076 - How To Position Your Portfolio To Profit For Trump's Presidency

You might be feeling some kind of way about Trump winning the election, but remember investing is not a place for emotions. 

Whether you like him or not, the best thing you can do for your portfolio is to figure out how Trump’s presidency is going to impact your investing strategy.

Once you understand the policies and mindset of Trump, it’s not that difficult to see how that’s going to affect stocks and the market.  

So today we’re going to discuss 10 things we think are likely to happen and how you can position your portfolio to profit while everyone else is wasting time losing their minds.  

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Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Transcript

Welcome to Roaming Returns, a podcast about generating a passive income through investing, so that you don't have to wait till retirement to live your passions. You might be feeling some kind of way about Trump winning the election, but remember, investing is not a place for emotions. Whether you like him or not, the best thing you can do for your portfolio is to figure out how Trump's presidency is going to impact your investing strategy.
Once you understand the policies and mindset of Trump, it's not that difficult to see how that's going to affect stocks and the market. So today we're going to discuss 10 things we think are likely to happen and how you can position your portfolio to profit while everybody else is wasting time losing their minds. The election is finally freaking over.
Oh my God, how annoying was that? Like talk about spam bombardment, just, I hate paper. I hate mail. I hate it.
Hate it. Hate it. You know that the government has ways around your like spam filter things.
The amount of text messages with the wrong name, just, I mean, absolutely ludicrous in general. So. But it's over.
So that's good. I was going to say, if you're anything like us, thank God it's over. But that's not really what we came to talk about today.
Today we want to know how the heck the results of the election are going to potentially affect investing going forward because that's really all that matters here. Yeah, pretty much. Got to set your emotions to the side.
Like if you aren't happy with the outcome, it doesn't matter. If you're happy with the outcome, it doesn't matter. So what you have to do is you have to understand the policies and the mindset of Trump when it comes to investing.
He is a protection, like an isolationist protectionism. If you remember, like civics back in grade school, like, what the heck is civics? Like government. Oh, okay.
Yeah, I'd obviously pay attention in that class. Isolationism means basically that he just wants to like take all of our external things and bring them back into America and then just kind of like build a symbolic wall around America and we just kind of stay in America and that's all we do. We don't navigate the world.
We don't police the world. We just are focused on American stuff. So if you know that, that's good.
Where it's going to be even better if you like the America first policy is that the Republicans also got control of the Senate and I'm pretty sure the House, they haven't called it yet, but I'm pretty sure the House representatives will be Republican as well. So that'll be the White House, Congress and the judicial part. Trifecta.
So they have like they control everything. So that means pretty much whatever he wants to do will get done within reason. Like obviously like taking the military and attacking private citizens because they talk shit about him won't happen, but like from a policy perspective, pretty much anything he wants to get done will get done.
If you don't have a lot of kickback or like, you know, collective agreement because everybody has the same train of thought, then it'll be easier to get whatever passed and implemented. So that makes sense. I got a lot of like, I got an email from Luke Langley.
We brought him up before and he covered this pretty extensively, like way better, but way better than I am. So if you want to sign up for, just Google Luke Langley, he'll like, he will, you sign up for a subscription and he'll send you emails periodically. He's one of the free ones? Yes.
I mean, you can pay for like a paid subscription, but I generally, most of the information I get. Is he the one that you said you basically get the same thing? He's the one that's really like tech focused and crypto focused. So he was like my cryptocurrency, like go-to.
And speaking of cryptocurrency, if you hold crypto, kudos, because crypto, Bitcoin just hit 80,000 this morning. Yeah. Trump's going to take, I would imagine Trump is going to be on the crypto side.
So that's actually bodes well for my retirement plan. I was looking through everything. We came up with 10 things, like 10 things to help you invest better under Trump.
And so here we'll start. Number one, stocks are going to go higher. This doesn't necessarily reflect on Trump.
It's just the historical, how it works. Stocks are going to go higher, but Trump is actually going to extend the tax cuts and jobs act that he passed in 2017. He's going to probably try to make it permanent.
These tax cuts should stimulate the economy with less like less business taxes and more like consumer spending. So in theory, it should actually stimulate the economy. Yeah.
I think last time he was president, people were pretty spend happy and that's why things went up the way that they did. So I imagine a lot of that's going to happen. So you will be able to start seeing like a reflection of his tax thing at the end of 2025 and the beginning of 2026.
One of the things that he will do will reduce the corporate tax rate from 21 to 15 percent, which should actually boost earnings per share across the board 4 percent. So earnings should rise 15 percent per year into 2026. I mean, should we're obviously trying to forecast.
There's nothing concrete. I mean, there's a couple of concrete things we'll get to. So they should rise 15 percent into 2026.
If you look back, if you look back at Trump's first term before the virus problem, the S&P rose 40 percent from January 2017 through December 2019. So that's pretty hardcore. So that's like, you know, about 15 percent.
So like we're again, we're probably projecting like 12 to 15 percent rise in the S&P and the NASDAQ. The NASDAQ might actually go up more because he is tech focused and his running mate J.D. Vance is like from Silicon Valley. So he's previewed a lot of stuff and it'll actually help the tech sector.
So tech stocks should be pretty good. Small caps. We'll get to that.
So hopefully that all makes sense. Like there's a lot of like specific stuff in there like the tax, but the tax rate being cut is huge because that's going to generate more profits. I think what he's hoping on is reducing the corporate tax rate will actually offset his the costs going up for Americans with the tariffs that he's going to implement.
Tariffs are the stupidest idea. Like the tariffs rank up there in stupidity with the interest rate being cut when the economy is good. I think the intention was possibly good, but I don't think in actual practicality it's going to make sense.
