The Resilient Market Paradox: Why Stocks Keep Holding Up Despite Chaos

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Here is KPP Financial Portfolio Manager, Luke Guerrero.

Good afternoon, fellow investors, and welcome to the Thursday, April 16, 2026 edition of InvestTalk.

I'm your host, Luke Guerrero, and I'll be with you for the next hour when we dive into what happened in the market today

and bring you a bunch of important stories you need to know.

That being said, before we do all of those things I just mentioned, let's tackle this collar question now.

Hi, I'm Luke. This is Andrew. I appreciate everything you do.

Calling to ask about a stock called Transmedics, the Tactical TMDX, they're the organ care transportation industry.

They provide the end-to-end services, everything from harvesting to transportation.

Just wondering what your thoughts are on the overall future of the stock.

A big profit long the way, but it's still pretty big percentage of micro-forleo.

So I'm just curious what you guys think about the stock, and I'll be listening on the show. Thanks.

TMDX, which is Transmedics Group Inc, is a $4 billion medical technology company

that focuses on the commercialization of organ care systems.

So they have a portable perfusion platform that keeps donor hearts, donor livers, donor lungs, viable outside of the body.

Last quarter, it looks like revenue was up 32% year-over-year, beat by about 3%.

Earnings per share, beat by about 40%.

The full year 2025 revenue was up 37% year-over-year margins, gross margins specifically expanded to 60%.

The first full year of positive cash flow.

And off of a year that was very solid for them, they guided revenue that was 20% to 25%.

You over your growth in 2026 with long-term targets that they say could move operation margin to about 30% by 2028.

Now in terms of where it's been trading, TMDX did hit a local high in February.

The end of February was trading about 145 per share before pulling back to where it is right now, 109 after actually being down 6% today.

A lot of places are cutting their price targets in early April after multiple insiders were selling shares in March that added on to near-term pressure.

And so if you want to be in this name, you're hoping that because it's the only FDA-cleared warm perfusion system on the market for all of those organs that I mentioned,

because of their proprietary logistics network that it's close to impossible to replicate.

But the downside is sequential declines in aviation metrics, gross margin misses and questions about scaling, they've raised doubts.

And it's currently sitting at a 41 times price to forward-looking earnings multiple.

So growth deceleration is going to be brutally punished.

Now they do have FDA approval for their next-gen system in hand, they have positive clinical data, maybe that resets the growth narrative.

I would say, clearly, this is an undeniable category creator and transplant medicine.

They have a defensible moat, but the stock needs clean execution on its 20-25% guide and progress in their kidney platform.

They have earnings coming up on May 5th where they will be reporting, and so it's going to be interesting to see how well they've been able to stick to that 20-26 momentum coming out of a sell stellar year.

I would say with the name that's this big, if it's a significant part of your portfolio, the momentum's pretty poor.

I hope that you're up a good amount. I would think of trimming my position.

Thanks for the call.

Looks like we had a live call. It's going to mark from New York. How can I help you?

Yep, I'm here. I'm sorry about that. I was on mute.

Oh, not a problem.

We appreciate it.

Looking at the ticker symbol, ARX, that's ARXIS, the IPO today.

I'm wondering what you guys think about it, and if this is a good entry point, or whether or not I should wait.

Yeah, so ARXIS Inc. looks like it's a PE-backed designer and manufacturing company.

They focus on mission critical electronics and mechanical components.

I think microarray products, sensors, bearing, seals, and their hope is that their products will be bolstered by spending in space,

aerospace and defense spending, Medtech, and their semiconductor testing platforms.

But if you've been listening to the show, you know the number one warning I give about companies like this is that historically speaking, on average,

IPOs have negative expected returns in the first year.

Now, the reason why we like investing in IPOs psychologically is because we always remember the ones that do well.

But sometimes there are rules that you should not go against, no matter how good the company looks,

just because investing is about finding ways to have positive returns.

And one of the easiest ways to achieve that goal is not investing in new IPOs until they've been trading for a year.

Not just because of what's going on with the company, what's going on with trade volume.

You also have insider shares locked up for 160 days.

There's just a lot of dynamics going on that drives prices that are distinct from the fundamentals of a company.

So I'm going to stick this in that bucket. Call me back next year. Have a good day.

Thank you.

We got a lot of ground to cover in the next 45 minutes or so, including my main focus point about the resilient market paradox,

why stocks keep holding up despite chaos.

Even with the Iran War, a Hormuz blockade, oil topping 100 and failed peace talks,

the stock market has shown remarkable resilience, leaving many investors puzzled and cautious in equal measure.

We will dig into what's really holding markets up and whether the resilience is a sign of strength or dangerous complacency.

We'll also touch on weekly jobless claims falling and manufacturing production retreating in March.

And a story about the relaxation of US day trading rules, what that means for risk in the market.

And should we have time at the end of the show, we'll touch on that story.

I tried to bring you on Tuesday about America's corporate boards and the role of activist investors.

