How to Safeguard Your Finances Amid Rapidly Changing Economic Policy
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On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is InvestTalk. Independent thinking, shared success. InvestTalk 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 InvestTalk. My name is Luke Guerrero, and it is Wednesday, February 19th, 2025. And we are well over the hump of February, an already short month, which means we are already more than halfway through quarter one, 2025. And that first quarter has brought us a lot. It's brought us a change in administration. It's brought us, as every quarter does, a

New earnings releases, though, Q1 2025 and Q1 of every year tends to be maybe particularly important because you see company annual statements. But through it all, the trend has been changed. And with these changes, there are fresh challenges. And the biggest challenge of all is trying to stay informed to set yourself up in a position

to achieve your financial goals. And we hope here at InvestTalk that we're at least a small part of that in your life, bringing you daily market wrap-up, answering your finance and investment questions, and really talking about what is going on and why it is important to you. So today is like any other day. We will do all of those things. We will run down today's market performance. We will go over what those show topics are for you. I think a couple of them are particularly important, especially our focus point.

But most importantly, your finance and investment questions. So let's tackle a caller question now. Hi, great show. I just wondered what your opinion of Aurora, A-U-R was, if it would be a good investment. Thanks for what you do. Bye-bye. Okay, let's take a look at A-U-R. That's the ticker. It's Aurora Innovation, Inc.,

It's a pretty decent sized company, about $16.48 billion market cap. They do not have a lot of debt, about $121 million worth of debt, but they do issue a lot of shares. Shares outstanding have gone up from 11, sorry, 1.1 billion to 1.8 billion in just over four years. So what do they do? Well, it's a self-driving technology company and it's developing the Aurora driver,

which is an autonomous driving system for freight and passenger transportation. Over the past year, it's up 206%. It's up 41% year to date, up 43.27% over the past three months. And revenue, well, there hasn't been much revenue to speak of, but they are projected to have 4.4 billion this year, again, based upon projections, analyst projections.

And so if you aren't having a lot of revenue, then it's kind of hard to have any profit at all. And they certainly don't. Net operating cash flow, very, very negative. And in fact, getting more negative. Free cash flow as well, very negative, getting more negative. And so the question is, why is this company up so much? Well, according to their timeline and through their partnership with NVIDIA, they're trying to deploy...

these driverless freight operations between Dallas and Houston in April of this year. Now, keep in mind that is a slight delay from their end of 2024 target. And so my question is, at least for me, I know anecdotally that if I missed a deadline, nobody would give me more money. And so if this company is missing its self-imposed deadlines, it seems interesting to me that it's trading 41% higher year to date, 43% higher over the past three months.

This is one of those companies that doesn't make money. It's never made money. There's a bunch of autonomous freight companies out there, a couple of which have gone under, one of which was launched by a friend of mine's brother, and that went under as well. And it's a difficult business to break into. It's going to be even more difficult because of labor unions, truckers unions, and negotiating with companies that may want to move towards the autonomous space.

And so for me, it's a pretty big company trading at incredibly high multiples because again, they don't make money. It's trading at 8.8 times its book value, which isn't that high. But for a company that's not making any money, I think for AUR, gonna have to pass. Thanks for the call. Looks like we got our first live call of the day and I haven't even asked for them yet. So let's go to Richard from Hawaii. Very lucky of you, Richard. There's a question about TOL. Do you own it or are you looking to buy it?

I got a small position, and actually, I remember, I think it was you, not Justin, I think it was you, on Toll Brothers about four or five months ago, gave it a thumbs up. It had, you know, five, six months ago, it's about what it is at as of today. It went way up, came down, I think the earnings came out, and they were a little lower than expected.

This is something that maybe it will be affected by lumber. We have tariffs. It may also, I think it's a pretty good company. They have pretty good fundamentals. But do you think as a long-term investment, at this point, this is still a good thing to get into?

Yeah, that's a great question. I think I remember looking at this name now that I look at it fundamentally, look at its balance sheet. It's a $12.19 billion market cap company. It's a U.S. luxury homebuilder.

