Consumer Check-In & AI’s Progress

0:00Is the consumer alright? Motley Fool, Jim's investing starts now. Welcome to Motley Fool, Jim's investing. I'm Travis Hoyam, joined today by Lou Whitman and Dan Kaplinger. Guys, I think we've got a lot of AI news. There's interesting news, but I want to start with something that's maybe a little bit more close to home for regular people. And that is, is the consumer alright? Consumer still drive about 70% of the economy, federal spending data, as Lou keeps reminding me, is not actually all that bad. But you start looking at consumer good stocks and these earnings reports and things look a little less bright to Lennar said this week that their new orders were down for new homes, were down 9%. And prices are actually down 30% from a year ago. I know they may be able to build a little bit different houses, but there's a lot of things going to that. A lot of people are not giving number. Nike sales were down last fiscal year in both Hoka and On reported weaker than expected

1:02results in lower guidance. And GM said sales have fallen 6.8%. Early this year, escalated sales are down 18% Tahoe's down 8%. Suburban down 18%. Lou, it seems like things are a little weaker than we would like in the consumer space. Am I reading this right? Well, I don't know how to read this because for one, you have the whole macro micro issue. We'll look at that in a second. But look at the data you just cited. The GM sales were the first half of 2026. That's not current. It's not without value, but it's not current. On holdings, yeah, they aren't as doing as great as they were before. On holdings is like 2% of the US shoe market. Well, I want to take one Nike. They're big. What percentage in their new ones? Nike too, but yeah, but I mean, I haven't seen a lot of barefoot people. So I do think people are still buying shoes. US home sales, long running issues there. I don't think that is a new. It might be getting worse. But let me give some counter points to US retail sales were up 1.2% in August.

2:06That's the biggest jump in five years. Bank of America, credit card data shows household spending up 4.5% year over year. Now some of that might be inflation. I'm not saying the consumer is healthy. The point is that they are spending more, they are somehow able to spend more than they did. Labor market remains quietly solid, if not unspectacular. Always come back to this, but I think it's so important to say the consumer, we talk about the consumer, but the consumer is not one guy. It's not one family. It is the aggregate of 130 million plus US households. Some of those households are struggling. Yes, I'm guessing some of those households are struggling more than two years ago. And I don't want to be dismissive of that. We are not trending in the right direction. But as long as there is a critical mass among those 130 million households that are business as usual spending what they spend, the consumer is fine even with the stresses. So two things can be true. A lot of brands, especially brands, they're selling premium products, are finding it harder

3:10to sell those products today. The economy, the consumer is kind of somehow humming along. Dan, one of the reasons that I brought up the names that I did is, Lou has been talking about this K-shaped economy for a while. And a lot of those brands that I talked about are the top of that K. They were the people they're supposed to be doing well. The people who are buying escalates, the people who are buying, you know, and I use the SUVs because that's where the money is made and the auto business is still those big, expensive SUVs and trucks. There's more deals on trucks. I talked about all the SUVs and sales are down. So it seems like if we have a K-shaped economy and the part of the K that's doing well is not doing nearly as well as it was a year ago, that's something. Agreed. But I wonder if we're starting to head more towards maybe, I don't know what you'd call it, an E-shaped economy or something like that, where that top end of the K can be reached into a couple of different. And the rights on that E-shaped economy. Couple different legs there though, you know, because I think that you have a decent

4:12number of people in the upper middle class who thought that they had secure jobs, thought that they were, they still are at the upper end of the income spectrum, but they're looking ahead and they're seeing trends and we're going to get to AI later in the show, I think, but they're seeing things that might put that at risk. And I think that in some of those cases, that makes those folks kind of think twice about, okay, yes, things are good now, but do I want to really go out and get another big car payment? Do I really want to spend money on another premium good that maybe I don't desperately need at this moment? So I think that you're starting to see some of those cracks in the armor kind of get a little bit bigger in an area that, like you point out, up until now it's been kind of at the top end of the cake. Let's talk about those interest rates because I think that's another piece of this that is ultimately important and drives things like home sales, which, you know, drives jobs, insurance segments of the market, same thing with auto sales.

