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In this episode of Wealthion, Andrew Brill welcomes Adam Johnson, former Bloomberg TV anchor, turned Portfolio Manager of the Bullseye American Ingenuity Fund, to dissect the current economic climate. Adam shares his views on investment opportunities, his thoughts on whether or not a recession will strike in 2024, and his strategic insights into the sectors that are setting up for significant gains. Don’t miss his expert advice on navigating inflation, interest rates, and more! What’s your favorite part of this conversation? Let us know in the comments below! Learn more about Adam and his insights visit


Adam Johnson 0:00
We’re not headed transfers, there’s nothing to land. The airplane is still flying and it’s got plenty of fuel. And that’s really the message.

Andrew Brill 0:06
Hello, and welcome to Wealthion. I’m your host, Andrew Brill. It’s earning season once again and with the markets on a little bit of a downswing. Is this the time to put some of your money to work? Well, we’ll get all the answers to that question and more coming up right now.

I’d like to welcome Adam Johnson to Wealthion. You’ve seen him on Bloomberg TV as an anchor, and now he’s the portfolio manager of the Bullseye American ingenuity fund, and author of the weekly investing newsletter Bullseye Brief, Adam, welcome to Wealthion.

Adam Johnson 0:45
Oh, thanks, Andrew, great to be with you.

Andrew Brill 0:46
It’s, you know, I read the newsletter, I see your notes, and it seems like things are actually looking up. So that’s a really good thing for the market. What’s your take on the economy right now?

Adam Johnson 0:58
Oh, I think it’s a lot stronger than people get a credit for. You know, if you remember, Andrew, you know, it was only a few months ago that everyone was so certain that recession was just inevitable. And I kept saying no, it’s not inevitable. In fact, I don’t think it’s going to happen. And I’ll tell you why. Three, I call it the three E’s, earnings, employment and the economy. The economy is growing somewhere between two and 4%. GDP growth, that’s pretty strong. And meanwhile, we’ve got just about everyone employed who can work, right. I mean, I remember when I was an economics major down on Princeton, my professor would say, well, full employment is somewhere between five and 6%. And now we have learned that full employment is probably somewhere down around three to 3.2%. We’re around 3738. So a lot of people are working. And when you have people working, they are making money. And when they’re making money, they are spending money, which is why you have economic growth. And of course, that translates into earnings growth. So we are now in the middle of the first quarter reporting season. And I think we’re going to by the time, it’s all said and done rolling out a fifth of the way through it. By the time it’s all said and done, Andrew, I think we’re gonna find out that growth in the first quarter was 10%. earnings growth was 10%, which is an acceleration from the fourth quarter of last year that was at about 7%. And then the third quarter of last year was down around four, so 478. And now 10. That’s a trend that that gets me excited. I’m fully invested. I know, I’m the optimist. In the room. I always, almost always am. But there’s a lot more to like than not to like, Andrew.

Andrew Brill 2:39
Not only that, but there’s you know, you had made the point that the market was down, there’s a lot of cash sitting on the side, I know the last couple of days, the market is creeping up this a good time to get back in with some of that cash that’s sitting on the sidelines.

Adam Johnson 2:51
Oh, absolutely. And I’m not gonna say it’s always a good time to be because there are times, you know, and there have been some rough sledding over the past couple of years, there have been times when you’d rather have cash. But this is not one of them. This is a time when you want to put your cash to work. That has been the case for a long time, it continues to be the case. So I’m fully invested. Whenever I have money coming in from clients who are bringing in more money or just new clients, at the moment, I’m getting them fully invested, I think there are far more opportunities to make money than to not to make money. And what’s amazing to me right now, Andrew, is that you still have over $6 trillion of cash sitting on the sidelines. There’s still so many naysayers, just people who don’t believe, you know, maybe they’re worried about inflation. And I get that maybe they’re still worried about recession. I don’t get that because I think that’s just wrongheaded. Maybe they’re concerned about the elections. And you know, we can we can talk about that, if you like I can run you through some, some stats, but election years tend to be very good for markets. So again, they’re just a lot more reasons to be invested than not to be invested. And so I’m very happily being fully invested both with my money and my clients money.

Andrew Brill 4:10
And you said that the talk about inflation should be in the rearview mirror. We’re at that at that point where, you know, we’re in between that two and 3%, almost where the Fed wants it. And there’s talk about a soft landing, and I would assume you’re thinking no laming at all, there’s just we’re not headed towards recession.

