Smart Investing with Brent & Chase Wilsey

Brent & Chase Wilsey
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Smart Investing is the radio show where Brent and Chase try to make investing easier to understand. They demonstrate long-term investment strategies to help you find good value investments.

  1. 4d ago

    October 2nd, 2026| AI Credit Card Spending, Office Real Estate Opportunities, The Fed’s Tough Decision, Huawei vs Nvidia, Nasdaq’s Hidden Market Weakness, Municipal Bonds Aren’t Tax-Free & More

    Would you let your credit card do your spending for you? That sounds like a very silly question, but the reality is that credit card companies like Mastercard now have AI bots that can shop for you.   This is crazy to me. People already have enough trouble controlling their spending on credit cards, and now credit card companies are rolling out programs that can do even more shopping for you.   Mastercard has teamed up with a startup called Alchemy, allowing AI to make purchases on your behalf. The credit card companies try to make this sound safe by emphasizing that you can set restrictions, such as how much the AI can spend and what types of products it can purchase. But the bot can still make purchases on its own without consulting you every time.   I suppose there could be some positives. Maybe the AI can find better prices on goods and services or save you time by handling routine purchases. But I still believe there is potentially more harm than good.   There is also a major legal question: If an AI bot makes an inappropriate or unauthorized purchase, who is responsible?   Right now, if you find fraudulent charges on your credit card, you can contact the credit card company. In many cases, the company will investigate the transaction, cancel the card, issue you a new one, and you generally aren't responsible for unauthorized charges.   But what happens when you have authorized the credit card company to let an AI bot make purchases for you? If the bot makes a purchase you don't want, it could become much more difficult to determine whether that transaction was fraudulent or whether you simply gave the AI too much authority.   With billions and even trillions of dollars being invested into artificial intelligence, it appears that many companies are trying to find ways to turn those enormous investments into profits. As the AI revolution continues, we're entering some pretty unknown waters, and I think we need to be careful about giving AI systems the authority to spend our money for us.   Could now be the time to start looking at office real estate? For years, office real estate has been one of the most unpopular areas of the market. Remote work, rising interest rates, concerns about vacancies and, more recently, AI have all weighed heavily on office properties.   But I think there are some signs that the story may be starting to change. Office usage in 10 major cities, according to the Kastle index, has reached a post-pandemic high of roughly 67%. On busy days, badge swipes at prime office buildings are regularly within 10% of pre-pandemic levels.   At the same time, the amount of office space available is shrinking. Older buildings are being demolished or converted into housing and other uses, while tenants are leasing more space. It’s currently estimated that there is only 19.7 million square feet of office space under construction nationally, close to the lowest level on record. This comes as Cushman & Wakefield say tenant are chomping up the most space since 2020.   And despite concerns that AI will eliminate the need for office workers, some of the biggest AI companies are actually taking significant amounts of office space. Anthropic, the company behind Claude, recently signed a long-term lease for a 16-story Manhattan building with space for approximately 1,700 desks. This is more than triple Anthropic’s New York based employees at the beginning of the year.   Manhattan is particularly interesting. Prime office space is leasing for roughly $95 per square foot, about 6% above pre-pandemic levels, while some premier locations can command more than $300 per square foot. More than 80% of the 7.7 million square feet of prime office space currently under construction is already leased. The interesting part for investors is that office REITs still appear to be priced for a very different future.   SL Green & BXP are trading about 50% below pre Covid levels, while Hudson Pacific Properties is down about 95%. Based on expected 2026 funds from operations, all three are also trading at lower valuation multiples than they did before the pandemic.   That doesn’t mean office real estate is suddenly without risk. A recession could hurt demand, and higher interest rates could make refinancing existing debt much more expensive. AI could also eventually have a meaningful impact on the number of office workers. But this is exactly why I think it is worth starting to look.   When an industry has been beaten down for years, you don't necessarily need everything to return to the way it was before. You just need the fundamentals to improve enough that the current valuation no longer makes sense. For us, I would not be interested in buying physical office buildings or taking on the risks of individual properties. If we were going to invest in this area, we would only look at publicly traded REITs with strong balance sheets, manageable debt, quality properties and attractive valuations. Sometimes the best opportunities are found in areas that investors have spent years avoiding.   The Fed Has a Tough Decision Ahead Inflation is still sticky, and I think the Federal Reserve has a difficult road ahead.   The good news is that inflation came in lighter than expected in August. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, rose 3.4% over the last year, while core PCE, which excludes food and energy, rose 3.0%. That was below economists’ expectations of 3.7% and 3.3%, respectively.   But 3.0% core inflation is still well above the Fed’s 2% target. And there is another problem that could make inflation more difficult to control: energy.   We are starting to see oil shipments improve as more crude makes its way through alternative routes and the Strait of Hormuz becomes more navigable. In fact, crude shipments through the Strait of Hormuz reached a seven-day average of 13.5 million barrels per day as of Monday, matching the prewar baseline. More broadly, crude oil shipments from the Middle East, which includes the Persian Gulf and Red Sea, have at times exceeded prewar levels. As of Monday, the region’s seven-day average reached 19.5 million barrels per day, well above the prewar baseline of roughly 17 million barrels per day.   That sounds like great news, but there is a major distinction between getting crude oil moving again and getting refined products to the market. Refined product shipments through the Strait of Hormuz are averaging just 677,000 barrels per day over the past seven days as of Monday, compared with 3.6 million barrels per day before the war   Diesel, gasoline and other refined products remain extremely tight. Refining capacity has been damaged, inventories are low and refiners around the world are already operating under significant pressure. That means even if the price of crude oil comes down, consumers may not see the same relief at the pump because the bigger problem is increasingly what happens after the crude reaches the refinery.   This is particularly concerning because diesel touches almost everything in the economy. Trucks, agriculture, construction and manufacturing all depend heavily on diesel. Higher diesel prices eventually work their way through transportation and production costs and can ultimately show up in the prices consumers pay.   And the Fed isn't dealing with a weak economy that gives it an obvious reason to cut rates aggressively. Second-quarter GDP was revised up from 1.5% to 2.2%, and ADP reported that private employers added 90,000 jobs in September, above expectations.   So here is the Fed’s problem: inflation is still above target, the economy is growing, the labor market is still producing jobs, and there are elevated inflation concerns coming from the refined fuel crisis.   The latest inflation report is certainly encouraging, but I don't think we can declare victory. If crude shipments continue to improve, that will help. But until refined products become more readily available and fuel prices start coming down, inflation could remain stubbornly above the Fed’s 2% target.   For now, I think the biggest thing to watch isn't just the price of crude oil. Watch what is happening with diesel, gasoline and refining capacity. That may tell us much more about where inflation is headed next.   Will Chinese Company Huawei Take Business From Nvidia? I’m still concerned about the price of Nvidia’s stock and its valuation, but I do not want to see the company lose business to a Chinese competitor called Huawei.   If you go back to the Biden administration, you may remember that China was restricted from buying Nvidia’s most advanced AI chips. Chinese companies, including Huawei, were also restricted from accessing the advanced equipment needed to manufacture more sophisticated chips.   Huawei has not given up. In fact, the company plans to introduce two new AI chips next year, with additional products reportedly planned for 2028 and 2029.   The chipmaking technology Huawei is using today is still behind Nvidia’s, but the company is moving aggressively to close that gap. Huawei also has the support of Beijing and other Chinese technology companies, which could give it additional resources to develop a domestic AI chip ecosystem.   For Nvidia, the question is how quickly Huawei can catch up and whether restrictions on China ultimately create a long-term competitor rather than simply limiting China’s access to Nvidia’s technology.   The Nasdaq climbed in September, but the market underneath it is becoming concerning The Nasdaq Composite gained about 2% in September, continuing to outperform much of the broader market. The problem is that when you look beneath the headline numbers, the market is telling a very different story.   On Wednesday, for example, the Nasdaq was up while new 52-week lows were overwhelming new hi

