Adam Johnson joins Wealthion’s Andrew Brill to uncover why he remains an economic and market bull, staying 100% invested in stocks. The portfolio manager of the Bullseye American Ingenuity Fund and author of the Bullseye Brief discusses his optimistic outlook on the economy, insights on the Federal Reserve’s upcoming rate cuts, and highlights the growth sectors he’s betting on.
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Andrew (00:11.008)
And then one better to clue us in into what to expect going forward than Wealthion’s good friend Adam Johnson. Adam is the portfolio manager of the Bullseye Ingenuity Fund and author of the weekly Bullseye Brief. Adam, welcome back. Always a pleasure to see you and speak with you.
Adam (00:28.834)
likewise, Andrew. Good to be with you. And, you know, it’s a new September. Hopefully it’s not necessarily a new market, but more of what we’ve seen, which is a lot of growth and a lot of reasons to own stocks.
Andrew (00:41.796)
So as we embark on September, the unofficial end of summer, what are you looking for or how do you see the economy and the markets moving forward?
Adam (00:53.292)
Well, you know.
What I just said is effectively that I think there’s a lot more to like than to fear. And I really do believe that, Andrew. And if you run through the numbers, here’s how you can get there. First of all, we have GDP that’s growing somewhere between two and a half and 3%. So the macro backdrop is good, number one. We have inflation that has finally broken below 3%. If you average all the four indicators of inflation, consumer prices, producer prices, et cetera,
You get to about two and a half. The Fed’s target is two. Inflation was as high as over 10%. So inflation is down, which means we now have rate cuts from the Fed. And on top of all that, we have earnings growth of, as we just learned from the recent reporting season, about 10%. So yes, I know there is uncertainty about the elections. Yes, I recognize inflation isn’t
completely back to 2%. Yes, I recognize that we have wars around the world. But again, I don’t think any of that is as important as the fact that we have GDP growth. We still have a lot of people employed. We have earnings growth. We have lower inflation and we have rate cuts. I think that’s the narrative that really matters. And that is why I continue to be 100 % invested in stocks.
Andrew (02:18.678)
And as we, like we said, embark on September.
We are expecting a rate cut in a couple of weeks. Do you think this is a cycle? They’ve raised rates 11 times over a year and a half. Do you think we’re now in a cycle or do you think this is, they’ve been so deliberate about let’s see the numbers, let’s take a look, let’s wait, we need more data. Do you think this is a one -off and they’re gonna wait and see and take it really slow? Or do you think that this is actually a cycle where we could see multiple cuts going forward?
Adam (02:50.584)
First of all, I do not think that a September rate cut is a one -off. I do think it’s the first of multiple cuts, but I would add that I don’t think the Fed will cut as aggressively as a lot of traders believe. And right now, the Fed Fund futures are predicting with 100 % certainty, you and I have been at this game long enough to know that nothing’s ever 100%, but Fed Fund futures.
Andrew (03:15.512)
Death in taxes, that’s it.
Adam (03:17.144)
Yeah, right. Yeah, exactly. Death and taxes and rate cuts don’t make that cut. But yeah, 100 % certainty of four cuts by December. I think that’s aggressive.
will probably get two or three. I’m OK with two or three. I think the Fed waited probably a little too long, but it’s it’s not dire. As I say, the economy is still growing. The only negative that we’ve seen is an uptick in employment and I should say unemployment, you know, up to 4 .3 percent. And given that that’s still a very low, low number. I mean, when I was in Princeton, my econ 101 prof was Alan Blinder, former vice chairman of the Fed. And he used to
teach us that 5 % was considered full employment. So if we’re at 4 .3, we’re actually below full employment, at least by his measure. I know that was a couple of decades ago, but even so, 4 .3 is still extremely low. And I would argue that that uptick from, call it 3 .9 to 4 .3, has actually had more of a benefit than a negative simply because it’s taken some of the incremental pressures off
rising wages and that’s been you know one of the reasons that inflation kept going up so yeah a lot more to like than to dislike I do think the Fed is going to cut rates but I think it won’t be quite as aggressive as the market thinks fine I’m okay with that steady as she goes
Andrew (04:45.814)
So think there’s, let me ask you, how big of a rate cut do you think is coming this month?