Adam Johnson 4:30
No, we’re not hitting turns. There’s nothing to land, the airplane is still flying and it’s got plenty of fuel. And that’s really the message as far as inflation goes, you know, think about this, Andrew, consumer prices and I know they’re still they’re still rising because you almost never see deflation. So they’re still rising, but they’ve been rising at a progressively slower rate, which is what’s called disinflation, which is a little bit disingenuous, right, because prices are still going up, they’re just going up at a lesser rate. Okay, fine. But at one point, CPI, consumer prices were rising 9.2% year over year. And at the moment, they’re somewhere around three and a half. That’s above the Feds target of two. But CPI is not the only inflation measure out there. You’ve got producer prices, ppi. You’ve got personal consumption, expenditures, PCE, and then you’ve got the GDP price index. And if you look at those other three measures, they’re anywhere from two to 3%. So if you average all four of the inflation measures together, what you would find is that the average is 2.7%. And again, the Feds target is 2%. So we’re getting there. The last mile is always the hardest, but we are getting there. And that’s why yes, as you just mentioned, I think that inflation is becoming a rear view mirror story. It’s something we had to worry about a year or two ago. It’s still with us. But it doesn’t, it doesn’t worry me as much as it did back then. Because we’ve made so much progress. And I think other things matter more like earnings growth.

Andrew Brill 6:13
Are we looking at the right numbers, and I know, the Fed says, Oh, we wanted these numbers between two and 3%. And I use the sports analogy, the analytics are always changing. Everybody’s looking for that competitive edge. Are we looking at the right numbers in the right way?

Adam Johnson 6:29
When you say looking at the right numbers, which numbers in particular?

Andrew Brill 6:33
The CPI, the PCE, all these numbers that the Fed takes into account is there. And like you said, you can take these and average them together, which is not what I don’t think the Fed does know how to average them together, you come up with a different outlook.

Adam Johnson 6:47
Yeah, yeah, you do. There are all sorts of things people do to try to back into inflation, that go beyond the numbers, you know, you might look at some of the freight indices, you know, what does it cost to ship stuff? And that’s a fair point. But I think, actually, that the four headline numbers actually do a pretty good job of capturing 90% of what really matters out there. Because, you know, the breakdown CPI, maybe one headline number, but actually, they’re they’re almost 100 separate inputs that go into just that one number. So I actually think that the government, I can’t believe I’m saying this, the government’s doing something well, but no, I think they actually do a pretty good job at corralling those numbers, and then, you know, economists do a reasonably good job of trying to forecast what those numbers are. So I’m comfortable with that process. I would like for inflation be going down rather than up because over the past three months, you know, we’ve we’ve seen an uptick, but nothing in life is ever a straight line, nothing’s ever obvious. And you know, they’re always wait way more reasons not to do something like go deploy capital than to, than to actually make a bet, you know, it’s a lot easier to just stay home and sit on your couch, than to go out and get on a bike and ride 50 miles, it’s a lot less risky to, to walk somewhere than to, you know, take a car on and on. There are plenty of reasons not to do stuff. But that’s just that’s not the way I am. And I don’t think that’s that’s the way we are as people and that’s certainly not what what this country is about, you know, my things, American ingenuity, the people, companies and technologies driving the world forward. And part of that means taking risks, taking risks with ideas, taking risks with money, and in moving forward. So yeah, I’m comfortable for all those reasons putting money into the market. And I do think that we’ve got inflation, moving the right direction.

Andrew Brill 8:58
We talked a little about jobs and people making money. I know wages, were all reports wages are up, our wages going up comparatively to prices, and I know that the prices are the increase in prices is starting to dig that gap is narrowing. You know, the the percentage that there increases or narrowing, but there seems to be a lot of people still out there hurting a little bit.

Adam Johnson 9:20
Yeah, and I think Andrew that’s because it’s only been recently that wage gains are finally starting to take back some of the price increases. In other words, if you go back two and a half, three years ago, prices were starting to go up and wages were not and then prices went up a lot. And then finally, people said to employers, you got to pay me more. So reluctantly, employers started paying more and and then we went into a second year of that and it was towards the end of that second year, which was really last year, that all of a sudden the wage gains were finally starting to get you, if not to parity, pretty close to where you should be so that your real purchasing power is the same. I suspect if we were to ask the average person, do you feel like, you know, you’re back to where you were, they’d say No way. Because inflation is just hit so many different products, and admittedly, higher interest rates haven’t helped with, you know, higher costs. So we’re finally getting back to some sort of balance where wage gains are making up for the erosion of purchasing power due to inflation. It’s, you know, it’s it’s the sort of thing that takes time, and it’s never the fancy word is it’s asynchronous, you know, it doesn’t happen at the same time, it’s not all synched up. And I think people have to view it that way. You know, just, you can’t expect that if prices go up, you’re suddenly going to get a raise. I mean, it just, you know, if you’re lucky, you get a raise at your end. And so, you know, you got to kind of deal with that for for several months, you know, until you get to year end, and hopefully you get your race, but we are starting to get back to where people’s purchasing power is catching up again, with eroding purchasing power.