Like Tim was talking to one of his basketball buddies about like, would you buy a phone that's made in America? And everybody was talking. He was like, no. And he was like, that's the point.
Yeah. Like if we're like, would you buy an iPhone made by Americans? You kind of know it's just not like I wouldn't. I wouldn't buy an iPhone to begin with, but like I wouldn't buy a cell phone made in America because we just don't have we're not known for that and we don't have like the cost effective way to do it.
So like even if you have like tariffs on like say Apple products or Android products, you're probably still going to buy the Apple or Android and pay the increased fee because let's make no mistake. Like we've heard for like a year now that tariffs are actually going to affect the business. That's not how tariffs work.
Tariffs basically get passed down to the customer, make it more expensive for companies to actually import things, products or import materials to make products. And when the when the when a company actually has higher costs, they don't just eat it. They actually raise their prices to cover the cost.
So like consumers are going to pay for the tariffs. So if people were upset about the increases in prices, I think that's going to make things worse in a lot of ways. We'll get to that in a hot minute because that's actually going to like be an inflation question that will.
So I would say if you plan on buying something that's foreign during his presidency, it might be good to make that purchase before he gets put actually in sworn in. So that's that. Stocks will go higher, but that really doesn't have much to do with Trump.
Stocks always go higher. So good for investors, not necessarily great for customers. The point to that is going to be that this is one where you should pay attention because energy has been just getting the shit kicked out of it for like two years now.
Oil prices will probably remain flat over the next 12 to 24 months. I prefer that. I like when there's a sideways market.
I'm cool with that. The caveat is oil prices will be flat or like across the board, but American refiners will actually have an increase because Trump wants to drill at home, produce oil at home to make oil cheaper for Americans. He's actually going to do more American drilling and refining and transportation and things like that.
So if you could, you probably wouldn't want, if you don't have energy in your portfolio yet and you're thinking about getting into it, you actually, for the next four years, you want to be in American companies like ExxonMobil, for example. That's an American one that should do pretty, pretty well under Trump. We got that one, right? We did.
We got out of it because it was too high and then I put it in other stuff. So we're not actually in any oil that you're recommending? We have EPD, which has American access. We are in Civvy, which has American access.
So like there's some. So the growth in the U.S. economic activity should be balanced by the increase in domestic oil production. So like we're going to have more economic activity from America because of the isolationist view.
So to actually make that cheaper, they're going to be investing in American produced oil. So where this gets tricky is if prices on oil hold around $70, inflation should remain between 2% and 3%. However, stronger U.S. growth in 2025 to 2026 could present upside risks to inflation.
Although historically Trump did have a low inflation number, he didn't have the proposals that he's proposing. Like he only had one tariff in mind and that was on China. And China, whatever, we could always buy other stuff, other tech from like, I don't know where other tech comes from.
Europe maybe? India? India? Denmark? I forget where the other tech place is. Brussels? So inflation is going to be the... Harry Monster? It's going to be something. Because that's one thing that we actually kind of hinted at with the deficits.
Because neither one of the candidates actually addressed the deficit being just ridiculous. We're spending more on interest payments on our debt than we are on a national defense. The deficit's out of control.
And that's actually going to compound the inflationary problem. Well, on top of what Powell's been doing with cutting rates. So it's like, okay, does it make sense? That's exacerbating that problem too.
Or from that side. I was reading a lot of stuff where they were trying to like basically say, well, the economy is going to be great in 2025 to 2027. Because when Trump was in office, 2017 to 2019, the economy was great.
That's all fine and dandy, but it could be true, but the metrics aren't the same. There's a different philosophy. Like if you look, he literally is saying he's going to put tariffs on every product coming into America.
And so what that'll do, that'll actually start a trade war where like, oh, say like we put a tariff on Great Britain. Well, Great Britain's not just going to sit back and take it. They're going to be like, well, anything that we get from America is going to be... Tariff through the nose too.
We're going to raise the price on. So a trade war will contribute to supply chain problems, will contribute to inflationary problems. It's going to be interesting.
So like you pretty much for your portfolio, you kind of want to be on the defensive at least until 2026 just to see what the hell is going to happen with all this crazy shit that's going to go down. Yeah. And maybe he'll see that it's not doing as much benefit as he wants and maybe he'll pivot back a little bit.
I don't know yet. Speaking of inflation, what goes with inflation is interest rates. And point number three is interest rates are going to be uncertain.
Like we don't know. All I do know is that the treasury yield is going to be bouncing around between four and five percent. It might actually go above five percent depending on how the inflation numbers come in.
If Trump's pro-economic and protectionist policies do create more inflation, which I think is highly likely and a lot of the things I've read think is highly likely, then the interest rates are not going to decline as much as the market expects, which could actually lead to market volatility because they're expecting four cuts and it's going to be like maybe one cut or no cuts because if inflation is back up at three to four percent, they're not going to cut the interest rates. They may even have to raise them. And the market actually, if you look at the market, is currently pricing in four cuts for 2025.
So if inflation does go up over the next few months, I don't even know if one or two is an option. That doesn't even make sense, but all right. So if there's no cuts, inflation's up, treasury yields are going to rise.
I believe, like I said, the treasury is going to be between four and like 5.25 for 2025. So that is an option for income investors. You can just invest in treasuries, like short-term treasuries for nine to 12 months.
I don't know if they do 12 months. I know they do nine months. I think they do 12 months.
You'll just have to check the options at the time you look because I'm sure it's all over. But like for what it's going to be is you're going to have to actually just reassess everything in 2025 as numbers are coming in, as data is coming in, like, okay, well, this is not good or this is good. Or this means this, this means that.
