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Transcript

SPEAKER_00 0:13

Well, welcome to Tactical Investing and Your Strategic Plan. I am Mark Melrose. I am an author, investor, and United States Marine Corps veteran, and on this week's podcast, you know, I well, let me say this. I stand down to uh write my notes on uh what I'm gonna talk about, and it just seems like uh it's the same old thing that I've talked about every time. You know, we're talking about uh inflation, interest rates, gasoline prices, ongoing conflicts in Europe and the Middle East. Uh it's it's the same old hat. Well, uh Trump helped me out a little bit the other night with his uh, you know, the week he talked gave a uh gave me an opportunity, I should say, to put some of these economic issues in perspective that he uh talked about, and particularly regarding his uh you know his proposal on uh you know uh inflation and his uh comments on inflation, you know, and I'll talk about that. Uh it's important to realize, or I should say it's important not to take things at face value. When someone uh of knowledge, even and someone with expertise uh start uh giving you data or economic information or any type of data for that matter, uh, you know, take it with a little grain of salt. It's it might be great, but uh, you know, don't uh don't take it just because of the source. You have to consider the source, that's that's helpful. But uh everybody should always, uh especially when it comes to economic data, keep themselves in the loop a little bit. So uh we'll we'll we'll do that here. How about that? Well, uh let's look take a look at uh the last week. Uh with the Dow Jones Industrial Average finished the week up uh 2.46 percent. And uh that was the uh the index, the mid one of the major indexes up. So blue chip stocks. You know, the Dow Jones being up has certainly uh uh added some growth to the more conservative uh portfolios out there, you know, the ones that uh are holding more um you know uh dividend paying ETFs and more conservative uh you know blue chip kind of stocks companies. They're uh you know, they're doing you know the Dow Industrials, Dow 30 there. They're doing uh not they're doing good, catching up with while they've really lagged for many years, right? Well, it's the SP 500 that was down 1.55 percent. The NASDAQ was down actually almost 3% at 2.9, and you know, gotta mention the energy sector, that's the big one, up 4.97 percent. So if you had your money in energy stocks this week, it uh it probably bode well for you. Now, let's take a look for a minute. You know, President Trump spent uh a considerable amount of time discussing the strength of the U.S. economy the other night. He also raised concerns about the nation's you know ability to uh protect private information, suggested that our voting systems remain vulnerable to cyber attacks. Uh, regardless of the political affiliation, we should all listen though, uh carefully to uh some anyone presenting economic information to us, as I said before, uh from a position of authority and uh compare those statements with uh underlying data. And I'm gonna give an easy example here. One of the things that uh I noticed he mentioned in his talk was uh the inflation rate was talking about how good the economy was going and how uh the uh drop uh you know the uh CPI inflation number dropped 0.7 percent from May to June, and uh how that was one of the biggest decreases uh on a month-to-month decline basis in recent years. Uh wow, that's uh you know that's that's great. You know, interest rates coming down. Of course, it had to go to 4.2 percent, it was coming down from. And uh while uh that is certainly encouraging, it's important to remember that inflation uh first accelerated significantly before declining to 3.5 percent. Okay, and if we like a look at consumer price index numbers just for the year, let's just take a quick peek here. Uh January uh the inflation CPI was up three percent. Uh yeah, January 2025, I should say, was up three percent. Then we rush ahead to the year, January 26, it was up 2.4 percent, February 26, 2.4 percent, March it's up 2.3.3 percent, April it's up 3.8 percent, May it's up 4.2 percent, and then of course, you know, the June number coming out, and we had such a huge drop, it uh you know came down to 3.5 percent, one of the uh uh biggest drops in years. Well, uh course, you know, one of the largest contributors to this inflation number, just look at it, energy prices. Uh in April, if I look at uh the CPI numbers and pull out uh energy costs or energy prices uh out of the CPI, April they were up uh 17.9 percent, May was up 23 and a half percent, and uh June, you know, even though it was down from the previous two months, uh lower number it was uh still up 15.5%. You know, uh so you know, even with the energy uh moderating somewhat over the uh past few months, it still remains historically high levels, and it also means that uh we're probably not gonna get any uh uh interest rate drops anytime soon. The Fed is not gonna be ready to uh lower rates because they've got to keep that inflation number or get it back down. You do not want to raise interest rates or keep interest rates high. Um, you know, and it well, if you do want to keep it high to slow down any growth, any uh economic growth, because the lower rates will uh influence and uh could be a catalyst for uh greater economic growth and higher prices. So that's that's something that uh we all have to look at. Now, meanwhile, of course, you know, the conflict between the United States and Iran that's intensified. Uh the U.S. expands its military operations and adjusts its tactical objectives. At the same time, the Straits of Hormuz remain effectively still closed. Uh, not not a lot of that's certainly not normal traffic uh going through, and concerns still persist regarding Iran's uh nuclear uh materials. So we're seeing a uh uh a tough world geopolitical