5:15That's a big jobs provider. So Loo interest rates up in the short term, the Federal Reserve raised interest rates this week. They're also expected to raise rates at least once more in the next, you know, maybe a few months, but we've also seen treasuries increase yields. I mean, borrowing costs is going up not only for companies, but for consumers as well. So this just seems like another headwind when we look at the consumer. I'm not sure this is a headwind for the consumer, but the only reason why is I think the Fed is way behind the curve here. The Fed is just basically, the Fed finally walked outside and got wet and said, hey, you know what, it's raining. That's what I think happened this week. Their rates in the real economy have a way out ahead of the Fed. And there's some good news there because for that reason, I don't think rate hikes will do much to affect lending rates in the real economy. If anything, I think we were this close to the Fed's rate hike actually bringing down rates. And we can get into that if you want, but a lot of it, I think there was, there was a

6:16scenario just briefly until someone opened their mouth where mortgage rates actually traded down after the Fed. Why is that? Well, because nobody is buying or nobody is deciding to buy a 20 year treasury based on the Fed's overnight lending rate. That's just not how it works. Which by the way, is the one thing that the Fed controls is that short term rate. Right. And the Fed can sort of influence the direction of rates there, but that is a market decision. And it's based largely on how much, how much premium do I have to take on to accept the risk that I might not be paid back. And for most of our country's history, that has been a pretty low premium because treasuries give paid back. But over the last year, we have had issues about, you know, Fed independence, Fed credibility. And I think the Fed going against the White House and saying we have to raise rates and we were unanimous here, that helps credibility and could put pressure on rates.

7:17But then of course, later that night, we had the president saying, oh, well, the chairman only voted that way because I told him to. I don't think that helped things, but that's what's going on right there right now. It's, you know, the Fed can't set rates, supply and demand for capital coupled with perceived payback risk is what sets rates. We've been here for a while. The economy has shown it can survive. And some parts of the economy can thrive at these levels. I think, I mean, this isn't Goldilocks because we, there's a lot of pressure in a lot of areas. But for now, interest rates are something I'm watching, not something I'm worried about. Dan, what about the corporate side of things? Because, you know, corporations are affected by this as well. Profitability will be affected. Investment, if we're going to put several trillion dollars into artificial intelligence, that's going to mean a lot of borrowing. And now those rates are going up to levels that maybe makes that a little bit more questionable. So how do you see these rates on a corporate side? Just true that those corporate rates should be going up.

8:21But a lot of corporations are finding ways to go ahead and borrow anyway. This past week, acts on enterprise to create XON went in and went into the convertible corporate bond market. I see a lot more of those, yeah. Raised a billion dollars at 0% with an equity kicker. So you can get around if you have a company with growth prospects, you can get around the higher interest rates by giving people a piece of hopefully you're appreciating stock price. But, yeah, we just haven't seen these higher interest rates slow down anybody who needs money, whether it's the big hyperscalers or even folks smaller lower down on the technology chain. There's an arms race going on and whoever gets the finish line has the best potential to win. That makes short term credit decisions pretty easy to make, especially you consider, yeah, interest rates are high, but they're only high relative to where they were in the 20 teens. We're really just back historically to kind of a relatively normal level and there's a bunch

9:25of, you know, my parents would be laughing at me saying, oh no, mortgage rates at 7%. Yeah, they come on. I mean, put a put a put a make it 17 and maybe they start having the conversation. Yeah, that is so important to consider right now because they're right. It doesn't make things any, any less painful for those having to borrow when, when you could have borrowed a two and a half percent of years ago, but historically, we have seen that we can survive and be okay at these levels. And I think that that is what we're seeing. I mean, look, corporations are basically paying the same thing on debt now that they were paying three, six months ago and that hasn't slowed the momentum. Again, there's so much right now going on, so many moving parts. One of the line is I don't see any easy way out of the current rate situation. And in fact, I think that, you know, the target rates at the Fed sets are, you know, kind of weirdly low. So I think everything's going to be inching up. I think we just have to find companies that can long term survive and do okay with these

10:29rates. And I'll say, Dan and I talked about this on the Motley Fool live stream early in the week. In a period of 0% interest rates, a lot of companies that in hindsight, I don't want to say frauds, but just weren't great business plans were able to continue on and kind of deceive investors because look, when money was free, they used that money and they kept going. There's actually a useful filter as an investor to having money cost something and there to be a cost to capital and actually to filter out the companies that can't survive that. And, you know, so again, it's a big deal. A different environment, it's not as easy as it was. There's downside for those trying to get mortgages, but I think it's actually a healthy environment right now. So I'm not too worried about a lot for investors to think about in the back half of 2026. When we come back, we're going to catch up on AI this week. It was in the Motley Fool hidden gems investing. Trading Eshwav is now powered by a merit rate, giving you even more specialized support than ever before.