So if going back to point one where he said stocks are going to rise, well, point number four is the upside in stocks rising is going to hinge on inflation and interest rates, which is, I mean, a no-duh. They should go up in the next 12 to 24 months, but the like 30 to 40 percent gains is going to be dependent on inflation and interest rates. If inflation stays low and interest rates keep declining, then S&P should just blow up.
If inflation rises and interest rates stay high, then S&P is going to do kind of a sideways, maybe a little bit up. Yeah. The gains are going to be retarded.
Like they're going to be suppressed or handicapped. Currently, overall, the S&P is trading at 20 times per 20 times for earnings, which means basically that's the P.E. of the, basically, if you look at any ticker, you see like the forward P.E. The forward P.E. is the projected forward earnings. If you adjust that for the Trump tax cuts in 2025, then we, that'll be a four percent, four percent boost in EPS, which we kind of talked about earlier, which will then equate to a five percent forward earnings yield, which will be above the 10-year at that time.
It gets very convoluted. If the Treasury is at five percent, then you're going to need to have the forward earnings be above the Treasury yield of five percent for people to actually invest in stocks. Yeah, because if not, what's the incentive of taking on the extra risk? It doesn't make sense.
You go Treasury yield any day. Yeah. So I think basically the whole point of all this scientific talk is if the interest, if inflation stays at like two and a half to three and a half percent, interest rates are going to stay at four and a half to five percent.
If that happens, there's not really going to be a lot of upside in stocks because people just put money in Treasury because there's going to be a lot of volatility because of they were factoring in four cuts, and if four cuts don't happen, the market's going to go down. So pay attention to the Treasury yield. You can get that on Yahoo Finance, literally if you just on the top ticker part, it'll tell you what the six month Treasury is and what the 12 month Treasury is.
So if you see that, that tells you right now that the 12 month is at like four point, I think four point four five, and the six month is at four point two five. So if those go below four, that's good for the S&P to raise a lot. If that stays between four and five, it's going to be kind of like it's been like 12 percent.
If that goes back above five percent, then S&P might do like an average year six percent gain. It might even go down. We just won't know.
Like I said, you have to pay attention to it because that is an important number. One of the most important numbers that people don't actually discuss is the Treasury yield because the Treasury yield, like Karim said, if you can get five percent, just putting money into Treasuries, then why would you invest in the stock market that's volatile? Yeah. And with higher risk.
You wouldn't do it. You'd keep your freaking principle intact and you'd earn essentially the same thing. What I'm saying though right now on the record is if inflation stays low and interest rates keep falling, stocks, the S&P could go up more than 30 percent, like more than 15 percent per year, over 30 percent for the next two years.
But how likely do you think that's going to be based on everything else? I personally think inflation is going to go up and so Treasuries are going to stay high. So we're looking at like six percent, maybe 15 percent for the next two years. But again, it's going to be dependent on the data coming in.
Now one area where I'm fairly confident is point number five. Because we have historical data for this, large caps are going to outperform small caps. Small caps had a very good week because of Trump's victory.
But the reason they did is if you think about most small caps are American based companies. So it's like a no-dull, like he's an American first type thing. So like the American company should go up.
But with his tax cuts, his tariffs, his deregulation and things and other economic policies, large caps are going to bounce off. Like if you look at historically from 2017 to 2019, the large caps went up about 43 percent while the small caps only went up about 20 percent. So what's the large cap like actual like number? I don't know.
A hundred million. A hundred million. Okay.
You have to look that up because that's one of those things where I always forget what's what and it's always way bigger than I remember. On any ticker page, it'll show like it'll show the market cap of whatever you're looking at, like whatever you're researching. And I know in Schwab.
I wish they'd tell you if it was actually a large. I know in Schwab, if you look at that, it'll say like it'll say like 10 billion small cap. Oh, it does actually give that on the end? Yeah, 50 billion mid cap.
Okay. But I don't know about Fidelity or Vanguard. I know Vanguard does.
Vanguard's just shit. It's just trash. We have talked about this ad nauseam.
But if you just look, if you look at historical data, large caps outperform small caps, and I do believe they will. I don't know if it'll be the two to one ratio that it was in 2017 to 2019. But large caps, I could see being 35 to 40 percent higher than small caps.
Just because we said the tax cuts, the tariffs, and the deregulation that he's proposing, that is all beneficial to large caps, where small caps kind of rely on regulation. And the tariffs are going to hurt them more because they're making less products. And they're not established businesses.
So I'm fairly confident in that point number five, that large caps are going to outperform small caps. Point number six, there's another one that I'm pretty confident in, that growth stocks are actually going to be better than value stocks. I know we like to do that, like here, we always preach about the valuation.
And valuation is a key metric. You don't want to overpay for something. So keep your metrics in mind whenever you're looking to invest in stuff.
I think that's going to make this hard to actually get in if you haven't gotten into stuff. But Trump's policy should stimulate economic growth, which means it will be awesome for growth stocks. And just for illustration, in 2017 to 2019, the growth index rallied 58 percent, while the value rose at just 27 percent.
And then if you look at the small cap growth index, it rose 40 percent, and the small cap value index rose less than 10 percent. So across all different market cap spectrums, when Trump was president previously, growth stocks outperformed value stocks, and that should happen again. Because of the tariffs, the taxes, deregulation, that's all beneficial to growth stocks more than it is value stocks.
And the tech component is going to be huge, because most growth stocks are tech-oriented in some way, and AI is part of the tech orientation in some way. So they're going to pop off. Speaking of which, I think AI is going to have a resurgence, because it kind of had what they call a bubble in 2024, but I think AI is going to just pop the hell off in 2025, because he wants America first, the America first way to do that whenever you have wages being what they are in America, and a potential for a smaller workforce, because he's going to deport God knows how many people in different sectors.