environment, and one of the other things that uh isn't helping are uh his now talking of bringing back tariffs. Uh taking another shot at that. Matter of fact, uh I just uh as I'm recording this Monday night, um I read that he's looking at uh adding a 50% tariff on Canada now. Shame on them, right? Uh for giving us those, not putting out that fire and giving us all that smoke. Uh and you know, some of the other interesting things he taught. I I just pulled this out of the journal, actually, the Wall Street Journal, and one of the comments it made, it said that uh, you know, where he said this the uh China had collected private uh U.S. information out of uh TikTok accounts. Uh this information included names and addresses uh which uh you know could be used for these fake uh driver's license. But then the FBI, the the FBI, yes, then the FBI comes and makes a comment on it and says uh they're noting that the uh address information was not actually a valid field when uh creating TikTok accounts, and that uh the source didn't specify how China could have required acquired the US data. And by the way, uh most people can buy the data they're looking for uh uh from uh different sources, uh marketing groups that uh keep statistics and things of this nature. Uh so it's not really that tough to get. Um you give TikTok enough money, they'll probably give it to you. But, anyways, uh and I and it just it ended the report, uh it ended it by saying that uh the this report uh by the FBI was was uh later rescinded according to another document in the trove of information they sent out. So again, you know, let's keep uh keep things in perspective when it comes to uh you know the information coming out. And I think every I think a lot of people do. I I did not, I don't I didn't see any lot of panicking in the markets today. The market was off a little bit. Um, but uh, you know, there wasn't uh uh I I didn't read a lot of things on uh how bad uh you know uh Trump had talked, and most people didn't really seem to pay much attention to it. So um I think everybody took it for what it was. And uh, you know, he's trying to get his uh uh voter uh uh passed here, the voter uh legislation passed. So, well, you know, so you know, higher inflation, like I said, net generally means interest rates are you know likely to remain higher for longer, limiting the Federal Reserve's uh ability to lower rates to stimulate economic growth. Well, at the same time, tariffs have once again raised its ugly head, and they're in the discussion. Tariffs can you know, tariffs can increase cost of imported goods, uh, putting additional upward pressure on prices, uh, you know, tariffs along with uh higher oil prices, which means transportation costs go way up. Uh, so the cost of goods start going up. Now the cost of goods just delivering it from uh one city to another, one state to another, you know, with gas prices moving up, uh, airline prices are gonna move up, and then we're gonna throw on those uh items that we uh transport from A to B within our country. Not only are we gonna have more gas, but the uh companies are gonna start paying more uh tariffs on the uh goods that they uh import in. Now uh, you know, last time the tariffs were put out there, I really looked for something a bit more, I don't know, how can I say tragic, but uh it wasn't all that uh you know decisive. Uh and it I don't think it had a tremendous effect that I thought it might on uh our uh economic prices and inflation. It did, but I I actually thought it would be much worse. They ate a lot of the cost. And uh they figured that if they absorb this cost uh because they felt that these tariffs wouldn't last forever, they'd be short term, and they can keep market share and keep prices down. So a lot of the a lot of companies uh you know they uh decided, like I said, to absorb some of that cost. Well, these next round of tariffs come on, uh that might be, you know, tariff on top of tariffs, that could just re-ignite this fire of uh higher inflation, higher numbers or higher costs, I should say, uh that we're gonna have out there. So this is the issue that everybody needs to be concerned with when it comes to everything we do in our economy, you know, from economic 101, macroeconomics 101, it tells us uh, you know, that these are things that can increase costs uh that we pay for our goods. I mean, uh uh with the uh told you about the uh Canadian uh 50% tariff. I heard that one of the things they're gonna put a tariff on is hockey sticks. Can you imagine? They're gonna they're gonna make hockey sticks from Canada that much more expensive? I mean, I don't know how many hockey sticks you buy a year, but holy cow, that I mean it, you know, doubling the price or even a 20% increase in hockey sticks from Canada? Oh, you can buy them in the US, can't you? I don't know if there's anybody uh just you know if you if you have to buy your sticks from Canada, hockey sticks, I guess that's a problem, but I can't imagine someone around here hasn't figured out how to make a hockey stick in the US. Anyways, I digress with that one. Um so you know, as a tactical investor, you know, I I look, I sit back and I start looking at different uh industry groups, trying to figure out where I need to dive deeper. All right, and and I just wrote down just a couple here uh just to kind of have a conversation of it. Uh, drug companies. You know, uh you know, drug companies did well with um the pandemic. You know, that we had a you know, right where you could pick a company that was uh bringing out the cure and it was gonna happen, and you know, they made a lot of money, and it was a lot easier to decipher all that information. But drug companies, you know, they're back to normal. Where you know it sounds like somebody's got a great drug and it's gonna the stock goes from ten dollars to twelve doll to fifteen dollars, and all of a sudden, you know, they they say the the third trials were