Recent earnings reactions have challenged the idea that growth stocks can do no wrong. Several mega-cap technology companies delivered solid results only to see their stock prices fall. Noah and Chris explain why this shift matters. Expectations have been set extremely high after years of strong performance, and the market is now scrutinizing margins, capital expenditures, and long-term profitability more closely.
Rather than rewarding growth alone, investors appear to be reassessing what they are willing to pay for future earnings. This change in behavior suggests selectivity, not panic, and highlights why big tech no longer dominates market leadership the way it once did.
A major theme of the episode is rotation. Capital has been moving out of mega-cap growth and into value, financials, healthcare, and international equities. Importantly, money is not fleeing to cash or Treasuries. Instead, it is being reallocated.
Noah and Chris discuss why rotations like this are healthy and often necessary after extended market runs. Sideways movement and leadership changes allow earnings to catch up with prices and help reset expectations without triggering broader market stress.
The conversation turns to the labor market, where unemployment has begun to tick higher and hiring momentum has slowed. Manufacturing remains under pressure, and recent data suggests that once unemployment starts rising, it tends to gain momentum rather than quickly reverse.
While these trends do not point to immediate economic trouble, they do introduce uncertainty and reinforce why markets may struggle to move meaningfully higher in the short term.
Artificial intelligence continues to shape corporate strategy, but its impact on productivity has yet to fully materialize across the broader economy. Companies are investing heavily in data centers, energy infrastructure, and advanced chips, placing pressure on free cash flow and near-term profitability.
Noah and Chris explain why the market is becoming more critical of these investments, even when long-term potential remains compelling. Execution, efficiency, and capital discipline are increasingly important in determining which companies are rewarded.
The episode closes with a reminder that strong returns over the past two years have created elevated expectations. Markets do not move in straight lines forever, and periods of consolidation are often part of healthy long-term progress.
Rather than focusing on timing the next dip or rally, Noah and Chris emphasize the importance of discipline, diversification, and managing risk. As 2026 approaches, long-term thinking and emotional control remain essential tools for navigating change.
Welcome everybody to the market enthusiasts podcast. I’m Noah Brooks and obviously with me Chris Needs.
Noah Brooks (00:22)
Hey, welcome back to the market enthusiast. I’m Noah Brooks. And obviously this is Chris needs. Hello. Hello. Hey, we got Christmas right around the corner. Chris, are you done shopping? 95%. So oddly enough, the only thing we have left is gift cards. Alexa’s like, I could meet you down in Reading and we could go out and get gift cards. I’m like, you just want to go to Target. Left to buy gift cards. Yeah. Yeah. I don’t know. You know, gift cards, when they came on the scene, I was all about them. I thought they were really
really interesting because you let that person the other person choose instead of making them take your gift. But now when I get a gift card, I’m like, great. have to do the work to begin. But no. So we have a family friend and their daughter likes to shop. So it’s like a gift card is perfect for her. She can go shop and she has money. But yeah, we still have to do that. There was there was this time. ⁓ might done so a lush my wife does.
95 % of all of the Christmas shopping, obviously, I buy some things for her. ⁓ We are taking a little mini break. And that’s kind of our vacation to each other. Well, you know, we bought some things I probably still have. Babe, I’m gonna do what I promise. I probably still have some things to do here or there maybe a little bit. you reminded me there about saying a list is 95%. Alexa last night was like she says so like what do we
Are you are we done shopping? Are you done shopping? I was like, I only bought for one person. for her. Yeah, well, that’s how it goes. Yeah, absolutely. But a few years ago, we were on this ⁓ circular gift card exchange with her dad and family. And it was like there was a limit there was like a three or $400 limit.
And so we were buying him a card for $300 for something and he was buying us a gift card for $300 to like Best Buy. And you were, was just thinking to myself like, well,
Why? It’s like Moe Curly and whatever the other guy is where they’re passing around the 20 dollar. I owe you 10 and you owe me 10. Something like that. And so I thought to myself at that point, you know, we should probably put a little bit more effort into it. At least with with her dad. And so we bought these big Phillies fans. We bought some Phillies tickets for him over the years, you know, try to get him good seats down there in Philadelphia. I don’t know what we’re going to do this year.
maybe a little bit more sports action. I had an incident the other day, it wasn’t necessarily Christmas related, but it was Ticketmaster related, which was kind of a pain in the butt. And it goes to my whole idea of people really valuing experiences. think more, and again, anecdotally, people valuing the experience of a concert or a show or something, maybe more than a gift per se.
So tickets went on sale for the Sphere. You guys know that I love the Sphere and we’re big fish fans. So we were going to go in April to Vegas and see fish. so tickets went on sale ⁓ last Thursday, I think it was. And so I try to get there in time. And so I’m looking at the first date. I think it was April 16th. I log in and they go on sale and it says I’m…
2,400 in the queue. And I’m like, well, I think there’s like 19,500 seats. And so it clicks down. finally get there. You have to hope people time out, I guess. Well, I mean, either that or don’t buy something. Right. So I finally get there and there’s maybe like literally like 60 seats left and they’re all in the front and I didn’t want them. We’re looking for upper level, like 300 or 400 level. Don’t want to be down on the floor.
And so I go, oh, well, maybe there’s another date. So now this is at like, it came, they went live at like 10 AM Eastern. And by like 10 14, it already clicked down and I said, I can’t do it. I’m going to try another date. I got in the next queue and I was 122,000 were people in front of me.
And then at that point I saw it and I just thought, well, this is just silly and I’ll get them on the resale market, right? Not direct from ticket master. Have you had any experiences with the buying resale tickets? I, so I normally use stub hub. I’ve never had an issue. I do recall one time out of Philly’s game, I used vivid seats and I didn’t get scammed per se, but the tickets went scan at the gate.
So like they had to call a manager over, manager just looks through it. They’re like punching in things. they weren’t like counterfeit tickets or anything. no, they weren’t counterfeit, but they just went scan. The barcode wasn’t good. I don’t know. But eventually, you know, they’re tapping, they have like a little handheld thing. Eventually they’re like, okay. And like he unlocked the side door and I just walked through side door and close it right behind us. But it was scary in that moment. Like they’re like, okay, follow us. So like walk this over to the edge.
So my experience buying tickets on Ticketmaster and resale tickets on Ticketmaster has been fine. They’re, you know, generally speaking more expensive when they’re resale tickets. I had an interesting experience the other day. ⁓ a neighbor texts us and says, Seinfeld is coming to Reading. You know, most people know who he is. I’ve heard mixed reviews, but I’ve never seen him as a standup comedian. And so the whole thing with
the Santander Performing Arts Center, which is near us here locally, is that you can go to the box office and buy the tickets without the Ticketmaster service charge. So I went over there and I was buying eight tickets, which turned out to be like $187 a piece. But I found out afterwards that the service charge was $53 per ticket and I didn’t pay it. It would have been, you know, $2.30 or something like that, $2.37.
Uh, so locally not bad, but you can’t avoid it. If you’re going to the sphere or you’re going somewhere else, Philadelphia, it’s just, uh, yeah, much of a fee. It’s 53 bucks on $187 ticket. They would add to it. Crazy. So anyway, we are ticking down. Uh, we are scheduled to record, uh, the last day of the year, Chris, do think we’re going to be able to do it? I don’t know. Maybe.
market close early on the 31st. does not. yeah. Tax lost harvesting and all that good stuff. The markets open till four o’clock. Yeah. Are you, you going to be in the office on the last day of year? I’ll be in hopefully the needs office here in reading. Maybe I’ll be here in reading. Depends what the boss says. You do whatever you want to do. You don’t have to, you don’t have to ask me on that one, but pre-rebalance. Yeah. You know, I just,
I always feel like being in the office on the last day of the year is important. I’m not sure. feel like it’s something that like Ebenezer screws four lumps of coal this year, sir. Well, do you remember? I know I’ve said it on here before, but do you remember the Simpsons episode where Mr. Burns is dying? He’s on his deathbed and Lisa Simpson comes over to him and he says, she says, Mr. Burns, do you, do you have any regrets? Would you have done anything different? And he’s
there and he’s half awake and half dying. And he says, I guess I do. I would have spent more time at the office. That’s Mr. Burns. I am not a Mr. Burns character. I do like the office, but I don’t know if we’ll be here on the last day of the year. Probably though. I’ll be working. In your uniform? In my uniform, white shirt uniform. Hey, it is what it is. It’s all good.
All right, well, let’s get down to business a little bit. Some interesting developments came out this week. Market is still up. S &P 500 is still up about 15.5 % as we’re standing here. Small cap companies up over 7%. Mid caps up over 7%. International and developed have been the story this year. Up close to 30%, 29 on both of the index as we stand here today. Obviously, outperformers, both on relative basis, on an absolute basis.