11:30Like access to the trade desk, our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check, meet assistance, no problem. Get 24-7 professional answers and live help and access support by phone, email, and in-platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more at Schwab.com slash trading. Welcome back to Motley Fool hidden gems investing. My big question for you guys is, what did we learn about artificial intelligence in this multi-trillion dollar market that is driving over half of the S&P 500? We started the week. It was, remember, just five or six days ago that we were all worried about an extinction level event coming from AI. The market seemed to really be impacted by that on Monday, recovered by kind of late in the day and Tuesday. We had completely forgotten that that was a thing. We're getting more deals signed, more debt taken out, like Dan alluded to earlier. Dan, what is really going on here?

12:31Is this all just normal course of business now with AI? I just don't think safety was ever going to be a change to the investment proposition. For the same reason, that nuclear armageddon was never really a change to investment proposition. There's risk out there and maybe it happens. If it does, the last thing anybody is going to be thinking about is their investment portfolio. So you just kind of set that aside and say, okay, yeah, it's there or whatever. But in terms of regulation, you have the US government more than happy not to provide regulation. And that's the kind of market that I think AI investors are most comfortable with because it lets everybody do their thing. It lets everybody try to attack the opportunity, try to take their view, pick whatever niche they think they can execute best in and kind of move forward with that. And so I think it refocuses investors on the long term question, which is still the same. It's our companies, our consumers going to adopt AI at what level will they do that and

13:35how will the companies that have made these AI products, how will they monetize that? So I think that's the question that we're refocusing on now and at least for now things look generally good in that area. You always see the world through the prism that you've set up for yourself. But my cynical, I guess, look at this is that I don't see a lot of economic value from the frontier models. I just don't. I think what we're seeing so far is that lesser models, the ones that we aren't spending a quadrillion dollars in hiring people for a hundred million dollars to develop. That's where a lot of the actual enterprise value and just economic value is being generated. So if I was the CEO of one of these companies that is promising imaginary friends and artificial intelligence forever, like general intelligence, and suddenly I realize ahead of my IPO that a lot of the actual revenue is coming not from the frontier where I'm spending all this

14:35money, but on lesser models, I would think of ways to both save face but also redirect to business towards where the revenue is. Maybe I'm way off here, but this is a pretty convenient way. We have to slow these frontier models not because we're losing trillions on them and there may not be the value that we thought. They may be more science projects than businesses. No, we're doing it to save humanity. I don't know. I don't discount the fact that one of these could do something. Most technologies have had unintended consequences over the years, so I don't want to be too dismissive. But I feel like the narrative here, the take is that maybe open AI and anthropic kind of de-emphasize some of that and emphasize on where they're making money and maybe that turns them into better or more palatable investments once they're finally public. Dan, this is the thing that I keep thinking about with this AI space. There's so much money going into it.

15:37Yet, the two leading companies, anthropic and open AI, the question I think this week was, do they really have a moat and is there a real profitable business underneath or do they need to invent something like this to sort of get regulatory capture? So we talked, I mean, I talked about these AI moats earlier in the week, but how do you think about investing in this space and what the potential competitive, durable advantages because it seems like the market is saying everybody's going to win right now, but historically that's not the way that this works. I don't have a great answer for that just because history's been kind of up and down on that question. I mean, certainly when Dawn of the PC generation, you had Microsoft jump into software market, it was a dominant player in the software market, but it was not the only player in the software market because other companies came in. They attacked specialty problems that needed specialty software to run.

