May 16th, 2026 - Should Semiconductors be a Sector?

In a lively studio session, Steve, Adam, and Joey dive into a whirlwind of financial topics, from market trends and the skyrocketing value of Nvidia, to the potential disruptions AI could bring. They explore the intricacies of required minimum distributions and share insights on personal finance careers, all while engaging with their audience through trivia and thoughtful discussions. With humor and expertise, they navigate the complex financial landscape, making the Van Wie Financial Hour an informative and entertaining ride.

Transcript

Steve Van Wie 0:00

It's Saturday morning. It's 10 o'clock. This is the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 0:05

I'm Adam Van Wie.

Joey Loss 0:06

And I'm Joey Loss.

Steve Van Wie 0:07

Back together again, all of us right here in the studio. Joey thawed out after returning from Minnesota. It's not usually that bad up there in May.

Joey Loss 0:15

Yeah.

Joey Loss 0:19

No, it was, it was fine. I mean, it was, the sky was a perpetual gray, but it was not hot or cold.

Steve Van Wie 0:25

Yeah. Um, living nearby there for a long, long time. We were on Lake Michigan, and back in one of the many downtown revivals that the city was always trying to make, they came up with a slogan. They called it "A Great Place on a Great Lake." So in honor of the weather, we kind of all renamed it to "A Gray Place on a Gray Lake." And I still have the t-shirt, only it's been woven into a rug in in our laundry room now. But that's another story. I digress, as I am wont to do. Welcome back to all the regulars. We are here for you. And as long as you keep listening, we're going to keep talking. So we'll see what happens today. It has been a year where finding topics for discussion has never once been challenging. Things happen. Lots and lots of things happen. We'll hit a lot of the highlights today. And you never know, maybe you'll learn something. So if you wanna change our subject, all you gotta do is pick up the phone, dial 904-222-8255,

Steve Van Wie 1:33

or 222-TALK, and we will put you to the head of the class. Let's see, where do we begin? The week was really fun, assuming it would stop at 9:30 on Friday. Yeah, it didn't do that.

Adam Van Wie 1:49

It didn't really. So despite that, the market just was basically flat for the week. It was actually all 3 major indexes ended within 2/10 of where they started. So that's about as flat as a week as we've ever seen.

Steve Van Wie 2:06

We set a bunch of records along the way, too.

Adam Van Wie 2:08

Yeah, we did a little bit earlier Thursday.

Adam Van Wie 2:12

And the Dow, which has really lagged this year, was down just 2/10 of a percent. The NASDAQ was off 0.1% and the S&P was actually up 0.1%.

Steve Van Wie 2:23

So 6 or 7 weeks in a row the broad market's been up.

Adam Van Wie 2:27

So it was 6 in a row that, that the, I think the NASDAQ, the S&P, and the Russell were all up. And then this week that ended that streak, but not by much.

Steve Van Wie 2:38

So, you know, the broad market's the best overall measure. So the S&P was up a little bit. So we're 7 weeks there. It's pretty encouraging to me.

Adam Van Wie 2:45

Yeah, pretty solid. It is, it is. The negative reaction on Friday was pretty interesting. We saw bond yields spike pretty much all week, but really spike on Friday. The 10-year moved from under 4.4% ending the week at around 4.6%.

Adam Van Wie 3:03

I think that the market was expecting Trump's China visit to do more. And part of that would've been a commitment to get the Strait of Hormuz reopened. It sort of fell short of that goal, although there was some talk about it, but it wasn't a clear and definitive, yes, we're gonna get that straight open. Um, and then, but the interesting thing is, at the same time, oil didn't really spike that much. It went from about $97 to open the week to $105 to end the week. So it wasn't a huge spike. It was some upward movement, but not as terrible as you might expect considering the spike in bond yields. So I don't know, it's, it's a really interesting time. What I do know is that seeing oil and bond yields go up in the same week is not really good for the stock market. So the fact that we stayed flat is probably a good sign.

Adam Van Wie 3:59

If you wanna know what's been driving the market higher since the March lows, look no further than the semiconductor sector. Well, it's not an official sector. It should be, but it really— in reality, it's a subsector of technology. The tech sector now makes up 37.5% of the entire S&P 500 index, and semiconductors make up 18.7% of the S&P 500 index. So that— if that's not worthy of its own sector, I don't know what is. When you realize that the S&P 500 has a total market cap of $67 trillion and one semiconductor company alone makes up 8.2% of that total, it makes sense. Nvidia reached a market cap of about $5.5 trillion this week, or more than 8% of the total market cap of the S&P 500. That is pretty insane.

Joey Loss 4:50

That is insane. I heard an argument this week that Nvidia now trades with a size discount, a thing I've never heard of before. It's so big that they just— it's not going to get credited the full value of the growth going forward because people just cannot imagine that it'll continue to grow at the pace it has.

Adam Van Wie 5:09

It is hard to imagine. But when you see companies that— we always say it's easier to double a $100 million company than it is a trillion-dollar company. And yet their growth rate kind of just looks that in the face and says, no, that's not true.