What are we going to do for 2026? I don’t know. We’re seeing a rotation right now. Um, so we’re started at the very end, like the last day of October and November we saw it. got a little reprieve at, you know, Thanksgiving and a week maybe or so after, and now we’re back to the rotation. Um, everything’s really leaving mega cap large growth, you know, and what’s been holding is the right word. There’s
There’s some trickling out. Yeah. Do think leaving is the right word? I think it aggressively trickling almost. ⁓ Yeah, it’s coming out. I think ⁓ I think the way to look at it is we’ve been talking about them being priced for perfection. And we’re seeing some cracks in that story, whether it’s Oracle, ⁓ which had, ⁓ you know, adjusted earnings per share beat that was huge.
revenue is a little light, but the stock just got smoked after earnings. And you know, the thing we’re hearing about now, ⁓ remaining performance obligations, which is our future contracted revenue being very high and requiring such a capex build out being a negative for them since they already, you know, went into ⁓ free cash flow negative status to basically build that out. Yeah, then you have a broadcom who had good numbers raised guidance, and they got crushed by the
by the market as well down 20 % in about a week, right? ⁓ There’s some doubt in there. And these are stories that you wouldn’t see if we were in a bubble. Right? The doubt the market is acting very rational, in my opinion, being critical of their capex policies and the expenses and the build outs going in there. They’re being very critical and discerning on what’s good and what’s bad. Yeah, so
This isn’t bubble activity. This is healthy market activity. And we always talk about rotations being healthy. I would tend to agree. ⁓ people have used the term whistling past the graveyard, you know, not paying attention to the valuations. And it seems like now the market and whether you call it the smart money, the big money, the money is going, Ooh, you know, we should maybe pump the brakes a little bit on this. And to your point, I think it really is healthy. We’re starting to see value pick up a little bit.
⁓ Smalls and mids are still underperforming. But the interesting thing to me is that when you look at, let’s say the Russell 1000 growth, Russell 1000 growth value, excuse me, they have been separated this year by as much as a thousand basis points or 10%. And right now they’re only separated by about 1%. Right. And that is a big move for value coming up at one point value was up seven and growth was up 17.
Now we have value up 14 and a half and growth up about 15 and a half. And so I guess my thought is that all of the productivity gains and efficiency gains that were are being talked about from ⁓ artificial intelligence, I’m not sure if they have actually come to fruition yet. mean, I know they haven’t come to fruition yet, but there we’re starting to get a catalyst why people are moving out of those large cap mega techs.
and into, you know, some of the better valued, if you will, value stocks, you know, from a from a I’m gonna say value like five times in a row, but from an evaluation standpoint, they just look more attractive when you have to allocate capital at the moment. I mean, or we already talked about Oracle and Broadcom. They are as of like a month ago, two of the top 11 market cap companies in the S &P 500, I think.
So those are huge companies are getting smoked right now. But we’re still like right at all time highs. We’re not far away. We’re one or two good days from all time highs and it feels worse than that just because the sentiment has sort of rotated. Last Thursday, I think it was the 11th, the market closed the S &P 500 closed at a new all time closing high wasn’t an absolute intraday high. 6910 I think was the number no 6902.
It closed over 6,900 first time ever. We are less than a week away and this, seems like almost the sky is falling at least on those mega cap techs. the hyperscalers. So the question I think that, that I’ve gotten the most this week from investors is, is this another buying opportunity? Right? Is this another buy the dip scenario or is this the beginning of
not of the end, but the beginning of the wind down in that trade. Yeah, I think it’s more of a shorter, like, not a quick V bottom like we’ve seen. I think this is a go sideways test a moving average, maybe, you know, so you’ll have a little short term pain. But we’ve been talking for a while now about we need some time to digest, we need to go sideways, let the earnings catch up. And, you know,
We’ve talked about profitability being awesome, which is true on for the most part, it has been on those large hyperscalers, but you know, if we go sideways, we touch a moving average, we’ll probably jump off of it. I would expect somewhere down the line in the next month or two. would be healthy. Nothing, nothing to fear. think in, in a healthy market, rotation is a real positive thing. When you only have tech.
or mega cap tech that works for an extended period of time. At some point, the air comes out of that. And I don’t want to say bubble because I don’t think we’re in a bubble. A bubble would be significantly higher. If you look at some of the expectations for the overall market, you’re seeing stuff where, you know, the average expectation for next year is 8,000 and we’re under, we’re close to 6,800 today. You know, so I think people, the expectations are
that there’s this rotation maybe out of some of the mega cap tech names and you have, you know, the, the Warren Buffets of the world, the Berkshire Hathaway’s, the, banking sector healthcare, right? Had a massive banking are both doing great. Yeah. Had a massive run last month. we have an opportunity here. I mean, everybody talks about a Santa rally. So Santa rally, I think is the last seven days, the last five trading days of the year. And then the next two trading days,
Historically that has been positive about three quarters of the time. Now it’s not, you know, you’re not getting five, 7 % gains. think the long, the, the best gain in that Santa rally was in the last hundred years was something like 6%. ⁓ I think on average is about one and a quarter percent when you do have it. So there’s certainly opportunity there, but you know, we have 10 days before we get to the Santa rally. Yeah. What did we see a stat that most like
very high percentage. think it might’ve said 100 % of the gains in December come in those last days, just meaning, you you muddle through and then that 1.3 % or whatever the average return last five, but was the back half, I think it Oh, the back half. You’re right. You’re correct there. So it said, you know, most of the gains do come in the back half of the month, and we could use it this year. We could. I mean, we’re still up. If the year ended today,
I think most investors, including myself, would be reasonably happy with the returns we have with the S &P 500 being up the rest of the market, you know, mids and smalls being up over 7 % fixed income, right? We know the 60 40 has been back. the ag is up over 7 % for the year. Not all fixed income is up as much as the ag, but I mean, I think if we ended here, I think everybody would smile and say, Hey, another great year of compounding our returns. Right.
⁓ we finally got some economic data. Did we ever? Yeah. It’s been a long time coming. So we got the jobs data. Yep. 64 K versus 45 expected. Not a bad number. Yeah. the for, for, for November. Yes. Right. We didn’t get October. We did. We did. It was a loss of one six. Yeah. So
We also got the employee unemployment going up to 4.6 five straight months ticking upwards. And we did not get a number on October for unemployment, but I don’t think to assume on the path from the other five data points that we have five straight. So wouldn’t that trigger the Psalm rule, Claudia Psalm, the economist. It should be right there, which I don’t know exactly where the three month.
versus the 12 month is, but yeah, I would expect that probably did, which would be the second time it triggered it triggered back in August of 2024 as well. some rule essentially is the three month average moves off the lows for the year by a half a percent or more. Over the longer term. Or over 12 months. Yeah. Over a 12 month period. I’m not necessarily, I mean, one of the issues with inflation has always been wage inflation.
historically, I mean, when I first got into the business in the late 90s, the general rule of thumb was that anytime you had unemployment under 5%, you had wage inflation, which typically is bad, and not bad for the worker. I want to qualify that is is, you know, it puts pressure on margins for the larger companies, economies overheating, and the feds likely to come in and tighten, right? We’re now in this other scenario.
right where it looks like I mean if you extrapolate where we were on the unemployment to where we are today and you want to push it out another six months it looks like we’re gonna see five percent yeah which will be great from a wage inflation standpoint but not great from an employment standpoint right yeah and once that that has inertia if you look at the chart of the unemployment rate when that starts curling upwards it doesn’t
you know, pump fake you out and you know, dive on you. But it generally gains momentum. No, to your point, I look at those Fred charts of the unemployment. And for anybody that isn’t familiar with Fred, it’s the Federal Reserve Board. And they’re all their data that’s that’s free out there that people can use and download and look at. And you know, their unemployment numbers go back, I think to 19.
48 or something like that when they started collecting the data regularly and you know, you see these big ebbs and flows and normally what happens is there’s this spike and then it comes down and It comes down and then it comes back up It doesn’t just come down and stay flat for you know years and years and years it’s this constant movement movement that the economy is contracting and expanding and There are definitely people out there that are betting on a contraction coming forward
Now we have ⁓ October was over a hundred thousand of losses, the saving grace on that. And I think one of the reasons that the market didn’t really respond ⁓ too much to that is because a lot of it was government jobs. And those were known to be like their last days were I think October 30th or 31st. And so I don’t think that freaked anybody out too much.
Not to mention that the data was already a month late. So you know, healthcare hiring was strong manufacturing hiring was weak. Yeah. Sort of the underlying trends there. Yeah, I don’t think it’s really shocking anyone. No, it’s not. The issue is if we start to see those numbers, and I know I’ve said this on here, the replacement rate is something like 70,000 a month in order to maintain the number of workers that we have.