  2. Sep 26

    September 25th, 2026 | Higher Rates Hurt Private Debt, Siri AI Obsolete? Trust Facebook With Your Data? GLP 1 Lawsuits, Bank Charters Exploding, Why I Fear AI, Portfolio Too Conservative? & More

    Will Rising Interest Rates Hurt Private Debt and Private Equity? It is hard to tell for sure because private investments are, by definition, private, and we don't have the same level of transparency that we have with publicly traded investments. However, with the 10-year Treasury crossing the 5% mark, common sense would tell you that higher interest rates could put even more strain on an already strained private debt and private equity market.   Private equity funds frequently use leverage, meaning they borrow money to enhance potential returns. The typical holding period for a private equity investment is generally seven to 10 years, but an increase in interest rates raises the cost of borrowing for private equity firms, which can reduce profits and ultimately investor returns.   Many private equity funds are already facing potential losses in software companies because of concerns that artificial intelligence could disrupt or even put some of these businesses out of business. Private equity firms may want to sell these investments quickly, but as interest rates rise, other investors may become less willing to take on additional risk because the risk-free return available from Treasury securities has become more attractive.   The longer these private investments remain in a fund, the longer the fund may have to carry its debt and pay interest, which can further reduce investor returns. PitchBook estimated that the average private equity return in 2025 was around 7%, the lowest in 14 years, despite decent economic growth and relatively stable interest rates.   For investors who own publicly traded private equity firms, the results have also been difficult. Companies ranging from Apollo Global Management to Blue Owl have seen significant declines in their stock prices year to date. If interest rates remain elevated, there could continue to be pressure on the business models of these firms.   For private debt, the story is not necessarily better, even if your broker tells you that it is "stable." The same basic principle applies to private debt as it does to publicly traded bonds: when interest rates rise, the value of existing debt generally falls.   With private debt, you may not see that decline reflected in a daily market price because the investments are not publicly traded. That does not mean the underlying economic impact isn't occurring. If a private debt fund eventually needs to sell assets, refinance debt, or deal with defaults, those underlying losses can become much more visible. One problem can potentially lead to another as lenders and borrowers are forced to deal with higher financing costs and declining asset values.   At Wilsey Asset Management, we have been cautious about private equity and private debt for years. We understand why these investments are attractive and why brokers sell them, particularly because they can generate significant fees and commissions. However, we believe investors need to understand the risks, especially in an environment where interest rates remain elevated.   One of the biggest concerns with private investments is liquidity. Unlike publicly traded stocks and bonds, investors in many private funds cannot simply sell their investment whenever they want. Withdrawals may be limited to certain periods, sometimes only once a quarter, and funds can impose additional restrictions when too many investors try to withdraw money at the same time.   If interest rates remain high for an extended period, the combination of higher borrowing costs, lower valuations, weaker exit opportunities and limited liquidity could create a difficult environment for private equity and private debt investors. The fact that you don't see the losses on a daily statement doesn't necessarily mean the risk isn't there.   Is the New Siri AI Already Obsolete? Is it possible that Apple’s latest update to its famous Siri has already turned it into a follower rather than a leader?   The new Siri AI assistant is supposed to be able to do things like book travel plans, fill out online forms, cancel appointments, and even file complaints with customer service. But in today’s fast-moving world of technology, there are already services out there, like Instinct, and Meta has built a new AI platform called Muse that runs in the AI cloud, meaning you don’t necessarily need to be inside a specific app to use it.   Many of these services can connect to your Gmail account and communicate with your iMessage or WhatsApp. Instinct and Muse can go beyond simply setting appointments. They can look at your existing appointments, identify conflicting travel arrangements, and then cancel the conflict and rebook the necessary reservations for you.   They can also look for reliable restaurant recommendations nearby and book a reservation for you without you having to do much of anything. With Instinct, it can even create an account on a website, navigate the site, find locations and times for events being promoted, and add those events to your calendar for you.   Currently, Siri AI can’t freely surf websites and is largely limited to working through apps on the iPhone. If services like Instinct and Muse are able to outperform Siri while Apple continues to keep its AI experience primarily within the iPhone ecosystem, users could eventually start asking themselves why they need to pay such a high price for Apple’s newest phones when cheaper Android phones may offer access to more capable AI assistants.   Apple has built its reputation on being a technology leader. The question is whether Siri will remain one.   Would you trust Facebook with your personal and financial information? This is an important question because this is the direction AI appears to be heading. Meta, which owns Facebook, recently released its new AI agent, Muse, and to complete tasks and make life easier for you, it will need deep access to your personal information.   Within the first five days of its release, Muse was downloaded 600,000 times, which on the surface sounds like a lot. However, keep in mind that there are roughly 3.6 billion users across Meta’s platforms, which makes 600,000 downloads sound like a very small number.   The bigger question is: Do we trust Mark Zuckerberg and Meta with privileged information based on the company’s track record?   Yes, they use words that sound good when describing Muse, such as “safe,” “secure,” and “private.” They also say Muse will run on a digitally walled-off virtual machine that other agents cannot access. OK, that sounds good, but let’s look at the track record.   Six years ago, Meta agreed to pay a $5 billion fine to the FTC over user privacy violations related to what became known as the Cambridge Analytica scandal. About a year later, information belonging to 533 million users was leaked. Then, in 2023, the company was hit with a record $1.3 billion fine related to the transfer of European users’ data to U.S. servers. Still fresh in our minds is the recent $18 billion settlement involving allegations that Meta harmed teenagers.   The cost of using Muse could be as much as $100 per month, depending on how much you use it. If you only have light usage, it could be free. When you register for Muse, a warning pops up saying, “May make mistakes or take unexpected actions, so review all its work.” All I can say to that is: Wow!   If this is how companies are going to make money from AI, by gaining access to all of your personal information so they can set appointments, send emails, manage your finances, pay bills, and handle other things that make your life easier, I’ll just say no thank you. I’ll do it myself.   How about you? Would you trust an AI agent with that much access to your personal and financial information?   Lawsuits are starting to form against the makers of GLP-1 drugs It’s no surprise to me that there are concerns about potential side effects from the popular weight-loss drugs known as GLP-1s. At this point, the potential connection between these drugs and certain vision problems is still being investigated, but there are some developments that investors and patients should be aware of.   The concern involves a condition known as NAION, or non-arteritic anterior ischemic optic neuropathy, which can cause sudden vision loss. In Denmark, where drug company Novo Nordisk is headquartered, 27 patients on the diet drugs were awarded as much as $1.5 million due to NAION and there are still 38 more pending cases in the country. There are also now warning labels on the drugs in the UK, Japan, and Australia. The FDA in the United States is currently reviewing the concerns but at this time are not placing a warning label on the drugs.   European regulators have concluded that NAION is a very rare side effect of semaglutide, affecting about 2 in 10,000 people. Unfortunately, it appears this side effect can occur even after taking the drug for just 6 to 12 months. They have recommended that patients experiencing sudden or rapidly worsening vision seek medical attention immediately, and that treatment be stopped if NAION is confirmed.   The risk appears to be very small, but when you are talking about potentially permanent vision loss, even a rare side effect deserves attention. For someone taking these medications for diabetes or significant obesity-related health risks, the potential benefits may be an important part of the risk-benefit discussion with their doctor. But for someone simply looking to lose 10 or 20 pounds, I think it is reasonable to ask whether the potential risks are worth it.   Ask yourself this question: If you lost your vision, what would you be willing to pay to get it back?   From an investment standpoint, this is also something I would be watching closely. If lawsuits continue to build and regulators impose additional warnings or restrictions, it c