That's actually kind of pushing businesses to go into AI, because AI can actually do the work. For less money. For less money and less manpower.
And robots want to work. So AI is going to pop off. That's one area, that's one sector that if you haven't invested in, you need to get into.
Even if this wasn't a thing, it still would have been. Even if it's just like an index fund that just basically deals with AI, or if it's a closed-ended fund that's basically AI-related, you need to get into some AI, because AI is about to pop off. At the same time, we brought it up before, cryptocurrencies are going to pop off as well.
So if you don't have exposure to cryptocurrency, I wouldn't start with Bitcoin or Ethereum, but I would do some research on some of those smaller altcoins that we brought up last year, like Filecoin, Fetch.ai, Cardona. I mean, Cardona is up like 70% in the last month. Is it? Yeah.
Nice. But it's still affordable. It's at like 56 cents a token.
And that's a weird one, where it's not like the same thing. Two to-do lists. If you don't have exposure to AI, find some AI to get into, and if you don't have exposure to altcoins, find altcoins to get into, because they're two areas where I could see just so much gain.
It's almost parabolic gain. Yeah. Number seven is new school growth stocks, which what they are calling new school is tech growth stocks.
They really are calling it new school? Yeah. So like AI, like we were just bringing up AI, disruptive tech startups. I do like those.
Like the Aurora that we brought up a couple of weeks, I guess it was a month ago, Aurora, like where the robots drive in the trucks, things like that. That's what they call new school growth stocks. Currently, in 2024, because like I said, the AI has hit a bubble.
These smaller disruptive tech startups, they've actually lagged behind just a general index when it comes to growth stocks. There's one area, one ETF called ARKK. It's Cathie Wood.
I don't particularly care for her. I think she's kind of not very good at what she does, but she actually has an ETF, which is ARKK, which is basically all new school companies in there. That's actually really interesting.
Over the last two years, it got just like just killed by the large cap NASDAQ 100 index. It was probably like 125% for the large cap and like 25% for ARKK. But if you look at Trump's first turn, one of the biggest winners was his ARKK.
It went up 150% from 2017 to 2019. That's really interesting. That's probably because his economic policies back in 2017 to 2019 were pro-innovation, pro-startup.
Which is probably going to be the same thing this time. It is because his running mate has connections to Silicon Valley, JD Vance, and he likes the tech startups. I think ARKK could be a huge winner in 2025 and 2026.
I don't know if it'll go up 150% like it did previously, but I could see it going up at least doubling to like 100%. If we want to go personality route, Trump and it sounds like JD Vance are both like intellectual types, which means they are super, super innately interested in technology even without the trend. So my solution to this because ARKK doesn't have a dividend is I'm going to be kind of tweaking their portfolio to actually with more exposure to the yield maxes because they're going to be writing covered calls on certain things like Tesla is going to be a good like TSL.
Isn't there one that covers her stuff? TSLY. There is an ARKK yield max. Yeah.
So I remember you saying that. So I'm going to be putting, generally I only like to have like one or 2% in my yield maxes, but I'm probably going to bump that up to 2% to 3% in the different yield maxes that I think will do well, like NVIDIA, obviously, Coinbase, obviously, because of the crypto. I mean, there's like the yield maxes you can do a lot of damage with if you don't invest smartly.
So you have to look at what we're saying here about tech, like a tech thing would be like I just started a position in the retirement account on the YMAG, which is the Magnificent 7, which is pretty much all like tech oriented, Google. What do you think of Microsoft? The Microsoft one? I love the Microsoft one. I was going to say because Microsoft is one of the companies that bought into the nuclear sector like that.
Do they have nuclear and the AI? So that's a hybrid, AI, tech. So I do like the MSFO is a really good one, but like that's what I'm going to be doing. Again, I wouldn't put more than 20% of your total portfolio value into the yield maxes.
That's a little high. But if you pick and choose correctly, it's going to be really nice. Yeah, it could be worth your gains.
Point number eight is one that we've already seen play out this week. Clean tech stocks are going to get just smashed, whereas nuclear stocks probably are going to surge. And this is like I said, it's played out all week.
Green stocks got just destroyed. Yeah, because he's going to want to oil mine and all that other stuff. So clean energy is going to be like lackluster.
This week we had double digit declines across solar, wind, hydrogen, EV and energy storage stocks. They all went down. That's probably because most people know that he's going to eliminate green energy tax credits and he's going to want to shift away from clean energy into fossil fuels and nuclear.
Republicans are super big on nuclear power. It is almost like their go to for clean energy. So nuclear, like we got... I can't necessarily disagree with that.
We fortunately got into that NLR two weeks ago before all this went down and it popped off. We went up like seven or 8% this week. And that's a pretty pricey one.
And it only does like the only problem with it is it only pays out one dividend per year. It's an annual dividend. But I still wanted exposure to the nuclear sector.
And a dividend. And a dividend. And it pays out.
It's like a... It's the only way to get it for now, but... It's like 8 or 9% dividend, even if it is once a year. And it has access to 26 companies in the uranium and nuclear area. So I really like NLR.
NLR is one that if you have a couple thousand, you might want to wait for a dip and then buy into it. I mean, I'm actually really excited about the whole nuclear thing. I've always thought, and I don't know if this is just because of my engineering background, but like nuclear just makes so much sense.
If you have the safety stuff implemented properly, which I'm not sure that we were super focused on that back in the day, but I would imagine the way tech's going, they have to improve things at this point. Have to. No, I'm not saying that.