We need approximately 70,000 jobs a month to be created. That brings up a question in my mind. Are you ready for the question? Are we at peak employment? We’re at 159,000, 159,600,000 jobs. Are we at peak number of people employed in the United States? Peak.
aggregate number 159 million, I would say no on labor force participation rate, I would say yes. percentage of employable right age to your working age. I mean, we were the on the labor force participation rate up at like 67 in the 90s. It’s been falling since it looks like it’s curling back down. And whether you’re talking about unemployment or labor force participation, I don’t see trends.
that would reverse that. There’s not really any callous out there. I see callous in the other direction. We’ll need less people for certain types of jobs with what we’re being told. Humanoid robots are right on the horizon. I heard Dan Ives say, talking about Tesla and Optimus at like 2027, they will be in full production. Of the Optimus robot? Yeah.
I’m just saying that could replace a lot of jobs. speaking of Tesla and Dan, I have space X is in the news. $1.5 trillion valuation. Is that what we’re looking at here? I don’t fully understand it. I know that there’s a lot of really rich people that want to travel to space. We’ve seen some of that. Hey, Katy Perry, go for it. That’s awesome. What’s the Branson? Yeah, Branson. Yeah.
Yeah, I mean, all of that stuff’s really cool. And I know that from a commercial side, you have satellite launches, you know, I mean, obviously, super important from a defense standpoint, ⁓ from a GPS standpoint, you have private satellites that are being launched. ⁓ And I’m sure there’s a lot of revenue to be made. Is the company worth 1.5 trillion at this point? I mean, there they want it to be
I just not sure what the commercial viability of this company is going to look like in 10 years. obviously they have Starlink, which is already operational and is interesting. Going forward, they sound like they’re angling towards having data centers in space using near zero temperatures to cool and then sun to power and energize. But that will only work if
you know, you’re looking at cost benefit analysis of what rate will the chips go bad and, and, know, break down versus here on earth, the rate you have for electricity and cooling prices, because you can’t just go up and change the repairman. can’t send a repairman, you know, two hours notice to go check on this server. unless you have a humanoid robot up there.
What if you don’t have to send him up there? Tesla to Starlink. What if they just live on that? And I say live, they’re not living to begin with, but what if they’re just stationed or positioned within that server farm in outer space? Yeah. And it breaks in there like, we’ll just swap this one out. Is that what a, is that what a robot sounds like? we’ll just swap this one. kind of interesting. And then obviously you have the Mars side of it. SpaceX is going to be a beneficiary if, if Musk gets his wish to go to Mars.
If I’d bet on anybody to somehow make Mars happen, it’d be probably Elon. Love him or hate him. I don’t think there’s any commercial viability in Mars in the next 50 years. just cyber truck looks like it was made for Mars. It’s like you’ve got the boring company, you might have to live under the crust there. I think there’s more opportunity on the boring mining than there would be on ⁓ on Mars. Honestly, yeah.
I mean, you can go right underground and get there today. You cannot take a million people to Mars. And I don’t think they want to take what that movie with Billy Bob Thorne? I’m watching land man right now. But I think Billy Bob Thorne was like the leader of it where they went up and stopped an asteroid from coming there with like a bunch of miners or like oil drillers or something. They sent them up. Was it Ben Affleck? Billy Bob Thorne?
I know the movie you’re talking about. I can’t think of it. I it’s Armageddon. I just work here. Yeah. You mentioned movies. I think it’s worth bringing up Rob Reiner died this week. right. I died is not necessarily the right word, but he was murdered by his son, apparently. And his wife. Yeah, I don’t think his son’s gonna sue me. So I can I can say that. Yeah, that’s pretty strange. Allegedly. Yeah, allegedly. I don’t I don’t have to say it. He was murdered by his son.
which is really crazy ⁓ to think that your own child could do that to, to, you know, to a parent. mean, that’s apparently that they produced a movie about his struggles with addiction. Yeah. So maybe there are unfortunately a few screws loose. Obviously. Yeah, obviously a few screws loose, but you know, we watched a short, a short catalog of his work the other day.
And you just just be so so surprised how many different things I mean, a lot of people know, you know, like Harry met Sally and all that stuff. But there’s just you just know all of the names he produced that was he also in it? Hey, his mom was in it. Really? His mom appeared in they said they said this on on the show we watched. His mom was the lady who uttered the line, I’ll have what she’s having. It’s probably so disrespectful to his catalog of accomplishments that when you
brought that up in our little cubicles over there talking to our team that I said my first memory of him was Wolf of Wall Street when he’s chastising Jordan Belfort for TNE. TNA. man. He’s been in he’s been in a lot of stuff. He’s directed a lot of stuff. He’s produced a lot of stuff and you know the world will be ⁓ the world will miss him. Let’s put it that way. Also and I guess I’m going to switch gears a little bit more interesting or happier.
⁓ in the entertainment world. I got an email from Netflix last week, right? That they’re going to be buying Warner Brothers. And obviously there’s a big hub hub about all that. Warner’s telling everyone to reject the Paramount bid. Yeah. But really interesting. I don’t know how many times in the last 10 years we’ve seen a streamer come in and fully buy a studio like this. Yeah.
In a big studio, not just a little niche something. I mean, like a giant studio. When you look at Warner Brothers catalog, you can think of like the DC Mar DC, Harry Potter, Harry Potter. ⁓ There’s a whole list, Batman, Superman, ⁓ giant franchises out there that Warner Brothers owns. And I think to myself, well, so let’s say that they do finally acquire them at some point, they might go to court, they might not, they might just
you know, take it. Are they gonna charge me more? Definitely. Is that right? Isn’t that their goal every year? Like, they’re not just like, we’re gonna stop cashing in on this cash cow, you know, eventually they want to be TV light, they want to be charging you $50 a month if they can down your 10 years down the thing is like, where does it end? Because a lot of people it doesn’t.
they need their margins to grow every year. Everybody has been moving away from traditional terrestrial, you know, television and certainly the cables and now we’re to ads on the streaming. And now we’re back to getting prime ads. Right. This wedding, this wedding’s horse crap. If I’m not mistaken, I just saw today, what was the thing that was going to be on YouTube?
in 2028. There was a contract for it. don’t know, but their ads are getting crazy too. We’re talking like a minute in like two minutes. We’re talking like 120 seconds plus like, I’m sick of ads. Sorry. Yeah, Hulu with ads. don’t I don’t pay up for the Hulu non ads. Actually, I don’t think it might use someone else’s login for that one. He doesn’t even pay for his own. All right. So moving on another big thing that happened this week, Ford
Right. They announced that they are going to stop making the F 150 a lightning the electric pickup truck. Take a write down of 19.5 billion 19 billion. Yeah, that’s a big write down. Yeah. What do you think? Do you think they got that call? Right? Do think eventually? No, they’re taking a $19.5 billion write down. That’s not getting it right. Are they making the right decision from this point in time for their company? Maybe but they didn’t get it right. Are you kidding me?
Well, obviously they didn’t get it right. That’s why they’re they’re switching gears, if you will see what it did. But are they doing that at the wrong time? Is the electrification of our vehicles just getting to the point where everybody’s ready for
I mean, if you ask most people in the industry in 20 years, do they see more or less EVs? I would bet most people will say more. Obviously, I think that’s like, very certain. So no, I don’t think they’re getting it right. I think short term ism, they want to get back to bigger vehicles. I know he said they’re going to release a smaller, more affordable truck because trucks are getting expensive now.
They are. Yeah. But their cash cows are the large trucks and SUVs. like, I think it’s short termism looking at just that. Yeah. I mean, they had to make some change. their stock price really has not moved in. I mean, prior to global financial crisis, they were like 12 bucks. Were they now 13?
I mean, there was some moves in between, you know, some people could have traded it, but like, I don’t even Yeah, no, not so much. Didn’t they? They were one of but I have I have never done a deep dive on Ford because I’ve never had interest in no offense, just like I never have interest in the airlines. I just they’re just not places I want to invest my money. No, I gotcha. ⁓ Ford was one of out of the big three they did not
Take money. Take, well, they took money, but they didn’t file bankruptcy. Right. So GM, ⁓ and Chrysler, you know, bankrupt Chrysler got, ⁓ absorbed by, ⁓ where are called now? Boom goes, goes right out of my brain. But they, know, they’re, they’re owned by, or at least half owned by another company. ⁓ and so Ford didn’t take it. And I think a lot of, a lot of people at that time thought that was great.
that they didn’t go bankrupt. But the reality is they probably should have in order to be competitive. Yeah, wipe their slate clean. Yeah, they did not do that. They didn’t take that opportunity. It’s like throwing the kitchen sink out. You might as well do it. You’ve got this much pain. Yeah, I if if the CEO needs replacing, it would be a tough job to be CEO CFO of one of those legacy.
car companies like Mary Barrett at General Motors. I mean, it is a tough situation to be even though I think some of the new Cadillacs that are coming out look sharp, especially the EVs. Yeah, but they’re not doing like a full size pickup truck EV. At least not yet. Yeah. While we’re on sort of buyout or you know issues there. I robot one of I feel like he was like a pandemic favorite or you know, everybody getting the
Robot vacuum cleaners. I got one for sure. ⁓ They filed for bankruptcy ⁓ founded by three MIT roboticists back in way back in 1990. I ⁓ think starting in 2022, Amazon tried to buy them out. US regulators and European regulators shot it down over antitrust concerns. Antitrust in the ⁓ robotic vacuum market.