And so, you know, its balance sheet looks pretty solid, only $2.7 billion worth of debt on that $12.1 billion market cap. Probably one thing that I liked is they buy back a bunch of shares. Their shares outstanding has dropped from $130 million to $100 million in the past five years. So they are returning capital to investors, something we like. Now their profitability has been on an uptrend since 2021. It's staved off a little bit, right? We did get Q4 earnings yesterday. We did get earnings yesterday.

And because of that, this stock is down 5.87% today. And that's because those earnings showed well profit margins have kind of stalled a little bit here. And growth has stalled as well. And so six months ago when we looked at this, we saw, okay, growth was slowing down. It peaked in the pandemic from 2021 to 2022, and it started to pick back up last year, but it slowed down again.

So from a fundamental perspective, I still like where this company is. Now you hit on hit the nail on the head of one issue that it might have, and that is potential tariffs. Now we saw an announcement of tariffs against Canada and Mexico, obviously Canadian lumber would be very important to this company, that were walked back for, I would say not that much in concessions, because for the most part, they were plans that were already being implemented.

And so I've become more skeptical of the likelihood of tariffs on Canadian imports. It seems to be more like an easy way to get maybe a tiny concession and say, I won there. And so if you asked me two months ago, I'd been more skeptical. I'm a little bit less skeptical now. As a whole, I still like where this company is positioned. I think that

From a multi-cycle perspective, its balance sheet allows it to stomach some of the headwinds that we were talking about. But overall, I still think it has a good position to be in. From a relative valuation perspective, it looks pretty solid. It's only trading at 1.6 times its book value, only 1.2 times sales. So seemingly several months ago, I might've given it a thumbs up. It's down since then. But you know what? Can't always be right, but in the long run, we might be. Thanks for the call.

We're going to do a break. On the other side, we will preview today's topics and talk about today's market activity. Please remember, you can call anytime and leave your questions on the InvestTalk Voice Bank 888-99-CHART.

InvestTalk is made better when listeners add their voices. My name is Robert and I'm from Florida. Great show. I learned so much from just listening to you. Hi, this is Susan from New Jersey. I'm calling about AXOA. How much of the information that came out today on the whole AI play with deep seek and all that, how much of that information can you really trust?

And Justin Klein and Luke Guerrero are always ready to provide unbiased answers. I am very much a person that does not trust Chinese data. Net income is growing and margins are staying pretty steady. Let's go take a live call. Paul from Palm Desert. Let's go to George from San Mateo who has a question about index funds. Tell your friends, live a little, live a little. Call InvestTalk weekdays from 4 to 5 p.m. Pacific time.

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One other thing I want to mention about that name we just got a call on is, because I was running out of time before we headed to the break, is in 2024, in spite of it being down 24% in the past three months, it still outperformed its industry by 21.5%. So it seems to me overall, it was a broad sector issue, not an individual company issue. Certainly with new earnings, the company's down 5.87%, but still outperforming.

I think it's a solid company. Now we've got a lot of ground to cover in the next 45 minutes or so, so here are some of what I have planned time permitting. My main focus point concerns this topic. How to safeguard your finances amid rapidly changing economic policy. To navigate turbulent economic times, you'll need proactive financial planning and smart investment strategies. So we'll go over all that and more. We'll also touch on how inflation is starting to look...

more worrisome than it did before. It's looking increasingly sticky. So what does that mean for the Fed? What does that mean for the economy? We'll also touch on the SEC's crackdown on ESG and what that means for passive managers and their participation in corporate governance. And should we have time at the end of the show, we'll touch on a story from Microsoft who claims a breakthrough in quantum computing.

We also have voicemail questions ready to call, ready to play rather, including one on VST, which is Vistracorp, and one on CDE, which is Core Mining Inc., as well as some questions that came in from the comment section of the InvestTalk YouTube channel, and hopefully more live calls from you.

Let's dive right into the market wrap for the day. U.S. stocks were mostly higher, finishing just off of best levels. The Dow was up 16 basis points, S&P 500 up 24 basis points, NASDAQ up 7 basis points, and the Russell 2000 down 34 basis points. Outperformers included A&D, airlines, E&P's oil majors, solar and grocers.

