Starting Over, AI Collapse & Investing — Full Breakdown & Transcript

[00:01] over financially, data centers, AI, jobs, and a whole lot in this video. But it is the evening of Lauren's birthday, and I'm going to go to bed after I post this video. We're going to set the expiration for that birthday coupon

[00:17] code, Lauren's birthday code, uh, to just a limited quantity of coupons left. So that way it'll expire while I'm asleep. [laughter] So, make sure you take advantage of that over at meet.com. In this video, we're going to go through

[00:32] 14 different questions that you all have submitted totally for free in the Meet Kevin app that you as a watcher can do this as well. And we're going to literally cover topics including what do we think about backyards with homes.

[00:47] starting over financially, what would you do? We'll talk about the jobs report. We'll talk about private equity exposure forum from from your job and how to diversify from there. We'll also talk about data center stocks and

[01:03] infrastructure, PEG ratios, how they work a little bit on real estate. We got a lot to cover here, so let's get started. We'll spend maybe 2 minutes on average, I'd say, per question, so I don't want to get carried

[01:17] away and go too ridiculously deep. But let's start with this scenario here. Imagine you're 33 years old on the verge of getting married, effectively starting over financially. You have a current net worth. I've added this up. It works out

[01:30] to about $299,000. Call it $300,000. Uh given the baseline assets and this major step-by-step strategy would you execute? All right. To try to rebuild or build a

[01:42] $1 million net worth within 5 years and then tax efficiency and some other things. Okay. So first things first, I generally don't think of marriage as a huge transition. Now everybody can be different on this, but typically I think

[01:59] before you get married and religions will differ on this, right? But you should already be together with a person for a while. Best case scenario, you're already living with them for a while. You kind of already know is this going

[02:13] to work longer term? And that way you're going in 300K. Not sure if you're going different video there. But definitely look into that. If you're going to do one, talk to an attorney. Very

[02:26] important. Uh but it shouldn't be that much of a transition. Getting into marriage should be smooth because you should really be going from the relationship that you're in to just continuously being in that relationship.

[02:41] you're talking about starting over financially there, and you didn't mention any kind of job here, the most important thing, especially if you're getting married, is making sure you've got a job. Doesn't have to be the

[02:56] greatest beall endall job. You just got to start somewhere. I know somebody who's lost their job and they were making pretty decent money and now they drop down to work minimum wage so that at the same time they can go back to

[03:11] school. I'm not saying do that, but you got to stay busy doing something that you could grow in. So, personally, I'd go dig trenches for an electrician if I had no skills and I'd start learning the electrical industry and after four

[03:23] years, I'd get my own electrical contractor's license or plumbing or HVAC, whatever. trades are great right now. I also think there's a really good strategic opportunity to get into real estate and start building a business now

[03:39] because if you can build a business between 2026 and say 2030 as a real estate agent or real estate lender when most people are leaving the industry going to have a reputation. You're already going to be in it for four or

[03:53] five years when rates come down again because eventually they will. and boom, now you've set yourself up for success. I'd start having those thoughts now and But it's all, you know, you could have one of those minimum wage jobs and get

[04:07] your real estate license. You could do these things together. Just ideas. But it all comes down to income. You've got to crank income over the next 5 years. just because you got, you know, $300,000 in these accounts. Look, it doesn't

[04:20] really matter what you invested into diversification, it's going to be tough to get to a mill within 5 years unless you hit a strong yolo. I think the better option is

[04:33] maximize maximize maximize your income and write off as much as you can as an independent contractor. Even if you are employed somewhere, have that side hustle. Make sure you're writing off absolutely everything you can. If you

[04:47] got a job or you work for yourself, you should look into the SE IRA or max out your 401k at your job. And of course, if you're under that income limit,

[04:59] contribute to your Roth as well. Big fan of those. But other than that, I those are little rounding errors in uh building a retirement portfolio. Focus on your income first. So, I'm less worried about the marriage being a big

[05:12] what are you doing income-wise? We got to focus on getting that income up so that hopefully in 5 years we can actually be cranking dough and that's what builds us a business or a salary

[05:26] million-doll net worth with. Okay, let's go on to the next question. Next go on to the next question. Next question here is -23,000 jobs in this last report and that number is likely to be revised down next month because

[05:40] historically they do trend down in revisions. Yes, because the numbers are there there have been times they get revised up, but you're right, it does seem to trend down uh especially in this environment. Fewer work uh force

[05:53] participants, fewer jobs being supposedly lost to AI efficiency games indicator. learned that from you early on. Therefore, when does this begin to on. Therefore, when does this begin to manifest itself in the markets? Bad jobs

[06:07] reports no longer seem to affect the markets. The Fed is printing for the BOJ, but that doesn't seem to affect the market. Rising oil doesn't move the market. Right? So, here's the thing. In my opinion, what's happening in our

[06:19] economy is the economy is so hyped up on artificial intelligence that we are plowing through a world of sin. We're plowing through an economy that's bleeding out. We're literally like an artery is just spewing blood out the

[06:33] bottom. Maybe not spewing, but we're we're dripping out. We're bleeding out slowly. It's going to take some time, but we're bleeding out slowly. Uh and you know, we keep getting cuts, tariffs, oil, war, private credit. You know,

[06:48] another private credit firm went a belly up today. Uh and what you end up finding up today. Uh and what you end up finding is that all of these are getting papered is that all of these are getting papered over by the wealth and the spending that

[07:01] is coming from the stock market going up. More the stock market goes up, the more of a wealth effect. The more people are spending on travel, food, entertainment, retail spending is through the roof. Personal savings are

[07:15] in the toilet. So, we're kind of living our best lives So, we're kind of living our best lives because the party is going or at least some people are. Not everybody is, obviously.