And, you know, less than three years, I think in 2024 ish Amazon formally walked away even though the writing was on the wall already. And yeah, now 2025, file for bankruptcy. Guess who bought them out? Who? Shenzen. So the Chinese company that was manufacturing it so they didn’t make a thing. They just had this IP of this is how you do a
little circular robot vacuum cleaner, and they paid a Chinese firm to manufacture it. That’s all they did. They had an idea. And our regulators shot it down and said that, well, this is antitrust. This is a monopoly for a company that really had nothing that couldn’t be imitated, you know, and ultimately that’s what we saw. Probably we know China steals our IP in a lot of areas and
I mean, I didn’t buy an actual Roomba iRobot brand. got some knockoff and it was like half the price worked half as good for half as long. And now the company’s bankrupt and all for not. We’ve had two of them. We’ve had two actual Roombas. the, don’t know if it was the original Roomba and then the upgraded one with a little holder that self cleaned it and took the stuff out of it. that’s the good one. was the second one was definitely better.
⁓ in the end, what would happen is it wasn’t on his docking station and then we’re perfectly. Yeah. Well, no, no, it wasn’t on it at all. And you, you have to go find it. And that was kind of annoying. And so you’d see the docking station sitting there empty. You’d know that the Roomba left and wasn’t able to make it back by itself. You’d spend a few minutes looking for it. ⁓ all the normal places, and then you’d be like, screw it. And you’d
go about your business and then it wouldn’t be on the docking station for two months. And eventually you’d find it, you know, stuck in a closet or underneath a bureau or something. And you’re just like, okay, I’ll put it back. Ours was we have a large bump between our dining room and our living room. couldn’t get over. And then we also had like a frilly carpet at like the base of our sink, like below our sink that would always get tied up in.
And then our son decided he thought that was funny that would get stuck and he would always guide it like bump it, bump it towards there. It was, yeah, that wasn’t definitely a smart one. No, ⁓ I don’t have anything else on the Roomba, but I did see the other day about one of these ⁓ robot cars, the Waymo. I don’t know if you caught this. There was the first birth in a Waymo.
in a driverless taxi. so this woman, she alone. Yeah, she was. She was in the back. And apparently she started making enough noise that and I know this, but it seems to make sense that there was this emergency feature that alerts somebody somewhere wherever the way Mo HQ is maybe LA or Austin and
like clue in and yeah and so they they hop on the line and she says I’m having this you know I’m about to have a baby and so they wind up pulling the car over calling 911 to you know have I thought to myself why wouldn’t they just drive the Waymo to the emergency room to the hospital well apparently that didn’t happen and she gave birth in the backseat of a Waymo
Did way most AI know like talk her through like Lamaze? don’t know. But it would be cool if it did. Right? We have the technology, I think. But it’s interesting that they actually have the ability to come in. Yeah. And I’m sure they see what’s going on. Yeah, not everything in that case. But they see that someone’s in distress. They hear someone in distress. And I think they even said that they have like heart rate monitors.
that they can sense. ⁓ know, you don’t have to have on you that you can sense what’s going on if there’s some type of stress or panic or, you know, heart attack or something like that. I think you’re like your body temperature changes. Maybe it’s based off that. would imagine. Yeah. But so that was it. That was interesting. Yeah. I mean, that seems like it’s something that’s going to happen more and more and more. But my question was, when you start thinking about it little bit, did she put herself in that way? Mo?
She was like, I gotta get to the hospital, man. And there’s no one around and I’m not gonna drive myself and hey, you know, hit the app and, you just hop in the Waymo. Yeah, we need to hear more about that. I’m curious. I think there’s more to the story somehow. Is there more? Oh no.
Just that’s just wild to me. It is a little bit strange. It was a little bit strange. Yeah. Yeah. So as we’re wrapping up here, there’s a few other things that I have. What do you what do you have for us? Anything interesting? Just some just some spark notes for next year. I mean, we’re in this rotation. Keep in mind where we’re at. We were up 20 % in 2023 20 % 2024. We’re up, did you say 15 % in 2025 here? Yeah.
Those are rare air returns right there. ⁓ So, you know, just be aware of that. Don’t have unreasonable expectations that we’re going to go up 30 % next year. You know, everybody knows sort of the tariff things and the inflation things out there. Unemployment going up. I would just say, keep that in mind. That doesn’t mean sell out and go to cash. It means manage your risk appropriately. And ⁓ cheers to a good year.
We didn’t really talk about tariffs. Some people had said that the unemployment rate was picking up due to tariffs or that some of those job losses from ⁓ October were tariff related. I’m not sure that that’s the case, but you did see a decline in manufacturing. And if I remember correctly, and I think I do, one of the key points of the tariff was to bring manufacturing back.
And that doesn’t seem to be happening. I’m not saying that it won’t, but the last few months that has not been happening. There’s a loss over the last three months, like 19,000. Uh, so that’s a little bit disconcerting. Um, one other thing in manufacturing realm where there’s going to be job losses. I don’t know if you know where I’m going with this. They’re going to do away with the penny. Oh yeah. Apparently the treasury came out and it says that it costs 3.
seven cents to make a single penny. How would I know you were going with the penny? It’s ridiculous. Do you I’m ready for pennies to be gone? Yeah. yeah, me too. You know what I mean? Yeah. Like, there’s no point of that. In Europe, they have lots of larger coins, you know, dollar coins, $2 coins. And I think that would be great. like coins a lot. I like them. I love collecting them. Yeah, right. Grab a handful of ones in your coins. Pop, pop.
They’re great tips over there. Oh, yeah. But so that’s gonna disappear. And then next on the chopping block are checks. Do you write checks? Do you? I do ever? Yeah, I actually have to order some more checks. Can I say that on is that bad? Can I get like something stolen by admitting? don’t think so. Someone could call in and be like, I’m Chris needs checks. I still pay a few things via check. Yeah, I do as well. I don’t necessarily need to. I mean,
most everybody has bill pay through, their bank. ⁓ not all services, most services aren’t taking demo or PayPal these days. ⁓ but you know, writing a check is, ⁓ one of the first things that I learned when I was a kid and I don’t balance a checkbook. mean, I don’t know that anybody does that. You’d have to be a sociopath to balance your checkbook these days. ⁓ you know, you can look online and see, Hey, the check went through, but I learned how to balance a checkbook when I was like 18 years old.
Did you did I did it for like two months? I remember I did like four checks on this like this is stupid. Yeah, right. Were you when you got your checks and your when your first checking account? Did you have online access to it? I don’t think I did. I mean, it was around. But I don’t think I personally like had a login. It’s just like I know that’s there. Yeah, swipe my debit card if I need cash. Yeah, that’s it. Yeah, when I had when I got my first checkbook and checks.
there was no online access. you wait until you kind of had to do it. Yeah. The statement. thought, yeah, I didn’t really do it though. so that’s it. The, the penny is ending, ⁓ checks are next and it’s, you know, the, the change in, ⁓ function is going to be different, right? But everything’s, I guess, fungible these days, right? It is what it is. You
are just going to exchange it for something else and it’ll be electronic. Yeah. And you won’t hold it in your hand. It’s like your ID. Aren’t they doing that in Britain? Digital IDs? Yeah, I think so. That doesn’t sound great to me. Yeah, it’s a little too much. All right. Well, do you have anything else? That’s all I have. We are- Happy holidays. Happy holidays. Are you, you can’t say happy Merry Christmas? Merry Christmas. Happy Hanukkah. Happy Hanukkah. Right? Kwanzaa. Kwanzaa. All the things. Russian Orthodox. Everything. All of
Hey, for everybody at Good Life, I’m Noah Brooks with me, Chris Needs. Thank you so much. Happy holidays.
Have questions about how this impacts your investment strategy? Reach out to your advisor or email us at marketenthusiast@goodlifefa.com.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
In Episode 51 of The Market Enthusiast, Noah Brooks and Chris Needs break down a growing question facing investors as markets sit near all-time highs: is the recent pullback in big tech another buy-the-dip opportunity, or a signal that the market is entering a different phase? With leadership rotating, earnings reactions changing, and economic data sending mixed signals, they explore what this new environment means as the year winds down and 2026 comes into focus.
Big Tech, Earnings, and Shifting Expectations
Recent earnings reactions have challenged the idea that growth stocks can do no wrong. Several mega-cap technology companies delivered solid results only to see their stock prices fall. Noah and Chris explain why this shift matters. Expectations have been set extremely high after years of strong performance, and the market is now scrutinizing margins, capital expenditures, and long-term profitability more closely.