Adam (04:51.64)
Probably 25 basis points. know, Powell is a gradualist. He has always been a gradualist. And the nice thing about that is consistency. You sort of know what you’re getting. You know, as you know, and I imagine many of our viewers know, markets like certainty, or at least markets like not to be surprised. And I think 50 basis points would be a surprise. I think…
the probably the first, let’s say he actually did cut rates by 50 basis points, people would say, hooray, 50 basis point cut, that’s great. Wait, what does he see that we don’t? Why did he have to go 50 basis points? Is it really bad? Right? So he doesn’t want to do that. He doesn’t want to scare people. He’s just gonna say, 25 basis points, you know? We waited until September, could have cut in August, no rush.
25 basis points now, we’ll meet again in another six weeks, we’ll take a look then, maybe another 20, right? I mean, that’s just his pattern. It’s always been his pattern to be gradual. He probably waited too long to raise rates because he was trying to be a graduate. I mean, remember when he said a few years ago, yeah, inflation’s running a little below where we’d like it, so we’re okay letting the economy run a little hot, and we may let it go a little hot, right?
So, you know, now you could say, then they probably waited too long and they’re doing damage. No, I think he learned the lesson of letting it run too hot. So I’m okay with the current trajectory of rates. think the market is too. you know, I think the far more disconcerting thing right now overhanging the market is politics because we don’t know what we’re going to get. And it’s two very different visions of America. And there are some pros and
to each, whether it’s higher regulation and a green energy mandate from Harris or potentially a lot of new China tariffs, maybe even European tariffs from Trump, the market would not like either one of those. So we don’t know what we’re going to get. I’m much more on edge about politics than about the Federal Reserve right now.
Andrew (07:03.47)
Do think that plays a little bit of a role into the rate cuts? The next FOMC meeting is, I think, the day right after Election Day. So they don’t have, know, if they cut September, they’re like, we didn’t do anything before Election Day. Well, of course not, because the meeting was the day after Election Day. But do you think that they, the Fed is sort of in a, let’s see what we get, because we’re in exactly the same boat that you described, where, you know, we know that one candidate will devalue the dollar and…
I both of them are going to spend like crazy. So inflation has a, it could rear its ugly head again. So do you think that November, they kind of take that meeting off and say, you know, let’s sit tight and then maybe cut it again in December? Or do you really think two or three cuts are on the horizon this year?
Adam (07:48.972)
Well, again, if, if, if,
Jerome Powell, Chairman of the Fed, lives up to his reputation based upon what he has done in the past. I think there’s more than one in the offing, it’s not going to be extreme. He is a gradualist. So steady as she goes, I think the market likes steady as she goes. There are enough uncertainties out there. So if we can just get some certainty around 25 basis points cut at a time, that’s good. I think the market likes him.
it.
Andrew (08:23.524)
Adam, I know that we’re looking at unemployment a lot. look with PCE, CPI, all that stuff, but the Fed’s kind of keeping a very close eye on unemployment. And I need you to help me out with something. Last week it came in, initial jobless claims came in about 231 ,000. The week before was a little bit higher, but the average, right in the 230 ,000 mark, that means in four weeks a million people lost jobs. Am I missing something there, or is that reason for concern?
Adam (08:53.484)
Well, it’s not that people lost jobs, it’s just that the job creation wasn’t as high as we thought. I mean, that’s very different. Because you’ve got to offset those jobless claims with the fact that every month we are creating jobs. And those come from two different data sources. You’ve got a survey which says, are you looking for work? And if you say you are,
then that goes on one column of the ledger. Meanwhile, if you filed claims, that goes on another. There’s some offset there. The numbers are really sloppy. mean, remember, we just had a revision of 800 ,000 jobs that we thought we got that we didn’t get because as it turns out, the Bureau of Labor Statistics was maybe using a wrong baseline. And or it may be that because of the survey aspect of the data, some of the people called were
illegal migrants who, you know, shouldn’t have been counted in the first place and it skewed the numbers. You know, we’ve had several million people enter this country and some of them are working and I think that that’s creating a ripple effect that I don’t think anyone really knows quite how to model. So the jobs data right now is kind of sloppy and I think you have to sort of look at a number of different sources, whether it’s survey data, whether it’s hard data, whether it’s ADP, the guys who, you know, create
your paycheck, ADP processing, look at their data, et cetera. I think you have to look at data from a lot of different sources and try to piece it together. Kind of like the news these days. You got Fox over here, MSNBC over here, CNN somewhere in the middle. I mean, you kind of have to triangulate if you want to figure out what’s really going on.