Big tech mostly higher with Tesla the standout on the day. Meta another down day after breaking its 20-day streak of gains on Tuesday. Underperformers included meme stocks and retail favorites like Palantir and MicroStrategies, homebuilders, home improvement names, and building materials. Treasuries overall looked pretty firm across the curve with the curve steepening in a reversal of some of Tuesday's backup in yields.

The dollar index was up 10 basis points, with gold finishing down 40 basis points. Crude oil finished up as well at 40 basis points. Not much new around the broader narratives that have really been churning the market recently. Market's still in a waiting mode for more clarity about Trump's policies and signals from the Fed for the 2025 policy path. Now, Trump has already signaled a 25% tariffs on autos and chips and pharmaceuticals.

But the market may be cushioned, at least in the short term to some extent, by lack of details, delayed implementation, and seemingly a very wide open door for negotiations. Headlines continue to highlight the GOP's struggles on reaching a consensus for Trump's legislative priorities despite controlling both houses of Congress, with the Tax Cut and Jobs Act from his first term the extension there the biggest issue for the market.

Nothing particularly incremental out of the recent U.S.-Russia talks regarding the war in Ukraine, though. Interesting to note a lot of attention on Trump's increasingly critical comments of Ukraine. No meaningful macro headlines, really, of any sort today. And nothing to discern, I would say, from the latest batch of earnings, really in a waiting game for Walmart on Thursday and NVIDIA next week.

On the Fed front, January FOMC meeting minutes mostly in line with expectations. A reiteration from those minutes that the Fed can afford to be patient to assess the economic outlook. However, some officials did flag that inflation remains somewhat elevated, while some see risks to the inflation side of the dual mandate appearing to be greater than the labor market side once again. I already mentioned it, but there's a little bit of a rate reprieve. Another area of focus, as the minutes noted earlier,

it may be appropriate to consider pausing or slowing balance sheet runoff aside from what they might do on the rate side. All of this, though, didn't do much to change expectations this year. The market continuing to price the next cut in July at around 40 basis points of cuts through the end of the year. Now we're about to head into another break and still to come, my main focus point, a bunch of stories for us to go over and more answers to your questions. Give me a call at 888-99-CHART.

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InvestTalk. Your questions are free. The answers are unbiased. Luke Guerrero is here now. 888-99-CHART. My main focus point today is an important one because we talk, I talk often at the top of the show about all the changes that are coming. And so given that, given the changing economic policy, how do you safeguard your finances?

President Donald Trump's administration has implemented economic policies at a breakneck speed, with several major announcements facing challenges, reversals, or delays within hours of their announcement. Now, the unpredictability surrounding tariffs, federal budget cuts, and income-related policies has left a lot of Americans questioning, how do I protect my personal finances from these shocks? So why does all this matter for you, for investors, for consumers?

Why do his policy changes matter? Well, tariffs could lead to higher consumer prices. The 10% tariff on Chinese imports and the threat of tariffs on Mexico and Canada could increase costs for a wide range of goods from electronics to food to auto parts. Inflationary pressures from trade policies could squeeze household budgets and reduce spending, which in turn may weigh on corporate earnings, stock market performance, and eventually the economy as a whole. Now, this uncertainty from the whipsaw policy changes

The speed of these changes may also fuel volatility. Think back to 2018, when tariffs were implemented then, what the market looked like then. Rapidly shifting policies create uncertainty for businesses, right? It impacts investment decisions, it impacts market sentiment. And so you as investors should be prepared for heightened volatility in equities, especially in sectors exposed to global trade like manufacturing and technology and consumer goods. Now cutting budgets can affect federal workers, but also benefits programs.

Federal hiring freezes, job buyouts, and spending cuts could impact millions of workers and millions of beneficiaries of government programs like SNAP, like student loan forgiveness, student loan programs. Veterans, one third of all federal employees is a veteran. The potential for sudden changes to employment and social safety nets could again weigh on the economy. And so because of all of this, there is risk of economic slowdown.