That's not saying that I'm completely getting out of clean energy. I'm still like, I'm buying every dip in NEP because it's... They will come back later. I think once tech advances in them.
I think they're a little ahead of their time. Like that's... It's still the wave of the future. It's just going to take... It's going to be postponed because of... We're going back to fossil fuels and nuclear energy right now, which is fine.
I just think we don't have the tech dialed in for those to truly be worth what they should be doing. So you could do a quick Google search and just find out like nuclear close-ended funds, or you could do a Google search on SRV, I know. It's a conglomeration of midstream oil companies, and we actually got into SRV this week.
I'll go over what we did. This week was crazy. Yeah.
Lots of change because, All hell broke loose. Well, IEP cut the dividend, which we fully expected. Let's wait to do this at the end.
Okay, we'll wait to do this at the end. Because it is like a lot. Okay.
Point number nine, financial stocks should be out for foreigners. I'm actually 100% confident in this one. Deregulation and economic growth, where they resulted in mad profit growth for financial firms, financial stocks during his first term.
I don't see that changing at all. I think it'll be a repeat with the Republic control of both the House and Senate. He'll be able to deregulate as much as he wants.
So banks, lenders, and other related firms are going to just pop off. So like BDC should do quite well. So if you're in Hercules Capital, if you're in Trinity Capital, like we've been mentioning, stay on them.
They should be fine. If the valuation, like I was just looking last night, the valuation of Hercules Capital is a bit high. So I just turned the drip off.
I'll get the dividend that comes out next week in cash. I'll just put that into the other things I have going on. We have a lot going on in the portfolio because of what we'll discuss here in a few minutes.
So I got into a bunch of new stuff. And so I have plenty of room to put my capital to work. But financial stocks, bank stocks, they're tricky because they don't really have a dividend, but they should actually do quite well.
Like we're talking maybe a 15% gain. So if you can find like a closed-ended fund or ETF that has exposure with a solid yield, you could probably outperform what those bank stocks are going to do. That's why I'm saying the BDCs are probably a good idea because they generally have like 10%, 12%, 15% yields.
This is one of those areas where you would prefer to have the individual companies over the ETF because the yields are so high in BDCs? Yes. Yeah. Well, if you do the work, if you just want to set it, forget it, then an ETF might work.
But that's why we don't actually have a ticker for the fund because Tim doesn't. He wants the higher yield and is willing to put in the work. Oh, yeah.
I mean, but we've told numerous times like Main Street Capital, like Hercules Capital, like Trinity Capital. I mean, they're all good. The only one that we got out of was Capital Southwest because it had some insider selling.
Which is red flag. Anytime like people that are actually in the company start selling, you have to like do some Red flag. Why are they selling? They know it's overvalued.
And point number 10, I saw this play out like on Wednesday. I was like, what the hell is going on? Because the market, if you recall, Wednesday, the market was up like 2% to 3%. And some of my REITs were up like 1% and some of my REITs were down like 4%.
I was like, what's going on? Well, real estate, they're going to struggle. Because people understand that a lot of his policies probably are going to mean higher interest rates, which will equate to higher mortgage rates. And then if that's the case, the housing market, which has been frozen by higher rates for the past two years, will remain frozen.
That's not, regardless of how well the economy performs, how many houses are built, it doesn't matter. If the mortgage rate is 7%, people aren't going to be buying like they would if the mortgage rate was 5%. Yeah.
And then banks can't really have as much of a profit margin on that piece. Again, this is one where you have to pay attention to the data coming out. If inflation stays low, awesome, that means they're going to lower the interest rates so the REITs are a good investment.
One area where I think it doesn't really matter is mortgage rates because the mortgage REITs, like ABR, for example, I don't think it's going to matter because they're buying the mortgages regardless of what the interest rate is. They're going to make money. What I was going to ask, like the BDC, some of them actually have real estate BDCs, correct? So those are going to fall actually into the real estate sector, not necessarily the BDC, right? Even if they have exposure to REITs, they're still technically a BDC, but like it'll be good for those BDCs that do REIT investments because... If it's part of their portfolio, but not their whole portfolio.
That's all. Like basically, if I would avoid REITs that have just literally 100% exposure to say commercial real estate or industrial real estate or single family home real estate, like you kind of want to avoid those for the time being because you don't know exactly what's going to happen. And they should keep going down or at least sideways.
So there should be times to buy into them if like the data coming in says, oh, inflation is going down and interest rates are going down. Well, you should be able to find a dip in these if you really, really want to get into them. Well, what sucks about this is we've been talking about how REITs were basically primed to pop off, but now we hit a giant economic pivot point or whatever you want to call it.
They're still going to pop off. Yeah, yeah. But now they're going to be depressed, I think, first before like it's going to be an extended.
So if you listen to us and you were actually getting into buying REITs every time you had money laying around, it's going to be a sideways market. It's going to be a hold. So sideways markets, like I said previously, are like the best because you're getting your dividends reinvested at a lower price.
You're accumulating a shit ton of shares. So you're going to get even more when they depress a little bit more. So whenever they actually pop off.
So we're not saying sell it if you're at a loss for sure, but this isn't going to real estate like the market always goes up. Yeah. So it's just going to be, again, like delayed, I guess, longer than we expected originally.
So it is what it is. Those are the 10 points that I read and came up with. So what does it all mean? Well, obviously, you want to focus on growth stocks in the tech, financial and consumer sectors.
BDCs are another area that I would like. I would pretty much put most of my focus into business development companies. Yep.