  3. Sep 18

    September 18th, 2026 | Fed Rate Hike, Strong Consumer, Scam Conversations, Mortgage Rates, AI Regulation, Pension Lump Sum & More

    Why I’m Glad the Fed Increased Interest Rates on September 16 On Wednesday, September 16, at 2 p.m. Eastern, the Federal Reserve announced its decision to increase interest rates by 0.25% to the range of 3.75% to 4% from 3.5% to 3.75%. This was the first rate hike since July 2023. Your initial reaction might be, “Why would you want the Fed to increase interest rates?” Generally, higher rates are viewed as bad for stocks because they can slow the economy and make bonds more attractive relative to equities. But I think this time is a little different, and investors need to think outside the box. The new Federal Reserve Chairman, Kevin Warsh, has made it clear since taking over that he intends to be tough on inflation. We recently received the latest Consumer Price Index report, and inflation remains nowhere near the Fed’s 2% target. We also continue to see a very strong jobs market, which could be viewed by Chairman Warsh as evidence that the economy remains strong enough to handle a modest increase in interest rates. I believe the rate hike actually sent an important message to the markets: Chairman Warsh means what he says. If he wants to establish credibility as an inflation fighter, this was an opportunity to show investors that he is willing to make the difficult decisions necessary to prevent inflation from becoming a bigger problem down the road.   The consumer remains stronger than expected The latest retail sales numbers are another sign that the U.S. consumer remains surprisingly strong. Retail sales increased 1.2% in August and are now up 6.0% from a year ago. But what I find even more interesting is what happens when you take gasoline stations out of the equation. Gas station sales increased 21% year over year due to higher gas prices, but sales excluding gasoline stations were still up 4.9% year over year, showing that the strength in consumer spending is not simply the result of higher gas prices. Even excluding both motor vehicle and parts dealers and gasoline stations, sales were up 5.6% from a year ago. What really stands out is how broad the annual growth has been. Electronics and appliance stores were up 7.8%, sporting goods, hobby, musical instrument and book stores were up 10.7%, miscellaneous retailers were up 14.0%, furniture and home furnishing stores were up 1.9%, clothing stores were up 4.3%, general merchandise stores were up 4.5%, building materials and garden equipment were up 5.1%, and restaurants and bars were up 5.8%. Interestingly every major category that is tracked in the report showed an annual increase. Another factor worth mentioning is the timing of Amazon Prime Day. The promotional event occurred earlier this year, which pulled some spending forward into June and created a tougher comparison for July. As that distortion faded, non-store retail sales rebounded sharply in August, rising 2.6% from July. The Census data show nonstore sales up 9.9% from a year earlier. The other number I am watching is the retail “control group,” which excludes several volatile categories and is used in calculating consumer spending for GDP. That measure jumped 1.4% in August, its strongest monthly increase since September 2024. There has been plenty of discussion about consumers becoming more cautious, inflation remaining elevated and higher gasoline and diesel prices putting pressure on household budgets. Those are legitimate concerns. But the actual spending data continue to tell us that consumers are still opening their wallets. For now, the consumer looks much stronger than some of the economic headlines would suggest. The bigger question is whether this strength can continue if inflation and energy prices remain elevated and households continue to draw down savings. That will be something I’ll be watching closely over the next several months.   How to Talk to Your Parents When They’ve Been Scammed Like many people, when we find out that someone we love or care about has been scammed, our first reaction is to get angry and immediately want to step in and fix the problem. The problem is that many scammers are extremely good at what they do. Whether it’s a romance scam or one of the countless other types of scams, these people are professionals at building trust and relationships with their victims. Remember, a scammer may have spent weeks, if not months, building a relationship with the person they are scamming. If you come in like a bull in a china shop, you could face resistance. You may hear things that make no sense to you, such as your parents saying that you don’t want them to be happy or that they know exactly what they’re doing. That’s why you should not start by accusing them of being foolish or saying they don’t know what they’re doing. Doing that can immediately put them on the defensive and make it much harder to help them. Instead, you need to build trust with your parents and let them know that you are on their side. Say things like, “I’m here to protect you.” Be especially careful if you believe the scammer has driven a wedge between you and your parents. That can be an intentional tactic designed to keep you from intervening and stopping the scam. Always talk calmly to your parents, or anyone else who is being scammed, and try to help them identify inconsistencies in the scammer’s story. If you notice something that doesn’t make sense, point it out without attacking them. For example, if money was wired to an account but the name on the account doesn’t match the name the scammer has been using, that could be an important detail to discuss. You should also try to get other trusted people involved. A banker, accountant, financial advisor, relative, or another person your parents trust may be able to help them see the situation differently. The goal is not to prove that you are right. The goal is to protect someone you love. If you handle the situation correctly, you may be able to prevent your parents from losing their entire nest egg. But if you come on too strong, you could push them further toward the scammer and make it even harder to help them.   There aren’t as many low-interest mortgages in the United States as you may expect In the United States, there are roughly 86.4 million open mortgages, representing approximately $13.1 trillion in mortgage debt. When interest rates and mortgage rates were extremely low in 2021, it seemed like almost everyone was refinancing their mortgages into rates around 3%. Apparently, that wasn’t quite the case. Some homeowners may have sold their homes and purchased new ones, taking on a higher mortgage rate in the process. Today, homeowners with a mortgage rate below 3% account for roughly 20% of all mortgages. That’s actually less than the 22% of mortgages with rates above 6%. The largest group, at 33%, has mortgage rates between 3% and 4%. For years, we’ve been told that the housing market is being held back because so many homeowners are sitting on extremely low mortgage rates and don’t want to give them up. But nearly half of all mortgages have rates above 4%, which may mean that the mortgage-rate “lock-in effect” isn’t quite as widespread as we’ve been led to believe. Maybe the housing market simply wasn’t as strong as we thought.   Do we need government regulation on artificial intelligence? I’m not, and never have been, a big fan of government regulation, but there are certain things in history that just make sense to regulate. On a smaller scale, who would think it makes sense not to have an age limit for a driver’s license? Another regulation that makes sense is having a legal drinking age. Can you imagine if it were perfectly acceptable for a 12-year-old to drink whenever they wanted? On a much bigger scale, during the arms race, the United States and the Soviet Union negotiated arms control agreements. Those agreements may have helped prevent the world from experiencing a nuclear war. But what about AI, or artificial intelligence? It seems like it could be incredibly beneficial, but just like nuclear power can be beneficial while nuclear weapons can lead to devastating consequences, AI has the potential to be used for both tremendous good and tremendous harm. Unfortunately, we can’t simply stop the development of artificial intelligence. There are many potential benefits including increased productivity and we also can’t afford to fall behind China in the development of AI. If the United States were to completely step away from AI while China continued to advance, we could lose significant economic and technological influence around the world. That’s why I believe we need reasonable guardrails around artificial intelligence. Ideally, the United States and China should work toward establishing some basic rules that both sides agree to follow. The goal shouldn’t be to stop AI or prevent innovation. The goal should be to make sure we develop useful and efficient AI while reducing the risk that uncontrolled AI could cause catastrophic consequences.   Financial Planning: Should You Take Your Pension Lump Sum Sooner? If you are approaching retirement and have a pension with a lump-sum option, it is important to understand how interest rates may affect your benefit. Traditional pensions are defined benefit plans, meaning the monthly annuity payment is generally determined by factors such as years of service and compensation. A lump-sum option, however, is calculated by determining the present value of those future pension payments using an applicable interest rate. Generally, higher interest rates result in lower lump-sum values. Therefore, if rates are expected to rise, retiring sooner could potentially result in a larger lump sum. However, every pension plan is different, including the interest rates used and how far back the plan looks when determining the applicable rate. Before making a retirement decision based