If tariffs remain in place, if federal spending is slashed, we talk about this all the time. The thing that floated the economy for so long was really that fiscal impulse. If that's pared back, if businesses slow down hiring, well, then there may be some issues economically. And so given all of this, given all these risks on the horizon, how do you protect your personal finances and investments? Well, there's a bunch of ways. One, you could build a cash buffer. Given the levels of uncertainty, increasing emergency savings to cover six to 12 months of expenses is

can provide that financial security in case of job loss, rising costs, or benefit reductions. You can evaluate those big ticket purchases. If tariffs are expected to drive up prices on essential items like cars or electronics, maybe it makes sense to accelerate the planned purchases before those price increases take effect. Now, to a certain extent, this can be helpful. We don't want anyone panic buying because over the long term, supply chain adjustments could mitigate these long-term costs.

but certainly something to consider. And of course, and we say this all the time, it is the only free lunch in investing, diversify. You want to reduce your overexposure to sectors that are vulnerable to tariffs. You want to reduce your overall exposure to sectors that are vulnerable to trade disruption. You can look towards commodities. You can look towards inflation protection security, certain tips,

Certainly, if you're in your advanced ages and you've moved away from the capital appreciation, your investment horizon is crunched more, you need the money sooner, then your primary concern is not just keeping the capital, but making sure it maintains its ability to spend, its spending power. So treasury inflation protected securities can be really helpful there. And through it all, what you need to do is monitor policy developments closely.

Market-moving policy changes are, like I said, happening at an unprecedented pace. So staying informed on trade negotiations, on budget proposals, on regulatory shifts can help investors anticipate risks and adjust their portfolio accordingly. Trump's rapid-fire approach to economic policy has created a landscape of heightened uncertainty, where investors and consumers alike must be proactive in safeguarding their financial well-being.

Let's keep things moving and get to a question that came in from the comment section of our InvestTalk YouTube. If you haven't checked it out yet, you should go check it out. We break down our show into multiple segments. Maybe you want to look at the market wrap-up. You want to look at a caller question segment. You want to look at the main focus point segment. You don't have to sit through all 45 minutes. We break it up into separate videos for you. And while you're over there, if you have a question, you can certainly leave it. This question is about EQH.

from our friend Carter Erickson and says, do you think EQH is a buy right now? Let me pull this up right here. Actually, we have to go to a break. So when we come back from the break, we'll dive into EQH. On the next Investop, we'll look into this topic, how to lower health costs in the new year. To avoid financial surprises, it is crucial to understand your health plan's coverage, your network, and potential out-of-pocket expenses.

That's tomorrow, but for now, I'm Luke Guerrero, and I'm ready to take your calls at 888-99-CHART. Luke Guerrero is here and ready to tackle your questions. 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? Just wanted to ask you about one stock that I'm looking at, InterGETR. Call InvestTalk, 888-99-CHART.

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Before the break, we started to dive into EQH, which is Equitable Holdings. It's a prominent financial services company in the U.S. It operates through its principal franchises, through Life Insurance Company and Alliance Bernstein. And what it does is it offers a range of products and services, including variable annuities, tax-deferred investments, and retirement plans, as well as life insurance policies. It's a fairly large company, $17.39 billion market cap.

It's got a little bit of debt, though not too much, only about $3.833 billion. Now, for the past five years, they have been pretty consistently buying back shares. They went from, get this, 450 million shares outstanding all the way down to 300 million. So they are certainly returning capital to shareholders.

They pay a solid dividend. Right now, it's sitting at 1.7% dividend yield, which is about where it's been over the past five years, five, six years, where it's ranged from 2.1% to 2.6%. Over the past 52 weeks, it's up 62%. Year-to-date, it's up 18%. Over the past three months, it's up 19%.

And from a valuation perspective, it sounds like it's cheap at 7.6 times forward-looking earnings, but that's about a high over the past five years. Trading at about 10.6 times book value. Yeah, 10.6 times book value as well. Now, we were looking at this name. It's been on my watch list for a couple months here now. And from a momentum perspective, it still looks pretty solid. In 2024, it outperformed its industry by 24.4%. In 2025, it outperformed its industry by 25%.

12.1% so far. Now the business revenue breakdown is pretty split, right? 20% comes from individual retirements. 24% comes from their insurance. 31% comes from investment management. And so because this company has such a high exposure to investment management and because they are a seller of annuity products, given that there's going to be a lot of people in the coming years that are turning towards retirement that are more concerned about a steady income stream

and would perhaps welcome an annuity, justly or unjustly, I think that the potential for continued growth isn't something that should be ignored.