Steve Van Wie 5:24

What happened this week? They got authorization to sell chips to China just one generation back. From the current one. So they weren't doing that. Now they are. That means their order book is big.

Adam Van Wie 5:30

Yeah.

Adam Van Wie 5:36

You know, last time the news was that that had been cut off and it was, it was a huge number of sales that they lost, but in relation to their total product volume, it was really nothing. Yeah. It's, they're just, they're, they're huge. Just unfathomable how big this company is.

Joey Loss 5:54

Yep.

Steve Van Wie 5:56

I loved our little chat this morning about the— probably going to bring this up, but following the pattern from the late '90s and then going into the year 2000. So when you're wrapped up, I want to talk about that a little bit. very important.

Adam Van Wie 6:09

Okay. I actually— I didn't talk about that, but it is a topic that I think we should— it's worthwhile to look at. We haven't talked about Bitcoin lately, probably because it hasn't been flying high like it did for much of last year when we were getting call after call, why isn't Bitcoin in my portfolio? Well, and then now, you know, stuff happened. It's shown some signs of life lately, making a series of higher highs and higher lows. However, it would take a rally of 55% to get back to its 52-week high. And that's why you haven't heard about Bitcoin recently. The sector of the stock market that it most closely correlates to is software, which also appears to be having a bit of a breakout recently from its downtrend earlier this year. Really started late last year. So kind of keep an eye on those two things. Just, it's interesting to see. I always like it when sectors that have been beat up start to show signs of life because it may not always, but sometimes that represents a decent buying opportunity. Unlike software, the healthcare sector has been stuck in a pretty serious downtrend and doesn't appear to be going anywhere near a breakout. Joey and I discussed this in his latest podcast. Yesterday, uh, which is— as a side note, it's called Wealth Unplugged. And if you aren't following Wealth Unplugged on Apple Podcasts, Spotify, or wherever you get your podcasts, you really should. Um, you can find the information on our website as well. The uncertainty and explosion of costs in the healthcare industry have led to more questions than answers in where the industry goes from here. And it has just been brutal. It's been, I, I'm pretty sure, the worst-performing sector of the S&P 500 recently. And it just— I don't know what it's going to take to turn it around.

Joey Loss 7:54

I don't either. AI. I mean, you know, if they figure that out, then it's going to be a very disrupted sector. I think when that happens, it's going to be— there's going to be a lot going on.

Adam Van Wie 7:56

Yeah.

Adam Van Wie 8:03

There is a ton of opportunity for AI in healthcare. And I'm not talking about doing— performing surgeries or anything like that. I'm talking about the back office function. Coding, billing.

Steve Van Wie 8:11

Yeah.

Joey Loss 8:12

Just the way the business is. Billing is huge. You got two bills this week. One was the same thing. It's just a mess.

Adam Van Wie 8:18

Yeah, I got two bills for the same thing this weekend. One was, uh, current and one was past due.

Joey Loss 8:24

And then he logged in and all of them were paid. Yeah, so he had a whole bunch of nothing.

Adam Van Wie 8:29

Awesome.

Steve Van Wie 8:30

AI maybe is just a guess or something like that. I don't know. And you're right though, this is not going to be replacing your doctors and lawyers and all this stuff. It's going to help them do a better job, but it's going to also keep the overhead on— what you guys have been talking about on our little shop— keeps the overhead down. Yeah, that's where it's really good. First of all, we got to take a quick break. We'll be right back. There's lots more to come. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 9:02

I'm Adam Van Wie.

Joey Loss 9:03

And I'm Joey Loss.

Steve Van Wie 9:04

And we do, as usual, have a trivia question today sponsored by Paul Lloyd for First Coast Alarm. You can call Paul at 904-636-7888.

Steve Van Wie 9:15

And today's question is by Adam.

Adam Van Wie 9:18

Yeah, and it has to do with NVIDIA. I figured it was a pretty timely, relevant topic. So as I mentioned before, NVIDIA reached a market cap of over $5.5 trillion this week. How many sectors of the S&P 500 are smaller than that, than just the, the actual Nvidia company? How many sectors of the S&P 500 are smaller?

Steve Van Wie 9:46

Well, I think that should be a very interesting question.

Adam Van Wie 9:50

Yes, definitely.

Joey Loss 9:51

The fact that it may take several calls to get the answer—

Steve Van Wie 9:54

exactly—

Joey Loss 9:56

is incredible.

Adam Van Wie 9:57

It is crazy.

Steve Van Wie 9:58

Um, yeah, just when you think about the blatant absurdity of the question itself. And it's true.

Adam Van Wie 10:03

I know. And when I read the sectors, then you're going to be really shocked because you just— it just doesn't even make sense. Well, we—

Joey Loss 10:11

I remember shortly after we came together early last year, we were talking about $4 trillion and scratching our heads, having the same conversation. This is crazy. Yeah.

Adam Van Wie 10:20

You know, can it happen? Is it possible? Can a company be that big? And the other crazy thing is their stock hasn't even been that good lately. No, it's been okay. But it— but compared to the other companies in that sector, it's one of the worst performing, if not the worst performing, in recent times.