Rather than rewarding growth alone, investors appear to be reassessing what they are willing to pay for future earnings. This change in behavior suggests selectivity, not panic, and highlights why big tech no longer dominates market leadership the way it once did.
Market Rotation and What It Signals
A major theme of the episode is rotation. Capital has been moving out of mega-cap growth and into value, financials, healthcare, and international equities. Importantly, money is not fleeing to cash or Treasuries. Instead, it is being reallocated.
Noah and Chris discuss why rotations like this are healthy and often necessary after extended market runs. Sideways movement and leadership changes allow earnings to catch up with prices and help reset expectations without triggering broader market stress.
Labor Trends, Unemployment, and Economic Momentum
The conversation turns to the labor market, where unemployment has begun to tick higher and hiring momentum has slowed. Manufacturing remains under pressure, and recent data suggests that once unemployment starts rising, it tends to gain momentum rather than quickly reverse.
While these trends do not point to immediate economic trouble, they do introduce uncertainty and reinforce why markets may struggle to move meaningfully higher in the short term.
AI Investment, Productivity, and Capital Allocation
Artificial intelligence continues to shape corporate strategy, but its impact on productivity has yet to fully materialize across the broader economy. Companies are investing heavily in data centers, energy infrastructure, and advanced chips, placing pressure on free cash flow and near-term profitability.
Noah and Chris explain why the market is becoming more critical of these investments, even when long-term potential remains compelling. Execution, efficiency, and capital discipline are increasingly important in determining which companies are rewarded.
Perspective, Discipline, and Looking Ahead to 2026
The episode closes with a reminder that strong returns over the past two years have created elevated expectations. Markets do not move in straight lines forever, and periods of consolidation are often part of healthy long-term progress.
Rather than focusing on timing the next dip or rally, Noah and Chris emphasize the importance of discipline, diversification, and managing risk. As 2026 approaches, long-term thinking and emotional control remain essential tools for navigating change.
Key Topics Covered in This Episode
• Big tech earnings reactions and rising valuation scrutiny
• Market rotation away from mega-cap growth
• Unemployment trends and slowing labor momentum
• AI investment, productivity expectations, and capital discipline
• Managing expectations after multiple strong market years
Investor Takeaways
Selectivity Is Rising: Earnings beats no longer guarantee positive stock reactions.
Rotation Is Healthy: Capital is reallocating, not panicking.
Labor Trends Matter: Rising unemployment adds uncertainty to growth expectations.
AI Requires Discipline: Long-term opportunity exists, but near-term costs matter.
Perspective Wins: Sideways markets can still support long-term success.
Listen to the Full Episode
Full Episode Transcript
Welcome everybody to the market enthusiasts podcast. I’m Noah Brooks and obviously with me Chris Needs.
Noah Brooks (00:22)
Hey, welcome back to the market enthusiast. I’m Noah Brooks. And obviously this is Chris needs. Hello. Hello. Hey, we got Christmas right around the corner. Chris, are you done shopping? 95%. So oddly enough, the only thing we have left is gift cards. Alexa’s like, I could meet you down in Reading and we could go out and get gift cards. I’m like, you just want to go to Target. Left to buy gift cards. Yeah. Yeah. I don’t know. You know, gift cards, when they came on the scene, I was all about them. I thought they were really
really interesting because you let that person the other person choose instead of making them take your gift. But now when I get a gift card, I’m like, great. have to do the work to begin. But no. So we have a family friend and their daughter likes to shop. So it’s like a gift card is perfect for her. She can go shop and she has money. But yeah, we still have to do that. There was there was this time. ⁓ might done so a lush my wife does.
95 % of all of the Christmas shopping, obviously, I buy some things for her. ⁓ We are taking a little mini break. And that’s kind of our vacation to each other. Well, you know, we bought some things I probably still have. Babe, I’m gonna do what I promise. I probably still have some things to do here or there maybe a little bit. you reminded me there about saying a list is 95%. Alexa last night was like she says so like what do we
Are you are we done shopping? Are you done shopping? I was like, I only bought for one person. for her. Yeah, well, that’s how it goes. Yeah, absolutely. But a few years ago, we were on this ⁓ circular gift card exchange with her dad and family. And it was like there was a limit there was like a three or $400 limit.
And so we were buying him a card for $300 for something and he was buying us a gift card for $300 to like Best Buy. And you were, was just thinking to myself like, well,
Why? It’s like Moe Curly and whatever the other guy is where they’re passing around the 20 dollar. I owe you 10 and you owe me 10. Something like that. And so I thought to myself at that point, you know, we should probably put a little bit more effort into it. At least with with her dad. And so we bought these big Phillies fans. We bought some Phillies tickets for him over the years, you know, try to get him good seats down there in Philadelphia. I don’t know what we’re going to do this year.
maybe a little bit more sports action. I had an incident the other day, it wasn’t necessarily Christmas related, but it was Ticketmaster related, which was kind of a pain in the butt. And it goes to my whole idea of people really valuing experiences. think more, and again, anecdotally, people valuing the experience of a concert or a show or something, maybe more than a gift per se.
So tickets went on sale for the Sphere. You guys know that I love the Sphere and we’re big fish fans. So we were going to go in April to Vegas and see fish. so tickets went on sale ⁓ last Thursday, I think it was. And so I try to get there in time. And so I’m looking at the first date. I think it was April 16th. I log in and they go on sale and it says I’m…
2,400 in the queue. And I’m like, well, I think there’s like 19,500 seats. And so it clicks down. finally get there. You have to hope people time out, I guess. Well, I mean, either that or don’t buy something. Right. So I finally get there and there’s maybe like literally like 60 seats left and they’re all in the front and I didn’t want them. We’re looking for upper level, like 300 or 400 level. Don’t want to be down on the floor.
And so I go, oh, well, maybe there’s another date. So now this is at like, it came, they went live at like 10 AM Eastern. And by like 10 14, it already clicked down and I said, I can’t do it. I’m going to try another date. I got in the next queue and I was 122,000 were people in front of me.
And then at that point I saw it and I just thought, well, this is just silly and I’ll get them on the resale market, right? Not direct from ticket master. Have you had any experiences with the buying resale tickets? I, so I normally use stub hub. I’ve never had an issue. I do recall one time out of Philly’s game, I used vivid seats and I didn’t get scammed per se, but the tickets went scan at the gate.
So like they had to call a manager over, manager just looks through it. They’re like punching in things. they weren’t like counterfeit tickets or anything. no, they weren’t counterfeit, but they just went scan. The barcode wasn’t good. I don’t know. But eventually, you know, they’re tapping, they have like a little handheld thing. Eventually they’re like, okay. And like he unlocked the side door and I just walked through side door and close it right behind us. But it was scary in that moment. Like they’re like, okay, follow us. So like walk this over to the edge.
So my experience buying tickets on Ticketmaster and resale tickets on Ticketmaster has been fine. They’re, you know, generally speaking more expensive when they’re resale tickets. I had an interesting experience the other day. ⁓ a neighbor texts us and says, Seinfeld is coming to Reading. You know, most people know who he is. I’ve heard mixed reviews, but I’ve never seen him as a standup comedian. And so the whole thing with
the Santander Performing Arts Center, which is near us here locally, is that you can go to the box office and buy the tickets without the Ticketmaster service charge. So I went over there and I was buying eight tickets, which turned out to be like $187 a piece. But I found out afterwards that the service charge was $53 per ticket and I didn’t pay it. It would have been, you know, $2.30 or something like that, $2.37.
Uh, so locally not bad, but you can’t avoid it. If you’re going to the sphere or you’re going somewhere else, Philadelphia, it’s just, uh, yeah, much of a fee. It’s 53 bucks on $187 ticket. They would add to it. Crazy. So anyway, we are ticking down. Uh, we are scheduled to record, uh, the last day of the year, Chris, do think we’re going to be able to do it? I don’t know. Maybe.
market close early on the 31st. does not. yeah. Tax lost harvesting and all that good stuff. The markets open till four o’clock. Yeah. Are you, you going to be in the office on the last day of year? I’ll be in hopefully the needs office here in reading. Maybe I’ll be here in reading. Depends what the boss says. You do whatever you want to do. You don’t have to, you don’t have to ask me on that one, but pre-rebalance. Yeah. You know, I just,
I always feel like being in the office on the last day of the year is important. I’m not sure. feel like it’s something that like Ebenezer screws four lumps of coal this year, sir. Well, do you remember? I know I’ve said it on here before, but do you remember the Simpsons episode where Mr. Burns is dying? He’s on his deathbed and Lisa Simpson comes over to him and he says, she says, Mr. Burns, do you, do you have any regrets? Would you have done anything different? And he’s
there and he’s half awake and half dying. And he says, I guess I do. I would have spent more time at the office. That’s Mr. Burns. I am not a Mr. Burns character. I do like the office, but I don’t know if we’ll be here on the last day of the year. Probably though. I’ll be working. In your uniform? In my uniform, white shirt uniform. Hey, it is what it is. It’s all good.