16:39And so now you have thousands of different companies operating in the software space. It doesn't mean that Microsoft didn't find a way to succeed in the long run. There was more than ample opportunity for that to happen. And so I think on a positive vein, maybe that is an answer for the AI frontier model companies. It's like, yeah, they may not have a long term competitive mode in the areas where they are concentrating now because they're just building the foundation. But once they have identified those competitive threats, then they can say, okay, yeah, we're going to need to let this one go. But we still feel like we have expertise in some other area that can be the seed that grows the business into kind of the second phase of its existence. Right. And that's the thing. Another word from mode is, who is definitely going to win here? Who is going to predict the future? And the real issue, I think, isn't the fact.

17:39I mean, there's definitely a there there with AI. There's definitely a lot of value. But right now in the US, we have 13 companies, valued at over $1 trillion. One of them is an AI company. We have two more that hope to go public and are talking trillions. So these are the best of the best. A lot of forward revenue is priced into that trillion, correct? I mean, they're not worth it today. The idea that I am forced to assume all three are going to be big winners is, I think, the real sticking point for the markets right now. One of these companies, maybe two of them are likely to be worth trillion dollars and more to be among the top 15 companies in the world to invest in any one of them right now, assumes that that is definitely a winner at this valuation. And that's a tough assumption to make. And the other thing you're assuming is that the existing big tech companies who are also spending trillions of dollars are going to be losers. You know, I think this week has been Google and Alphabet.

18:40You know, where are they? Right? Muse came out out of nowhere that's great product. We're in the world. We'll be talking next week about Google taking over AI because of the introduced Gemini for and a new great product on top. So we will see when we come back, we're going to see where Dan and Lou are seeing value in the market. We'll listen to Motley Fool and Jim's investment. They say leadership isn't just about where you're going. It's about the conviction it takes to get there. For those who demand the world and possess the drive to claim it, there's a vehicle of equal distinction, dynamic by design and engineered for pure impact. The Range Rover Sport rises to meet you the moment you take the lead. This is the most advanced Range Rover Sport yet, a master class in uncompromised performance and unbridled agility. Inside the innovation is seamless. You'll find an elegant 13.1-inch touchscreen that puts total control of the vehicle systems right at your fingertips. But it's the refinement that sets it apart. It's gulped to 22-way heated seating with built-in massage function ensures every

19:43journey is defined by pureless comfort. Whether it's through unique interior finishes or custom wheel options, the ways to personalize your Range Rover Sport are nearly unlimited. Command attention and experience ultimate luxury and motion. Exclusive offers are available now. Explore further at RangeRover.com. Welcome back to Motley Fool and Jim's investing. At the top of the show we talked about, we consume our numbers and some of the numbers that are coming out of companies that don't look all that great. That means that the stocks, a lot of them, are down significantly over the past year or two. I wanted to get an idea where Lou and Dan are looking at values and what sort of factors they're looking for if you're looking for values in some of these beaten up areas of the market. I'm going to give you a group of companies. I want you to pick your top stock in this group and tell me what is attracting you about those specific companies. We're going to start with apparel and shoes. The companies are Nike, Lulu Lemon, Decker's Outdoor, which makes Hoka and on holdings.

20:44The common thing that all these companies have together is they are all down over 50% from their high. Dan, when you look at those kind of stocks, what do you like and why? Yeah, so it's hard for me to be objective about this because I own Lulu Lemon Athletica. I owned it before the big rise and I have owned it all the way down. I even now they proud owner of a round trip stock. The thing that I look at with Lulu Lemon is just how many mistakes it has made recently, but historically how it has been able to recover from those mistakes. I do think that that is still an option that Lulu Lemon has. They still have a core audience that is interested in them. They have shown in the past a willingness not to give up even after some pretty big mistakes. I am hopeful that that is what will happen again, that the company will eventually stop making mistakes. They've been making more than I had hoped, which is why that drawdown is as big as what

21:48you said it was. I still think that the consumer demand for the product is there and that eventually that should help the company recover. Yeah, I want to throw back the curtain a little here of people listening. Travis managed to find four categories that I just have no interest in investing anything right now. I'm trying to make it tough on Lulu every day. Right, right. I mean, maybe one of these for a cycle, but yeah, so he always does that boilerplate at the end about how this is not personalized by do not, but my real answer here is not for all of the above. But look, here's the way I see it. Lulu Lemon caught lightning at a bottom. They managed to get people to overpay for yoga pants. They might do that again, but I'm not betting on it. Otherwise, it is just a incremental retailer from here and one holding kind of the same story, but it was shoes. They have managed to capture something. May it long continue? May it bounce back, but I don't think you can predict that something that is a red hot