Joey Loss 10:23

It's got to cool off.

Joey Loss 10:31

Yeah.

Joey Loss 10:40

Which, for scale, leaves a lot of room, because what is the year-to-date on semiconductors? Is 49%.

Adam Van Wie 10:47

Yeah, it, it does. But at one point this year, NVIDIA was actually trailing the S&P 500. I'm not sure if they still are, but it was the only company in the sector that was trailing the S&P 500. So It's not— It's not like Nvidia has been setting the world on fire like they did in the previous few years. So pretty interesting.

Steve Van Wie 10:58

that wasn't long ago.

Steve Van Wie 11:05

That is maybe starting up again though, you never know.

Adam Van Wie 11:08

All right, some other bit of, uh, some interesting news. This is today's edition of Jobs I Don't Want. Kevin Walsh was confirmed as the new Fed chair this week. So what do you guys think his first move is?

Joey Loss 11:26

Uh, probably rate stay.

Adam Van Wie 11:29

Yeah, I mean, I would not— I would not move either. I agree with that. My first move if I was him would be to try and convince Jerome Powell to stay on the board so that way, yeah, I can point to him and say it's his fault because he's gonna need a scapegoat. That job is impossible right now. I don't know what he's gonna do. I, I think doing nothing is probably the safest and most correct answer. But you've got one— you've got parties out there clamoring for a rate cut. You've got data out there that says perhaps a rate hike is the right move. Yeah. And I don't— I don't know.

Joey Loss 12:04

An increasing amount of data. Yeah.

Joey Loss 12:08

And the long end of the yield curve is kind of deciding rates are going up on its own. It's not— it is deciding that.

Adam Van Wie 12:13

Yeah. You can't— they don't control that.

Joey Loss 12:15

So. Right. They don't control it. But if you're looking for broader indicators of where things are naturally going.

Adam Van Wie 12:20

Sure.

Steve Van Wie 12:21

You know, there's a bona fide discussion that has to take place as to is this inflation or is this an oil price shock that will go away the second UAE pulls out of— which it already did, I guess— pulls out and starts cranking up their huge amount of oil and the Hormuz gets open. We had Xi Jinping promise to shall we say, make a phone call. I got a feeling when he makes a phone call, somebody picks it up and listens.

Adam Van Wie 12:50

Yeah, but so that is all a legitimate scenario, but it's just one possibility and we can't prove what's going to happen next.

Steve Van Wie 13:00

So if we, if you didn't raise rates, then will inflation drop? Yes, it will, because we're including the price of oil in the inflation rate.

Adam Van Wie 13:08

The rate of inflation will drop.

Joey Loss 13:10

Yes. Yes, but every week this topic comes up, that argument gets weaker because it's permeating through the rest.

Steve Van Wie 13:18

That's exactly what my next point was going to be. It becomes inflation. I don't call it inflation today, but it will do it.

Joey Loss 13:23

It does.

Adam Van Wie 13:27

Yeah, it's— I hate to say this word even, but it goes back to what they tried to pull off in 2021 and say it was transitory. Yeah, well, it can be. Until it sticks around for a few years, right? And then it's definitely not.

Steve Van Wie 13:42

There is one more thing too that came out. I don't know if you guys caught this this morning, but on rents, because of the government shutdown, there were 6 months of rents not included in the calculations, right? It got front-loaded now, and it actually jumped the rate up quite a bit. And it's going to smooth out over the next 6 months. So that's going to be an automatic lessening of the rate of inflation. It's not going to change anything major, but it's just a point in there that they have to consider that blips should be smoothed out.

Adam Van Wie 14:17

Yeah. The other, the other point is that it's currently— the most recent reading was 3.8%. So if you look at the long-term historic average, it's 3%. We've been below 3% for quite a few months now. So the average right now is probably right around that target of 3. But the longer we stay elevated closer to 4 or hopefully not, but higher, it's going to really pull that data up and the average will become higher than 3, which is really— we just do not need right now.

Steve Van Wie 14:48

No. Trueflation is at 2.11. It's been creeping up also. Yeah, it wasn't, but maybe 6 weeks ago it was around 1.5 or 1.3. It's been on a steady march.

Adam Van Wie 14:59

Yeah, yep. So this is, uh, not the direction we want to see things go. And there's an easy— well, not an easy solution, there's an obvious solution, but it is not easy to achieve. So we'll see what happens.

Joey Loss 15:12

When it, when it comes to the bond market and 10-year yields, 30-year yields, uh, it's been interesting to watch. We had a conversation about this yesterday on the podcast. In the beginning of the year, in the start of the war, it was bad news that was making rates go up. Now we have arguably neutral news in geopolitical sense that nothing's really changed. And we have good news on the corporate profits front, and that is also making rates go up.

Adam Van Wie 15:25

Mm-hmm.

Adam Van Wie 15:31

No.

Adam Van Wie 15:35

Well, people are clamoring for private capital and, and they, they need that money because there's opportunities out there right now. So they're willing to pay more for it. So that is also contributing to the rise in rates.