[07:27] This is not sustainable. At some point, something will give. And At some point, something will give. And this is why I've been overly cautious the last few years because we don't know how long it's going to last, how long

[07:40] the music's going to keep playing. But at some point whether you know it it it could be something as simple as Enthropic and OpenAI IPO their stocks Enthropic and OpenAI IPO their stocks tank you know SpaceX fell 50% in the

[07:53] first uh you know month but these guys let's say tank even more because they're only AI and they don't have all the other like Starlinker rockets and stuff like that. So what ends up happening those guys can't raise capital anymore.

[08:06] the last sort of spending gets sent into artificial intelligence, uh, you know, data center spend, and the cycle screeches to a halt. When that AI cycle screeches to a halt, there's we're going to be in for a world of hurt. So, to

[08:22] actually the labor market that really pushes us the labor market that really pushes us into a recession. It's the spending stopping. At some point, the spending will stop. Not yet. We're not We're not

[08:37] there yet. At some point, the credit cycle will end and the spending will be forced to stop because nobody's going to finance it anymore. Uh then we'll see layoffs rise into a labor market that is way too weak to absorb those. And that's

[08:53] why employment will be a lagging indicator. Oil going up is just sort of another one of those little cuts just like tariffs. These are all little cuts. But so far we've been able to paper over everything because artificial

[09:06] intelligence has been frankly a gift to this economy. You know, I don't think our economy would have been as strong in 2023, four, five, or six, last four years if it weren't for artificial intelligence. Uh and and I'm not saying

[09:20] think there there are good things that come out of artificial intelligence. Uh but I I I do think it is healthy for an economy to reset and uh that time will

[09:32] economy to reset and uh that time will come and I'm very concerned that Kevin Worsh isn't going to be there to bail people out. The only thing he'll do is drop rates to zero which is why earlier I mentioned get your real estate license

[09:45] and lending license. Get ready, right? It's going to be a crazy time. Um but uh a lot of money to be made. So, so the way I look at it is anything you invest with the person who's like starting over financially, anything you invest today,

[10:01] personalized financial advice, obviously. I don't know what your full situation, but um, anything you invest in the stock market today, you've just got to be comfortable with if it goes down 80%. Are you going bankrupt and

[10:15] starting over? And if the answer is no, I don't care. Just going to keep making I don't care. Just going to keep making money or, you know, whatever, great, perfect. Then you might be ready. I don't know that you'll actually be

[10:28] actually ready for a crisis when one comes. But, uh, good question. But, but really, that is why the labor market lags because it is not the catalyst that breaks, uh, the camel's back. something else breaks the camel's back and then

[10:44] layoffs happen and then the employment data really gets ugly. All right. Now, uh but it is evidence of a slow bleed for sure. Here we got um a question from Joe. Longtime fan. Uh let's see here. [laughter]

[10:59] Okay, I get the joke about the pitches. That's great. Joe's basically saying if you use the coupon code, you don't hear the pitches anymore. [laughter] Uh here's my conundrum. Rough net worth breakdown. 35% equity in a private uh

[11:12] breakdown. 35% equity in a private uh equitybacked company I work for. Okay. equitybacked company I work for. Okay. Basically, this could be uh you know a Basically, this could be uh you know a local software startup that has a bunch

[11:24] Private equity is going to try to IPO this one day or roll it up. Uh and you own equity in it, but you have no idea when that's going to happen. No idea. That's typically how it is. You have 46% of your net worth in public markets, 12%

[11:39] in cash, and 7% in home equity. Okay, great. So, uh, so roughly 80% equity, and half of it is illquid. While you're working at your PE firm,

[11:51] uh, or it's not a PE firm, but the firm that's PE back, I personally would just pretend that I didn't have any equity stake in the company that I work for. Because the worst case scenario is your company, I don't think this will happen.

[12:05] don't think this will happen. Just saying the worst case scenario, your company goes bankrupt. All your shares go to zero. Now you have no job, and that part of your net worth is gone. So, I like being mega conservative with this

[12:18] and and so I just pretend and go, "Okay, I if those shares do something, it's icing on the cake, but I'm going to live based on what I'm making. I'm going to do my best at my company to help make those shares go up in value, but I'm not

[12:34] pay attention to it. I'm just going to know they exist and forget about it as much as you can." Obviously, you're going to know. So, uh, then I would be very conservative, uh, with growing the rest of my portfolio. If you've got 7%

[12:48] in home equity, you relatively thin in home equity. Uh, I mean, I don't know what these numbers are. It depends on how large these numbers are, right? Maybe these are all millions of dollars and 7% is is already a few hundred,000.