And so it is a little expensive at this point in terms of where it's been over the past five years. It has been on an uptrend pretty consistently for the past 12 months. I would look for it to pull back, find some resistance, find some support. Maybe I would buy between 45 and 50 here. But for now, I'm keeping it on my watch list, waiting for a likely pullback. Thanks for watching.

Now we'll get to our next talking point soon, but as always, this is about your finance and investment questions. So let's play another question now.

Hey, this is Chris from Las Vegas. I got a question about Vistracorp. That's ticker Victor Sierra Tango VST. Just want to get your overall position on it. I don't have a position in Vistracorp yet, but I'm looking to enter and I know they have their earnings coming up here in about two weeks, but...

Most of the analysis that I'm reading are very bullish with high price targets over the next year or two. So just want to get your take. Thank you. Vistracorp, ticker VST, is an integrated electricity and power generation company. They have several business segments.

which in my opinion have some pretty funny names because one is retail. That's about 50% of their business. The next is East, which makes up about 20% of their business. And the last one is just called Texas, which makes up about 18% of their business. Now the retail segment, as you'd expect, sells electricity and natural gas to residential, commercial, and industrial customers. Texas and East, well, they're involved in electricity generation.

Over the past 52 weeks, this company is up 271%. It has outperformed its industry and the S&P 500 since 2022. Its relative strength looks pretty darn solid there. In fact, it's outperformed its industry since 2021. Year-to-date, it's already up 22%. So the question is why? Well,

As is the case with a lot of these companies, we've talked about it a lot, the rapid expansion of AI and data centers has significantly boosted electricity demand. And so Vistra, being a major power provider, has benefited a lot from this surge. Another is a lot of demand for their shares.

Hedge funds have been trying to move into AI adjacent spaces. And so if you look at their chart here and you look at their share volume, 2024 really started to pick. Now, with that being said, it's sitting at some pretty expensive levels for a power generation company. 23.9 times forward looking earnings, 14.5 times price to cash flow, 19.5 times book value.

And so given this run-up, it certainly does look expensive. Now, it recently was rejected at about 190, head down to 140. Now it's trying to find some new support levels around 160. It could go either way from here from a technical perspective. So given that it is at the upper end of where it's been over the past five years in terms of relative valuations, this is another name that I would keep on my watch list for now.

We've seen one of the biggest benefits potentially from the deep seek news we saw weeks ago is there could be lower energy demand from less intensive models. This would likely cause companies like Vista to pull back, which would provide solid buying opportunities. So for now, keeping it on the watch list, that is ticker VST Vistacorp. As you may know, Jerome Powell's Fed is facing the renewed pressure as inflation expectations surge.

fueled by rising consumer concerns, tariff threats, and wage growth. January's core CPI increase of 5.5% on an annualized basis has reignited fears of a prolonged inflationary period, challenging the prevailing narrative that price pressures were cooling. The University of Michigan survey shows consumer inflation expectations jumping sharply from

since the election, suggesting the public is bracing for a new wave of price increases. So what does this mean for you? Well, first, rising inflation expectations could keep interest rates elevated. Investors betting on rate cuts probably need to reassess. I hear all the time, be it from friends or heard it from three different people in the past month on various golf courses, that they're looking to buy a home and they're just going to refinance when rates come down. That doesn't seem to be on the horizon anytime soon.

Continued pressure on long-duration bonds and rate-sensitive sectors like technology and real estate is likely to be a secondary outcome of higher rates, just like higher mortgage rates. Tariffs could exacerbate inflation and weaken market confidence. There's another side effect. Trump's trade policies are already influencing expectations with businesses and consumers pricing in with their expectations those potential cost increases. If tariffs push import prices higher,

Inflation could accelerate beyond current projections, and this could lead to even more aggressive Fed policy, more tightening, maybe even raising rates. Another is this wage price spiral concept, and that could really shift equity market leadership. Wages rising at 5.9% annualized in January signals a pretty sustained cost pressure for businesses. What does that do down the line? Well, it hurts profit margins in labor-intensive sectors like hospitality and consumer services.

but also benefits inflation hedge plays like commodities, energy, and select industries that can really pass along those costs. One thing that I think is most important to note is the stark difference in inflation expectations between political parties. Historically, inflation fears can become self-fulfilling. If people think that things are going to be more expensive tomorrow, they may buy today. If more people are buying today, that drives up demand for goods.