Joey Loss 15:47

Yeah. And from the lending side, they're seeing, okay, well these companies are growing at 15, 16%. This money is worth a lot to them. We can go ahead and charge a little bit more and get away with it. And companies they're happy to pay it. So there you go. That's how you turn good news into rate increases.

Adam Van Wie 15:56

Absolutely.

Adam Van Wie 16:01

Well, they've got multiple groups coming to them for money. So yeah, you're going to get the highest rate that you can get safely and expect that return to be paid back. So it makes sense.

Joey Loss 16:11

Mm-hmm.

Steve Van Wie 16:12

May you— a curse upon you. May you live in interesting times. And we do.

Joey Loss 16:16

Absolutely.

Adam Van Wie 16:18

No doubt about it. Last thing I wanted to mention, earnings season for the first quarter is winding down. And a good portion of this rally we've seen over the last 6 weeks is due to the strong results. Earnings beat rate stands at 72%, while the revenue beat rate is at 74%. Those are both great numbers. Even more impressive, 11% of companies have raised guidance while just 4% have cut guidance. So that spread is really big, almost unheard of. Keep an eye on a few key reports this coming week. We've got Walmart, Home Depot, Lowe's, and the big one, Nvidia. So that'll be really telling.

Adam Van Wie 17:01

I think Walmart, Home Depot, Lowe's will give a really good picture of the consumer, which has been a hotly debated topic. How there's a lot of data that says the consumer's as well off as they've ever been, but there's an increasing amount of data saying that maybe that's just the top of the K and not the bottom. So I think Walmart, Home Depot, and Lowe's, they sell to everybody. It'll be a pretty good indication.

Steve Van Wie 17:24

It's going to be another interesting week. All right, let's, let's hit that earnings thing again and let's talk about the tracking charts for where are we now, Netscape versus what, uh, AI, I guess.

Adam Van Wie 17:38

Yeah, so the release of ChatGPT versus the release of Netscape.

Steve Van Wie 17:43

This is acting like 1999. The charts— they've got the charts on our research outfit that we use. They're almost identical. There's hardly any spread in them for a whole series of months. It's unbelievable how close this is.

Adam Van Wie 17:54

It is.

Adam Van Wie 18:02

So what we're talking about specifically is the performance of the Nasdaq since the release of the Netscape browser back in '94. '94, was it '94?

Joey Loss 18:14

It was '94 to like '99.

Adam Van Wie 18:15

Okay. So, so then versus the release of ChatGPT and the two lines that track that index over the time period since those two releases are almost identical.

Steve Van Wie 18:29

Now, anyone of a certain age who paid any attention at all knows what happened in early 2000. Around March 15th, some were a little bit before, some a little bit after, but the wind came out of the dot-com sales, literally, figuratively, whatever, and the market crashed. NASDAQ had peaked at 5,048, I think, and there was a time— I was on the other radio show at the time— and there was a time I went in there one morning and In my market wrap, I said, I think the question of the day is, can the Nasdaq go negative? That's how fast it had been falling and how far it had already fallen. And then I said something like, it's going to take a long, long time to regain that. What is it today?

Joey Loss 19:22

I don't even— I don't know. I don't know what the number is. I just follow the percentage.

Steve Van Wie 19:26

Nasdaq today, 26,000. So recovered pretty well. But in that period, in March of 2000, there was a difference between that and today. This whole discussion started because actually Joey was asking me this morning, or sort of commenting, not asking me, but saying, I just don't like following those charts along to where that end would be after all those years. And I reminded him and I remind everybody that there's so much difference between the NASDAQ today and the NASDAQ back then. The dot-com boom, they were counting the number of people who logged on to the website, and they were counting what they called their burn rate, which means I've got X number of dollars and I used Y number a day. The burn rate would tell you what day that company was going out of business, and it did. Well, They're not borrowing or running out of money today. They're printing money. If you look at the cash flow from places like Microsoft and Nvidia and so on, it is unbelievable how much money these guys are making. Big difference. Not something I'm going to spend a lot of time worrying about. Okay, we've got to take another short break. We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 20:52

I'm Adam Van Wie.

Joey Loss 20:53

And I'm Joey Loss.

Steve Van Wie 20:54

And I remind everybody that lines are open, 904-222-8255,

Steve Van Wie 21:00

where you can take a shot at our trivia question, which is done by Adam today. So let's repeat it.

Adam Van Wie 21:05

Yeah. With the recent news that NVIDIA reached a market cap of over $5.5 trillion during this week, I think it's a little bit below that based on the Friday decline. But I want to know how many sectors of the S&P S&P is Nvidia— that's just the company Nvidia— larger than?

Steve Van Wie 21:25

I say let's give them a hint. How many sectors are there in the S&P?

Adam Van Wie 21:29

Um, 12. Yeah, I think it's 12. I think sometimes I see it as 13 because they do break out semiconductors, but officially I think there's 12.