Andrew (10:43.044)
Exactly. And PCE kind of fell in line last week. It came in 2 .5. I think the previous one was 2 .6. So that, like you said earlier, that’s definitely coming down as well. And services, the service sector is also coming down. I think back in March, April, was over 4. And now it’s in the mid threes. So a lot of things, like you said, moving in the right direction.
Adam (11:05.704)
yeah. And you know, wouldn’t it be nice if everything were always, you know, crystal clear and if economist’s forecast were always correct. You know, you may recall when, you know, studying economics back in college that there was this theory that all the information that the efficient markets theory, that all the information is known and distilled by all these tens of thousands, if not hundreds of thousands or even millions of people
trading stock that somehow because there’s so many people that eventually consensus, you know, gets it right. Like if you look at ants, they all, or bees, they all sort of, you know, all the thousands of them together kind of figure out the right way to go. Well, actually, thank goodness that markets aren’t efficient because if they were, there’d never be any opportunity. And it’s inefficiency that, you know, opens doors to
you know, doing something that others aren’t, you know. I’m a contrarian, right? I like to go where they’re not. And so I’m okay on occasion, you know, buying something that just got knocked down because everyone has dismissed it. And you say, well, hang on, you know, are they just, are they overreacting? Is there an opportunity here? So, you know, I think you always have to have your ear to the ground and be aware that consensus doesn’t always get it right.
Andrew (12:30.03)
Let’s talk about the market a little bit. Obviously you think there’s room for growth. We had Mark Faber on last week. thinks that there’s gloom and Dr. Doom thinks there’s gloom and doom. He thinks that the market’s due for a big haircut. How come you think it, I mean obviously you think indicators show that it’s gonna still continue to go up. Why would someone think, hey look, there’s reason for serious concern here?
Adam (12:57.976)
So over the past 10 years, the market has tended to trade the S &P 500 somewhere between 16 times earnings on the low side and 23 times earnings on the high side. P, price earnings ratio, right? So I just ran my numbers on what I think the S &P can earn over the next, call it four quarters. I think it’s $275. Trailing is about 245. So all I’m saying is that we’re going to have 10
11 % earnings growth over the next four quarters. That gets us to 275. So what multiple do I put on that? Well, if the range has been 16 to 23, and we have growth, we have still reasonably good employment, and we have rate cuts, I think a 22 multiple is a reasonable multiple. I’m not at 23 the high, but I’m towards a higher end. So 22 times earnings of $275 gets us to about 6200.
on the S &P 500. That’s about 10 % above where we are now. So for the market as a whole, I see 10%. Now, I’m trying to pick stocks that go up more than 10%. Fine, I’m a growth guy. But if the market as a whole, if that baseline is for 10 % growth, I’m okay with that. So that’s where I get my fundamentally bullish orientation. I’m not just saying I’m bullish because I’m bullish and…
Right? know, things look great. Now I’m actually trying to run some numbers and, you know, put a little bit of acuity behind it. There are people out, you know, some will say I’m perpetually bullish, but I would also say, well, over the long haul, stocks tend to rise two days out of three. And if you chart the S &P 500 over the past five years, 10 years, 20 years, 30, whatever.
It generally goes up. So yes, there are dips along the way and sometimes, you you may raise a little cash. You know, I may sell 10 % of my holdings across the board so that I’m only 90 % invested and I’ve got a 10 % cushion so that if things go down, I can buy them. And occasionally I do that, but I’ll be honest with you, Andrew, I’m not a great timer at the market because it’s really hard to do. Right? You’ve got to be right twice. You’ve got to be right on the sale and you got to be right on the
Adam (15:19.19)
buy back in again and then you got to repeat that maybe six months down the road or nine months or maybe eight weeks. I mean that’s really hard to do. So I tend to stay fully invested and to have a view. I might change things at the margin but that’s just generally the way I approach it. Timing the market not timing the markets.
Andrew (15:38.87)
Why is September, Adam, such a volatile month? It seems that September is the month where maybe it’s people getting back to work and overthinking things, but September seems to be a volatile month.