If demand for goods are driven up, prices are driven up. If supply stays the same. And so this uncertainty, these expectations, this anticipation of future cost increases can lead to more market volatility as investors weigh these risks, particularly regarding the Fed's independence and how seriously the Fed is taking inflation. So what are the investment takeaways here?

Well, investors should expect continued volatility in treasury yields as inflation expectations shift. The lack of clear downward trend in long-term inflation forecasts suggests you should have some caution if you're thinking about investing in longer duration bonds. Another consideration, companies with strong pricing power, particularly in commodities, industrials, and energy, could outperform if inflation remains sticky. With expectations for persistent inflation, gold, commodities, and it

sorry, with the expectations for persistent inflation rather, gold commodities and tips, as we already mentioned, may continue to see strong demand. And so investors should prepare for a scenario where rate cuts are delayed or scaled back because the Fed's ability to maintain credibility in fighting inflation will be critical in shaping long-term market trends. If inflation expectations keep rising, the Fed may have to reinforce its commitment to price stability,

Dashing hopes for near-term rate cuts. Now, we already dipped into the InvestTalk YouTube question bank once, so let's dive in. Again, this question from our friend Randy Ramos, Randy23Ramos32, and it's about Allstate, ticker A-L-L. It says, would love to know your thoughts on starting a position in Allstate. Is it good to buy right now? Now, as we pull this company up, ahem,

So Allstate, as probably most of you know, is a leading U.S. insurance provider. They offer a range of property and casualty insurance products. Over the past year, they're up about 18%, though year-to-date, it's pretty flat, down about 60, 62 basis points, it looks like. Over the past three months, down about 2.54%.

Now it's a pretty large company. It's about $51 billion market cap. In terms of its business segments, it's really split into three, right? It's got its property, its liability, its protection services, and it also has its health and benefits segment. But most of it is about property liability coverage. Taking a look at their balance sheet, or actually let's take a look at their growth first, right? So their growth looks pretty solid. Their net income, though negative in 2022 and 2023,

Move back to positive, $4.6 billion in 2024, projected to be about $4.9 billion in 2025. Now, in terms of balance sheet, as I mentioned, they're about a $50 billion market cap company. They have very little debt, only about $8 billion in debt. And their cash flow took a dramatic step upward in 2024 after lingering in the $4 to $5 billion range for just about three or four years. They pay a solid dividend, about 1.9%.

Not too high, not too low, just right compared to where it's been over the past six years. And that dividend is pretty stable. Their payout ratio is only about 21. Short interest, not much to speak of, and they do buy back shares. So one thing that is important to note here, given that all states' general exposure is to the United States, is anytime you're looking at property insurance, you want to be particularly cautious about regional exposure.

Now, they weren't too exposed to any housing policies, as far as I'm aware, in California or in North Carolina. Insurance companies generally are pulling out of some areas that have outsized risks. Now, for a relative valuation perspective, it looks pretty cheap, right? Forward-looking price earnings only about 10 times. It's below its five-year average.

Return on equity looks pretty solid. Price to book value only about 2.6 times. It's kind of expensive for an insurance company. You tend to see insurance companies be like banks, trade more closer to asset value. From a technical standpoint, it looks pretty solid. It's been on uptrend since July. It's ranging at about the $190 level. Overall, I think Allstate is a solid company. Their growth looks pretty solid as well.

From a relative strength perspective, it's pretty much tracked the S&P 500 since 2019, and it does not look too expensive. So if you're looking to get into some insurance exposure, some diversified insurance exposure, they do a pretty good job with geographic diversification. I think Allstate is a solid company. Thanks for the call. We won't be able to answer it, but let's listen to this InvestTalk listener question. You know the number, 888-99-CHART.