So we're super heavy on BDCs. Point number two, mortgage REITs probably should be awesome, but not every REIT is going to do well. And I think physical properties, REITs that hold physical properties are not going to do as well as the mortgage REITs because like, again, if you're not familiar with a mortgage REIT, literally anytime you buy a house, you have a mortgage.
What a mortgage REIT does is they buy that mortgage from your bank. They give your bank, like say it was $100,000 house, they give the bank $100,000 for the mortgage REIT, then they hold the mortgage REIT. So every time you're making a payment, you're actually paying the BDC, not the bank.
So mortgage REITs will be, they'll be really well. So like mortgage ABR, for example. I mean, I keep bringing it up because it's undervalued and it has like a 10% dividend or it might be 11% yield by now.
ABR is awesome. Slam dunk. Point number three, American companies are going to have higher margins than foreign ones.
Trump wants tariffs and that in theory should stimulate American production. ExxonMobil, EPD, CIVI, like these ones that are, I know they're all energy, but like the energy is the most depressed right now because of the last two years. So you actually want to do your contrarian investing.
Get the ones that have been just like going down for like two years. Get all the ones, all American ones you can find because they're going to go up. Point number four, deporting millions will result in a wonky labor market.
So invest in companies with AI exposure. If the company doesn't rely on people, the labor market issues are meaningless. NVDY, like I'm actually investing in AI through the yield maxes because I want to get a monthly dividend or weekly dividend depending on if it's a YMAG or YMAX as opposed to just investing for growth.
And that's a huge, like I know we've addressed it, but a lot of people like are focused on growth stocks. I don't like growth stocks because you actually have to sell the shares to make money on them. And people, it's so easy to get greedy.
It really is so easy to keep thinking things are going to keep riding. And then as soon as you do it, they go the other direction. You're left.
It's so sad to watch your like profits just drain away. Oh, I don't like the whole like, say if you have a portfolio of $200,000, well, to make money to get any money to like live off of, you actually have to sell shares, making your portfolio value smaller so that you can live off it when you could just literally get companies that give you a dividend where you could live off the dividend, hold your shares. And it's the whole premise that everything that we've addressed for about a year and a half now, dividends are the way to retire early.
It's not growth stocks. I know growth stocks are sexy and flashy, but you can't retire early on them. You know, there's a common theme.
Most stuff that's sexy doesn't actually pan out. In general, what normally happens with people that have growth stock portfolios is they retire at 65 and they just start drawing off their portfolio balance at that point. When if they just tweak it, you can have growth stocks.
We have growth stocks. We have a few growth stocks in our portfolio. Yeah, but we're not looking at growth stocks like lottery tickets.
Like most people have that lottery ticket mentality and that's not the way to go. You can have that and you can still have a good solid income coming in with the dividends. I was going to say if you want to do that, though, you should have the dividend portfolio in place first and then if you want to play around.
I would equate it to working. Okay. If you're 20 something, say 25 years old, you have a house and you have a job.
The dividends are like your job. You're getting your weekly paycheck or your monthly paycheck from your dividends. Whereas the growth stocks like you sell your house to live off the proceeds of the house.
At some point, the money from the house is going to evaporate and you're going to have to buy another house or work more than you want to. But that's our little caveat. Where are we at? Point number five, private prisons, especially those that have immigrant detainment centers because of the deportations are going to flourish.
GEO just had an earnings report came out pretty nice. We were in that, I want to say five or six years ago. I don't know why they do it, but prisons used to be like state ran.
Now they're like private companies run the prisons. GEO is one of these companies that runs a prison, but they have a lot of exposure to the immigrant detainment centers. GEO is going to flourish.
If you were looking at getting a prison stock, I don't know why, GEO is the one. That's hot on your list. That's really funny.
Point number six, defense stocks should flourish. This is one area where it's not just American because we're doing the whole America first approach. We're actually going to actually go back to spending money on the defense budget, defense companies like Lockheed Martin, LMT is going to pop off.
But then if you want a European exposure, they actually have a few funds that just literally deal with European defense and aerospace. They're actually going to pop off too, not because of what you're thinking, because they're not going to have any American support to do anything, so they actually have to strengthen their militaries or they could be up the creek without a paddle. So that's one area where you can actually invest in international stocks that will be good.
One that I saw that we discussed, I'm going to say what, three months ago, was that Rolls Royce one. Oh, yeah, that's right, because Rolls Royce doesn't just do cars. Yeah, so that RYCEY was one of my growth stocks.
That popped off, didn't it? Yeah, it went up like 27% this week because people know that, okay, Europe's going to have to defend themselves. So these defense stocks for European countries are going to go off. I swear to God.
I don't know how you predict future like this. You get into these things and they're just up 20%. What was SoFi up this week? SoFi just went crazy.
It was up to a damn near $12 a share. We got that for like $4, and we're at 300x on that already. There was another one that just shot off too, one of those little ones you were talking about.
I don't remember. I just know that my growth- I think they had like a 30% gain. I just know that my growth stocks, if you haven't listened to the growth stock, go back and listen to the growth stock podcast because pretty much they're all firing off except for- I don't know what he sees, and I don't even know if he can convey what he's actually seeing.
Except for the Aurora one. The Aurora one's still on the buy zone, and that's the one that actually is- Oh, is that? I thought you said that was the one that went off a little bit, but it's still undervalued. It went off and it came back.
It's been doing that up and down thing. But that's the AI driving the trucks. That one's huge.
That one's going to be like a 10, 20-year hold, but whatever. It's going to make you a shit ton of money. Point number seven.
Crypto is going to pop off. We've discussed that. Point number eight.
Dividend growth stocks should have higher margins with significantly lower tax rate. So that means if you're actually wanting to get into dividend growth stocks, you have to find ones that have solid or robust finances. So you have to actually, I know, look at the financial pages of all the holdings.