We also have some voice bank calls ready to play, including one on Oracle Corporation and Cavco Industries to your CVCO.

So there's some questions that came in from the comment section of the Invest Talk YouTube channel and hopefully some live calls throughout the show.

We're headed into our first break. It is a quick one. When we come back, we'll talk about today's market activity.

Serious investors are certain to have finance and investment questions.

I'm looking at an ETS, it's Goldman Sachs, NASDAQ.

And the best person to ask your question in the right way is you.

If that would be a good hold to having a Roth IRA from a long-term horizon.

And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.

This isn't really a copper plate, this is an iron ore plate with some aluminum copper.

If you're looking at ETFs that hold so few names that are so top heavy, I think it is probably ill advised to pay an expense ratio like this in order to get exposure that you could really get yourself in.

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Hey guys, Brian from North Carolina here. I'm a big fan of the show. I haven't listened episode in over five years.

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US stocks grounded higher today in what was overall a pretty quiet session, but both the S&P 500 and NASDAQ set fresh record closes.

The NASDAQ has now risen for 12 consecutive sessions, the Dow added a quarter percent, the S&P gained a quarter, and the NASDAQ rose about a third of a percent with the Russell 2000 edging up to 10s.

Now the market continued to show really a general lack of angst about these still unresolved Middle East situation.

Expectations remain that the ceasefire will hold though finality and resumption of normal Hormuz flows are it's all going to take some time.

Mechanical support from systematic strategy repositioning continues to provide a bit of a tailwind though there is some scrutiny around the speed and magnitude of the recent balance because

near a breadth it's been a concern, even though there were some improvements on that front today.

Diving in a bit software remained the standout story of the week with the IGV up nearly 13% over the past 5 sessions, a remarkable snapback for one of the most pressured areas of the market in recent months.

Private credit has also bounced pretty sharply this week easing another overhang, semis, energy, chemicals, and media all outperformed on the day.

Microsoft the notable mag 7 gainer while banks, med tech, airlines, asset managers, and pharma underperformed.

Did overall pretty mixed bag we to get some encouraging top line prints but less favorable details.

Underneath the April Philly Fed index came in well ahead of estimates at its highest level since January 2025 though.

The employment component actually turned negative and put both price indices jumping to their highest since August.

Initial claims dropped to 207,000 below consensus industrial production mist, declining half a per percent against expectations for a small gain though the prior month was actually revised higher.

Fed speak overall I would say a bit modestly constructive Williams acknowledged the Iran war is adding to economic uncertainty and driving price hikes

and slower growth but said policy remains well positioned.

Almoran reiterated his view that three or four rate cuts this year are still appropriate, certainly the only member of the board with that opinion.

Chargers were weaker with curve, bear, steepening, and yields up one to four basis points.

Dollar was roughly flat while gold and silver both edged.

Lower and WTI crude settled up 3.4%.

Next week's marquee event is Kevin Worsh's nomination hearing to become Fed Chair on Tuesday.

Also get retail sales on Tuesday flash PMIs on Thursday and final Michigan sentiment on Friday.

From time to time we also receive questions on web forms from investtalk.com.

Here's one that came in a little bit ago.

Says thank you for sharing your knowledge every day.

I listen every morning at work with the aging population I was looking into investing into elderly care or funeral services.

I was looking at CVS 80 US and NHC I would love to hear your thoughts look forward to hearing the answers on your podcast.

Well I think this is an example of how oftentimes there can be things to talk about there a bit morbid and you can ignore them.

Or you can think about how certain trends can benefit your life.

These are things that are going to happen the population is aging and you think about what does that mean for the secular trends in investing.

Because there's 10,000 baby boomers that turn 65 every day in the US and that trend continues through 2030 meaning the demand for elder care for home health for hospice and end of life services.

It's essentially guaranteed to grow.

These businesses are already recession resistant people age pass away regardless of the economy and the government reimbursement met for Medicare for Medicaid it provides a relatively stable revenue stream.

Now if you're looking at these companies we don't have time to dive into each three or each of the three really deep.

So I'll give a high level CSV has about 13 times earnings its cheapest 80 US looks like has about 25% revenue growth so you're looking for fast growth there and HC is low beta has a good dividend history.

But you got to worry about the debt to equity of some of these companies CSV is 2.17 times the best recession hedge probably funeral services as it's truly non discretionary.

But bottom line is this right your thesis is sound aging demographics is as close to a guaranteed growth drivers you'll find all three play different parts of the aging life cycle so they actually complement each other.

If you want to pick one maybe the one with the most growth profile 80 US has the strongest policy tailwind.

But if you want value CSV is cheapest with decent fundamentals if you want stability and income in HC has the dividend and longest track record so I would say that your theme is right and at a high level I think attacking at any angle is a good way to go about it.

Thanks for the call.

We're headed to break my focus point is coming up on the resilient market paradox.

We also have plenty more answers to your finance and investment questions so stay with me.

You're listening to invest talk.