[13:00] But, uh, but assuming that's not the case, since you're asking for some insights here, maybe it is. uh you know, I think there's an opportunity to uh I think there's an opportunity to uh build up uh your cash, use that and only

[13:15] consider paying down your mortgage if your rate is greater than 5 and a half%. Maybe 5%. So, if you got a rate of like 6 or 7%, I'd start paying that puppy off. That is the easiest ROI. And now you can actually take some of your cash

[13:30] or your extra savings every month, start paying down that equity, uh, well, paying down your debt and building your equity, uh, and you actually make yourself more resilient in the event there's, you know, an oopsy doopsies in

[13:42] the future. I know that's maybe not deemed to be the, you know, highest leverage move, but I think that's a great way to diversify your portfolio a little bit since you've already got 46, you know, percent in in uh in public

[13:55] markets and uh the rest compared to your real estate net worth and cash is is real estate net worth and cash is is relatively on the small side. Uh so obviously whatever you can do to increase your income at your job or a

[14:08] side hustle is a bonus. Not everybody can pull off a side hustle. Some jobs because you should have most of your upside at your primary gig anyway. The side hustle is a great tool for having some extra write offs and maybe one day

[14:23] that side hustle can develop into something larger. But uh I think you're in a good spot to think about that debt. Now if you've got a super low loan uh interest rate or let's say so maybe you're at 2.9 3%. So obviously a lot

[14:39] more painful to pay that off. Something that you could consider for being more want to be aggressive, and that depends on your income. So, you look into getting a home equity line of credit or just refinance the puppy. You got 7%

[14:52] Never mind. I was thinking it'd be nice to be able to get you in a rental, but with 7% home equity, it's it's like you just bought the place with 5% down, you know? Um, so that's not going to happen. Um, and if you moved and rented it out,

[15:05] you'd probably have a negative cash flow at 7% equity. You got to build up the got to build up the equity. I think that's the best answer. Build up the equity in the home. Try to increase your income. And uh you know, if you've got

[15:18] any kind of other debt against those stocks you didn't mention, you do uh But uh given that you didn't mention it, I I don't think you do. So that sounds Happy to own the shares I do. I've already taken some off the table once.

[15:31] Another PE recap should free up some more later. Uh I'm not uh asking how to everything more. Right. Does the frozen 35% count against my entire budget? Again, I personally think you set that almost to zero. So, instead, let's say

[15:45] you had $46 in public equity, 12% in C or $12 in cash, and $7 in home equity. You got $65 in total in this example, right? Uh that means to me, you are 70%

[15:59] right? Uh that means to me, you are 70% stocks and 7 divided by 65 only 10% home equity. And I'd like to try to get that to be a little bit more even. even to be a little bit more even. even uh Okay. Um yeah, so I think that's uh

[16:12] that's that's that's the way I would look at it, right? Okay, cool. Here's the next one. Kevin, you said data centers and hyperscalers will suffer in those stocks. That's pretty aggressive. [laughter]

[16:25] That's pretty aggressive. [laughter] That's probably true. Uh CMIw uh hold on a sec. I don't know what that means. Correct me if I'm wrong. I've never heard of that before. I've never seen that in my life. I must be

[16:39] sheltered. Uh correct me if I'm wrong. Your reason is that uh they will be paid a premium for. Yeah. So I mean that's that's one of the reasons. However, even when tokens become cheaper, demand for AI will remain

[16:53] strong. Right. This is the whole Jeans thing, Javon's paradox that you hear Satya Nadella talk about and you see it on Ax blah blah blah. Uh, in fact, I people will start to experiment more and do more. Hence, won't data centers still

[17:06] be a good business even though chips are outdated? They have a high likelihood of well, especially with their bring your own chip model. It further reduces their risk. Okay, a lot to unpackage here. So, let's let's start from the top. I don't

[17:22] let's let's start from the top. I don't like commodities. I like things that are uh representative of pricing power. So, I'm a big fan of Nvidia and Nvidia's I'm a big fan of Nvidia and Nvidia's chips. Uh, maybe not for the next decade

[17:37] because they have such a high bar for growth that I don't know if that's going to stay elevated at these growth levels, which really affects their valuation. moment when we do the KPEG versus PEG ratio. I'll break that down. But, uh, so

[17:53] I like pricing power companies. I personally just don't think data center chips have pricing power. I think they might now because there's a shortage, but when there's a shortage, you don't have pricing power because you're

[18:07] better. You have pricing power because there's a shortage. That's very different. It's sort of like, you know, if you're in the middle of a desert and you're super thirsty and somebody's got, you know, a little sack

[18:19] of water, you don't care where that water is from. You'll just drink. You'll pay a hundred bucks for that sack of water and you'll drink it. You don't even really care what's potentially in it because the near-term risk of death,

[18:33] [laughter] right, is so high that the pricing power is so high because there's assuming you're dehydrated in the desert, right? Uh, you know, whereas there's no shortage of water, it's like, all right, well, there's a water

[18:46] fountain that's free next to the bathrooms. It's kind of gross sometimes, you know, the back of grocery store water fountains, but they work. That's free. You could go get a refrigerated Danny for like a buck 50 up at the