Adam (15:49.784)
I know, and it happens on a pretty regular basis. It’s the worst month of the year followed by October, the second worst month of the year. we gotta, you I’ve been wrestling, wondering, I mean, who knows, will tell whether we actually saw the CEPOC typical decline back in July and August. I mean, you know, the NASDAQ fell 16%. That was pretty ugly. And while…
The NASDAQ over the past five years has fallen an average of 15 % three times a year. Again, each of the past five years. So we could get another one, but you know, that was pretty nasty. That decline, the S &P 500 didn’t go down.
quite as much. think that midsummer decline was because the market thought it had a sure thing in Trump because it just looked like he was going to crush Biden. mean, you saw all the polls, Trump, Trump, Trump, Trump. And then suddenly Biden’s out, Harris is in, and the market says, well, wait, we thought we had a sure thing in Trump. And he was going to be lower taxes, lower regulation, and drill baby drill. The market loved those three things.
you know, we might get Harris and that’s a very different story. yes, there could be decline this year. Why is September typically?
Uncomfortable? Well, everyone sort of goes on autopilot in July or August, and then they come back, and you know human nature, all those gloom and doom folks like Faber come back and say, well, while you were sitting on the beach, you should have been watching this or that, right? And suddenly, there’s this kind of animal spirits thing, and people say, my gosh, should I be concerned?
Adam (17:35.808)
I mean, depends upon your timeframe. Should you be concerned about the next two to three weeks or maybe the next five to six? Yeah, maybe. Should you be concerned looking six months down the road? Probably not. So, you know, it’s just that animal spirits time of year and we’re all back. We all want to be busy. We all want to get engaged and we all feel like we need to do something. Yeah, I’m going to do something. You know what? I’m going to sell. Well, maybe doing something should be just sitting back and thinking and pondering.
Andrew (18:00.024)
Ha ha.
Andrew (18:05.902)
So we passed earnings season and you know, Nvidia came in with whopping earnings, but for some reason, expectations were higher than where they were. Where does AI sit at this point with the, you know, I guess the granddaddy of them all, you know, Nvidia, now having some issues, not issues, but stock issues. The stock seems to be selling off a little bit. And then all of a sudden, you know that people are going to jump back in saying, they’re now shipping their new chip. Great times ahead.
Adam (18:16.461)
Yeah.
Adam (18:35.672)
It’s so ridiculous, isn’t it? It’s so silly. I mean, crying out loud. Yeah, their new chip was delayed by three months because they wanted to make some changes to the architecture. Fine, three months. That’s 12 weeks. Meanwhile, NVIDIA’s earnings beat the top line estimates by 5%, the bottom line estimates by 5%. The company not only reiterated guidance, but raised guidance by about two percentage points.
saying that the top line will grow by at least 85%. What’s wrong with that? Well, because they grew at 150 % last year and 250 % the year before that, so 85 % is clearly slowing.
Okay, fine. I’m okay with 85 % growth, especially with the stock trading somewhere between 30 and 35 times earnings. So think about it. You can buy the S &P 500 at 20 or 21 times earnings with 10 % growth, or you can buy Nvidia at 30 to 35 times earnings with…
75 to 85 % growth, right? I mean, you know, Nvidia costs more, but it’s growing, you know, seven to eight times more than the S &P. So yeah, I’m fine with owning Nvidia, buying more Nvidia on weakness. Their chips are 10 to 20 times faster than competitors. The new chip, part of the reason the architecture had to be sort of revamped.
The new chip uses a fraction of the energy of the current chip. It uses like 95 % less electricity.
Adam (20:22.04)
That’s wonderful news. And yet, it’s 10 times faster than the current chip. So, Nvidia’s doing everything right. Everyone wants their chips, own it on weakness. I own Nvidia. I own a lot of semis. I’m probably overweight and on down days, you know, that kind of bites me. But on up days, they’re all up so much that I think you just have to own semis, especially since a lot of them are trading actually in the teens, know, mid teens.
multiples. mean that’s pretty cheap.
Andrew (20:55.637)
That was one of my next questions is about energy and now Nvidia is sort of having me cross out my question but energy with AI is obviously going to be a huge issue. Are you keeping an eye on these things? Is AI still attractive to you?
Adam (21:12.717)
yeah.