Andrew Brill 11:26
I know it’s a subject that drives you crazy, because everybody talks about it. And I know that you would wish it would go away the interest rate question. And now we’re done. I seen your notes. Now you’re calling from maybe only one decrease this year, as opposed to maybe they’d sneak in a second. But it could be smaller than we expected?

Adam Johnson 11:45
Yeah, what did change. So, four or five months ago, the Fed Funds Futures market, believe it or not, there’s actually a market for what you think the Fed is going to do. In the same way, there’s a corn futures market and oil futures market, et cetera. And that, by the way, is not just for gamblers. It’s for hedging. You know, if you have interest rate exposure, you can offset some of that by hedging in the Fed Funds Futures Market fine. Several months ago, the fed fund futures market was predicting three rate cuts by June. Here we are, you know, almost, almost to June. And rate cuts are nowhere in sight. And it was forecasting another, the market was forecasting another three rate cuts by December. So total of 625 basis point rate cuts are a total of one and a half percentage points over the course of year. And now, the fed fund futures market says we’ll get one in December and maybe maybe we’ll get another one in January. So big change. The reason is because inflation kind of started to creep up again. But just as the pendulum always swings too far in one direction, and everybody thought that recession was inevitable, and I mean, it’s inevitable that it didn’t happen. Right now, everyone is saying, Oh, well, we’re only going to get one rate cut, hang on, it’s still only springtime. We’re not even at the half halfway point for this year. So I suspect, given that we’ve had three months in a row of slightly rising inflation, that that will start to roll back over again, on the optimist. But there are enough indicators that suggest to me that that is likely going to happen in the next couple of months, which means by the time we actually get to October, November, December, chances are the fed fund futures market will have shifted again. And I think actually, it’ll shift in consumers favor where we have more than just one rate cut, you know, two, maybe three.

Andrew Brill 13:52
Is all of this already baked into the market, the market set, or you know, what, we’re tired of hearing about interest rates where we don’t know how many cuts, there could be one, three, whatever it is, and investor just saying, you know what we’re gonna go along and just do what we need to do. Let them do what they need to do.

Adam Johnson 14:07
I think so. I think you’re right, because, you know, markets up until a week or two ago, we’re at all time highs, right. And the correction that we saw in the s&p 500 in the NASDAQ was a whopping six or 7%. Not really a correction, right? Corrections are usually 10 to 12%. So the fact that markets went down, but not by much, and people are starting to buy stocks, again tells me yeah, that we probably aren’t baking in future success. No recession, falling inflation and an eventual rate cut scenario. Nothing’s ever certain. But yeah, watch what people do with their money because that’s very telling. And they’re buying stocks right now. If you thought that things were going to be really bad, you wouldn’t be out there buying stocks. You’d be running Cash. And I think that we’ll see that 6 trillion in cash start to come down as more and more people get comfortable with the future.

Andrew Brill 15:09
Is it possible Adam, that people will just like, you know what the market did so well, in the first quarter, I’m gonna take a little camera and take some profits early in the second quarter, wait for it to come down a little bit, like you said, six, maybe 7% and pumped that back in, I’m going to hang on to my profits. But I’m going to I’m going to put that money back in is that a possibility?

Adam Johnson 15:29
So one of my guiding principles, Andrew is time in the market, not timing, the markets. Big difference. And I have found over the years that whenever whenever I’ve tried to get cute, and say, Oh, I’m kind of worried about the future, right now, I’m willing to sell 10 or 15% of everything and raise some cash and have a cash cushion. Fine. Okay. But remember, that’s only half the trade, you then have to decide when to put that money back to work again, right? So you got to be right on the sell. And then you’ve got to be right on when you buy back in. And then of course, it starts all over again, which means you’ll have to be right again on another sale, and then right on another buy back and then a night, right. That’s really hard to do. So. Yeah, focus on time in the market, not timing the markets. I’m a growth investor. I like finding high quality growth companies. And by that I mean, companies with low debt companies with high cashflow companies with great management teams growth, double digit earnings growth, stable profit margins are improving profit margins. And if I don’t think that I can double, triple or quadruple the money, I’ve invested in a given stock over the next two to three to four years, then I don’t buy it. So I have a long term horizon. I think that allows me flexibility and staying power. But yeah, it’s again, it’s about time and what happens to high quality companies over time. Not uh, what happens to the market over the next four to six weeks?

Andrew Brill 17:11
So what what, what themes? I mean, let’s switch gears and talk about investing. What theme I know you talk a lot, a lot about your mentor, saying, You know what, pick a theme and go with it. What themes are you looking at, in now and into the future?