[19:00] Danny for like a buck 50 up at the front, or you can get the Evian for $3, right? Uh and and so the people grabbing the Evian are proving that pricing power for H2O, the same freaking molecule, exists. Uh I like Evian, too. I don't

[19:16] but whatever. So, the point is that whole example is to say that when something is a to say that when something is a commodity like compute, the reality is

[19:30] in the long term, I don't care if I get it from SpaceX, Riot, which was a crypto company, right? They just did a $9 billion deal with Anthropic because Anthropic doesn't care if it's Riot's chips, Oracle's chips,

[19:45] you know, uh, SpaceX's chips, coreweaves, and everything. They don't care. They just want the compute. And so, they're not actually choosing SpaceX They're choosing them because they have the product. In the future, I expect

[19:59] there won't be a shortage. There won't be you won't be parched in a desert. Instead, you will be in a grocery store full of water bottles. okay, well, what's the difference? Because this isn't even comparing Evian

[20:13] to Dani. This is literally comparing a GB300 at Nebius to a GB300 at Microsoft to a GB300 at SpaceX. Why would I pay $11 at one when I could pay six at

[20:25] another, assuming they have the same availability? I wouldn't. I'm going to pay all the costs are going to converge to the same price. So there's literally no difference again assuming the same availability for

[20:40] the same hardware. There's no difference between pricing power for these companies. So these companies can't really prove pricing power. And I think that's why when you notice SpaceX raised money for data centers before it was

[20:53] SpaceX, when it was just XAI, they were paying 12 a.5% on their debt. So risky. It's going to commoditize. Coreweave spends over 10% on interest. It's risky. their mom knows it's going to commoditize.

[21:09] And so this is where if you watch my bifurcation video that I posted this morning, we know there are two elements to uh this this LLM compute. There's the

[21:21] LLM compute side you're talking about which is the enterprise compute the Alibaba models the meta openweight models the deepseek models the Kimmy openweight models doesn't matter all those models we can use at an enterprise

[21:37] like house hacker reinvest we could use those and we can actually solve problems whether it's in stock AI or homes AI or the other things that we're building we can functionally put these things to work but we don't need GB300 00s. We

[21:51] don't need bleeding edge. We need the 5090. We don't even need the RTX 6000 because it has way too much VRAM. 96 GB of VRAM. We don't need that much. We need like 32 because we just need many of them.

[22:05] of them. So, point is enterprise AI won't give a flying f about what these data centers are putting in. the enterprise AI that can be done on a

[22:18] smaller scale with workstations. There's money to be made there. I'm a big fan of that and I'm a big fan of the companies that can actually turn AI into money. Palunteer is a great example. Axon is going to be another example in my

[22:33] going to be another example in my opinion. No guarantees. Uh that you know Salesforce, we'll see. Can they turn it around? Can they actually integrate AI into Salesforce and make it something that it wasn't before? We will see. Same

[22:47] that it wasn't before? We will see. Same thing for UiPath. We will see. So those companies will be able to prove their pricing power. Palanteer is already Salesforce and UiPath might be question marks. Axon is already proving its

[22:59] pricing power. These data centers, they don't have pricing power. they uh are receiving a rental return on their assets that they're paying a premium for. It's kind of like somebody going into Southern California and paying a

[23:15] premium for a bunch of houses, paying 20% above market value. And renting them cash flow. We just bought all these houses." But then you look at the equity, it's like you just overpaid for all of them. That's bad. You know, we

[23:29] like to do the opposite. We like to pay 20% under uh market value for these properties after we fix them up. That's the wedge, right? So, so that's how we can take a commodity like housing and actually turn it into uh something where

[23:45] we're building wealth up front, but then we can also piggy bank leverage into that in the future. Say when rates go down to zero, we got a huge call option at the company. Basically um data centers are like the opposite of

[24:01] um data centers are like the opposite of a call option. They are um hot today. I expect within the next uh 10 years probably 5 years um these these will be probably 5 years um these these will be commoditized and uh the GPU rental rates

[24:16] companies will have earned their money back. But a lot of analysts are underwriting these companies as if those rental yields are going to last forever at shortage rates and they won't. So, you know, even if you get your money

[24:31] back on all the hard bear, hopefully you do, and you pay off your debt, hopefully you do, if you're still making a yield by then, great, you're finally profitable, [laughter] you know? So, you bought the hardware and which includes

[24:46] paying off the debt, obviously, uh, and and now you're cranking a profit. Great, don't buy it. I don't believe it. I don't think it's going to last that long. And I I hope I'm wrong because I think it's keeping the economy going. Uh

[24:59] like Oracle, I just look at the balance sheet that they have and it makes me want to cry uh just looking at how much debt they have. It's been a minute since I've looked at the Oracle balance sheet. So, uh since the question was asked, I'm

[25:13] going to hop in. Now, just so you know, while I pull this letter up, uh you can you have to do is download the Meet Kevin app in the um me uh wait download the Me Kevin app in the Android or Apple app store and uh then you too can join

[25:30] the discussion. All righty. So what do we have here? Oracle. So this is the Oracle annual report. Uh and again forgive me it's been a while since I've gone through this. So we're just going to sort of do a live look if you will.