  4. Sep 11

    September 11th, 2026 | Data Center Insurance, AI Targets Seniors, Housing Rate Problem, Apple Under Ternus, Fed Rate Hike, Military Tax Exemption & More

    Another big cost for data centers: insurance! You always hear about the obvious expenses involved in building data centers: incredibly expensive chips, massive energy requirements, cooling systems, and the cost of constructing the facility itself. But there’s another major expense that doesn’t get nearly as much attention: insurance. Once completed, a large data center can be worth anywhere from $20 billion to $50 billion or more. Meta’s data center project in Northeast Louisiana, for example, is expected to cost more than $50 billion and will house thousands of servers along with extremely valuable power and cooling infrastructure. In the rush to build data centers, many hyperscalers and other companies have located facilities in areas where real estate is relatively inexpensive. The problem? An estimated 40% of U.S. data centers are located in tornado-prone areas. I guess some companies didn’t think quite that far ahead. For insurance companies, this could become a massive market. The potential insurance premiums associated with data centers could eventually be 4–5 times the current global aviation insurance market. Data centers could become some of the most valuable insured assets in the world. And insuring them won’t necessarily be cheap. An average cost of around $20 billion for a data center will exceed the insurance cost for bridges, tunnels, and skyscrapers. There’s very little historical data showing how these massive facilities will perform during extreme weather events such as tornadoes and hurricanes. Companies also want coverage for risks like equipment failures, business interruption and even terrorism, all of which can add significantly to premiums. So, there’s yet another enormous cost that hyperscalers must absorb on top of the hundreds of billions of dollars they’re already spending to build out AI infrastructure. The big question I still have is: How are companies ultimately going to recover all of these costs? The AI infrastructure buildout is becoming more expensive by the day. I’m sure glad we own an insurance company in our portfolio.   AI has taken scamming seniors to a whole new level The Federal Trade Commission estimates that roughly $196 billion was lost to fraud, with nearly half of that or about $82 billion coming from people over the age of 60. It’s now estimated that roughly 37% of fraud involves artificial intelligence. The cases are frightening because scammers can now use AI to identify targets, make their pitches more convincing, execute scams faster, and target thousands of people at a scale we’ve never seen before. With AI, scammers can create what appears to be legitimate proof of identity, including realistic passports, driver’s licenses, websites, and other documents. Gone are the days when scams are easy to spot because of grammatical errors, thick accents on phone calls, or obviously fake videos. And it goes far beyond dating scams. Imagine getting a phone call saying that your daughter witnessed a major drug deal and has been taken by traffickers unless you come up with $20,000. That sounds unbelievable, until they put your daughter on the phone, and you hear her voice, panicked and pleading for help. The problem? It isn’t actually your daughter. It’s an AI-generated voice that sounds just like her. So how do you protect yourself from AI fraud? One major red flag is a demand for cryptocurrency. Another is the pressure to keep the situation secret. Scammers often tell you not to contact anyone because they want to isolate you and prevent someone else from recognizing the scam. Scammers are becoming so bold that some will even show up in person pretending to be federal agents with fake badges and credentials. Remember this: The federal government will not demand that you hand over cash, cryptocurrency, gold bars, or other assets simply because someone claims to be a federal agent. If someone claims to be a federal agent and wants to meet at your home, you can always ask to meet at their office instead. A legitimate agent should have no problem with that. If someone is pressuring you to act immediately, keep it secret, and hand over money or valuables, stop and verify who you are dealing with before doing anything. AI is making scams more convincing than ever. The best defense may be simply slowing down long enough to question what you're being told.   The Housing Market Has a Rate Problem Existing-home sales fell 2% in August to an annualized pace of 3.98 million homes, the lowest level since June 2025. Sales are now down 1.2% from a year ago and have remained stuck around the 4 million annualized level for much of the past few years. Historically, a more normal housing market has been closer to 5.2 million existing home sales annually. At the same time, we are finally seeing more inventory. There were 1.62 million existing homes for sale in August, up 5.9% from a year ago and the highest level since 2019. That represents about 4.9 months of supply, which is the highest level in over a decade. This gives buyers more choices and more negotiating power than they've had in quite some time. But here's the problem: home prices aren't falling. The median existing home price rose 1.6% from a year ago to $429,100. So, buyers are dealing with a combination of high home prices and high borrowing costs. And I think one of the most important things to watch is the 10-year Treasury. A lot of people assume mortgage rates are primarily determined by the Federal Reserve. That's not really the case. The 30-year fixed mortgage is heavily influenced by longer-term Treasury yields, particularly the 10-year Treasury. The 10-year Treasury recently approached 5%, reaching its highest level since 2023. As the 10-year moves higher, mortgage rates generally move higher as well. The 30-year fixed mortgage climbed over 7%. The last time the 30-year fixed mortgage was at 7% or higher was May 26, 2025, when it reached 7.02%. That's a big deal for affordability. A buyer who could comfortably afford a $500,000 mortgage at 5.5% has a substantially different purchasing power at 7%. Higher rates can push buyers to either purchase a less expensive home, put more money down, or simply stay on the sidelines.   I don't think the current data points to a traditional housing crash. We don't have the same combination of excessive speculation, massive overbuilding, and widespread distressed selling that characterized 2008. Instead, we're seeing a housing market that is essentially frozen by affordability. The big question going forward isn't just what the Fed does. Watch the 10-year Treasury. If the 10-year moves meaningfully lower, mortgage rates could follow, and housing activity could improve. But if the 10-year stays near 5% or moves above it, don't be surprised if 30-year mortgage rates remain around 7% and housing continues to struggle. For buyers, the good news is that inventory is improving, and negotiating power is coming back. The bad news is that the cost of financing remains extremely high. Housing may finally be shifting from a seller's market toward a buyer's market, but that doesn't necessarily mean homes are getting cheaper.   How will Apple stock do under new CEO John Ternus? Apple has turned a new page in its history books with Tim Cook stepping down after 15 years at the helm. Cook did a tremendous job managing the business and growing the stock mainly by improving the supply chain to overseeing the launch of products like the Apple Watch and AirPods. During his 15-year tenure, Apple stock increased roughly 2,680%, which is a phenomenal return for investors. This reminds me of another major business story that was incredibly successful: General Electric under the leadership of Jack Welch. Welch ran GE for 20 years, from 1981 to 2001. During his tenure, GE stock increased roughly 4,000%. Yes, that was over five more years than Cook's tenure at Apple, but I doubt Apple would have produced another 1,300% return if Cook had stayed for five additional years. At the end of both CEOs' tenures, however, their companies had one major similarity: very high valuations. The comparison is a little scary. When Jack Welch left GE in 2001, the stock was trading at roughly 30 times earnings. This was during the dot-com bubble, when the S&P 500 was trading at about 36 times earnings. When Tim Cook left Apple, Apple was trading at roughly 37 times earnings, while the S&P 500 was around 29 times earnings. Those are very high valuations, especially considering we're also experiencing what could be an AI bubble. When Welch stepped down in 2001, his hand-picked successor, Jeffrey Immelt, took over. From 2001 through 2017, GE stock generated a total return of roughly -27%. Yes, investors actually lost 27% over 16 years. Apple is an incredible business with an enormous ecosystem, tremendous cash flow, and some very valuable brands. But Ternus is taking over at a time when expectations are extremely high. Apple does have some interesting things coming. The company announced a new foldable iPhone on September 9, along with an updated Siri and other AI improvements. But I personally didn't think the event was a big deal. The bigger question is whether consumers are really willing to spend around $2,000 on a new, foldable iPhone. And perhaps even more importantly, will AI actually create the upgrade cycle that Apple investors are expecting? There are also potential headwinds from significantly higher chip costs, which could push up the prices of iPhones and other Apple devices. I remember talking to people years ago about potentially selling some GE stock and diversifying. The response I often heard was, "Don't touch my GE stock." I'm hearing very similar stories about Apple today. The big question is whether history repeats itself with Apple like it did with General Electric. I don't know if it will. But I am pretty confident about one