Steve Van Wie 21:38

Yeah, I think that whole thing is going to be updated a little bit. Yeah, it's kind of old, but that That doesn't matter. The point of the question is very well made, I think, and it's stunning that we should even ask a question like that. One company is bigger than how many sectors of the broad market index? It truly blows me away. All right. We done beating up on the market or having it beat up on us?

Adam Van Wie 21:42

It needs to eventually.

Adam Van Wie 22:09

Yeah, I think we, I think we've exhausted all of that. But I did want to mention, I don't know if you— you said you did see the story out of UCF. There was a graduation speaker at the communications and media graduation who made her speaker all about AI. She called it the next industrial revolution. I don't think anything she said was controversial. It's kind of a pretty well-established consensus at this point that AI may be that. Not definite, but yeah, I don't think it's controversial. Well, she almost got booed off the stage by the graduates when she started saying that. And my takeaway from that is I, I understand that AI is probably going to make it a bit more difficult to find a job for recent graduates, but It is the reality of the times we live in, and you can't just bury your head in the sand and pretend that AI isn't going to be what we think it's going to be. I think that you need to embrace it and get out there and learn how to harness it to make yourself the best version of whatever it is that you— that whatever type of career you're pursuing, because the people that figure out how to do that are going to be tomorrow's leaders.

Steve Van Wie 23:33

Yeah. You're saying no flash in the pan, this one?

Adam Van Wie 23:36

I don't think so. Just— we've been really heavy experimenting with it in the office recently, and it is truly amazing the things that it can do and the amount of time that it can save you to get the— and money to get these things done. And it's not like the things don't need to be done. They still need to be done. And someone has to coordinate all that through the AI. Products, but pretending that it's not going to be part of your life is not a good solution. Get out there and figure out how to use it.

Joey Loss 24:08

Yeah. And in our case, I think it's, you know, it helps us be faster at the background work so that we can spend more time doing the front side work of actually talking to people, which is exciting. And so I think what these graduates probably don't know is that if you you're going to get to spend more time doing the actual value-driving thing and the rest of your work is going to be easier. You still have to build and maintain the system that does that work. But yeah, I think some of that's just, you know, graduation day is pretty raucous day and you got riot, you got group, groupthink, riot mind mentality.

Adam Van Wie 24:35

Yeah.

Adam Van Wie 24:46

Yeah, that's probably to some degree true. I was just surprised by the reaction.

Joey Loss 24:50

I think so.

Steve Van Wie 24:50

You know, I have in my great big book of old expressions, one of my favorites over time was, I said, um, the only thing that impresses me more than a kid who can get into medical school is one who can get out of medical school.

Adam Van Wie 25:08

Yeah, that is arguably harder.

Steve Van Wie 25:10

Nowadays it's more generalized. If you can get into a Florida school and get out, you're really something.

Adam Van Wie 25:17

Yeah, you're automatically in the top, I don't know, 10% probably. Yeah.

Steve Van Wie 25:22

When you guys were born, Mom and I used to talk about this over and over and over. Is it going to be that when we bring these hopefully smart kids into the world, are they going to be head and shoulders above everybody else? So life will be easy for them, or are opportunities going to be better? Or worse. In other words, what is the future for the brighter kids today? And I personally don't believe it's ever been brighter. It's going to be more difficult to control it. I was just telling Adam, I read a story yesterday where there's a, a very, very common and fast-growing college segment of people getting dual majors where the second one was becoming adept at using AI. So yeah, you want to do finance, that's fine. But here's some AI. You want to do medicine, that's fine. And also some AI. Psychology— that you cannot— I cannot think of anything where AI isn't going to penetrate the world of making a living anyway. So we'll see. It's going to be very interesting.

Adam Van Wie 25:54

I agree.

Adam Van Wie 26:34

Yeah, definitely. But I think I agree with your point that I think there's more opportunity, not less. And it's just going to be up to the individual to take advantage of it or, or not. And that's, that's the difference. Yeah.

Steve Van Wie 26:48

And if anybody wants to know how important it is, just Google this one. How much is Mega paying for the people that they're trying to get to come to work for them because they're good at AI? And I would tell you and you wouldn't believe me. So just look it up.

Adam Van Wie 27:03

Oh, you can— fathom. Just go on Indeed and look, look at the job offerings for certain, certain careers. I mean, you're talking about salaries that are numbers that, that used to be CEO salaries for just like a, a, a mid-level manager in a, in a tech company. It's in— it's crazy. And then you layer the stock options on top of that with like a company like Nvidia, and these people are— have more money than anyone you knew growing up. They are legitimately rich.

Steve Van Wie 27:36

Yep. And by anybody's definition, I'm sure they get personally signed thank you letters from IRS every year. But, you know, if they're taking less than half, which hopefully they will be, that leaves you a lot of money.

Adam Van Wie 27:44

Oh, yeah, for sure.

Adam Van Wie 27:51

It still leaves you a lot of money. It does. A lot of digits in these salaries, especially if you hire a good financial planner. May, may help you find a way to keep a little bit more of it. Hint, hint.

Steve Van Wie 28:01

Funny. I have in my left hand a little thing called What Makes Financial Planners Successful.