[25:44] live. But we're going to find the balance sheet here, wherever it is. Oh, balance sheet here, wherever it is. Oh, it's coming up. And here we go. So, I've got cash. Oh, they've raised some money. It looks like I've got cash of $ 31

[25:59] billion. That's nice. So, $ 31 billion. I have bills to pay of 11 + 2.2. 11 + I have bills to pay of 11 + 2.2. 11 + 2.2 plus deferreds I won't include.

[26:12] 2.2 plus deferreds I won't include. 11.4. That's 24.6. 11.4. That's 24.6. notes payable. Uh, plus 7.2. I got 31.8 of bills to pay. Wow. They have literally just enough cash to pay their

[26:26] bills. So, I've got just enough cash to pay their bills. And then this company literally on top of that has another $122 billion of debt, not including lease liabilities, 11.7 of taxes to pay, and

[26:42] uh I've got other current liabilities of 16.2. So I'm looking at another $150 billion of debt. Now, the issue when these companies have a lot of debt is the interest burden at at the interest rates we're seeing now is a lot. This

[26:57] company has $150 billion of of uh long-term debt and it's a $435 billion market cap company. This is uh they've got barely enough cash. So, that's a lot

[27:10] of debt. And if I look at their interest expense, this makes me nervous, too. They're going to end up taking on so much debt. They're going to have this operating income is 20.6 billion. They're spending almost $5.6 billion on

[27:25] interest. Obviously, they still have income though, so that's nice. They at their cash flow, though. So, if I look at their cash flow, net cash provided by operating activities, 32 billion, but we're spending 55. So,

[27:39] we're short another 24 over here. So, where's the money coming from? Oh, right. We're taking on another 46 billion in debt. Debt scares me because again, I think these data centers are going to commoditize and then what do

[27:53] you end up with? you're ending up with high interest rate debt on the balance high interest rate debt on the balance sheet that's gonna kind of drag you down sheet that's gonna kind of drag you down like an anchor into the zombie land of a

[28:05] Okay, now I'm just being hyperbolic, but that stuff makes me nervous and I think direction, which is a little bit disappointing, but whatever. Next, uh

[28:17] this um Omar has a similar question about these AI infrastructure companies, NBIS, Iran, and so on and so forth. Uh, I hate them longterm because I think uh they'll be bag holders in the future. Yes, I didn't mention them in the next

[28:30] hardware uh rally. This is true. I'll I'll probably do, you know, another dive on these and I uh and and a lot of these sort of crypto turn data center plays, they they're all in the same boat. Uh they're they're all playing the game of

[28:44] commodities and it's just not for me. All right, next question. KPEG versus PEG. Okay. So, an easy one we could do here is let's just go to Nvidia. here is let's just go to Nvidia. So, uh what we'll do is we'll make this

[28:59] So, uh what we'll do is we'll make this very simple so you can see how uh this um practically plays out. And this is actually important because there's a actually important because there's a risk factor in PEG ratios that we

[29:12] risk factor in PEG ratios that we frequently forget. Uh so let's take frequently forget. Uh so let's take Nvidia for example and uh what we're going to do is we're going to look at their current uh projected I always like

[29:25] looking at the end of the upcoming year so that way I get a little bit of a forward PE ratio. I don't like looking backwards because if I look backwards then I have to incorporate growth that has already occurred and I'm more

[29:38] interested in forward projecting how much growth may there be in the future. Okay, here we go. So, uh current projected earnings per share. This is going to be uh we've got $9 even. All right, so

[29:53] that's the earnings per share. Now, the stock price is uh I don't know what's the puppy trading for 220 or something like that. Uh okay, there we go. 21755.

[30:05] like that. Uh okay, there we go. 21755. Okay. So, to get a PE ratio, we all know how to do this. All we're going to do is PE stands for price to earnings. So, price divided by earnings equals. All right, there we go. We got a PE ratio of

[30:21] right, there we go. We got a PE ratio of 24. Now, what's the growth rate going to 24. Now, what's the growth rate going to be for Nvidia? Well, the best way, the way I like to evaluate growth rates is I like to take the average of the analyst

[30:35] like to take the average of the analyst or my adjusted forecasts for the next four years. I'm going to add together uh these numbers right here. So whatever these numbers are going to be. So this is going to be uh forward year 1,

[30:50] forward uh year two, right? Forward year three, forward year four. Okay. Now we're going to put some growth rates down here. And

[31:03] these growth rates are going to be the current forecast from Wall Street. This is the Wall Street consensus. 43.4 24 91. And then this gets interesting. 24 91. And then this gets interesting. -22.6.