  5. Sep 4

    September 4th, 2026 | AI Capex Bubble Bursts, A Market Like 1901, Jobs Report Beats Expectations, Sports Betting as Investing, Big Food Battles Diet Drugs, Be Your Own Bank? & More

    The AI Capex Bubble Is Starting to Look Crazy I keep coming back to the same question when I look at the incredible amount of money being poured into artificial intelligence: Where is all of this capital ultimately going to earn a return?   Since the beginning of 2024, roughly $500 billion has been spent on chips, $350 billion on power infrastructure, $200 billion on construction and $100 billion on networking. That's approximately $1.1 trillion of AI infrastructure spending in less than three years. For perspective, the entire S&P 500 spent roughly $575 billion on capital expenditures in 2021 right before ChatGPT even existed.   And the spending is accelerating.  In 2021 The four major hyperscalers—Microsoft, Amazon, Alphabet and Meta— spent about $125 billion on new plants and equipment. It’s now estimated that they will spend $1 trillion, which is about half of total capital spending for the S&P 500 and the companies could spend roughly $3.7 trillion through 2029. Add companies such as Oracle, OpenAI, SpaceX and others, and total AI spending could approach $6 trillion by the end of the decade.   Those numbers are almost difficult to comprehend. And here's where I think the historical comparisons to railroads and the internet become interesting. Yes, those were enormous infrastructure buildouts too. But the economic opportunity created by those technologies was incredibly clear.   The railroad connected producers with consumers, opened new markets, lowered transportation costs and allowed goods to move across the country. The internet created entirely new businesses and fundamentally changed commerce, advertising, communications and how we work.   I don't see AI in quite the same light. I see enormous potential, but I don't yet see the same obvious economic expansion that will ultimately justify trillions of dollars of infrastructure spending.   And now we're starting to hear another argument: "Look at the cloud. Look at how much money the cloud is generating. That's proof the AI infrastructure will earn a return."   I'm not sure I buy that. That's a little like building railroads and then saying: "Look at how much money we're making selling railcars. Look at the demand for locomotives and railroad equipment. Clearly the railroad investment is paying off." The problem is that's not where the ultimate economic return came from. The return came from transporting goods and people. The railroad was valuable because businesses used it to create economic activity.   The same is true of the internet. The real economic payoff wasn't simply selling servers and networking equipment. It came from everything built on top of the internet. So with AI, I think the ultimate question is not: "How much revenue are Nvidia, the cloud companies and data-center operators generating?" It's: "How much NEW economic value is being created by all of this computing capacity?"   That's a much harder question. Because if we're essentially spending trillions of dollars building increasingly powerful computers, data centers and power infrastructure so companies can sell more computing capacity to other companies that are also spending billions on AI infrastructure, we need to be careful about confusing activity with economic returns.   And this is where the bubble argument gets interesting. A recent Barron's article points out that historically, transformative technology booms have been able to absorb enormous amounts of capital before eventually running into trouble. Its "rule of 25" suggests that previous infrastructure booms became particularly vulnerable when investment approached roughly 25% of GDP. The railroad boom saw about $2.5 billion of rail spending before the 1873 panic and GDP was about $10 billion a year. Internet infrastructure saw about $1.5 trillion of investment before the bust and back then GDP was only about $6 trillion. For today's roughly $30 trillion U.S. economy, that would be around $7.5 trillion before we saw problems.   That's being used as evidence that the AI boom has plenty of room to run. And maybe it does. But here's the funny part. We're increasingly hearing very smart people say: "Yes, this is going to end badly." "Yes, there is too much capital being deployed." "Yes, there will eventually be excess capacity." "Yes, the financing is getting complicated." But then comes the qualifier: "Just not yet." That might be the most dangerous phrase in investing. Because that's exactly how bubbles work.   When I look at $1.1 trillion already spent, and potentially $6 trillion by the end of the decade, increasingly creative financing structures and companies racing to build capacity before we fully understand the ultimate demand, it starts to feel less like a normal technology cycle and more like a capital spending boom.   Maybe the bubble doesn't burst this year. Maybe it doesn't burst next year. But when almost everyone agrees there is a bubble and the only disagreement is about when it ends that's usually when I start paying very close attention. The technology can be real. The demand can be real. The companies can be profitable. And it can still be a bubble.   The Stock Market Today Resembles the Stock Market of 1901 Some people believe they are witnessing something completely different in the stock market today and that what is happening now has never happened before. They believe the market will continue rising forever, and that there is simply no way they can lose. History tells us otherwise.   Time and time again, we see the same patterns repeat themselves. Surprisingly, the stock market of 1901 had many of the same characteristics we are seeing today. For starters, there was a tremendous amount of trading back then like there is today. In 1901, the turnover rate on the New York Stock Exchange reached 319%, meaning stocks were changing hands roughly every 16 weeks.   They also had something that resembles today's prediction markets. Back then, they were called bucket shops, where people could bet on whether a stock would move up or down. Many were led to believe they were participating in the same type of opportunity as wealthy investors. In reality, they were speculating and many people who didn't know better confused gambling with investing.   Leverage was also widely used. Investors could put up as little as $10 and control as much as $300 worth of stock. That kind of leverage could produce enormous gains when markets were rising, but it could also lead to devastating losses when they turned.   And this is where human psychology comes into play. People's emotions are often far stronger than their logic. The more the market rises, the more people begin to believe it will continue rising and that a crash is unlikely to happen anytime soon.   When investors become excited because they are making easy money, they can lose sight of the difference between investing and gambling. The problem is that gambling can feel like investing when you're winning.   The market's performance in the early 1900s is a good example. The stock market rose 19% in 1900, another 20% in 1901 and 5% in 1902. Then came 1903, when the market declined 23%. But the good times returned, and over the next three years the market gained roughly 69%. Then came the Panic of 1907, and the stock market fell roughly 30% that year.   The lesson isn't that today's market will follow the exact same path. It won't. The lesson is that human behavior hasn't changed much in more than a century. Greed, fear, leverage, speculation and the belief that "this time is different" have been part of financial markets for generations.   As the saying goes, history may not repeat itself, but it definitely rhymes. Investors would be wise to study those rhymes and remember that making money in a rising market doesn't necessarily mean you're investing wisely. Sometimes, it simply means you haven't experienced the other side of the cycle yet.   The Jobs Report Was Much Stronger Than Expected Today’s jobs report was a big surprise. The U.S. economy added 162,000 jobs in August, well above the roughly 53,000 expected and the strongest monthly gain in five months. Even more importantly, July was revised from a loss of 23,000 jobs to a gain of 21,000. June was also revised higher, meaning the previous two months were collectively revised up by 55,000 jobs.   The unemployment rate remained at 4.1%, but there was an interesting development underneath that number: the labor force increased by 683,000 people, while household employment increased by 569,000. The labor-force participation rate also rose from 61.4% to 61.6%. It is still down by 0.5% since January, but it’s a positive to see it moving in the right direction.   So, we had substantially more people entering the workforce without the unemployment rate increasing. That's a pretty good sign.   There was also a significant difference between industries. Food services and drinking places added 59,000 jobs, while local government education added another 42,000 and construction added about 22,000.  Health care, which has been a large source of employment growth, saw a gain of just 13,000, compared with the monthly average of 32,000 over the prior 12 months.   On the other hand, the information sector continued to lose jobs as information-related industries reported a loss of 23,000, putting the 12-month average at a loss of 8,000. This is worth watching given the impact of automation and AI on certain white-collar industries.   Another positive: the average workweek increased to 34.4 hours, the highest level since March 2024. More hours worked can be just as important economically as more workers being hired.   But there is one area that isn't quite as strong: wages. Average hourly earnings increased just 3.1% from a year ago. That's a healthy increase, but wage growth continues to moderate, and this marked the lowe