All right, well, let’s get down to business a little bit. Some interesting developments came out this week. Market is still up. S &P 500 is still up about 15.5 % as we’re standing here. Small cap companies up over 7%. Mid caps up over 7%. International and developed have been the story this year. Up close to 30%, 29 on both of the index as we stand here today. Obviously, outperformers, both on relative basis, on an absolute basis.
What are we going to do for 2026? I don’t know. We’re seeing a rotation right now. Um, so we’re started at the very end, like the last day of October and November we saw it. got a little reprieve at, you know, Thanksgiving and a week maybe or so after, and now we’re back to the rotation. Um, everything’s really leaving mega cap large growth, you know, and what’s been holding is the right word. There’s
There’s some trickling out. Yeah. Do think leaving is the right word? I think it aggressively trickling almost. ⁓ Yeah, it’s coming out. I think ⁓ I think the way to look at it is we’ve been talking about them being priced for perfection. And we’re seeing some cracks in that story, whether it’s Oracle, ⁓ which had, ⁓ you know, adjusted earnings per share beat that was huge.
revenue is a little light, but the stock just got smoked after earnings. And you know, the thing we’re hearing about now, ⁓ remaining performance obligations, which is our future contracted revenue being very high and requiring such a capex build out being a negative for them since they already, you know, went into ⁓ free cash flow negative status to basically build that out. Yeah, then you have a broadcom who had good numbers raised guidance, and they got crushed by the
by the market as well down 20 % in about a week, right? ⁓ There’s some doubt in there. And these are stories that you wouldn’t see if we were in a bubble. Right? The doubt the market is acting very rational, in my opinion, being critical of their capex policies and the expenses and the build outs going in there. They’re being very critical and discerning on what’s good and what’s bad. Yeah, so
This isn’t bubble activity. This is healthy market activity. And we always talk about rotations being healthy. I would tend to agree. ⁓ people have used the term whistling past the graveyard, you know, not paying attention to the valuations. And it seems like now the market and whether you call it the smart money, the big money, the money is going, Ooh, you know, we should maybe pump the brakes a little bit on this. And to your point, I think it really is healthy. We’re starting to see value pick up a little bit.
⁓ Smalls and mids are still underperforming. But the interesting thing to me is that when you look at, let’s say the Russell 1000 growth, Russell 1000 growth value, excuse me, they have been separated this year by as much as a thousand basis points or 10%. And right now they’re only separated by about 1%. Right. And that is a big move for value coming up at one point value was up seven and growth was up 17.
Now we have value up 14 and a half and growth up about 15 and a half. And so I guess my thought is that all of the productivity gains and efficiency gains that were are being talked about from ⁓ artificial intelligence, I’m not sure if they have actually come to fruition yet. mean, I know they haven’t come to fruition yet, but there we’re starting to get a catalyst why people are moving out of those large cap mega techs.
and into, you know, some of the better valued, if you will, value stocks, you know, from a from a I’m gonna say value like five times in a row, but from an evaluation standpoint, they just look more attractive when you have to allocate capital at the moment. I mean, or we already talked about Oracle and Broadcom. They are as of like a month ago, two of the top 11 market cap companies in the S &P 500, I think.
So those are huge companies are getting smoked right now. But we’re still like right at all time highs. We’re not far away. We’re one or two good days from all time highs and it feels worse than that just because the sentiment has sort of rotated. Last Thursday, I think it was the 11th, the market closed the S &P 500 closed at a new all time closing high wasn’t an absolute intraday high. 6910 I think was the number no 6902.
It closed over 6,900 first time ever. We are less than a week away and this, seems like almost the sky is falling at least on those mega cap techs. the hyperscalers. So the question I think that, that I’ve gotten the most this week from investors is, is this another buying opportunity? Right? Is this another buy the dip scenario or is this the beginning of
not of the end, but the beginning of the wind down in that trade. Yeah, I think it’s more of a shorter, like, not a quick V bottom like we’ve seen. I think this is a go sideways test a moving average, maybe, you know, so you’ll have a little short term pain. But we’ve been talking for a while now about we need some time to digest, we need to go sideways, let the earnings catch up. And, you know,
We’ve talked about profitability being awesome, which is true on for the most part, it has been on those large hyperscalers, but you know, if we go sideways, we touch a moving average, we’ll probably jump off of it. I would expect somewhere down the line in the next month or two. would be healthy. Nothing, nothing to fear. think in, in a healthy market, rotation is a real positive thing. When you only have tech.
or mega cap tech that works for an extended period of time. At some point, the air comes out of that. And I don’t want to say bubble because I don’t think we’re in a bubble. A bubble would be significantly higher. If you look at some of the expectations for the overall market, you’re seeing stuff where, you know, the average expectation for next year is 8,000 and we’re under, we’re close to 6,800 today. You know, so I think people, the expectations are
that there’s this rotation maybe out of some of the mega cap tech names and you have, you know, the, the Warren Buffets of the world, the Berkshire Hathaway’s, the, banking sector healthcare, right? Had a massive banking are both doing great. Yeah. Had a massive run last month. we have an opportunity here. I mean, everybody talks about a Santa rally. So Santa rally, I think is the last seven days, the last five trading days of the year. And then the next two trading days,
Historically that has been positive about three quarters of the time. Now it’s not, you know, you’re not getting five, 7 % gains. think the long, the, the best gain in that Santa rally was in the last hundred years was something like 6%. ⁓ I think on average is about one and a quarter percent when you do have it. So there’s certainly opportunity there, but you know, we have 10 days before we get to the Santa rally. Yeah. What did we see a stat that most like
very high percentage. think it might’ve said 100 % of the gains in December come in those last days, just meaning, you you muddle through and then that 1.3 % or whatever the average return last five, but was the back half, I think it Oh, the back half. You’re right. You’re correct there. So it said, you know, most of the gains do come in the back half of the month, and we could use it this year. We could. I mean, we’re still up. If the year ended today,
I think most investors, including myself, would be reasonably happy with the returns we have with the S &P 500 being up the rest of the market, you know, mids and smalls being up over 7 % fixed income, right? We know the 60 40 has been back. the ag is up over 7 % for the year. Not all fixed income is up as much as the ag, but I mean, I think if we ended here, I think everybody would smile and say, Hey, another great year of compounding our returns. Right.
⁓ we finally got some economic data. Did we ever? Yeah. It’s been a long time coming. So we got the jobs data. Yep. 64 K versus 45 expected. Not a bad number. Yeah. the for, for, for November. Yes. Right. We didn’t get October. We did. We did. It was a loss of one six. Yeah. So
We also got the employee unemployment going up to 4.6 five straight months ticking upwards. And we did not get a number on October for unemployment, but I don’t think to assume on the path from the other five data points that we have five straight. So wouldn’t that trigger the Psalm rule, Claudia Psalm, the economist. It should be right there, which I don’t know exactly where the three month.
versus the 12 month is, but yeah, I would expect that probably did, which would be the second time it triggered it triggered back in August of 2024 as well. some rule essentially is the three month average moves off the lows for the year by a half a percent or more. Over the longer term. Or over 12 months. Yeah. Over a 12 month period. I’m not necessarily, I mean, one of the issues with inflation has always been wage inflation.
historically, I mean, when I first got into the business in the late 90s, the general rule of thumb was that anytime you had unemployment under 5%, you had wage inflation, which typically is bad, and not bad for the worker. I want to qualify that is is, you know, it puts pressure on margins for the larger companies, economies overheating, and the feds likely to come in and tighten, right? We’re now in this other scenario.
right where it looks like I mean if you extrapolate where we were on the unemployment to where we are today and you want to push it out another six months it looks like we’re gonna see five percent yeah which will be great from a wage inflation standpoint but not great from an employment standpoint right yeah and once that that has inertia if you look at the chart of the unemployment rate when that starts curling upwards it doesn’t
you know, pump fake you out and you know, dive on you. But it generally gains momentum. No, to your point, I look at those Fred charts of the unemployment. And for anybody that isn’t familiar with Fred, it’s the Federal Reserve Board. And they’re all their data that’s that’s free out there that people can use and download and look at. And you know, their unemployment numbers go back, I think to 19.
48 or something like that when they started collecting the data regularly and you know, you see these big ebbs and flows and normally what happens is there’s this spike and then it comes down and It comes down and then it comes back up It doesn’t just come down and stay flat for you know years and years and years it’s this constant movement movement that the economy is contracting and expanding and There are definitely people out there that are betting on a contraction coming forward
Now we have ⁓ October was over a hundred thousand of losses, the saving grace on that. And I think one of the reasons that the market didn’t really respond ⁓ too much to that is because a lot of it was government jobs. And those were known to be like their last days were I think October 30th or 31st. And so I don’t think that freaked anybody out too much.