great, and it goes to you know, goes up another two dollars, and then the next thing you know, uh competition didn't work out, it didn't get approved, and the thing's back to ten again. Um, so I can't get my hands or my head around, you know, even with this weight loss drugs. I mean, certainly weight loss drugs did offer some early opportunities. And if you thought about that tactically, who's gonna get in early? And it was more than one company. So uh any company that got in, if you look at Johnson ⁇ Johnson uh and and a couple of these other companies that uh brought out uh weight loss uh drugs, whether it's injections or uh the pill, uh you're seeing that uh they uh increased their price in uh or their stock went out in 2025. So uh you know that was a good read on tactics of uh, you know, and again a lot of people will call this a top-down um way of uh you know picking your stocks, taking a major industry and then picking out the winners out of those industries. But the drug industry, they they they don't sing to me like uh they used to. Uh energy companies, now that's a different story. Now, the problem with energy in the beginning with me was uh are oil prices gonna stick? Are gasoline prices gonna stick? Because are they gonna solve this problem in the Mideast and with Iran and open up the straits? And how much really comes through the straits, anyways? Uh there's one thing to keep in mind with the energy crisis, and that is that the energy crisis isn't a supply crisis. There's plenty of gas you can buy at $4 a gallon, no problem. But uh, and they have to refine that oil into gas, and that's why refineries, you know, I recommended a few weeks ago to pick up a refinery and uh pick up uh you know the uh ETF XLE, the energy ETF, two good investments, and they still are. And I'm I'm uh I'm liking that industry and uh liking those sectors. There's a lot of um positive things happening there, and now you just have to dive down into the companies that are gonna be able to take advantage of that. Uh I don't look for oil prices to maintain a certain or maintain a very high level to uh justify a lot of capital investing by uh drilling oil drilling companies, things like that. So I don't look for them. Uh now speak of uh companies that are taking advantage of things, defense companies. Uh when uh Russia first uh attacked uh uh Ukraine, it was a great uh uh great time picking out some of the uh uh defense stocks. I loved it and made some good money there. But uh right now uh they're pretty much a capacity. So the problem isn't they they can't sell what they're making, the problem is they can't make enough to sell. So that's kind of slowed down the fence a little bit. So, you know, I I am peeking my head around uh different directions on where uh weapon systems are gonna go and how they're gonna be used. And for example, um, you know, all these uh flying buzzards around there that are uh coming in, uh, you know, these uh drones that are uh you know effective weapons and working. So where's the margins in that and where's the big price movements in that? Uh that's the other problem. I don't see a big price movement in that. Uh of course, semiconductors, I mean, they were racking, and I still think does move in the upside, but we're the uh semiconductors uh they're starting to catch up with some different competition. Uh things are you know, a lot of uh companies have loaded up on uh their chips ahead of schedule or ahead of uh their needs so that they don't run short. So a lot of them have been already purchased and they don't need to buy as many, but uh that's still something that's gonna happen. Uh semiconductor stocks I'm still seeing moving sideways before they start going up or maybe even down a little bit and then sideways before coming back up. But you have to be selective. Some of these companies are gonna be uh gonna be in trouble down the road. So uh we want to keep an eye on every single one of them. Uh follow the uh tactical practice of uh if it uh you know if the reason you bought it is still there, and it's still uh, you know, all the reasons you bought it is still in place, then uh you know keep it. Now, should you trim a little bit of it? Well, that it's gonna depend on your risk tolerance and where you've come from. So that's gotta play in there a little bit. Uh so there's uh there's that coming into play. Now, listen, uh I talked about the different uh you know philosophies and uh uh different uh you know thinking you need to have from a tactical standpoint. I say this every week that uh you know as a tactical investor, you know, as as tactical investors, you know, our responsibility is not to react to emotional, emotionally to headlines or uh, you know, to uh put uh elevated uh you know uh economic uh developments into uh you know uh effective industries to make sure that they're uh they're uh more in uh emotion than they should be. You're giving them more um weight than they should be. Yeah CPI numbers uh coming down, should we give it that much weight? You know, so be conscientious of these numbers. Uh, you know, so understanding again the difference between short-term news and long-term trends, you know, that still remains one of the greatest advantages uh an investor can have. Uh and of course, I love uh finishing all my uh wonderful uh podcast with uh my favorite uh tune or my favorite uh stain, and we'll say the we'll go with that and I'll finish up and thank you all for listening and and uh tuning in. Uh I hope it didn't seem like I was rambling too much, but uh enjoying and uh having a conversation with you guys and we're gonna keep it up now. Remember now the first guys to the planets in the skies to remind you of what is possible. Okay, keep your feet firmly in the earth for it is here on this ground in this life. Your journey unfolds, and the greatest achievements are made. Hey, thanks a lot for listening again, and uh you guys have a wonderful week.