22:50trend will come back to it. This morning, they signed in Bapa. You don't think that's a need to move over for them. I mean, look, everybody has somewhat everybody signed someone, which kind of gets to Nike. What's special about that anymore, too? I'm taking Decker's here only because they have three brands. They have shown a willingness to acquire brands and kind of by lightning in the bottle again here. I don't think any of these are really I can find better alternatives to put my money than anything in a peril right now, but Decker's has a history of diversifying further. So I'll lean in there. I would love to see Dan and some Lulu lemon and Lou and some ugs if we can do a live recording one of these days. All right. Let's look at home builders. There's a bunch of names here, but the thing that was striking to me was the Lunar numbers this week and the fact that they have had to go to a much lower price point than we had just a few years ago. There was a spike during 2021 and 2021, but things are definitely down over the past couple

23:51of years. So Lunar, T.R. Horton, toll brothers, Maritage Homes, Lou, those are the names that I picked out. If you're looking in this space, what are you looking for in a home builder? So I know there are differences here, but here's my honest and this is the one one segment that we're going to get to that I would invest at the right point of the cycle. I don't think it's the right point of the cycle. So for right now, for me, none of these work. There are just too many headwinds on housing. We mentioned rates before. We talked about just labor issues with immigration policies, tariffs and for the supply chains. This is just not a good time. I probably, NVR is one that's not on this would be my first choice just because they're so well run. I think though, if you make me pick one, it's Horton for the just diversification and it's a decently run business. But again, I just, I don't see why that catalyst is going to come and housing is going to rebound anytime soon.

24:52So I'd be reluctant to jump in here. I'd rather be late. It's funny because I've had some of the same thoughts. I mean, we've had home building has had such a, I don't know, secular tailwind from we hear about affordability. We hear about a lack of good entry level homes. It's been an arguable bull market thesis for a lot of these companies and yet the company just doesn't seem to materialize. Whether it's rising costs from materials, whether it is, yeah, there's demand, but not in every area and where there is demand. It's kind of not always at the entry level. So out of these four, I go with toll brothers to QTOL. That is the one that I see benefiting the most from this continued. Yeah, maybe it's decaying K, but it's still K shaped. And I think that the emphasis on the higher end of the market is something that will continue to pay off longer than in the lower end of the market.

25:54And hopefully toll brothers will be able not to have to make some of the same concessions to the same level that we're seeing. They were likely to see entry level home builders make as mortgage rates rise a lot of time when mortgage rates rise. It's the builders who end up kind of eating that on the new home side by giving enough incentives to effectively reduce the mortgage rate to something that's affordable for those buyers. One area that I hope you guys are both in agreement is that restaurants have some sort of future. So it seems like there's got to be some sort of value here. We've got five stocks on this list, but I have a question for you, which is which one of these is in the biggest drawdown and how big is it? The five stocks are Chipotle sweet green Dutch bros, Wendy's and Wingstop. Lou, you have a guess. I guess sweet green or Wingstop probably. Dan, I think maybe Chipotle with around 60% something like that.

26:54Chipotle is down 52% from its all time high. Chipgreen down 91.1% from its all time high. All of these stocks are down over 50% in a currently over 50% drawdown. So if you look at those five stocks, Dan, where are things getting a little bit tasty? Yeah. So I still go by Chipotle restaurants when I'm traveling on the road. Nobody local here, but when I'm traveling, I definitely see them. I definitely see the lines are long. People are still going. Yes, they've had that CEO transition. Yes, they've had some growing pains, but they still have those big expansion plans. And yeah, from a competitive standpoint, they face many of the same challenges that all the other restaurants stocks do. But I just think that that concept is a popular one. It has bridged generations to some extent. So I think that there's enough timeline for them to bounce back and figure out how to