It’s hugely attractive. I think it’s in its infancy and any number of CEOs across any number of industries will tell you that. You know, just look at the conference calls where they all mention it and they all want to have a plan and they all want to be on top of it. We’re probably going to see over the next year a new post emerge out of the C -suite called Chief AI Officer, right? There’s a Chief Technology Officer. There’s a Chief Marketing Officer. There’s a Chief Revenue Officer. Well, maybe there ought to be a Chief AI Officer
whose sole purpose it is to figure out how to use AI to boost revenue growth, customer engagement, efficiency.
on and on. I think that’s very exciting. In fact, one of my clients has a daughter who’s enrolled in the AI program at Stanford. And the stuff they’re doing with these kids, mean kids, 18, 19 years old, it’s incredible. In fact, Apple is now running programs at Stanford to try to win over all of their electrical engineers so that they just automatically feel that the Apple ecosystem
is the only one they want to be associated with. You know, there’s a reason why so many of these companies are located so near Stanford and why Stanford turns out so many scientists. It’s called synergies. They are all working together. And yeah, we’re seeing the very beginnings of AI. It’s nowhere near maxed out in any sense of the word.
Andrew (22:48.272)
I feel like it’s professional scouts for sports teams hanging around high schools and even junior high schools waiting for these kids to get a little bit bigger and a little bit better, but knowing that they’ve got an ace in the hole if they play their cards right. And I think you just created a new job too, the chief AI officer. I wish I knew more about AI, because I’ll bet you that’s going to be lucrative down the road.
Adam (22:53.822)
yeah.
Adam (23:04.14)
I think you’re right.
Adam (23:16.481)
yeah, I mean.
There are kids coming out of some of these schools with multi six figure salaries and stock guarantees. mean, imagine being 22 years old and being paid 250, 300, $400 ,000 as a 22 year old kid, but you’ve just studied AI for four years and you know a lot of stuff that a lot of people don’t and they all want your expertise. So suddenly, you you’re catapulted to a much higher level and sense of trust. Again, you have knowledge and knowledge is
power.
Andrew (23:49.294)
Where are we in the AI? There are so many tentacles yet to be grown in the AI space. Where do think we are? Is it we still in the infancy stage? Are we not even to that place yet?
Adam (24:06.678)
Yeah, it’s definitely infancy. I remember when GE, back when, before they had separated GE Aerospace from GE, GE had a press release talking about how the engines were getting smarter because there were so many sensors inside the engine. So the engine could tell you if not only was a certain part overheating, but that it probably ought to be a related part checked for
or maintenance on the landing. And so that would ping the arrival airport to let the maintenance crew know that this flight was gonna be landing at a certain moment and that a certain sensor in one of two or four engines needed checking. And it just thought, wow, that’s amazing. I mean, how did it know? And how did it communicate? Isn’t that incredible? And now actually that seems so…
Simple by comparison that’s just called preventative maintenance really You know now it’s not that the sensor is sensing real -time danger, but AI actually is able to Tell you when each of these parts is likely to Begin to degrade and so it doesn’t you don’t even need to wait for that moment so You know you start modeling All this stuff and you say well if this part is
is going to degrade, then you can write these programs that say, what other related parts would begin to degrade? And then you can start to optimize when they should all be substituted out. And while we’re at it, is it cheaper to replace it at each airport? Probably not, because then you have to have all these parts at all the different airports. But instead to have the parts only at your critical hubs, and whenever that airplane lands at the critical hub,
Within two weeks of the parts needing to be replaced you do with right you start to model out all that stuff I mean, they’re just I’m just kind of you know speaking extemporaneously here, but I mean think about Applying that kind of logic across all your businesses, you know your Amazon and You’ve got all these people regularly ordering stuff like soap and shampoo and should they be notified? You know, it’s it’s time to reorder
Adam (26:32.728)
You know, Hewlett Packard already does that with ink and they give you 20 % off if you just sign up for their predictable ink supply. My printer communicates with Hewlett Packard just via Wi -Fi to say how many sheets of paper I’m printing on a given month and then it optimizes when it thinks I need more ink. And because I’ve committed to that program, I get a 20 % discount, right? I mean, there’s so many ways to apply AI. It’s really incredible.
Andrew (26:58.338)
There you go.