Adam Johnson 17:26
Well, the obvious one everyone’s talking about is artificial intelligence. And you say how do you get there? Well, fine. You can buy all these big companies like Microsoft, Intel, Google, Facebook, they’re obvious because they all have internal AI efforts. But you know, the building block of AI what makes it all possible? semiconductors. So yes, in video, I flagged in video for my Bullseye subscribers back at 175. Two years ago, my first target was 475, we sold a little next target was 675. We sold a little next one was 900. So little, my target at this point is 1200. The reason I sell on the way up is there goes my phone dropping off my desk vibrating because people are calling. And you know, you have to sell names as they go up, otherwise, they get too big. And so that’s why I’ve been selling in video even though it’s a winner. And then you say okay, fine. What else besides in video oh, all kinds of companies are part of that computing power theme. Marvell technologies mrvl Another wonderful AI play that focuses on the databases behind artificial intelligence, you know, think about all the criss crossing of data that has to happen in order for a computer to to generate new intelligence, right, that’s a generative AI you’re generating new knowledge. That doesn’t come. It doesn’t come easy. It comes from crunching a tremendous amount of data. You need databases, that’s Marvell. They’re just so many different aspects to computing by Excellus ACLs. This company makes machines that embed silicon wafers with ions. Well, again, that’s the raw material for creating a semiconductor. So you don’t if you want to play AI, you don’t want to just own the big obvious ones like Microsoft and Google. You want to own the raw materials, the picks and shovels the chips and and the other companies that are responsible for making the components of the chips and then wiring all this together. The data centers, you know, a pro logics, right? I mean, there’s so many different aspects to computing power and artificial intelligence. You know, you could have an entire portfolio you know, 30 names just on that one theme. What about all the derivative users of artificial intelligence, which is ultimately you know, the story, I’ll give you an example. symbiotic s YM is that ticker, this is a company that is converting all of Walmart’s distribution facilities into a AI power distribution facilities. So it’s robotics and it’s aI really cool stuff. Andrew in the truck pulls up, an automated forklift goes in, unloads it, D palletize. It meaning takes the pallets apart with all the stuff, then little robots store all the stuff on shelves record where it is. And then when the individual stores need more product, a program is just sent back to that distribution facility in their 47 distribution facilities around the country that Walmart operates. Then the robots go retrieve all the stuff, build a pallet so that it’s weighted correctly. Again, this is all artificial intelligence enabled that enables that. And then it’s loaded onto the truck. And the pallets are positioned in a way to optimize weight and stability, again, made possible by artificial intelligence, and then the truck is on its way. So artificial intelligence is something that happens in so many different ways. It’s not just a chip. It’s not just something happening inside a computer. It’s actually happening all around us. And I think every company is going to have to be an AI company.

Andrew Brill 21:33
It was amazing. I was in a grocery store just the other day. And I saw this thing coming at me and it says, Pardon me, I’m taking inventory. And I was like, Is nobody with a clipboard anymore? You know, writing things down that they need the little, little robot or whatever it was, obviously, was just taking inventory of everything that was there. I was amazed that something like that could do that. But Adam, how do we power all this AI? I mean, isn’t that going to eventually be an issue? Or is that another sector we should be looking at?

Adam Johnson 22:02
Well, you raised an interesting question. What about clean energy? Andrew, I will tell you that every single clean energy stock I have bought in the past two years has been a money loser. Clean energy has been a disaster. So it’s not clean energy that’s going to power us I mean, yes, okay, fine. You can say, well, what if we could use solar power to create electricity and power these higher electricity needs? Okay, fine. In fact, there is even a some argument that in California, they have a surplus of solar electricity. But the problem with clean energy, from my point of view, as an investor, is that a lot of these companies only survived because of low interest rates. And because of subsidies, government subsidies, and then when rates go up, obviously, they lost access to cheap money. But more importantly, we realized that they couldn’t stand on their own. And that’s a problem. Excuse me, when I talk, my throat gets dry, because it gets so excited. Because I keep talking. But clean energy is not the way forward I think good old fashioned, natural gas and natural gas powered turbines run very clean, not as clean as solar, but very clean and a lot cleaner than coal, or oil, nat gas powered turbines and their pipelines all over the place. And you can power factories, a lot of factories in the US are powered by nat gas turbines. There’s a wonderful solution right there.

Andrew Brill 23:33
We talked about all this AI stuff. And you know, it’s great. And what about people who are looking at it now the market is starting to creep up again. Is it too late? Like there’s this fear of like, Oh, my God, I timed it wrong. I need to get in. It’s too late. I’m gonna sit on the sidelines. How do you coach people through that?