Steve Van Wie 28:11

You want to hear a little of that since you guys are living it? Well, what you need to know part. Well, first, a third of respondents sought a financial services career to serve others. Now, I— Joey, you're the only person I know that started your life knowing you wanted to do this. What was your motivation for becoming what you are today?

Adam Van Wie 28:14

Sure.

Adam Van Wie 28:17

All right.

Joey Loss 28:37

I mean, I think that piece, and I can say this for my colleagues at school back then, that was the first one because we had all come from either engineering or corporate finance in the absence of the ability to work with people individually. Was the thing that made us jump over to personal finance.

Steve Van Wie 28:52

Where'd you start?

Joey Loss 28:54

I started as general engineering. Jumped over to corporate finance and it felt closer, but not quite. It's still a little cold, kind of cog in the machine. And then just ended up in the right series of conversations and made a jump to personal finance.

Steve Van Wie 28:56

Okay.

Steve Van Wie 29:09

That fits right in. I've always said

Steve Van Wie 29:13

younger people, if you're looking for a career, If you satisfy these 3 things, you should look at this really carefully. You got to love people, you got to love money, and you got to love numbers. And all of that fits together. That's what we do. We deal with nice people and we do it in a manner that involves numbers and money and all that stuff. And it— some of the reason I harp on this all the time, it might seem like I'm trying to encourage our competition. Which wouldn't make any sense until you realize that we are woefully short of real honest-to-goodness financial planners. See, there's a big shortage. Huge. And it's not going to get any better because a lot of these people are in my age bracket and a lot of them don't want to work anymore. I, I love it, but some don't. And you got to replace those more than one for one. It's like the population of countries shrinking. If you don't have more CFPs in 10 years than we have now, then America is going to be shorted on their financial planning and investing strategies.

Joey Loss 30:25

Hey, at least the IRS deficit will be getting some more revenue against it. Yeah, you know, with no guidance.

Steve Van Wie 30:31

Yeah, exactly.

Adam Van Wie 30:32

Yeah, that's

Adam Van Wie 30:35

not a good thing. I, I often wonder why more people don't go into this career. It's such a great It's a great job. It's a great career. It offers— I don't know, it just seems— it baffles me that there isn't more interest.

Steve Van Wie 30:51

I like to say that it's heated and air-conditioned. That's having lived half my life in one area and half in the other area. They're both good. Heated and air-conditioned.

Adam Van Wie 31:02

I mean, that's just the basic step one. But then you can make it lot of money. You can— you get to work with people, but it doesn't involve doing one thing repetitively all day. It's interesting, it's challenging, it's constantly changing. And yeah, I just— I don't understand.

Steve Van Wie 31:21

It is—

Steve Van Wie 31:24

it's fun. That's— I keep trying to find a better way to describe it, but it's fun. Yeah, we do.

Joey Loss 31:31

One of the things I tell young people who are looking at it is

Joey Loss 31:36

versus engineering or corporate finance, in financial planning you can have the same numbers 10 times and end up with 10 completely different solutions because of the people involved. Whereas in the corporate finance or engineering side, there's one right answer every single day. Yes. And that's what keeps it interesting.

Adam Van Wie 31:49

Yeah, that's right.

Adam Van Wie 31:52

It's more of an art than an exact science.

Steve Van Wie 31:54

It's the perfect mix of art and science, I think. Anyway, that, um, 39% of people going into our business describe technology and AI disruption as the biggest challenge. I'm not gonna argue with that. Financial planners want both soft and hard skills training, which is what we were just talking about a little bit ago. So what makes a good one? Well, when you put that blanket over everything, there's some more conclusions to be drawn. Which of course we will have time for after a quick break. So lines are open. Remember, trivia questions out there. We'll repeat it again. Don't go anywhere. We'll be right back for the final quarter. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 32:43

I'm Adam Van Wie.

Joey Loss 32:44

And I'm Joey Loss.

Steve Van Wie 32:45

And I would remind everyone, lines are open, 904-222-8255.

Steve Van Wie 32:50

We have a caller on the line, but I'm gonna repeat have Adam repeat the trivia question before I take it, because that's what he's calling about.

Adam Van Wie 32:56

Nvidia eclipsed a market cap of over $5.5 trillion this week. How many sectors of the S&P 500 is that larger than?

Steve Van Wie 33:08

Good morning, Dave.

Adam Van Wie 33:10

Hey, how are you?

Steve Van Wie 33:11

We're fine. How are you? I'm good. Good. I want to answer your question.

Joey Loss 33:16

I believe it's 6 sectors.

Adam Van Wie 33:18

So that— yeah, there's So when I looked at it this morning, it was 5, but there were 2 that it had been larger than during the week. So I'm going to say yes, that's probably correct based on it just depends on where, what day you were looking at the data. So good job. It's, did you, there was one that, what was the one that you had that was really close to the size? Healthcare, I believe healthcare. Yeah, exactly. So it was almost identical when I looked at it this morning. So I, I was making the official answer 5, but I was going to take 6 or 7.