  6. Aug 28

    August 28th, 2026 | K-Shaped Recovery, Alternative Investment Traps, Dividend Stocks? Dynamic Pricing, AI Disrupts Publishing, GM Loses Ground & More

    The K-Shaped Economy May Be Improving If you’re unfamiliar with the term, the upper arm of the “K” represents higher-income Americans, who are spending more and generally doing better. The lower arm represents lower-income consumers who have been struggling with higher prices and tighter budgets. But there are signs the lower end of the K-shaped economy may finally be improving. Treasury Secretary Scott Bessent recently argued that the K-shaped economy is over and that we’re moving toward what he calls a “C-shaped economy,” where lower-income workers are beginning to catch up. That may sound like a bold statement, but there are some encouraging signs behind it. Economists have pointed to stronger hiring in the spring and early summer, which has allowed more Americans to change jobs. Changing jobs often comes with higher wages, giving lower- and middle-income households more income to spend. There has also been improvement in wage growth at the lower end of the income spectrum as after-tax wages grew at an average 5.2% annual pace in July for lower-income households. This marked the first time since December 2024 that after-tax wage growth for lower-income households surpassed higher-income households. Higher-income workers are still seeing strong wage growth as well. So, I wouldn't say the K-shaped economy has completely disappeared, but the bottom of the K may be starting to move upward. Another positive is the impact of the Big Beautiful Bill. Provisions such as no tax on overtime and no tax on tips can put more money directly into workers' pockets. This led to good refunds for many people and some people have also changed their withholding to increase their take-home pay rather than waiting for a large refund at tax time next year. That makes perfect sense. Why give the government an interest-free loan of thousands of dollars when you could have an extra couple hundred dollars in your paycheck every month? There are other encouraging signs. Data shows the share of households paying off their credit card balances each month is increasing, while savings remain above 2019 levels when adjusted for inflation. We’re also seeing some evidence that consumer spending is becoming less concentrated among higher-income households. In the month of July, spending on credit and debit cards rose 5.4% for lower-income households year over year compared to growth of 4.3% for higher-income households. That’s important because consumer spending accounts for roughly 70% of U.S. GDP. If lower-income consumers are finally seeing their incomes improve, paying down debt and rebuilding their financial cushion, that could broaden economic growth beyond the wealthier consumer. I’m not ready to declare the K-shaped economy dead. There are still significant differences between how higher- and lower-income Americans are doing, and housing affordability remains a major problem. But perhaps the more important point is this: The bottom half of the K may finally be starting to move upward. If that continues, it could create a much healthier economy in the second half of the year, with GDP growth potentially around 2.5% in the third and fourth quarters. Maybe the economy isn't completely C-shaped yet, but it may be starting to bend in that direction.   How to protect yourself when someone tries to sell you alternative investments You may already know this, but there are some brokers out there who are very good salespeople and unfortunately, they may be more concerned about their commission than your financial well-being. It’s estimated that over the next three to four years, another $2 trillion of client assets could flow into alternative investments. I’ve talked at length about the high fees, which can be 2% or more, and the fact that your money could be tied up for 10 years or longer. Even when you are allowed to get your money back, the redemption process can be very slow. If you still believe an alternative investment makes sense for you, here are some questions you should ask the person selling it to you. First, what is the manager’s track record? Don’t just take their word for it. Verify the track record and make sure you understand what they actually managed. Someone who successfully managed a small fund may not have the same results when they are suddenly managing multiples of that amount. Second, how will I receive my tax information? A lot of investors are surprised at tax time when they receive a K-1 instead of a 1099. K-1s can make your taxes more complicated and often arrive much later than a 1099. That can mean waiting to file your taxes or even having to file an extension. Understand the tax reporting before you invest. Third, how do I get my money out? Ask exactly what the redemption rules are. How long is the lockup? How much notice do you have to give? Are there penalties or restrictions Don’t assume you can access your money whenever you want. Fourth, what happens if things go wrong? What recourse do you have if the investment loses money or the manager does something wrong? You may discover that you signed an arbitration agreement that prevents you from taking the firm to court. In some cases, the investment may even be governed by laws outside the United States. Fifth, how much does the broker and their firm get paid? Ask directly: “How much do you earn if I invest in this? Does your firm receive additional compensation for recommending it? If so, how much?” And there are two other questions I think everyone should ask. “Knowing my financial situation, do you really think it makes sense for me to tie up my money for 10 years?” And perhaps most importantly: “Anything you are telling me verbally, please put it in writing.” If they won’t put it in writing, you should seriously question what you’re being sold. I believe alternative investments are much riskier than people are led to believe and you need to understand the fees, liquidity, tax consequences, and incentives of the person selling them to you. Never let a salesperson rush you into an investment you don’t completely understand.   Should You Invest in Dividend-Paying Stocks or Not? Over the last 15 years, the dividend yield on the S&P 500 has been cut roughly in half from more than 2% to just over 1%. Some investors may say, “Who cares? My total return is much higher, and I don’t need the dividends.” But they may be missing an important part of investing, especially as they get older and closer to retirement. Dividend-paying stocks can provide a valuable source of cash flow. Qualified dividends also receive favorable tax treatment compared with ordinary income. That tax advantage, particularly when compared with interest from U.S. Treasuries or CDs, is worth considering. Another benefit investors sometimes overlook is dividend growth. Many companies increase their dividends over time, sometimes every year, as their earnings and cash flow grow. This can potentially provide investors with a growing stream of income. Investors appear to be taking notice. Morningstar has reported that dividend-focused funds have attracted billions of dollars in new money over the past two years. Using dividend funds is one option, but at Wilsey Asset Management, we prefer investing in individual companies because we believe it can provide a higher yield while giving us more control over the companies we own. Of course, a high dividend yield alone doesn't make a stock a good investment. We look at several factors to manage risk, including: The company’s payout ratio based on earnings and cash flow to make sure the dividend is sustainable. The company’s debt and interest expense to make sure it isn’t overly burdened by high-interest payments. The valuation of the company to make sure investors aren't paying too much for its earnings. Investors should also remember that dividends are never guaranteed. Companies can cut or even temporarily suspend their dividends when their business requires them to preserve cash. For that reason, diversification is important. We believe investors should consider owning at least 12 to 15 different dividend-paying companies across multiple industries rather than relying heavily on just a few stocks. Dividend investing isn't just about the yield today. It’s about the potential for income, dividend growth and total return over time. As investors get closer to retirement, that income can become a much more important part of the overall investment strategy.   You could be paying more for products because of something called dynamic pricing. Most people assume that when they see a price online, everyone else is seeing the same price. That may no longer be the case. With AI and the enormous amount of data companies can collect, retailers can learn a surprising amount about you. They may know your browsing history, location, the type of device you’re using, your purchase patterns and even how long your cursor stays over a particular product. They can also potentially determine whether you’re a college student, a businessperson, or a senior citizen. They may also know what competing apps or websites you use. The thinking is simple: If you’re not shopping around, a retailer may believe you’re more willing to pay a higher price. You may be thinking, Isn’t this illegal? According to the Federal Trade Commission, it appears to be somewhat of a gray area. The FTC has recently addressed the use of consumer data to personalize prices and has said that businesses need to be transparent about what information they’re using and when they’re using it to personalize an offer. My guess is this will be like many other disclosures: We’ll see them, but most people won’t take the time to read them. So, what can you do to protect yourself? Shop around. Before making a purchase, compare the same product on at least two or three different websites. Don’t a