Andrew (27:01.89)
And I thought it was cool that my car told me I need oil change. But it goes so far beyond that. So Adam, I want to ask you now that rates are going to start coming down, obviously high yield savings accounts, the yield on that is going to change. Maybe CDs will come back. They won’t be as lucrative as that. That’ll take a little bit longer, I think, to come down. But what do people do to replace that? Because
Adam (27:05.633)
Yeah, right.
Andrew (27:31.997)
Even I said, you know what, I’m going to put some money in a high -yield savings account because maybe I’ll need it. It’s liquid, but I don’t have to worry about it. There are a lot of things people need to do now to kind of adjust to maintain that level of income, don’t they?
Adam (27:47.192)
Yeah, and I don’t know where they’re going to find it. Right? mean, there just not a of companies that pay 5 % or higher dividends. I mean, that’s really hard to come by. I mean, there a handful of oil companies. mean, Energy Transfer is a company I own, ticker ET, and that pays $0
Andrew (27:49.849)
you
Adam (28:11.476)
seven and a half, eight percent. It’s an MLP master limited partnership. So some people can’t buy that. Institutions can’t buy it. But, you know, they’re the largest pipeline operator in the country. Thirty percent of U .S. capacity. OK, so that’s one name. Great. You you can’t put your whole portfolio in one pipeline company. There are a number of companies that pay sort of three and a half to
four and a half percent, even some Dow industrial type names. But yeah, mean, you’re gonna take a hit on your payouts if you’re depending upon five to five and a half percent. The irony of that, Andrew, is that only sounds high and like a great deal if you’ve been around for the past 15 years. If you were around for 15 years before that, you’d say five and a half, that’s nothing, right? We got spoiled.
by low rates and now they’re going to go back to hopefully low again. So yeah, it’s not a great time to be a retiree living on fixed income. That’s just one of the realities of a low rate environment.
Andrew (29:19.844)
I remember graduating college and being crazy about balancing my checkbook and having to actually run to the bank on the first of every month to see what the interest payment was, because it was substantial. You were getting 8%, 9 % on your checking account, not the 0 .01 % you’re getting now. it’s obviously, we’re living in different times now, but I do remember when we had a lot more.
Adam (29:31.5)
Mmm.
Adam (29:36.45)
Yeah.
Andrew (29:48.288)
interest than we’re getting now. But assuming a moderate risk appetite, what are we betting on in the near future?
Adam (29:59.828)
What we’re betting on is that the economy does not go into recession, that growth continues, that the Fed lowers rates, which will stoke growth across multiple industries. We’re betting that our capital is going to continue to work for us. We’re also betting that Washington will be kind to our capital, and that may increasingly become a concern.
That’s the one thing that is sort of hanging over the market that I’m concerned about. But we have to play the hand we’re dealt. I mean, let’s say we come in the day after election and it’s a sweep, a democratic sweep. The market’s not going to like that because that will imply higher taxes, higher regulation.
and you know stay tuned. What I will also tell you is that the best outcome for the market is what we have seen over the past four years and that is a Democrat White House, a Democrat Senate and a Republican House. That particular combination
going back to World War II, has produced the highest annual returns of any of the various combinations, 14 .9%. So, you know, if Harris wins, you know, people can say, my God, more regulation. but if the House remains Republican, remember, tax policy and spending policy both begin in the House. And so that’s why you have checks and balances. So again, if you have Republican House, that will keep the
the White House in check and I think ultimately the market will like that. Democratic sweep, different story, but you you don’t often see sweeps. So again, we just are gonna have to wait and see. There’s no way to know. No one knows and you know, polling is often only indicative. So you know, you just have to let the thing play out. If you’re nervous about that, fine, raise some cash. But…
Adam (32:12.477)
Again, time in the market, not timing the market, is the mantra that has served me best over the years. So I’m still invested.
Andrew (32:20.804)
So I had an interesting question from a viewer. says he has a lot of cash but wants to know what to do with it. Obviously with rates coming down, he’s not going to go put it in a CD or a high yield savings account at this point. What are you doing with about $300 ,000 worth of cash at this point that you don’t need to spend, you know, imminently?
Adam (32:43.618)
Put it to work. And you don’t have to put every single dollar in the market. You don’t have to put all that money into just semiconductor stocks or Nvidia or no, diversify. So I would certainly want to put money to work in growth sectors like the ones that I buy. I run the American Ingenuity Fund. I’m a growth investor. There’s a lot of tech.