Steve Van Wie 33:53

We had a 5 to 7 range and you hit 6 and you can't do it much better than that. All right. We appreciate it. I'm going to put you on hold and we'll have Roger get your information. We'll send you a little something out from— Thank you very much.

Adam Van Wie 34:05

Enjoy the show. Thanks for the call.

Steve Van Wie 34:06

Thanks so much. We appreciate it.

Adam Van Wie 34:08

So the 5 that I was truly counting were utilities, real estate, materials, energy, and consumer staples. And if you add up the first 3, NVIDIA is larger than the sum of those. If you add the last 2, it jumps a little bit higher, but that's how big that single company is. It's bigger than the entire real estate sector of the S&P 500, bigger than the entire energy sector. That's Exxon Chevron. So when you, when you think about like, It's so hard to put it in scale because you just think of Exxon being this enormous oil company, but it pales in comparison to what Nvidia does.

Steve Van Wie 34:50

It's, it's almost incomprehensible. All right, well, we, we're talking about incredible companies. How about incredible people? There is a woman whose name is Rachel Entrecan, or Entrecan, I'm not sure which one, and she just did something kind of noteworthy. Do you know what an ultramarathon is? I do. 250 miles.

Adam Van Wie 34:52

It is.

Adam Van Wie 35:13

Oh, that's an even—

Steve Van Wie 35:14

that's the, the big kahuna.

Adam Van Wie 35:16

Yeah, I've heard of the 100. In fact, I have a friend who did a 100-mile marathon.

Steve Van Wie 35:21

Okay, this is called the Cocodona 250. It's a 250-mile endurance race. She broke the record, and it's, it's co-ed, so to speak. Yeah, apparently when you go to that great distance, you never know. Yeah, exactly. 56

Adam Van Wie 35:31

Wow.

Adam Van Wie 35:38

It's probably mental.

Joey Loss 35:39

Men and women.

Steve Van Wie 35:43

hours, 9 minutes, and 48 seconds. 250 miles on foot. Can you imagine? I can't either. Broke her own record and the course record by 6 hours or better. Wow. The guy who came in second, where is he?

Adam Van Wie 35:48

Wow.

Adam Van Wie 35:54

No.

Joey Loss 36:02

Wow.

Steve Van Wie 36:08

It's in here somewhere. He said something like, if you look at the pictures along the way, I look miserable. She looks like she's having a good time.

Adam Van Wie 36:17

That might be the difference.

Steve Van Wie 36:18

It could be the difference.

Joey Loss 36:19

With bathroom breaks for my wife, sometimes it takes half that long to drive. That's incredible.

Steve Van Wie 36:25

Isn't it?

Adam Van Wie 36:25

I hope your wife is not listening to the show.

Joey Loss 36:27

I think she is.

Steve Van Wie 36:28

I'm going to get in trouble.

Adam Van Wie 36:30

Oh, by the way, good luck to all the Ironman, uh, participants here today. Yeah, that's, uh, that's a— that is a pretty grueling test of endurance as well. Not 250 miles test, but it's still pretty impressive. Yeah.

Steve Van Wie 36:45

And if you're going to be out and about today, there are some areas of town where the roads are going to be a little goofed up, and you can go to the, to the county city website and Google it. It'll come right up and they'll tell you which one. Phillips Highway and and Solano Road and A1A South. There's a few like that. So if you think it might be interfering, then look it up before you go. You'll thank yourself and hopefully us. All right, we're talking about incredible things. How about incredible stupidity? You'll love this one. This is almost a Darwin Award person the way I see it. The European Commission President Ursula von der Leyen A lot of people know who she is, a lot don't.

Steve Van Wie 37:30

She came up with a stroke of brilliance in response to the Strait of Hormuz. Here is Europe's plan to handle this, the energy problem that's resulting from that. She says, the cheapest energy is the one you don't use. Stay home, don't drive, and don't use electricity. Oh yeah. Then we won't have to reopen our nuke plants and things like that.

Joey Loss 37:55

Also, don't eat if you don't want to buy groceries.

Adam Van Wie 37:59

Yeah, if they're too expensive.

Steve Van Wie 38:00

I like it.

Joey Loss 38:02

Don't drink water. It's bad for the environment.

Steve Van Wie 38:04

It gets nothing but better. All right, next.

Steve Van Wie 38:09

This is discussion for you guys. Taking required minimum distributions in stock or ETF or whatever instead of in cash? Pro or con? Or is it a maybe?

Adam Van Wie 38:24

Wait, I'm not sure I understand the question. Like transferring stock out of your—

Steve Van Wie 38:30

out of your traditional IRA?

Adam Van Wie 38:33

I mean, why? There's no point in doing that.

Steve Van Wie 38:38

Well, some people disagree with you. All right, well, here are the things that people talk about. The main one, in-kind RMDs can be appropriate in a down market.

Adam Van Wie 38:40

All right, explain.

Joey Loss 38:50

Yeah, that's the only thing I can think of.