[31:19] you're already seeing that rollover. Right now, this is actually really dangerous because first of all, let's divide this. And this is how you would normally do the uh PEG ratio. We're going to divide this by four. Forward

[31:32] four years. There we go. Now, we have a growth rate on average over the next growth rate on average over the next four years of 33.9. And so now technically if I want to calculate a PEG ratio, I'm going to go

[31:46] in here and I'm just going to take growth divided by just ignore growth divided by just ignore percentages. The PE ratio, boom. Uh sorry, I did that the wrong way. Uh it's going to be the um PE ratio divided by

[32:01] growth. And there we go. Because growth is higher than the PE ratio, I know I'm paying less than a one peg because that's basically price to earnings. growth and you literally just did the math with me. Uh I will just I think

[32:16] sometimes it's really useful to visualize how PEG actually uh looks. Uh when you see this once it it help it should help you it helped me. Okay, look

[32:29] you know how to do the price the PE ratio right? price uh to earnings. All right. So if earnings are uh five

[32:44] and then the price is 100 then in this case that would be 20. All right. Price case that would be 20. All right. Price to earnings P E. Okay. Now if I do this

[32:56] and I put growth right here, I'm literally just dividing division in. So it's sort of like divide once, divide again. And then if you look

[33:08] really closely here, you could actually see price to earnings growth. [laughter] See peg. Okay. So like if the growth year is 20, then the price to earnings

[33:21] year is 20, then the price to earnings growth is one. 20 divided by 20, right? All right. Cool. So um here's the problem. And

[33:34] And I struggle with this, but when I look at a company and I really like it, uh, I might say, hey, you know, I actually think the growth rate of this company is going to be 50. Well, in that case, if I

[33:47] think the growth rate is going to be 50 and I think analysts are underestimating the stock, I call it the KPEG, then what I'm actually going to do is I'm going to I'm actually going to do is I'm going to take this divided by 50 and my PEG ratio

[34:00] looks even cheaper. That's just an example of a KPEG. But here's the problem with Nvidia. I want you to chart this and then you'll see it much more clearly. And by you chart this, just watch me chart it. Uh,

[34:16] that should work. There you go. Look at this chart. Uh, let's zoom in on Look at this chart. Uh, let's zoom in on it a little more. Yeah. If we just look it a little more. Yeah. If we just look right here. All right. We're kind of

[34:30] bouncing around between, you know, 50-ish percent growth. Wow, sounds good. Maybe a little bit below that. Okay, call it 40% growth. Sounds that. Okay, call it 40% growth. Sounds good. But in the last year, it's

[34:44] actually trending down. Wait, it's actually trending negative. So what actually trending negative. So what happens if I get to 2030 and my next growth forecasts for Nvidia are actually -22.6

[35:02] are actually -22.6 -3 -5 -2. In other words, I never get back to that peak. Well, in this case, my PEG ratio is actually undefined because there is no growth. It's just pure negative. Right? Now, let's say

[35:17] it's going to be -10 + 11 and then flat. Okay, so you're deleted the formula. Hold on. There we go. We're going to have very very little growth here. Let's go with uh -10 11 0

[35:35] growth here. Let's go with uh -10 11 0 0. There we go. Super low growth. Uh 0.25. If I now divide this, the PEG ratio is going to be off the chart. Ready for this? uh PE divided by growth peg 96 peg

[35:50] ratio. You wouldn't touch that with a 20 foot pole, [laughter] foot pole, [laughter] right? So those growth estimates matter right? So those growth estimates matter a lot. And this is one of the reasons

[36:02] why memory stocks look so cheap because markets know it's going to fall off a cliff. Well, when I had the other cliff chart. [laughter] So, still got a little bit of that cruise

[36:17] still got a little bit of that cruise cold. Hate that. All right, that's K Peg and Peg. All right, next question. Hey, Kevin. I have a condo in the greater Seattle area that I bought for I bought in 2021 for $55,000.

[36:30] I don't live there currently. I've rented it out for $26.50. My monthly payment is 2550. Okay. So, I mean, you're going to be upside down uh because you've got you're probably if you're I hope you're hiring a manager so

[36:43] but you know, then you're going to be a negative cash flow. You'll be able to write some of it off. Let's see what's going on in Seattle. Red Fin data center. So, the first thing we'll do is we will look at uh home prices

[36:58] in uh the Seattle market. If we can actually get this puppy to load. There we go. All right, let's go to metro. Let's see All right, let's go to metro. Let's see if we can get Seattle in here. We can.

[37:13] And let's see how we're doing on the monthly. Yeah, so year-over-year in Seattle, median sales price year-over-year change. Uh, this is kind year-over-year change. Uh, this is kind of flat. That's going through um that

[37:28] only goes out to Feb 25. Well, that's comparing to now. Okay, let me see here. you a summary over here. Here it says negative about 5%. That's roughly about. It doesn't look like we're falling off a cliff over here. There's

[37:43] obviously volatility. This volatility is heavily interest rate based, right? But it's actually holding pretty stable. So, the fact that you're saying, "Hey, uh, you know, I've seen prices come down over

[37:58] know, I've seen prices come down over time from peak of 650 down to 550. Uh I I don't know if it's been that extreme. Maybe it has been. Uh but the overall Seattle area while if you compare depending on when you bought to

[38:13] some of these peaks, yeah, prices have come down. So if I go like peak peak, come down. So if I go like peak peak, peak peak was 870 and now we're 8.27 peak peak was 870 and now we're 8.27 870 that's about 5%. Right? So 650 times

[38:28] 0.95 brings it down about 617. So, I don't know that values have come down a something like special about your condo neighborhood that's really gone oopsy dupsies. But, uh, you've got a loan of $410,000

[38:42] on it. You put 5% down. The loan is 30-year fixed to 3%. This is an asset. 30-year fixed to 3%. This is an asset. This is this is an inflationprotected loan almost. I mean, inflation is higher than this. This loan gets cheaper every

[38:56] single month due to inflation alone. That loan is a steal. I wouldn't want to make yourself feel better is I would look at the principal payown on this. You owe $410,000. I put down 5% of purchase. So, you know, let's say you

[39:12] put down, let's say it was a $450,000 property and you put down 5%. It puts you at $427 plus pay down a bit. Okay, fine. So, you've probably got a loan that's amvertised around 427 on a 30-year fixed. All right, let's type

[39:27] this up. Amortization table. uh mortgage. amortization table. Let's see what your principal payown is. You probably principal payown is. You probably started at about 427.