Not to mention that the data was already a month late. So you know, healthcare hiring was strong manufacturing hiring was weak. Yeah. Sort of the underlying trends there. Yeah, I don’t think it’s really shocking anyone. No, it’s not. The issue is if we start to see those numbers, and I know I’ve said this on here, the replacement rate is something like 70,000 a month in order to maintain the number of workers that we have.
We need approximately 70,000 jobs a month to be created. That brings up a question in my mind. Are you ready for the question? Are we at peak employment? We’re at 159,000, 159,600,000 jobs. Are we at peak number of people employed in the United States? Peak.
aggregate number 159 million, I would say no on labor force participation rate, I would say yes. percentage of employable right age to your working age. I mean, we were the on the labor force participation rate up at like 67 in the 90s. It’s been falling since it looks like it’s curling back down. And whether you’re talking about unemployment or labor force participation, I don’t see trends.
that would reverse that. There’s not really any callous out there. I see callous in the other direction. We’ll need less people for certain types of jobs with what we’re being told. Humanoid robots are right on the horizon. I heard Dan Ives say, talking about Tesla and Optimus at like 2027, they will be in full production. Of the Optimus robot? Yeah.
I’m just saying that could replace a lot of jobs. speaking of Tesla and Dan, I have space X is in the news. $1.5 trillion valuation. Is that what we’re looking at here? I don’t fully understand it. I know that there’s a lot of really rich people that want to travel to space. We’ve seen some of that. Hey, Katy Perry, go for it. That’s awesome. What’s the Branson? Yeah, Branson. Yeah.
Yeah, I mean, all of that stuff’s really cool. And I know that from a commercial side, you have satellite launches, you know, I mean, obviously, super important from a defense standpoint, ⁓ from a GPS standpoint, you have private satellites that are being launched. ⁓ And I’m sure there’s a lot of revenue to be made. Is the company worth 1.5 trillion at this point? I mean, there they want it to be
I just not sure what the commercial viability of this company is going to look like in 10 years. obviously they have Starlink, which is already operational and is interesting. Going forward, they sound like they’re angling towards having data centers in space using near zero temperatures to cool and then sun to power and energize. But that will only work if
you know, you’re looking at cost benefit analysis of what rate will the chips go bad and, and, know, break down versus here on earth, the rate you have for electricity and cooling prices, because you can’t just go up and change the repairman. can’t send a repairman, you know, two hours notice to go check on this server. unless you have a humanoid robot up there.
What if you don’t have to send him up there? Tesla to Starlink. What if they just live on that? And I say live, they’re not living to begin with, but what if they’re just stationed or positioned within that server farm in outer space? Yeah. And it breaks in there like, we’ll just swap this one out. Is that what a, is that what a robot sounds like? we’ll just swap this one. kind of interesting. And then obviously you have the Mars side of it. SpaceX is going to be a beneficiary if, if Musk gets his wish to go to Mars.
If I’d bet on anybody to somehow make Mars happen, it’d be probably Elon. Love him or hate him. I don’t think there’s any commercial viability in Mars in the next 50 years. just cyber truck looks like it was made for Mars. It’s like you’ve got the boring company, you might have to live under the crust there. I think there’s more opportunity on the boring mining than there would be on ⁓ on Mars. Honestly, yeah.
I mean, you can go right underground and get there today. You cannot take a million people to Mars. And I don’t think they want to take what that movie with Billy Bob Thorne? I’m watching land man right now. But I think Billy Bob Thorne was like the leader of it where they went up and stopped an asteroid from coming there with like a bunch of miners or like oil drillers or something. They sent them up. Was it Ben Affleck? Billy Bob Thorne?
I know the movie you’re talking about. I can’t think of it. I it’s Armageddon. I just work here. Yeah. You mentioned movies. I think it’s worth bringing up Rob Reiner died this week. right. I died is not necessarily the right word, but he was murdered by his son, apparently. And his wife. Yeah, I don’t think his son’s gonna sue me. So I can I can say that. Yeah, that’s pretty strange. Allegedly. Yeah, allegedly. I don’t I don’t have to say it. He was murdered by his son.
which is really crazy ⁓ to think that your own child could do that to, to, you know, to a parent. mean, that’s apparently that they produced a movie about his struggles with addiction. Yeah. So maybe there are unfortunately a few screws loose. Obviously. Yeah, obviously a few screws loose, but you know, we watched a short, a short catalog of his work the other day.
And you just just be so so surprised how many different things I mean, a lot of people know, you know, like Harry met Sally and all that stuff. But there’s just you just know all of the names he produced that was he also in it? Hey, his mom was in it. Really? His mom appeared in they said they said this on on the show we watched. His mom was the lady who uttered the line, I’ll have what she’s having. It’s probably so disrespectful to his catalog of accomplishments that when you
brought that up in our little cubicles over there talking to our team that I said my first memory of him was Wolf of Wall Street when he’s chastising Jordan Belfort for TNE. TNA. man. He’s been in he’s been in a lot of stuff. He’s directed a lot of stuff. He’s produced a lot of stuff and you know the world will be ⁓ the world will miss him. Let’s put it that way. Also and I guess I’m going to switch gears a little bit more interesting or happier.
⁓ in the entertainment world. I got an email from Netflix last week, right? That they’re going to be buying Warner Brothers. And obviously there’s a big hub hub about all that. Warner’s telling everyone to reject the Paramount bid. Yeah. But really interesting. I don’t know how many times in the last 10 years we’ve seen a streamer come in and fully buy a studio like this. Yeah.
In a big studio, not just a little niche something. I mean, like a giant studio. When you look at Warner Brothers catalog, you can think of like the DC Mar DC, Harry Potter, Harry Potter. ⁓ There’s a whole list, Batman, Superman, ⁓ giant franchises out there that Warner Brothers owns. And I think to myself, well, so let’s say that they do finally acquire them at some point, they might go to court, they might not, they might just
you know, take it. Are they gonna charge me more? Definitely. Is that right? Isn’t that their goal every year? Like, they’re not just like, we’re gonna stop cashing in on this cash cow, you know, eventually they want to be TV light, they want to be charging you $50 a month if they can down your 10 years down the thing is like, where does it end? Because a lot of people it doesn’t.
they need their margins to grow every year. Everybody has been moving away from traditional terrestrial, you know, television and certainly the cables and now we’re to ads on the streaming. And now we’re back to getting prime ads. Right. This wedding, this wedding’s horse crap. If I’m not mistaken, I just saw today, what was the thing that was going to be on YouTube?
in 2028. There was a contract for it. don’t know, but their ads are getting crazy too. We’re talking like a minute in like two minutes. We’re talking like 120 seconds plus like, I’m sick of ads. Sorry. Yeah, Hulu with ads. don’t I don’t pay up for the Hulu non ads. Actually, I don’t think it might use someone else’s login for that one. He doesn’t even pay for his own. All right. So moving on another big thing that happened this week, Ford
Right. They announced that they are going to stop making the F 150 a lightning the electric pickup truck. Take a write down of 19.5 billion 19 billion. Yeah, that’s a big write down. Yeah. What do you think? Do you think they got that call? Right? Do think eventually? No, they’re taking a $19.5 billion write down. That’s not getting it right. Are they making the right decision from this point in time for their company? Maybe but they didn’t get it right. Are you kidding me?
Well, obviously they didn’t get it right. That’s why they’re they’re switching gears, if you will see what it did. But are they doing that at the wrong time? Is the electrification of our vehicles just getting to the point where everybody’s ready for
I mean, if you ask most people in the industry in 20 years, do they see more or less EVs? I would bet most people will say more. Obviously, I think that’s like, very certain. So no, I don’t think they’re getting it right. I think short term ism, they want to get back to bigger vehicles. I know he said they’re going to release a smaller, more affordable truck because trucks are getting expensive now.
They are. Yeah. But their cash cows are the large trucks and SUVs. like, I think it’s short termism looking at just that. Yeah. I mean, they had to make some change. their stock price really has not moved in. I mean, prior to global financial crisis, they were like 12 bucks. Were they now 13?