There’s a lot of automation and robotics, digitization of businesses.
you know, payments processing, you know, stuff that isn’t necessarily pure tech, but that has a tech component to it. I mean, every company is effectively becoming a tech company with an AI sort of, you know, bent. You have to, right? So I would absolutely want to put some of that money to work in my kind of growthy names, especially with rates coming down. I would probably want to put some of the money to work in good old dividend paying stocks that, you know, you see.
in the Dow Industrial is fine. I’d probably want to own some government bonds and then I’d probably just sit on some cash just because, you know, there’s nothing wrong with a little extra cash going into the election. If we get some sort of downdraft, you can put it to work then. Meanwhile, the rest of what is invested will work for you.
Andrew (34:04.804)
do you see the geopolitical situation playing out with respect to the market and all that? Nobody knows how it’s going to play out, I can tell you that. Not even the two sides that are fighting, or more than two sides that are fighting. How do you see the geopolitical situation affecting the economy and the markets and stuff like that?
Adam (34:24.44)
Well, a couple of comments. First, I will tell you that I went back and looked at all, call it 20 or 21, sort of bellicose or war -related events of the past 25 years, from 9 -11 to the bombing.
the USS Cole when it was in Saudi Arabia at the docks, to the initiation of the Gulf Wars, to, know, right, just all these events when missiles were flying. And what’s fascinating, Andrew, is that you almost always get an immediate five to eight percent drop in the market. And by immediate, I mean within the first 36 hours. And everybody says, my God, the world’s going to end. Well, incredibly, two weeks later, stocks are right back to where they were.
So there is an emotional response to geopolitical events, but it tends to be short -lived. And that is why I tend to, over the long haul, discount geopolitical unrest. The market just figures it out. mean, World War II, horrible, right? More people died during World War II than any other conflict in the history of the world. And what did stocks do? They tended to rise.
Right? So, you know, it’s like when people come to me and say, you know, I mean, I remember back in 2016, Trump won, and some of my clients called me and said, I hate Trump, and I don’t trust the country anymore, so I’m going 100 % to cash, and I’m canceling my bullseye subscription. You’re really smart, but I just hate the world right now. I said, why? Because you hate Trump? Yes.
OK, fine. And then look at what the market did. So mixing politics and investing.
Adam (36:17.656)
is, I think, generally mistake. We have to have outcomes. We have to be prepared for outcomes. mean, if Hillary Clinton had won in 2016, we would have shorted banks. But Trump won, so we bought banks. You have to be flexible. And the market figures out what those solutions are, not necessarily on day one, but eventually figures out the workarounds and deals with it. And so we all have to do that.
So, you know, in thinking about your question,
How did geopolitics play into my thinking? Not a lot. But I’m aware that they can create some dislocations, especially in the short term. just be aware of it. Be aware that wars like what’s happening in Russia and Ukraine or in the Middle East, and it’s really across the Middle East, given all the strikes that are happening from country to country. Just be aware that they’re disconcerting.
Adam (37:24.25)
yet. I think that’s a signal to us to just be aware but keep forging ahead.
Andrew (37:32.248)
That’s one of the beauties of AI is it takes the emotion out of it all. It’s not human, so there is not a ton of emotion. Adam, thanks so much for joining me. Where can we find you? I know it’s the bullseye brief. We can read it. And where else can we find you? I know you do your walk and talk all the time. Where do we find it all?
Adam (37:39.928)
That’s right.
Adam (37:50.872)
yeah, well, I post my walk -in talks, these kind of 45 second conversations with myself as I’m trying to get my head in the game walking to work in the morning. I post those on Twitter, at AJ Insight. And BullseyeBrief .com is where you’ll find my investment letter. I post a new stock pick every Sunday morning at 7 a plus news on the portfolio, changes in the portfolio that I may be making, buys and sells, though I don’t trade a lot.
catalysts that are on the horizon. think we all need to do that. So BullseyeBrief .com. I’ve got a 45 -day trial for 45 bucks. That’s where you find me.
Andrew (38:31.598)
Thanks Adam, really appreciate it, always great insight as always. Thank you very much.
Adam (38:36.109)
thanks for having me, Andrew. Hope to see you again soon.
Andrew (38:38.338)
Absolutely.