It's riveting reading, but- But it's worth it. It is worth it. This is how Tim finds this stuff.
Pharmaceutical companies, for example, they're going to pop off. She was- Karim said, no, well, they're not going to- Well, so I was like, okay, if he has Robert Downey and I'm- I was in the whole health thing for the longest time. Robert Kennedy, not Robert Downey.
Robert Downey's Ironman. Sorry, Robert Downey. Robert Kennedy.
I was in the whole health thing. That was actually really funny. I suck at names.
So this is another reason. Ironman is not running. Awesome.
Okay, anyway. Anyway, so I was in the health thing for years and years and years. And Robert Kennedy kept coming up all over the place.
And I just knew for a fact that he's super anti-vaccine, super anti-Big Pharma and all this other stuff. And I was like, Tim, how is this going to affect Pfizer and some of these other companies that we're in from a perspective since Trump has now implemented him into that health thingy position that he's in? And go ahead and tell me what you told him. So the vaccine portion of the budgets may be compromised because he's not into vaccines.
But because they're going to do- They're going to alter like your Medicare, your Medicaid, and they're trying to do away with Obamacare, the AMCA. AMC? I don't remember. ACA? I don't know.
Whatever the acronym is. What are you trying to say? Because they're going to alter those or maybe do away with those. Prices of everything is going to go up.
You're not going to be able to use your health care to get your medication that you need. Yeah, because you were talking about going away with genetic. They're getting rid of generic.
Generic is going to be altered. And like there's a lot of- I know the Biden administration passed something with a cap on pharmaceutical things. That's going to go away.
So like drug companies are going to be just fine regardless of the vaccine budget. You also told me that a lot of Pfizer's products are sold outside of America. So if it's not just American-based, they should still have a lot of proceeds coming in.
So yeah, so I'm saying OGN, PFE, and BMY. If you're not in those, you should be in them. So it's exactly the opposite of what I thought was- You should have already been in them.
Bristol-Myers is the one I said that for the next decade, I would actually hold that stock. Well, because the other thing too with vaccines, even if they, quote unquote, make them non-mandatory, that doesn't mean that they're making them illegal. Like that means people are still going to want to get them.
They're going to still get the vaccines in America, but more so that they're like worldwide companies and they're actually going to get them. And because it's a medical world, like it doesn't matter if there's tariff on it. People are still going to pay for their like diabetes medicine, even if it's 20% higher.
So that actually, but that was my concern because I don't think like Tim does. So I was, I actually enjoyed that conversation. So Pfizer was up this week, like 8%.
Bristol-Myers was up like 7% and OGN was down. So OGN is actually in a buy area. If you're not familiar with OGN, that's the one that we got into in the retirement account and went up like, I don't know, 150% in like the last four years.
You're just so ridiculous. It's down now, but it's like, like I said, it's in the buying area and it has a pretty good dividend. It's like 6% or 7%.
Can I go back to the crypto one? A couple of things back. I just want to ask. So if we think crypto is going to go up, but you don't actually want to buy crypto yourself, what would be the place for that? That would be, would you actually recommend getting into the Celsius or not Celsius? Oh my God.
Coinbase stock. I know that's not a yielder or would you just recommend the yield max? I would get into BITO. I would get into CONY.
And then there's other ones that actually pay dividends that are actual stocks that deal with Bitcoin. But the ones I would get into would be BITO and CONY. And if you're like, and like what you can do is what I've kind of, like I said a couple of weeks ago, I actually bought TSLY and I bought the yield max short of TSLY.
And Coinbase has a CONY is the yield max for Coinbase and they actually have a short, which is I think Fiat, F-I-A-T. So you can actually play both sides. Would you need to do that? If we think they're going to go up? I guess if it's super volatile, that could benefit you.
We haven't actually proved the pudding on that yet. We'll get back to you on that. But that's something Tim's tinkering around with.
But I think CONY makes more sense than Coinbase because Coinbase doesn't have the dividend. And CONY is based on Coinbase. Like you're limited, if you buy CONY, you're limited in your upside on the Coinbase play.
But I'm okay limiting my upside on the- To get a dividend. It's paying like a dollar, between like $1.08 and $2.25 a month in dividends. Then that's insane for a $20 stock.
So I'd rather just be in the yield max in that regard. You don't have to reinvest it, which when we discussed this previously, like if you put like $1,000 into CONY, well then just collect the cash. Those ETFs are completely different than the normal strategy because they're not actually invested in the stock.
But I like them and they're doing pretty well. Even like ULTY, which is down like 50% since we bought it. We've actually made like 70% in dividends.
So we're actually up 25%. That's crazy. Because we've just been taking the cash and putting it into other stuff.
And that's one of the areas, like we never actually, we've hinted at it. But like how people judge their total returns is kind of wonky because if you're getting the dividend, you're not actually putting money into the stock. So it doesn't affect your cost base.
You have to proactively track it yourself because if you rely on your brokerage, the numbers are not going to be... Yeah, if I go into Schwab, I can see a bunch of stocks that I know were up like 12% to 20% and it says we're like break even or down 1%. I know that that's not the case because I put no money into it. I know it's not right.
So you have to alter your tracking method. Okay, and then... The last point. Point number nine, I would say breathe.
It doesn't matter. Like again, emotions are not part of investing. If they are, you shouldn't be investing.
You should have like a person do it for you. The market goes up no matter who's in control and the market goes down no matter who's in control. That's how it is.
Yep, because it's all based on buyer sentiment. Tariffs are going to probably increase inflation and keep interest rates higher. That'll present plenty of buying opportunities and if everything goes well, we've actually created portfolios that should keep on going up regardless of what happens with inflation or interest rates.