I mean, there was some moves in between, you know, some people could have traded it, but like, I don’t even Yeah, no, not so much. Didn’t they? They were one of but I have I have never done a deep dive on Ford because I’ve never had interest in no offense, just like I never have interest in the airlines. I just they’re just not places I want to invest my money. No, I gotcha. ⁓ Ford was one of out of the big three they did not
Take money. Take, well, they took money, but they didn’t file bankruptcy. Right. So GM, ⁓ and Chrysler, you know, bankrupt Chrysler got, ⁓ absorbed by, ⁓ where are called now? Boom goes, goes right out of my brain. But they, know, they’re, they’re owned by, or at least half owned by another company. ⁓ and so Ford didn’t take it. And I think a lot of, a lot of people at that time thought that was great.
that they didn’t go bankrupt. But the reality is they probably should have in order to be competitive. Yeah, wipe their slate clean. Yeah, they did not do that. They didn’t take that opportunity. It’s like throwing the kitchen sink out. You might as well do it. You’ve got this much pain. Yeah, I if if the CEO needs replacing, it would be a tough job to be CEO CFO of one of those legacy.
car companies like Mary Barrett at General Motors. I mean, it is a tough situation to be even though I think some of the new Cadillacs that are coming out look sharp, especially the EVs. Yeah, but they’re not doing like a full size pickup truck EV. At least not yet. Yeah. While we’re on sort of buyout or you know issues there. I robot one of I feel like he was like a pandemic favorite or you know, everybody getting the
Robot vacuum cleaners. I got one for sure. ⁓ They filed for bankruptcy ⁓ founded by three MIT roboticists back in way back in 1990. I ⁓ think starting in 2022, Amazon tried to buy them out. US regulators and European regulators shot it down over antitrust concerns. Antitrust in the ⁓ robotic vacuum market.
And, you know, less than three years, I think in 2024 ish Amazon formally walked away even though the writing was on the wall already. And yeah, now 2025, file for bankruptcy. Guess who bought them out? Who? Shenzen. So the Chinese company that was manufacturing it so they didn’t make a thing. They just had this IP of this is how you do a
little circular robot vacuum cleaner, and they paid a Chinese firm to manufacture it. That’s all they did. They had an idea. And our regulators shot it down and said that, well, this is antitrust. This is a monopoly for a company that really had nothing that couldn’t be imitated, you know, and ultimately that’s what we saw. Probably we know China steals our IP in a lot of areas and
I mean, I didn’t buy an actual Roomba iRobot brand. got some knockoff and it was like half the price worked half as good for half as long. And now the company’s bankrupt and all for not. We’ve had two of them. We’ve had two actual Roombas. the, don’t know if it was the original Roomba and then the upgraded one with a little holder that self cleaned it and took the stuff out of it. that’s the good one. was the second one was definitely better.
⁓ in the end, what would happen is it wasn’t on his docking station and then we’re perfectly. Yeah. Well, no, no, it wasn’t on it at all. And you, you have to go find it. And that was kind of annoying. And so you’d see the docking station sitting there empty. You’d know that the Roomba left and wasn’t able to make it back by itself. You’d spend a few minutes looking for it. ⁓ all the normal places, and then you’d be like, screw it. And you’d
go about your business and then it wouldn’t be on the docking station for two months. And eventually you’d find it, you know, stuck in a closet or underneath a bureau or something. And you’re just like, okay, I’ll put it back. Ours was we have a large bump between our dining room and our living room. couldn’t get over. And then we also had like a frilly carpet at like the base of our sink, like below our sink that would always get tied up in.
And then our son decided he thought that was funny that would get stuck and he would always guide it like bump it, bump it towards there. It was, yeah, that wasn’t definitely a smart one. No, ⁓ I don’t have anything else on the Roomba, but I did see the other day about one of these ⁓ robot cars, the Waymo. I don’t know if you caught this. There was the first birth in a Waymo.
in a driverless taxi. so this woman, she alone. Yeah, she was. She was in the back. And apparently she started making enough noise that and I know this, but it seems to make sense that there was this emergency feature that alerts somebody somewhere wherever the way Mo HQ is maybe LA or Austin and
like clue in and yeah and so they they hop on the line and she says I’m having this you know I’m about to have a baby and so they wind up pulling the car over calling 911 to you know have I thought to myself why wouldn’t they just drive the Waymo to the emergency room to the hospital well apparently that didn’t happen and she gave birth in the backseat of a Waymo
Did way most AI know like talk her through like Lamaze? don’t know. But it would be cool if it did. Right? We have the technology, I think. But it’s interesting that they actually have the ability to come in. Yeah. And I’m sure they see what’s going on. Yeah, not everything in that case. But they see that someone’s in distress. They hear someone in distress. And I think they even said that they have like heart rate monitors.
that they can sense. ⁓ know, you don’t have to have on you that you can sense what’s going on if there’s some type of stress or panic or, you know, heart attack or something like that. I think you’re like your body temperature changes. Maybe it’s based off that. would imagine. Yeah. But so that was it. That was interesting. Yeah. I mean, that seems like it’s something that’s going to happen more and more and more. But my question was, when you start thinking about it little bit, did she put herself in that way? Mo?
She was like, I gotta get to the hospital, man. And there’s no one around and I’m not gonna drive myself and hey, you know, hit the app and, you just hop in the Waymo. Yeah, we need to hear more about that. I’m curious. I think there’s more to the story somehow. Is there more? Oh no.
Just that’s just wild to me. It is a little bit strange. It was a little bit strange. Yeah. Yeah. So as we’re wrapping up here, there’s a few other things that I have. What do you what do you have for us? Anything interesting? Just some just some spark notes for next year. I mean, we’re in this rotation. Keep in mind where we’re at. We were up 20 % in 2023 20 % 2024. We’re up, did you say 15 % in 2025 here? Yeah.
Those are rare air returns right there. ⁓ So, you know, just be aware of that. Don’t have unreasonable expectations that we’re going to go up 30 % next year. You know, everybody knows sort of the tariff things and the inflation things out there. Unemployment going up. I would just say, keep that in mind. That doesn’t mean sell out and go to cash. It means manage your risk appropriately. And ⁓ cheers to a good year.
We didn’t really talk about tariffs. Some people had said that the unemployment rate was picking up due to tariffs or that some of those job losses from ⁓ October were tariff related. I’m not sure that that’s the case, but you did see a decline in manufacturing. And if I remember correctly, and I think I do, one of the key points of the tariff was to bring manufacturing back.
And that doesn’t seem to be happening. I’m not saying that it won’t, but the last few months that has not been happening. There’s a loss over the last three months, like 19,000. Uh, so that’s a little bit disconcerting. Um, one other thing in manufacturing realm where there’s going to be job losses. I don’t know if you know where I’m going with this. They’re going to do away with the penny. Oh yeah. Apparently the treasury came out and it says that it costs 3.
seven cents to make a single penny. How would I know you were going with the penny? It’s ridiculous. Do you I’m ready for pennies to be gone? Yeah. yeah, me too. You know what I mean? Yeah. Like, there’s no point of that. In Europe, they have lots of larger coins, you know, dollar coins, $2 coins. And I think that would be great. like coins a lot. I like them. I love collecting them. Yeah, right. Grab a handful of ones in your coins. Pop, pop.
They’re great tips over there. Oh, yeah. But so that’s gonna disappear. And then next on the chopping block are checks. Do you write checks? Do you? I do ever? Yeah, I actually have to order some more checks. Can I say that on is that bad? Can I get like something stolen by admitting? don’t think so. Someone could call in and be like, I’m Chris needs checks. I still pay a few things via check. Yeah, I do as well. I don’t necessarily need to. I mean,
most everybody has bill pay through, their bank. ⁓ not all services, most services aren’t taking demo or PayPal these days. ⁓ but you know, writing a check is, ⁓ one of the first things that I learned when I was a kid and I don’t balance a checkbook. mean, I don’t know that anybody does that. You’d have to be a sociopath to balance your checkbook these days. ⁓ you know, you can look online and see, Hey, the check went through, but I learned how to balance a checkbook when I was like 18 years old.
Did you did I did it for like two months? I remember I did like four checks on this like this is stupid. Yeah, right. Were you when you got your checks and your when your first checking account? Did you have online access to it? I don’t think I did. I mean, it was around. But I don’t think I personally like had a login. It’s just like I know that’s there. Yeah, swipe my debit card if I need cash. Yeah, that’s it. Yeah, when I had when I got my first checkbook and checks.
there was no online access. you wait until you kind of had to do it. Yeah. The statement. thought, yeah, I didn’t really do it though. so that’s it. The, the penny is ending, ⁓ checks are next and it’s, you know, the, the change in, ⁓ function is going to be different, right? But everything’s, I guess, fungible these days, right? It is what it is. You
are just going to exchange it for something else and it’ll be electronic. Yeah. And you won’t hold it in your hand. It’s like your ID. Aren’t they doing that in Britain? Digital IDs? Yeah, I think so. That doesn’t sound great to me. Yeah, it’s a little too much. All right. Well, do you have anything else? That’s all I have. We are- Happy holidays. Happy holidays. Are you, you can’t say happy Merry Christmas? Merry Christmas. Happy Hanukkah. Happy Hanukkah. Right? Kwanzaa. Kwanzaa. All the things. Russian Orthodox. Everything. All of
Hey, for everybody at Good Life, I’m Noah Brooks with me, Chris Needs. Thank you so much. Happy holidays.
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The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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