustin Klinez, and this completes another Invest Talk program. We thank you for listening. We encourage you to tell your friends and family about a free podcast download. By the end of the time, at iTunes, Spotify, Google Play, and be sure to rate and review on iTunes as well. And remember, we can help you better understand your portfolio dynamics, and your financial independence goals, and calculating your investor risk number by heading over to investtalk.com. Click on the Portfolio Review button.
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