Adam Johnson 23:54
New highs beget new highs? Right? I mean, so who’s your favorite baseball team?

Andrew Brill 24:04
Oh od, it’s the Mets. Okay.

Adam Johnson 24:08
So if the Mets are on a run, and you know, they’re, you know, they they’ve won 10 games in a row. Do you say, oh, gosh, that’s probably as good as it gets. I don’t think they could win in 1130. Keep rooting for them. Right.

Andrew Brill 24:20
Yeah I keep rooting for them because I’m crazy.

Adam Johnson 24:22
Exactly. And it’s the same kind of thing. Just because the markets have gone up doesn’t mean that they’re going to stop going up. In fact, arguably, I would say momentum is on the side of the markets if it’s going up. You know, new highs beget new highs, the market rises two days out of three over the long haul. So you’re much better off betting with the market. Now if you want to say to yourself well but it’s had such a run. There might be a pullback, okay, fine, but you don’t have to put all the money in at once. So one thing I will tell so my clients do is just buy a little bit every month. Dollar cost averaging, you know, if you’ve got $10,000, and you want to invest it put 5000 to work now, put 5000 to work next month, you know, smooth it out, and then you take some of the stress out of it, you don’t have to worry oh my gosh, I, I put all 10 in right now, you know what if I’m wrong, well, don’t worry about it, you put five in, you’ve got five in your pocket. And if you get a pullback, you can put the other five in. Or if it keeps going and say, well, it keeps going, I may as well put it to work, which by the way, just argues for just put it in now put all 10 in now. That’s generally my my orientation.

Andrew Brill 25:35
So talk to me a little about the bond market, the 10 year, which is what a lot of things are based on, is it was about four, seven now, maybe it’s creep down a little bit. You know, there’s talk about getting hitting five, we hope that doesn’t happen. But what where are we with the 10? Year Treasury? I mean, because that’s all, you know, a lot of that’s tied to the debt. So we hope it doesn’t get to five, obviously. But you know, where are we in the bond market?

Adam Johnson 26:02
I think we spend way too much time worrying about the bond market and what the Feds gonna do. I think they’re way too transparent. I wish we could just go back to that kinder, gentler time, where Chairman Greenspan would would, you know, only a couple times a year, say what he really thought. And now we’ve just become so transparent, you know, it’s like every kid who runs the 40 yard dash gets a blue ribbon. Oh, we’re so proud of you for finishing the race. No, you only the winner gets the blue ribbon. But there’s this constant handholding that parents do that schools do. And unfortunately, I think the Fed does with all of us, and we’ve become dependent on it. So yeah, we worry way too much about all this stuff. And by the way, you know, the fact that people are so upset that the tenure is 465. That’s crazy, because the the 40 year average is 565. So for all this hand wringing, oh, my gosh, rates are so high, it’s so horrible. No, it’s not. The tenure is a full percentage point below, where it has been on average for the past 40 years. I mean, I don’t know about you. But I remember when I actually got my first mortgage, it was seven and a quarter. And you’re right. And then it went down to five and three quarters, and I thought I was a hero. And then, you know, a couple years ago, people were getting 30 year mortgages for under three, that’s not normal. That was crazy. Actually, that was a function of free money, because they’re flooding the system to prevent a total implosion due to K COVID. So we got spoiled by low rates, we need to get over it. I think the market is getting over it, which is why stocks are at new highs, even as rates have started to go back up. And I consider that progress. And I’m glad to see that. Yeah, rates rates are what they are just use capital efficiently. If anything, that’s good. Higher rates mean, you have to be more discriminating about how you use capital and whether you actually employ leverage or not.

Andrew Brill 28:09
Yeah, they say history repeats itself, you and I got a mortgage around the same, same amount. And now here we are 30 years later, it’s right back where it was. So I feel like I should just buy another house. Not that I can afford that. But you know, rates are right where they were when when I bought my first apartment. So you know, but what what are we what are we you know, we’re just in the beginning of earnings season. I know a lot of the SNPs report very, very soon, the banks seem to have done very well. What are we expecting this earnings season?