  7. Aug 21

    August 21st, 2026 | AI Boom Leverage, Oil Supply Risks, Travel Boom, Healthcare Stocks, Treasury Bond Buybacks, Home Insurance Deductible & More

    The AI boom is starting to look a lot more leveraged than investors realize There is a growing risk in the AI infrastructure buildout that isn’t getting nearly enough attention: how much of this spending is being financed, and how much of the risk is sitting off the balance sheet.   The headline numbers around capital expenditures are already staggering, but what concerns me more is what sits underneath them: joint ventures, off-balance-sheet financing arrangements and leases that haven’t even commenced yet.   In other words, some of the financial obligations associated with this AI buildout aren't necessarily showing up in today's debt figures. And the spending is enormous. Goldman Sachs analysts estimated that hyperscalers have combined lease commitments for data centers, R&D facilities, offices and equipment of $1.5 trillion, up from about $200 billion five years ago. This includes about $1 trillion of “uncommenced” lease commitments, which are not yet shown in financial statements but will result in future payments. This pairs with consensus forecasts that hyperscaler capital spending alone will surpass $1 trillion per year from 2027 onward and there are with no clear signs of moderation. According to a multi-asset credit strategist at PIMCO, the AI capex cycle is, adjusted for inflation, on track to be the largest investment cycle since the 19th-century railway construction.   The problem is what happens if the revenue doesn't grow fast enough to justify the investment. This is where Steve Eisman’s warning is particularly interesting. Eisman, who became famous for betting against the housing market ahead of the financial crisis, believes the AI boom has become increasingly dependent on just two companies: OpenAI and Anthropic. According to Eisman, those two companies account for roughly 70% of AI-related revenue at Microsoft, Amazon, Alphabet's Google and Oracle, and potentially 25%–35% of their overall cloud revenue.   That creates a concentration risk that investors shouldn't ignore. If OpenAI and Anthropic continue growing rapidly, the economics of all this infrastructure can work. But what if they don't?  Eisman believes one of the biggest threats could come from China.   Chinese open-source and open-weight AI models are significantly cheaper, and if they continue gaining market share, the industry could face something that investors haven't really modeled into these enormous infrastructure investments: an AI price war.   If the price of AI inference and cloud computing falls dramatically, the companies that have spent hundreds of billions building capacity could find themselves with a serious problem.   The infrastructure doesn't disappear just because pricing does. The debt doesn't disappear. The leases don't disappear. And the depreciation expense certainly doesn't disappear.   Another major concern given all the commitments from OpenAI is the turnover the company has seen. The company recently announced that Chief Revenue Officer Denise Dresser is leaving less than a year after joining the company. Dresser had brought more than a decade of Salesforce experience and was viewed as someone with important enterprise expertise as OpenAI tried to compete with Anthropic.   She isn't the only senior executive to leave. Fidji Simo stepped down from her product and business role, and several other executives including COO Brad Lightcap departed earlier this year.   Executive turnover doesn't necessarily mean something is wrong. Fast-growing companies go through enormous amounts of change. But when two companies are potentially responsible for such a large percentage of the revenue supporting an enormous AI infrastructure investment cycle, leadership stability becomes much more important.   There are a lot of things that need to go right to justify the enormous amount of spending in the AI space. And increasingly, there seem to be more and more question marks that investors need to consider. I’m not saying the AI boom is over. I’m saying investors should spend a lot more time asking who is financing this boom, who is ultimately responsible for the obligations, and what happens if the economics of AI change.   Refined oil could be in jeopardy over the next 6 to 12 months U.S. refineries are currently operating at historically high utilization rates at around 96.5%. Aside from July 25 of this year, when utilization briefly reached 97.2%, the last time refineries were operating at this level was in 2018, when utilization hit 96.6%.   Part of the problem is our own doing. California politicians deserve a significant amount of blame. Over the past 20 years, nine of the 12 refineries that have closed in the United States have been located in California. At the same time, the push toward electric vehicles led many refiners to avoid investing the billions of dollars required to build new refining capacity. Now, we not only lack significant new capacity, but some existing refineries are also in need of repairs and upgrades.   That leaves us particularly vulnerable considering we are in hurricane season, which runs from June 1 through November 30. A major hurricane hitting the Gulf Coast could knock out anywhere from 10% to 30% of U.S. refining capacity, depending on the severity and location of the storm. That could put enormous pressure on already-tight supplies of gasoline and diesel.   And supplies are already below normal. Global inventories of refined fuels, which primarily consists of gasoline and diesel, are estimated to be roughly 130 million barrels below normal levels for this time of year.   This isn't just a U.S. problem. Gasoline and diesel are globally traded commodities, and the global refining picture has changed significantly because of the war in Ukraine. Ukraine has reportedly knocked out roughly 30% of Russia's refining capacity, while Russia has also reduced exports of refined products as it prioritizes its own domestic needs.   The United States is a free market, and American businesses can trade refined products on the global market. U.S. refineries currently export roughly 900,000 barrels per day of gasoline, while diesel exports recently reached a record 1.9 million barrels per day.   This is why having millions of barrels of crude oil doesn't necessarily solve the problem. You can have all the oil in the world, but if you don't have the refining capacity to turn it into gasoline and diesel, that oil is of limited use to consumers.   As an investment firm, we're always looking for the other shoe that could drop. This is one that concerns me. If we get a major hurricane over the next few months and refining capacity is reduced even temporarily, the impact on gasoline and diesel supplies could be significant. A disruption lasting only a week could be enough to send energy markets into a tizzy, particularly given how tight inventories already are.   The irony is that we spent years aggressively pushing toward electric vehicles while underinvesting in traditional refining capacity. EV adoption hasn't progressed as quickly as many expected, but the refining infrastructure we depend on for gasoline and diesel hasn't magically expanded either.   Now we're heading into hurricane season with historically high refinery utilization, below-normal refined fuel inventories, limited new refining capacity and a global market that is already facing disruptions. That's a combination worth paying attention to.   Americans are traveling more than ever If you’ve noticed how busy airports have been lately, there’s a reason: Americans are traveling more than ever, and there’s little sign of that slowing down. One reason is wealth. Americans collectively hold roughly $100 trillion in wealth. They’re also living longer and, perhaps more than any previous generation, are choosing to spend their later years enjoying life, traveling, and creating experiences.   Back in the 1970s, 80s, and even the 90s, Americans seemed more content to stay home, spend time with family, and enjoy their homes. Fast-forward to today, and travel has become a much bigger priority.   Trips to Europe reached a record 24 million in 2025. While some Europeans certainly aren’t thrilled with the influx of American tourists, those visitors are having a major economic impact. Americans accounted for roughly 15% of luxury sales across Europe.   Of course, not everyone is happy about the crowds. Barcelona, which sees roughly nine times as many visitors as it has residents, has seen protests against tourism, including protesters spraying tourists with water. I guess on a hot day, that might not be the worst thing.   The change in travel habits is pretty remarkable. As recently as 1990, only about 5% of Americans had a passport. Today, that figure is around 50%, giving Americans far more ability to travel internationally.   So who is doing all this traveling? Women 55 and older account for roughly 24% of travelers to Europe and other international destinations. I don’t know about you, but that doesn’t surprise me.   What does this mean going forward? If this trend continues, it could have a meaningful impact on the economy. Airlines, hotels, restaurants, and other businesses tied to travel should continue to benefit from Americans prioritizing experiences.   I do believe we’ll eventually see an increase from the historically low levels of spending on home remodeling and repairs. But I also wonder if that trend could eventually be constrained as people choose to spend $10,000 on a trip to Europe rather than $10,000 on a kitchen remodel. And with all these Americans traveling around the world, I have to wonder how many have taken the time to see the incredible places we have right here in the United States.   I’m talking about the Grand Canyon, Yellowstone, the giant redwoods of Northern California, or our nation’s capita