[39:40] Your rate is 3%. You've had it now for 5 years because you bought it in 21, right? You bought it in 2021. Yeah. So, you're on five years already. This is great. Okay. Watch this. Uh where's the table? Oh, man. They used to give us the

[39:57] table. Uh, oh, look. End of year five. How great. What did I say? I hope I said it out loud. $500. You're you're probably paying down 500 You're you're probably paying down 500 to 550 bucks a month in principal. So,

[40:11] even though it feels like you're losing money, you're you're you've got this little force savings account and now you're already itemizing your taxes. If anyway for a side hustle or other purposes, you know, any extra expenses

[40:24] here, property manager, it's just a write-off. But I would hold this like a little piggy bank uh and have a manager deal with it because if you go to sell it, as desirable as it is to just get rid of it, here's what it's going to

[40:37] cost you. It goes out for $550,000. You're probably going to pay about 7%. 2 and a half to one realtor, two and a half to another realtor, 1% for closing costs, 1 and a.5% for bull crap fixes, maybe even more for repairs. And I'm

[40:52] just being realistic. You'd probably be down like to 92% of that value. He just spent $44,000 just to get rid of the puppy. Why? Keep that equity, man. [laughter] Keep the equity. Uh, what do we got

[41:07] here? My financial position is decent. I think I got 750 in cash and stocks and another property in Austin with a 6 and a half% loan on it. I'd start paying off that $270,000 loan. That's what I would do. You got cash and

[41:22] stocks. Good for I mean, you're doing good. you know, you're gonna like you're not dying for the 90 grand you're going to get out of that condo. Instead, take some of that cash and pay down your Austin property at six and a half. Come

[41:37] on, that's an easy rate of return right there. Get rid of that. [laughter] 6 and a2%. I like that already. Anyway, all right, let's do another one. How 18-year-old who works for his dad who farms? So, your dad farms or you farm

[41:53] and doesn't get paid the traditional way, meaning getting paid with a pickup and things like that. Okay. I want to get into farming, but finding land that going to college because I don't see the

[42:06] point. I have a Weeble account and I'm up a little bit, but I struggle would you do to make more money and invest? invest? Well, well, son, look, it all comes down

[42:20] to income potential. You know, farming is very hard work, but it can also be very rewarding. And so, I would be very real with your dad and ask, "Hey, you know, is this a business we can grow

[42:35] together? Father, son, can we crank this business and make some more money?" I don't know, maybe he's already making good money, questions and

[42:50] getting paid in the traditional way suggests maybe the answer is no. Uh and is it going to take for us to actually legitimize this. Can we get this set up as an S corporation or an LLC? Can we get on W2s?

[43:05] Let's get some retirement stuff going. 401ks, Roth, whatever. tax write off that way anyway. you got to pay health insurance anyway and let's

[43:17] turn this into a real business. What's it going to take for us to expand and grow? Whether it's uh more livestock or or land I I I don't know, right? Those things I would ask. in that I would kind of sus out what is the potential here

[43:31] because I mean I I don't want to dump on you know anybody's business but like if if your parents are point blank or your father's point blank to you go look you know this this gets us by it pays the bills but

[43:46] you know we're we're running against the clock like I don't know maybe maybe there's some idiosyncratic reasons that there's an issue to the longevity or the longevity potential right of the actual business, then uh I would want to know

[44:00] that. And then maybe, like I said earlier at the very beginning of this time, I'd be starting maybe a side have to go to college uh if that's not what you want to do. There there are

[44:12] there. So, something to think about. All right, let's do another one. So, lack of swagger says, "Hey, Kev, love your content. With the IPOs of Anderil and OpenAI being a possibility in the near

[44:25] investing New Burst Pro? Should you consider them? Look, I think Ander is going to be a bitching company, like really exciting. Very, very cool. Um, but and you know, less excited about OpenAI, but we'll see. And I'm not

[44:40] trying to blow it off, but it's for me it's really hard to say, "Hey, how should you feel about the IPO?" Until I see the financials. The financials tell should get good at reading financial statements. You should know what the

[44:55] three basic financial statements are. Very simple. Income statement, balance sheet, cash flow statement. Very important. And and how they affect each other. The three components of the balance sheet,

[45:09] the operating or of the cash flow statement, the operating cash flows, the investing cash flow, the financing section, what goes where. Capex is an investment. You know, salaries for your GNA

[45:23] expenses. Well, those are operating expenses. They're not actually on the income statement, but they flow through the cash flow statement. How? They show the cash flow statement. How? They show up as a net income at the top, right?