Adam Johnson 28:39
Yeah, by the way, my takeaway from the bank reports that came out, you know, over the past couple of weeks, credit quality is quite good. So, you know, people can complain about high prices, but they’re not over leveraged. And they’re dealing with high prices pretty well. And I don’t mean to sound callous by saying that, but the banks, you know, purposely took money back onto their balance sheets that had been set aside for bad loans. As it turns out, there weren’t as many bad loans as they thought. That’s good. So that’s my takeaway from banks. And, you know, when the banks are making money, generally speaking, the economy’s doing well. So that’s a positive indicator. As far as earnings in a broader sense, this is going to be the third consecutive quarter of earnings growth. And, and that’s wonderful. The, the forecasts call for about 3% earnings growth for the quarter that’s being reported right now. But if you look at the past two quarters, the actual results have been seven percentage points ahead of forecast. So if the forecast is three, add seven for the upside surprise and you get to 10. That’s pretty powerful. So I think over the next four quarters will be north of 200 and A few dollars in earnings for the s&p 500. And that means that given the fact that the s&p 500 is trading around 5000 5000 divided by 250 gives you a price to earnings ratio of about 20 times 20 times as a P E for the market is not cheap, but it’s certainly within the realm of reason. And, you know, if you look to next year, you know, that number probably starts looking like 275, maybe 280. And all of a sudden, you know, on a forward basis, you’re talking about a P E ratio that gets down into the teens. So again, it’s not cheap, but that’s, that’s reasonable, I’m comfortable with that and eyes a stock picker, and not trading the market. I’m trying to buy stocks that are growing faster than the market. And so just knowing that the market is trading at a 1920 Multiple means that it’s okay to go swimming in the pool, and then you know, try to find some exceptional stocks within that pool.

Andrew Brill 31:01
So you’re staying kind of staying away from ETFs, because you’re using your expertise to pick the individual winners.

Adam Johnson 31:07
Correct. People come to me also i brief, because they, they, they want a stock picker to try to find stocks that are better than the market. And I can’t do that with an ETF. You know, an ETF is a sliver of the market, but I want a sliver of the sliver, I want the stock. You know, in video, as I say I bought it at 175. Okay, not every stock I buy isn’t in video, but you know, from 175 to 900, in two years, great. Again, you know, there’s some losers in the portfolio, and I and I own up to those you have to, not everything you buy makes money. Not not not everything I do is correct. But over the long haul, I’ve beaten the market significantly. And I’ve got a number of stocks in position right now. Where I have more than doubled my money. And I’m very happy keeping those stocks in position, some of them I sell. But generally, if a stock is doing the right thing, if a company is doing the right thing, growing earnings, and the stock is doing the right thing going up, you want to hold on to it unless it hits your target, in which case you sell half. And then you say well, do I still want to own the rest? Yes or no? And if yes, you do that hold on to it? If no, then just sell it and go redeploy the capital. The next great idea.

Andrew Brill 32:31
For our viewers out there, Adam, where do you find that information? Because that’s great information is but where do you find that information? Obviously, you know, where to dig. But to find out, you know, is a company profitable? Do they have cash? Do they have all those things that you’re looking for? Where does someone go to find that information?

Adam Johnson 32:49
I spend over $30,000 a year on my Bloomberg terminal, which is a lot of money, but I’m a pro I mean, this is what I do. So I can justify the average investor know, the next best thing is probably FactSet, that’s 10,000 a month, or 10,000 a year. But if you’re an average investor, I hate to say the word average because no one wants to be average. If you’re a typical investor, you know, sites like Charles Schwab actually have some very powerful programs and and and databases to help find that data and do the data scouring and scrubbing and research. Just reading Barron’s is a great source. The Wall Street Journal is a wonderful, wonderful source of information. And then you know, you can always go to company websites just go to the investor relations tab on a company’s website. And all the data is right there.

Andrew Brill 33:53
Anything we need to worry about with the geopolitical situations? I know, it’s it’s funny, you know, Israel thwarted the bombing by Iran. They bombed back, the price of oil comes down, which is unusual, because you would think that, you know, a geopolitical situation like that oil that would it would start to creep up but it hasn’t. It’s right around 81 $82 a barrel. It was 85. But anything we need to be worried about? I know you don’t look at those things. You’re looking at the market in general.

Adam Johnson 34:23
Yeah I’m looking at individual names. The funny thing about geopolitics is it can have a huge impact on the market in the near term, but generally not over the long term. And I’ll tell you why say that enter, actually went back and looked at all the major geopolitical upheavals that involved hostilities over the past 2530 years. Gulf War One Gulf War Two, the bombing of the USS Cole 911. You know, any any anytime there were hostilities in the world and you know, Have people lost their lives, what typically an armies get involved? What typically happens is that you get a very sharp, five to eight percentage point decline within the first two days. And then about a week and a half later stocks are right back to where they were. So there’s a very emotional response near term, oh my gosh, you know, bombs. Bombs are our flying cell. And then you sort of step back and you say, well hang on a minute. And markets rebound. So that’s why I say in the short term, geopolitics can have a very negative impact, but generally, not over the longer term. Interest rates and earnings are far more relevant for stock markets than then then geopolitics. And it may sound callous to say that, but that’s just the truth. And the numbers bear that out.