  8. Aug 14

    August 14th, 2026 | Earnings Optimism, AI Financing, SpaceX Patience, Retail Rebound, Inflation Cooling, Crypto Selling, Mortgage Choices & More

    Second Quarter Earnings Give Me Some Optimism  I call all my clients on their yearly anniversary with our firm to have a discussion about their past performance and where I see their portfolio going over the next six to 12 months. I’m very pleased to report that I expected a more subdued performance in 2026 than what we’re experiencing so far. However, stronger-than-expected returns can also make projecting what comes next a little more difficult. Even with the nice year-to-date returns we’ve seen, I’m still telling my clients that I believe we can add a little bit more to their portfolios by December 31 of this year.  So, what is giving me this optimism?  For one, many of the companies in our portfolios have not become overpriced. On top of that, second-quarter earnings have come in rather strong, and the guidance from many of the stocks we own has also been positive going forward.  When looking at the overall market, some people may think it’s simply AI and technology companies that are doing well. That is not the case. Recent numbers show that during the second-quarter earnings season, 86% of companies have beaten their earnings estimates. That is well above the recent average of 78%.  Historically, when good times seem to last too long, analysts often begin cutting their earnings estimates. But that doesn’t appear to be happening right now. In fact, earnings estimates for the next quarter have actually risen by 0.3%.  There are certainly some concerns. The consumer has been dipping into savings to keep spending going, and the recent jobs market has been somewhat lackluster. However, the vast majority of people still have jobs, and at this point, there doesn’t appear to be any sign of widespread layoffs in the near future.  With all that said, I think the green light is still on for investors to continue putting money to work. But, as always, I believe investors need to be very cautious about overpaying for public companies that are being bought based more on emotion and excitement than strong financial fundamentals.  For me, that remains one of the most important things to watch as we move through the rest of 2026. Strong earnings are encouraging, but valuation still matters.     The AI boom is getting increasingly dependent on financing  There is no question that AI is creating enormous demand for computing power, data centers and semiconductors. But the latest move from Nvidia and Wall Street raises an important question: How much of this growth is being driven by genuine economic demand, and how much is being enabled by increasingly creative financing?  Jensen Huang has been pushing the idea that AI data centers are essentially a new class of infrastructure or what Nvidia calls “AI factories.” Now Nvidia has partnered with some of the biggest names on Wall Street, including Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, to create financing platforms that could provide more than $500 billion of capital for AI infrastructure.  On the surface, this makes a lot of sense. AI companies need enormous amounts of capital to build data centers and purchase Nvidia's chips, while investors are looking for ways to participate in the AI boom.  But there is a risk that deserves much more attention: circular financing.  If Nvidia helps finance the companies that buy Nvidia's products, and those purchases generate revenue for Nvidia, which in turn increases Nvidia's valuation and ability to support additional financing, the system can begin to reinforce itself.  That doesn't automatically make the investments bad. But it does make it more difficult to determine how much of the demand is truly coming from customers who can generate sufficient returns on the infrastructure they are building.  And that leads to the bigger question: Can the economy actually absorb this level of investment? We are talking about hundreds of billions of dollars going toward data centers, power generation, networking equipment and AI chips. The capital is available, but ultimately the infrastructure has to generate enough economic output and cash flow to justify the investment. That is where I become more cautious.  Another concern is details were extremely light as we don’t know who the borrowers will be, what the rates will look like, where facilities will be built, and when this is supposed to start.  Intel's announcement is another interesting piece of the puzzle. Intel originally announced a $15 billion stock offering, but quickly increased it to approximately $20 billion, selling shares at $95 each. The proceeds are earmarked for general corporate purposes, including capital expenditures and working capital.  There is also an interesting irony here. We are increasingly financing AI infrastructure as though these assets will have long, productive lives. But AI technology is improving incredibly quickly.  Today's most advanced GPU, server or data center configuration can become obsolete much faster than traditional infrastructure. A power plant or building might remain useful for decades. A generation of AI computing equipment may have a much shorter economic life. That creates a unique risk.  What happens if we finance billions of dollars of AI infrastructure over 10 or 15 years, but the technology improves so rapidly that the equipment becomes economically obsolete much sooner?  The financing doesn't disappear just because the technology does.  I am not saying that the technology isn't transformative. I believe AI could absolutely create enormous economic value, but economic value and investment returns are two very different things.  The biggest question for investors over the next several years may not be whether AI works. It may be whether the amount of capital being committed to AI infrastructure can ultimately earn an adequate return. When companies, investors and lenders all believe they need to keep spending because everyone else is spending, that is when I start paying very close attention to the financing structure. The technology may be revolutionary, but the financial engineering surrounding it deserves just as much scrutiny.    Will Investors Really Be Patient Holding Their SpaceX Stock?  The common advice I hear when it comes to SpaceX is simple: “Don’t worry about it. Just hold the shares, don’t look at them, and you’ll be glad you did 10 years from now.”  It’s certainly possible that this advice will prove to be correct. But I question whether human emotions can really handle that kind of long-term commitment when it comes to an investment as volatile and intangible as a stock like this.  Think about everything that can happen over the next 10 years. There will be negative news, disappointing developments, changing expectations and plenty of commentary that investors simply won’t be able to ignore.  And there’s another issue: a significant amount of additional stock could become available over the coming months. Even after the recent unlock of just over 911 million shares on August 6, which was greater than the 639 million shares sold in the IPO, there is still a substantial amount of potential supply coming to the market.  On August 20, another 319 million shares could become available, followed by roughly 700 million shares in September and another 700 million or so in October. In November, an additional 28% of shares will become available, and by December, all remaining shares held by standard pre-IPO investors and employees will be eligible for release.  The final major unlock comes from Elon Musk’s stake in June 2027.  That is a tremendous amount of potential supply entering the market in a relatively short period of time, and it raises an important question: Will investors have enough conviction to keep holding if the increased supply puts significant pressure on the stock?  The idea of investing alongside Elon Musk is certainly attractive, especially when you consider his ambitious vision for SpaceX from building data centers in space to eventually manufacturing on Mars. But ambitious visions don’t necessarily make it easy to hold a stock through extreme volatility.  We’re already seeing what can happen. Some investors appear to have panicked and sold shares for as little as $105 after the stock had climbed as high as $225.  It’s easy to say you’ll stay the course when the stock is going up. It’s a completely different experience when you watch it fall every day and start asking yourself: What if this isn’t going to work? What if SpaceX doesn’t look nearly as attractive 10 years from now?  I believe the investors who have already sold may be a preview of what we could see over the next nine months. I’m not convinced there are enough investors willing to look 10 years into the future and maintain that level of conviction while hundreds of millions of additional shares are released.  So, here’s the question: Can you honestly say you would hold SpaceX no matter what, even if the stock fell to $60 or $70 a share and stayed there for an extended period? I’d love to hear what you think. How much patience do you really have with an investment like SpaceX?    Retail sales look better than the headline suggests  The headlines are focused on the 0.6% month-over-month decline in retail sales in July, the first monthly decline in nine months and the largest drop since May 2025.  That sounds concerning, but there are some important factors behind the monthly decline that deserve attention. One of the biggest was nonstore retailers, which fell 2.2% from June. That category is heavily influenced by online shopping, and the decline appears to be largely a timing issue related to Amazon Prime Day.  Amazon moved Prime Da

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Smart Investing is the radio show where Brent and Chase try to make investing easier to understand. They demonstrate long-term investment strategies to help you find good value investments.

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