[45:35] That's important. And so, what I would do to prep for any kind of IPO, study financial statements. So that way when your favorite company's coming up for IPO, you could scrub that puppy and you could defend it. Because that way if you

[45:48] know, you're not going to get your boot shaken out of that stock. You could shaken out of that stock. You could defend your ownership of that stock. I Somebody else says, "Hey, Kevin, are you still bullish Meta by the end of the

[46:01] year?" Meta for me, I think, has some really good long-term opportunities. I see them as an advertising play more so than just a midterm elections play or or even a presidential election play. I see them

[46:15] as probably the greatest beneficiary of artificial intelligence enhanced advertising ever. Advertising is going to get so good. And with three billion daily active users, daily active users,

[46:31] daily active users, daily active users, Zuck has got people by the Zuck has got people by the impressive. So for me, I look less at the data center leases. Uh I do know they have outs on some of these and I

[46:44] think Zuck is kind of getting a little smart with the program here of like meta ecosystem so we can advertise to them, give away the LLM stuff. It's kind of smart, but he's pivoting, right? He's like, "Wait, we don't want to be a

[46:59] Frontier Lab." And he's pivoting exactly the way he should in my opinion. So I'm optimistic on it. You know, I've got a price target of like 1377 for the company. None of this in the video is personalized financial advice.

[47:14] Uh, what do you know now about finding the beauty in life that you wish you the beauty in life that you wish you knew earlier? Um, wow. Well, as a ripe knew earlier? Um, wow. Well, as a ripe 34y old, let me tell you [laughter]

[47:26] 34y old, let me tell you [laughter] no. Uh I I think um probably the biggest thing is that everybody in life ends up having these regrets and and they just nag at you. Like when people hear the word regret,

[47:38] and like emotional because it's like, "Oh man, the time I effed up and I did shouldn't have worked with that person. I shouldn't have done that." Whatever. Or worse, the inverse. I wish I did do

[47:52] this. I wish I did XYZ. Right? the would a could a shoulda eat you alive and anything you can do to just look and go man got good things right now maybe it's not everything we want but is it a good life

[48:07] know I I don't know what your situation is but uh is but uh we tend to mentally as humans uh have a people always say oh live in the present live every moment like it's last you

[48:23] can't you're hardwired to think about what can I do differently in the future to preserve myself, my income, my family's income, whatever, right? That's family's income, whatever, right? That's hard. And uh it it's something that um

[48:38] the sooner you can come to grips with just sort of getting over regrets, the more unstoppable you become. And I think honestly the best example of that of somebody who just doesn't give a flying f probably to a fault is Donald Trump.

[48:51] [laughter] Dude, the guy's got plenty to regret uh in so many angles and uh he just doesn't seem to care. Maybe it's because he's it sort of papered over it all. [laughter]

[49:05] But uh man, um even I remember, you know, back in 2022, the guy kind of disappeared for a while,

[49:17] more in 21. And when he came out and he did his campaign speeches, he seemed kind of miserable. Guy campaigned for like what felt like two and a half years to get back into the office and somehow

[49:34] he swallowed all his guilt, frustrations, whatever, and and crank to frustrations, whatever, and and crank to get back. Uh so you got to give him credit for that. Uh, a lot of people, you know, have not so nice things to say

[49:49] about Donald Trump. This is not a political video, but I think as as an example or testament to an example that that I think is quite interesting. Uh, all right. Last question we have here is

[50:02] to get into the first investment of Reinvest because I didn't have the liquidity in time. I was wondering if the minimum is still going to be 10K in the next goound. Uh, just so I can look to set aside some dollars. All right.

[50:16] So, we're not 100% sure yet on the minimum. Once we set the minimum, you know, if you're in the position where you were going to invest previously and invest in this round, maybe you have a little bit less uh than the minimum. I

[50:31] can't promise it, but you can always email us at [email protected]. email us at [email protected]. You can mention this video. Uh but um so You can mention this video. Uh but um so I don't know uh exactly what the final

[50:45] situation is going to be. We haven't filed yet, but we are planning on filing a fund raise. Uh and so we'll see. It should be a preferred dividend yielder, which I think will be really cool. And uh I'm very excited because it is going

[51:01] to refill the pot to for us to go buy some wedge deals and keep developing uh plenty of cash to develop a lot of our more and uh buy some more wedge deals and then of course keep expanding what

[51:15] intelligence. Uh so we're really excited. Uh we we'll see though, you and then we'll have a whole lot more details and disclosures and risks, right? Obviously, this isn't a solicitation. There is no offering. So,

[51:29] solicitation. There is no offering. So, uh yeah, we'll see. But, uh thank you. interest. And uh folks, if you want to leave a comment, yeah, feel free to do so as well. Download the Meek Kevin app in the Apple or Android app store. Once

[51:41] you sign up uh with your email, or you could sign in [music] with Gmail, whatever is easier for you. Um that's what I do. I just sign in with Gmail cuz I don't have to save another password that way. Uh once you set up an account

[51:53] on the actual app on your phone, you could also go to app.meke.com for [music] watching and we'll see you in the next video. Goodbye everybody and told us here? I feel like nobody else

[52:08] see how it goes. >> Congratulations, [music] man. You have look up to you. >> Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to get your [music] take.