Andrew Brill 36:00
So early in our conversation, you talked about the presidential election and how that could affect markets. Is there an indicator in the market that can point as to who might win this election or something like that?

Adam Johnson 36:15
Yeah, yeah, the early warning system. So there are a number of companies that have created these baskets, the Democratic basket and the Republican basket, right. And then they track, you know, how, how they go back and forth. Morgan Stanley has one that a lot of people track. And I mean, a lot of companies have these, but Morgan is the one I think that’s most widely followed. And the Republican basket has been beating the Democrat basket now for about six months. And And what’s interesting about that is what goes in it. So in the Republican basket, you have energy, for example. Whereas in the Democratic basket, you have clean energy, right. In the Republican basket, you have the banks, because presumably Republicans are stand for fewer regulations, whereas Democrats think Elizabeth Warren would want more regulations. So banks are in the Republican index, they’re not in the Democrat index. Biotech is in the Republican index. Because similar reason, fewer regulations, lower taxes, were as managed Pharma is in the Democrat because, you know, that means more government large s, right. Medicare, Medicaid, more people being covered means more profits for managed care. So it’s kind of interesting to look at the composition of these portfolios, and, and recognize that, that, you know, markets do a pretty good job of sort of sussing out what’s happening. And even though the polls that we read day in day out, CBS, NBC, 538, RealClearPolitics, Ipsos, etc, even though they’re neck and neck, you know, Trump, Biden, Trump, Biden, Trump, Biden, and the house in the Senate, neck and neck and neck and neck, right? The market is saying no, actually, it’s it’s a GOP victory. So we’ll know when we get there. But that’s the message of the market at the moment.

Andrew Brill 38:17
And one thing I forgot to ask you about, we’re talking about clean energy and Evie, electric vehicles, which seems to be you know, now there’s a price war between Tesla and China. And it seems that the prices of EVs are coming down, because the demand is a lot less, and people are turning to hybrid vehicles. Because yeah, they want to save a little bit. But, you know, they look, I live in New York City, there really isn’t many places I can plug in an electric vehicle. So there’s there’s there’s bigger cities that are losing out on the electrical via the electric vehicle market. Is this a market to just stay away from at this point?

Adam Johnson 38:53
I won’t touch it. I haven’t own Tesla. And I don’t intend to own Tesla. The I think the only thing about Tesla that I find interesting is that about 5% of their revenues come from making big industrial batteries that utilities actually will purchase to store electricity on site. And then they make a smaller version of these batteries for people’s homes. And it kind of looks like oh, I don’t know, a refrigerator but not as deep. You know, it’s not three feet deep. It’s maybe only about 18 inches deep, but the front of it, it looks like a refrigerator and it just sits on the wall in your garage. And I think battery storage is interesting. But electric vehicles are not. There are a couple of problems. Number one, we don’t have the infrastructure yet the charging infrastructure that you just mentioned. I’m not gonna say it’s non existent, but in some places it is. It’s not easy to drive a car across country if it’s an electric car. The network just isn’t there. And As you mentioned, price prices are coming down because they have to because electric vehicles were typically 15 to $20,000 more expensive than gas powered vehicles, that doesn’t work, especially given all the inflation that we’ve we’ve talked about, and you know, the squeeze on families. And then the third thing, I think that’s problematic, and this won’t really start becoming apparent until maybe two to three years from now, when people have EVs that are 789 10 years old, the batteries are wearing out. And there’s no secondary market, there’s no resale market, because part of the problem is the way EVs are built, you can’t just pull out the battery and slip in a new one, the chassis of the car has to come apart. So it’s hugely expensive. And the technology doesn’t really even exist to do that. So all of a sudden, you’ve got this car for which you paid 50, or $60,000. And not only is no one going to buy it from you, there’s really nothing you can do with it, you know, you’d have to rebuild the whole car, and that’s probably more than the cost of the car. So it doesn’t make sense. So it’s a depreciating asset. You know, it’s kind of like a phone, you know, okay, here’s my phone. Right? Great, I love it, I went out, and you know, I bought a lot of money for it. But when this thing wears out, it’s probably gonna get shredded. I mean, if it’s still in really good condition, they might recondition it. And then, you know, send it to Malaysia or China and sell as a used phone. But they only do that with a fraction of the phones, most of these things just kind of wear out. And then you know, they try to recycle the parts and get the metal out of it. And I think that’s part of the problem with EVs. You know, what do you do with a thing when it’s eight to 10 years old? And we haven’t gotten there yet, because so many of them are still only three, four or five years old. But I think I think there’s that cliff that’s out there that people are going to start to have to deal with.