I'm calling today about ticker CDE Co-Ower Mining. I used to own Silvercrest Metals and they got bought out by this company. So now I own shares of this company. I was hoping you could take a look at the fundamentals and the chart and let me know, give me some guidance on what I should do if I should go on to this stock or to just move it to something else. I do own some other silver companies.

I do also report earnings tomorrow. So by the time I hear this on the radio, it may be a little bit too late. But at least it'll be, I don't know, it'll be a little volatile in the next couple of days. And maybe I can have some guidance on what to do. Thank you very much and have a good day. As promised, we will answer this after the break because we don't have time because we have to go into our final break. This is InvestTalk. I'm Luke Guerrero. We have one goal here to help you achieve your financial freedom.

Our work continues after our final break, so get your questions in now at 888-99-CHART.

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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. InvestTalk 888-99-CHART. Before the break, we had a question about ticker CDE, which is core mining. Core mining.

It's a U.S.-based mining company specializing in the exploration and production of precious metals, including gold and silver, with most of their operations, in fact, all of their operations in North America, about 61.9% of their revenue comes from the United States, about 38.1% comes from Mexico. Now, it's a small-cap company on the upper end of the small-cap spectrum, about $4.1 billion market cap company.

with not much debt on its balance sheet, which I would say tends to be a little rare for a miner. About $610 million. But it hasn't made money in a while, which with the elevated gold prices maybe seems a little suspect. It hasn't had a profit since 2020. Now it's projected to have some 2025 net margin projected to jump up to 24.8. And these miners do tend to be volatile. Any company that

whose price is predicated upon revenue that comes from a volatile commodity is inherently going to have volatile profits. But in spite of not being profitable, it's up 11% year-to-date, it's up 141% over the past 52 weeks, and its relative valuations look pretty average compared to where they've been over the past six years, 2.6 times price-to-sales, 14.7 times price-to-cash flow. Now recently, in October of last year,

announced plans to acquire silver crest metals, so they are doing strategic acquisitions. And it does show reinvestment in the business in a time when demand is shifting towards gold and silver as hedges against inflation, as protections against uncertainty. But I question this company whose relative strength has looked pretty bad going back for six years.

that has 10 short interest out there is really the proper way to play the gold and metal space and so for core mining ticker cde gonna have to pass thanks for the call quickly before we head off for the day let's touch on the sec's new guidance on investor activism and how it's created significant uncertainty for major asset managers like blackrock and vanguard

This move reflects the broader regulatory shift under the Trump administration, which seeks to curb the influence of large fund managers over corporate governance, particularly in relation to ESG. Previously, asset managers that owned more than 5% of a company could engage in corporate discussions without being classified as activists. They would file a less detailed 13G form indicating passive investment. But the new guidance broadens the conditions that require a more complex 13D, creating more...

compliance burden, and more cost. And so by introducing this additional regulatory burden, what you're doing is you are making it less likely that these companies participate. Now, listen, I have a questionable relationship with ESG, not because I don't think that in social considerations, environmental considerations, if it's important to an individual investor, I'm not going to question why it's important to somebody. Investing is about your preferences. And so there can be a role for all of this in there.

My problem with the E part is, well, the data is not really good. There's no uniform way of analyzing it. You can't really make determinations. But out of E, S, and G, the most important part has been the G part, corporate governance. Why? Well, what does a passive manager do? What does a passive investor do? They hold shares for the long term. What do activists tend to do? What do hedge funds tend to do? Short term. And so I think it's incredibly important for voices at the table to

to be more concerned about long-term performance and long-term growth than short-term share price fluctuation. And so with these changes, what's likely to happen? Well, large asset managers who often advocate for government's improvements, such as executive compensation oversight, they're kind of going to be left out of the table. And so there could be a shift away from longer-term performance considerations and more towards short-term share price appreciations.

I'm Luke Guerrero and this completes another InvestTalk program. We thank you for listening and we encourage you to tell your friends and family members about our free podcast downloads, which they can get at iTunes, Google Play, and Spotify. Remember, we can help you better understand your portfolio dynamics and calculate your investor risk number. Just go to investtalk.com and click the portfolio review button. It is a free and confidential service. While you're chatting with us, we can also help you optimize the potential of your 401k and build you a full wealth plan.

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Thank you.

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