And even if they go down a little bit, we're still accumulating shares at lower prices and therefore going to make more money in the long run. Speaking of inflation, I know there's one... There's a few different funds but like WIW is literally just a treasury fund that basically... What they call it? It's an inflation protection fund. So that means like if inflation goes up, WIW goes up.
If inflation goes down, WIW goes down. But it's one that like... You have to start thinking a little bit differently about inflation because most people go into gold and gold I don't think is going to perform very well in the next couple of years. Yeah, there's going to be so many other opportunities.
I think gold is going to trade sideways in the next couple of years. If you buy it right now at say $2,700 an ounce, it might be worth $2,800 an ounce in like two years where you could actually make more than... What is that? Like a 3%. You can make more than 3% just buying in a close-knit fund that deals with inflation.
I know WIW pays... I think it's like an 8% yield. That's incredible. So that's that.
So this week, what happened? Okay, so that's the 10 points. So what are you doing? The portfolio adjustments because of said instance? Normally with macros and things, it's like a slower transition, but this was like literally a band-aid rip-off because the election happened. It was a big event.
So that made Tim have to overhaul. I remember he was sitting over in the room just like bitching. It's like, oh my God, I have so many adjustments to do because the portfolio started moving instantly as soon as those announcements came out.
Well, the first thing that happened this week IEP cut its dividend from $1 to $0.50, which we knew was going to happen. We said that if they are being responsible, they should cut it 50%. It still yields about 15%.
So it's not the end of the world. What happened though, what I didn't like, where it caused me to actually sell at a loss was they're cutting the dividend not to be financially responsible. They're cutting the dividend to buy more shares into CVR, which is their top holding that just suspended its dividend a while ago.
Yeah, that doesn't make any sense. We liked IEP and we stuck with IEP even through the dividend cut, through the other thing that happened, through that lawsuit that came out or that scam thing that happened. And then the short seller thing, because they stayed consistent with their original process of buying companies and turning them around and then having a specific strategy.
Yes, he did do a whole market short during a bull run, which was stupid. He admitted that. He changed that.
He stayed in line with that thing. And then when he actually took out a loan to pay the dividend, I think knowing, we assumed it was because he knew that the court case was going to get thrown out, which it did. And the stock popped off like a mofo after that because it proved the original thing wrong.
But now this thing that he just did is completely contradictive, which is why we decided to fight. I understand what they're trying to do because CVR is undervalued because when they suspend the dividend, everyone overreacted. But it sounds like they're already over allocated.
So basically, he wasn't looking at the shareholder's best interest. And that is a big no-no. Like he cut the dividend twice, which right there is the first no-no.
If you were going to do that, you should have done that before. So we sold in the retirement. I got out of all the retirement.
We took it. I got it at a good price. It was only a 20% loss.
So that'll be good for tax harvesting. Which I actually am going to do a big deep dive on that and get back to you guys here, maybe in the next couple of episodes to tell you how you can do that, take advantage of that. Because that'll offset your earnings so you pay less taxes.
So what I did with that is I put some of the money in the TRMD, which we own in the retirement portfolio. It's a shipping company that just transports oil. Energy is going to pop off regardless of like what the tariffs and all that crap means.
People are still going to need gas. So TRMD, we put it into. And then SRV, which is the midstream.
If you actually, it's a midstream fund. If you actually look at its holdings, majority of its holdings are American. So I fully expect it to be pretty good.
It pays $0.45 a month per share. And so it's like a 10% yield. I think it's like $45 a share.
And then I put the rest into bullet shares in the retirement account. In the Madden portfolio, I put a lot of it into the bullet shares for a dry, like that's our dry powder thing. And then I put some into PHT, which is a severely undervalued bond fund.
It's like 20% undervalued and it pays a monthly dividend as well. And whenever PDI hits its sell point, I'm actually going to take the proceeds from that and put it into the PHT because it's super undervalued. And that's one area like bonds, like a lot of people are forecasting bonds to go do poorly under Trump.
But I don't think that's the case because inflation is going to go up and interest rates are going to stay high. So the bonds should be just fine. So that's an area, like if you are thinking about getting out of your bond things, I would think about it again.
I would actually, rather than get out of your bond funds, I would actually just put the drip off and just collect cash and keep your bond fund because it's going to do, it'll be just fine. But that was the big news this week that we actually got out of IEP in the retirement and we sold half of our position in our van life portfolio. Yeah, that was big because we had been, this has been like a basically podcast inception topic.
I've held on to IEP, I've been an icon for like, I want to say five years. Yeah. So that was a big, big, big, big.
But that was a no, that pissed me off. And I don't know what we're doing next week. It might be the tax harvesting.
I don't know. Well, if it is, I got to get researching. But I just know that like the Trump trade, as they call it, the Trump trade, I don't know why.
I guess they're not creative. I don't know. The Trump trade is going to be just fine.
Just understand the policies that he's trying to implement and then use your creative thinking hat and you should be just fine. Or just keep listening to us because as much as I can't stand the guy, I can still make money while that dipshit's in office. So I mean, I think you should caveat that you didn't like the other candidate either.
Well, I can't stand her. So it's not that we were pro one and anti the other. They're both trash.
So, but again, like everything else, you got to roll with the punches of whatever happens, whatever side you're on or anti on. I still firmly believe that we have, what, 350 million Americans and the two best people that come up with Kamala Harris and Donald Trump. That's just a sad commentary on, this is the two best people they had to run for president.
That's just horrible. I don't know. So like we have four years of making money ahead of us.
So yay, stay tuned for that. See you guys. Peace out.
Later.