Andrew Brill 41:58
So my last question, Adam, your best friend comes to you and says, I’ve got all this cash? What do I do with it? Where are you telling that put it?

Adam Johnson 42:07
Put it in the American ingenuity fund?

Andrew Brill 42:11
I had a feeling that was coming.

Adam Johnson 42:12
Yeah, which I’m very comfortable with. You know, it’s, it’s been a journey for me, Andrew, because before rates went up, I had a whole bunch of tiny little companies that an IP owed a lot of companies you’ve never heard of. And I can tell you the story of the company, what they’re doing and say, Oh, my gosh, that’s brilliant. Wow, I love what this company is doing, whether it’s in biotechnology, or whether it’s in data storage, or whatever, and then rates started going up. And all those names, all those capital hungry young companies, some of which didn’t have earnings suddenly didn’t have access to capital. And those future earnings had to be discounted back to the president at a higher rate, you say, oh, gosh, I shouldn’t pay up for that one. And they kept going down. So I sold a lot of those little names, and I rotated into higher quality companies, I just went up on the quality curve. And that has really stuck with me that lesson from the past five years or three years. And so as I look at the portfolio, now, I am very comfortable with the companies that I own. At any one time, I typically have 35 to 40 in the portfolio, I have some very, very high quality, cash generating well run outstanding businesses. And that’s why I’m able to sleep at night. They’re growing, they’re doing the right things, they’re innovating every now and then one of the companies will disappoint or isn’t doing the right thing, and I have to kind of call it but for the most part, I’m very comfortable with my portfolio and the way I manage it, my process behind it. And so if you asked me, you know, what do you do with your money, you find a manager you’re comfortable with whose process you understand, and who has a track record of success. And either you give your money to that person, or you try to replicate what that person does. Learn from that person and do it yourself. Both are perfectly acceptable, giving your money to somebody else to manage or learning how to do it yourself. For people who are creative and thirsty for knowledge. Managing your own money can be extremely rewarding, frustrating at times, but over the long haul, empowering and very rewarding

Andrew Brill 44:32
I think it’s a really good lesson don’t be afraid to cut your losses. Re configure put it someplace that we you know that’s going to grow and look don’t beat yourself up over taking a loss. Fix it, put it someplace where your money is gonna grow.

Adam Johnson 44:46
Yeah, that’s right. And it’s, it sounds funny to say this, but it’s so true. There have been times where you know, fretting over oh my gosh, these three names they just keep going down what is wrong, right and then I finally sell them, take the money and redeploy it. And Wow, isn’t that amazing? I’m not stressed anymore. Right? It’s just it’s so obvious. And I inevitably look back and say, Why did I sit with those names for so long? You know, I’d wake up in the middle of the night stressed out, well get rid of them. You know, it’s Yeah. But you know, we learn these lessons along the way, and sometimes we have to keep relearning them.

Andrew Brill 45:27
Absolutely. Well, Adam, thanks so much for joining me. I really appreciate there’s a great talk. Where can people find you either on social media or at Bullseye brief? Oh, you bet.

Adam Johnson 45:36
Oh, you bet. Well, is the website. And that’s the investment letter. And I publish every Sunday morning, and actually have a 45 day trial for 45 bucks. So for people who don’t know, Bullseye, I think that’s a great way to get to know it, and hopefully become members over over time. And, and I’m on Twitter at AJ insight. I’ll tell you what’s also interesting, Andrew, is I get a lot of traction with these little 32nd videos I put out especially on LinkedIn, I call it walk and talk. And as I’m walking down to the office, some mornings, I’ll just spend 30 seconds talking about something on my mind. And that’s fun. It gets my head in the game, and people seem to enjoy it. So Twitter, LinkedIn, and of course,

Andrew Brill 46:22
I actually caught one of your one of your, your walking talks on Twitter, and I thoroughly enjoyed it. So if anybody’s out there looking for a little insight and a little quick pick me up because that’s what you do. You’re like encouraging people to just like start their day and get it off on the right foot. So I appreciate that. And I appreciate you talking with us.

Adam Johnson 46:41
Oh, gosh, Andrew, thank you. I really, I appreciate your time. And I’m so glad our viewers are listening in as well. Hopefully, there’s been a little bit of insight for them as well.

Andrew Brill 46:52
Absolutely. That’s a wrap on another discussion here on Wealthion. Thank you for joining us. If you need help being financially resilient, please head over to and sign up for a free no obligation consultation with one of our registered investment advisors. And remember to follow us on social media for the latest news and information to help you invest wisely. And if you could like and subscribe to the channel, we’d greatly appreciate it. And don’t forget to hit the notification bell so you can find out when we post new videos to the channel. Thanks again for watching. And until next time, stay informed, be empowered, and may your investments flourish.


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