27:56adapt to this new environment in the restaurant world where you're getting more automation and dealing with a different supply chain than you used to. You said tasty, which made me think of Kava because that's obviously. I left Kava off just for you because I didn't want to make this too easy for you, Lou. Well, no, I wouldn't buy Kava either though. Again, it's just restaurants. Gosh, there are easier ways to make money in my mind. Chipotle, the interesting thing, I've stopped going there because I think quality is down. And I know I'm not alone there. I don't know if that's true or not. I love these if I was to lean in because again, I'm not good at seeing where lightning could be caught in a bottle. But the one company on this list that is still on the right side of the early in the growth curve is Dutch bros. So I don't know if it's going to be a huge market beater or not, but I'll buy that and just see if they can pull off the time to get into these is early in the trend when the trend still is working. Weak reans has run into problems. Weak reans is a good example of why this doesn't always work, but maybe Dutch brothers

28:59can continue and kind of be a shooting star for a while and I can ride it and hopefully get off before it falls. I've been told by a listener that Kava is coming to our area. So I may have to make a pilgrimage. I will say what you said in Chipotle is totally right and what's so wild about Chipotle and just talks about their previous management team and what a good job they did. It is so dependent store to store what your experience is and we ordered something this week. We have five items, five people in the family. Every single one of the items had something wrong and I went through there at the app. It's really hard to make a complaint. There's detailed forms. They have an AI running it. It took six seconds to deny my claim that so they're calling me crazy for getting the wrong items delivered to our house and I have kids who are upset. It is one of those companies that seems so easy because it's something that people crave, but when you get those mistakes and those operating errors, it is pretty infuriating for

30:03customers. I do think that it lose right that the quality there just isn't what it used to be. All right. Let's end with auto stocks. I know an area that Lou doesn't typically like to invest, but these companies are profitable. It is a driver of the economy. Lots of jobs. AutoSax, I have GM Ford Ferrari on the complete other end of the market and Tesla. Anything interesting that for you, Lou? I mean, again, the problem with autos is this is an industry that over 100 plus years of data, when times are good, it's low margin. So yeah, I don't. Why would you buy that when you can get a Garrett motion or one of their suppliers that just have better margins, better profits? But look, if you force me to pick one here, Tesla's, I just don't understand it. I get it's not an auto valuation, but I can't go there. Ferrari is the one that is kind of escaped this business model I'm talking about, which is just brutal. Ferrari's issues are all just kind of self-harm.

31:04They have a waiting list that stretches out almost to the end of the decade. All you have to do is make the daggone cars and get them out and you can make money. So I will take that just because it's a different business model and one that if the right people are running it should work better than a normal automaker. Yeah. Yeah, I'm there with Ferrari. I think GM and Ford, a lot of Americans are underplaying the impact that the tariffs on Canada are having just on the Canadian mindset on the North American market generally, not just in autos, but especially in autos because so much of Southern Ontario's economy depends on this. GM and Ford, if that starts to unravel, if we start to get signs that this is not just a negotiating chip and things are never going to go back to the status quo, which just seems as this goes on and on, it seems more likely. It's going to be a problem. They're going to have to undo a lot of the things that they did in order to take advantage

32:05of these trade agreements. If the trade agreements go away, then they're going to have to do things. It's not necessarily that they're going to be less efficient in the long run, although plenty of people will make that argument. It's just that they invested heavily to make it the most efficient for what may now be a time that is in the past. With that in mind, I prefer a company that can stand the test of time that it has minimal tariff exposure just in the sense that, hey, if you buy a Ferrari, you're going to go ahead and pay the extra 100,000 or whatever it is. You've been on that waiting list for hour long. You've been, what are you going to do? Leave the waiting list because there's a 20% tariff or whatever it might be. I just don't see it. From that perspective, I think Ferrari, again, playing in that K-shaped economy as well, just has the most staying power, the most predictability going forward. Definitely a company with a lot of pricing power. When we come back, we're going to talk about an end of an era at Berkshire Hathaway.