Steve Van Wie 38:52

So if you have a down market, we can use the simplest example of all, probably just the SPY, the S&P 500 index tracking stock. If it's way down and you think it's going to go up in 31 days, then by transferring it out of that account But keeping it will allow you to go up. It doesn't make you wait 31 days.

Adam Van Wie 39:17

No, that's not true. That is not true. You can rebuy it right away outside of your account because you did not— they only care about you capturing a capital loss. And so if you sell in your IRA and then rebuy outside, there was no tax consequence inside your IRA. So you can rebuy right away. The rule only applies when you are, when you have a capital loss that they want to disallow, right?

Joey Loss 39:45

So, so the wash sale rule, right? So it, it is a problem in the reverse. If I hold Nvidia in my taxable account and I sell it at a loss and then buy it in my IRA, I've broken a wash sale rule. But in the reverse, it doesn't matter because there's—

Adam Van Wie 39:58

yeah, and RMDs, you're pulling out, so it should not matter.

Steve Van Wie 40:01

All right, now let's take One more level of this. If you pull that, that we'll call it a stock index right now, or just call it a stock. If you pull that out and try to put it in your Roth IRA,

Steve Van Wie 40:17

what's the consequence?

Joey Loss 40:20

If you want to put it into your Roth IRA, like journal it from the IRA to the Roth or—

Steve Van Wie 40:27

Won't work. Well, it will work under certain circumstances.

Joey Loss 40:33

If it's a Roth conversion, sure.

Steve Van Wie 40:36

But what is the requirement for a Roth conversion from an IRA if you're in RMD age territory?

Joey Loss 40:44

It would have to be over and above the RMD.

Steve Van Wie 40:46

RMD has to be first.

Adam Van Wie 40:47

Oh yeah, definitely. So you would still have to collect the RMD from the account.

Steve Van Wie 40:53

Yeah, exactly. Then you could do this.

Joey Loss 40:54

You can't, yeah. RMDs can never, immediately become a Roth conversion. Yeah.

Steve Van Wie 40:59

Right. A lot of people don't know that. And I have had instances where people tried to do a Roth conversion, but they were RMD subjected and they had to take that out first. All right. How about this one conceptually? You've got a highly appreciated

Adam Van Wie 41:11

Yeah.

Steve Van Wie 41:19

SPY or whatever in there and you want to roll it out to your taxable account. What's the possibility there?

Adam Van Wie 41:28

I mean, I think they would reset the basis on it because it does.

Steve Van Wie 41:32

Yeah, that was ding, ding, ding. We have a winner that whatever you pull out of there is reset. The basis is reset, so you inherit it. So now you have already paid tax on this because you had to do that to take it out. And now you've got a highly appreciated index. And if down the line that were to get sold, you're not going to have to pay much anymore. And if you wait 366 days, if it goes up further, you get it at capital gains rate.

Adam Van Wie 42:04

But that's also true if you just sell it in the IRA, take out the cash, rebuy it. So the only advantage that I can see to that is that if the market is just ripping and you're worried that that time to complete that transaction, you're going to miss a little bit of appreciation. Maybe it makes sense. Honestly, I don't see a real advantage to doing it that way.

Joey Loss 42:20

Yeah.

Joey Loss 42:24

If it's April 8th, 2025, and you move your SPY in kind, you've just avoided a 10%— you know, missing out on a 10%. That's true. And but the keynote there with your example about rolling SPY out of an IRA and it becomes a high basis stockholding

Steve Van Wie 42:33

There you go.

Joey Loss 42:45

is that you got to have cash from another place to pay the taxes on that because it's still an IRA distribution.

Steve Van Wie 42:49

And the other thing, let's say the stock you're looking at in the IRA is a dividend payer and you roll it out and you got to pay on it, obviously, then you start getting dividends and a year later your dividends could be qualified. So if you're going to hold it long-term for income, that gets you down to preferred dividend status.

Adam Van Wie 43:14

But it's still the same as rebuying it outside.

Steve Van Wie 43:17

Yeah, it's just an interesting look at something that people don't know can be done.

Adam Van Wie 43:22

There is a downside to it, though. If you instruct Schwab to journal shares to satisfy an RMD, they're not going to do it the second you submit it. It's going to happen sometime later in the day. That stock might go up or down, causing you to under-remove

Adam Van Wie 43:39

your RMD or over. It was the worst case scenario.

Steve Van Wie 43:42

I wouldn't be doing this in late December, believe me. So I think you have to have a way to calculate what's left over so you can take a separate part of it. Or you can take whatever's left over and do a qualified charitable distribution from it, which would offset the rest of the RMD.

Joey Loss 43:57

Or a tax withholding. Cash tax withholding. Yeah.

Steve Van Wie 43:59

Yeah.

Steve Van Wie 44:01

So these are just some of the reasons why AI is not going to sit around and discuss possibilities like this with you. On the other hand, it would be very helpful in figuring out what the tax ramifications are and that sort of thing. So, you know, you're going to need the CFPs, ladies and gentlemen. A lot of you already know that. We know it. And we hope you'll keep listening to us. So we'll see you next week, same time. Be careful out there. This is the Ben