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35:09Command attention and experience ultimate luxury and motion. Exclusive offers are available now. Explore further at RangeRover.com. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows the Motley Fool's editorial standards and is not approved by advertisers, advertisements are sponsored content and provided for informational purposes only to see our full advertising disclosure. Please check out our show notes. Guys, the other news that came across the way this morning is that Warren Buffett is stepping down as chairman of Berkshire Hathaway. He's inserting his son as the new chairman. Dan, what were your thoughts there? It's no big surprise. This succession plan has always been kind of multivariate. He wanted to have somebody that would be able to make smart investments and run the company well. That's CEO Greg Able and he's been in place now long enough. Warren Buffett in his letter to shareholders today said that Greg's performance has exceeded

36:14his expectations. And so that's the vote of confidence that shareholders would have wanted there. With respect to Howard Buffett, the idea has always been that the chair of the board would be the person who was charged with guarding and protecting the corporate culture, avoiding getting seduced by Wall Street's short-term think-ism and picking Howard seems like a reasonable choice. It means because it's just a shift on the board, there's going to be three Buffets on a board of 13 directors. That's not changing. It's just the first name of the person on the chair name plate is going from Warren to Howard. Let's remember the Buffett still, I mean, they should control this company. Turn the foundation and the family holding it makes sense to the Buffets in charge. And yes, Howard is the son, but before we call NEPO, baby, he's been on the board since 1993. Okay. So I mean, he's time on the board basically is as old as Warren Buffett was when he took

37:16over a brochure. Yeah. Yeah. So we're not exactly just throwing in the boss's kid here. Look, the real question is, should we care? What does Berkshire have become from here? I still think a dividend would help making the case that it is just ballast waiting for that contrary and moment where it works. But increasingly, it's just so big. I don't know if they can beat the market consistently. And that's a bigger problem than the first name of the chairman. I just like the way that they, when they have strong returns, the way that they have them, I can't tell you the number of days when I've seen a big AI stock route. It's Berkshire Hathaway among that top 10 that's going up. And I'm willing to see a little bit of it. It's somewhat true in reverse as well, but I'm willing to put up with that just for diversification and my somewhat tech heavy portfolio. Yeah. Everything has become pretty tech heavy and Berkshire Hathaway is kind of a ballast against that. We like to end the show with the stocks on our radar, bringing in Dan Boyd for his thoughts behind the glass.

38:16Dan Kaplinger, you're up first. What are you looking at? So I'm looking at a little stock for a change. Back in robotics, ticker over the counter trades, KRK and F. This is a company in the national security industry, a drone maker, but it specializes in drones and supporting systems for subsea ocean based autonomous operation. So it's got things like sonar systems, optical sensors, complex navigational equipment and communications equipment, along with the power systems to keep these operational for long periods of time. So much stuff happens under the sea that can otherwise escape detection. This is an important way for the government to support its national security obligations to us, the public. Dan, not only does Kraken have a cool name, they have a cool logo, which they scary looking octopus. Where are you at? Yes.

39:16I'm actually what I was going to talk about with this is cool name, cool logo. It seems like high technology stuff. I don't know. It feels, it sounds like it might be a winner here. All right, Lou, you have a lot to live up to here. Yeah. Don't bring a boring airline to us. I'm going to and one. Dan, the logo is a tulip, which is not as cool as a sea monster. I'm going to admit right now, but the tulip airline is United Airlines ticker UAL. And Dan, I'm looking at it now because shares are down more than 20% since July 1st. Investors, I think they're pretty right to be worried. A combination of high fuel prices and that weaker consumer we discussed earlier, that that would finally catch up to the airlines needed in the profits. It makes sense, but United Management this week said, not so fast. They say, bookings remain and I quote tremendously strong, but about 35% of tickets are already sold for the December holiday period. So fools, get them in now. You better start buying now.

40:17Management believes that demand is strong enough to cover those higher fuel costs with ticket hikes. They're also in the process of renegotiating credit card deal with JP Morgan Chase, which could generate hundreds of millions of dollars in incremental revenue. Dan, investing in airlines can be dangerous. You have to play the cycle right, but it appears this cycle still has room to run. And if so, United trading it just barely 10 times earnings. That looks like decent value here. Dan, how much do you love airlines raising their prices? If an oloom, looming affordability crisis and fuel prices going through the roof gang, I don't know if it's the time to be investing in airlines. Fair enough. All right. Crack in or United Airlines, what's going to you watch this this week, Dan? Well, I believe the listeners can call me a broken man on a Halifax pier because we're going to go with Crack in. All right, congratulations to Dan, Kaplinger. I got to look at Kraken as well. I think that one's interesting. Well, that's all the time we have for the show. We're Dan Kaplinger, Lou Weitman, and Dan Boyd behind the glass. I'm Travis William.

41:18Thanks for listening. We'll see you here tomorrow.