Luke Guerrero is here and ready to tackle your questions.

I wanted to pick your rainbow apple. What did you think about their earnings call to just a good time to add to my position call invest talk 888 99 chart.

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So here's something that should genuinely puzzle you.

We've had an active war with Iran for nearly seven weeks the straight of her moves has been effectively shut to commercial shipping oil has been above $100 for most of last month.

The US just imposed a naval blockade peace talks collapsed last weekend inflation is reigniting consumer confidence hit record lows the IMF issued its most alarming forecast in years.

And the SB 500 is basically fat flat for the year.

And just set a fresh record close. How is this possible?

The answers that there are powerful forces working beneath the surface that are offsetting the geopolitical drag and understanding them is critical for knowing whether their resilience is genuine or a trap.

The most important factor is corporate earnings black rock just upgraded us equities to overweight and the reasoning is worth absorb it.

SMB 500 companies are expected to post 12.6% profit growth in the first quarter.

If historical heat rates hold and companies almost always be lower expectations that number could approach 19%.

The tech sector alone is rejected to deliver 43% earnings growth in 2026 up from 26 last year.

Even since the conflict began on February 18th earnings expectations have been revised higher not lower.

That's pretty remarkable. Market isn't holding up in spite of fundamentals that's holding up because fundamentals are strong enough to absorb the geopolitical shock.

But the valuation reset also matters. Tech stocks they sold off hard in the first quarter which means the price investors are paying relative to earnings have actually come down meaningfully.

The max sevens forward price to earnings ratio relative to the SMB 500. It's compressed from 1.7 to 1.2.

That's the narrowest premium since the mid 2020. So the same companies with accelerating earnings are now cheaper than they've been in years and that combination better earnings lower prices.

It's with Drew Blackrock, JP Morgan and Morgan Stanley, all the upgrade US stocks in the past two weeks.

There's also a structural floor under the market from the AI buildup regardless of what happens in the Middle East.

Tech and up companies have committed hundreds of billions in CapEx to data centers to semi conductor fabs to AI infrastructure.

That spending is contracted. It's flowing and it's supporting earnings across industrials, utilities, materials that build and power the physical infrastructure.

This is why the market can sell off on war headlines and rally on earnings. The AI investment cycle is operating on a different timeline than the geopolitical one.

Now the ceasefire fragile as it is has also changed risk calculations. The fact that talks happened at all even if they collapsed over the weekend tells the market there are strong economic incentives for all parties stand the conflict.

If that's the case, you can understand how geopolitical dips can ultimately prove to be buying opportunities.

The threshold for a return to full scale war is pretty high. The market is essentially priced in the view that worst case a multi-year conflict with permanently elevated oil is pretty unlikely.

But here's where investors need to be careful because there's a fine line between resilience and complacency.

The bounce back to all time highs. Well, oil is at 99. The straight is blockaded and the Fed is frozen is not normal. It requires the earnings story to hold perfectly and the risks to that story are real.

Q1 earnings are mostly pre-war. The real test comes in Q2 when the full impact of higher energy costs, disrupted supply chains and cautious consumer spending, hits the income statements.

Consumer spending is starting to crack already. Credit card data from Bank of America show spending growth in gasoline has slowed or rather X gasoline has slowed to 3.6%.

Lower income households are diverting more of their budgets to fuel discretionary spending on restaurants and travel and entertainment. That's under pressure.

And the labor market is stable, but it's still fragile. Jobless claims are low, yes, but hiring is plunged to a six-year-low excluding COVID.

The technical indicators worth watching. Credit spreads, the move index, the ratio of consumer discretionary to staple stocks.

Let's take a look at those because credit spreads have widened only modestly. If they blow out, it signals credit stress that equity markets can't ignore.

The move index, let's drop from drop to 72 from 115, which suggests bond market volatility, it's subsiding.

And if consumer discretionary continues down to perform staples, it tells you the defensive rotation is accelerating even as the headline index looks calm.

Morgan Stanley's chief investment officer said he's seeing the market rotate back into pre-cyclical positions, the rather pro-cyclical positions, which he interprets as the market pricing in a bottom.

Interactive brokers took a more cautious view, noting that Monday's tech-led rally was actually narrow investors are reaching for a mang 7 names as defensive positions because those companies can weather elevated rates in technical slowdown.

That's kind of a different resilience than what a broad based buying would be.

Bottom line, market's resilience, it's real, and it's been driven by legitimate forces, strong earnings, cheaper valuations, AI infrastructure spending, and the market's assessment that the conflict will at some point end, but resilience is not invincibility.

The gap between the headline index holding steady and the underlying consumer and labor data deteriorating, it's a warning sign.

If Q2 earnings disappoint on the blockade, or rather the blockade escalates into something worse, the market's posture could unwind quickly.

Enjoy the calm, but don't confuse it with safety. Keep your hedges on, diversify across the rotation themes we've been tracking, and remember that the market doesn't have to be right about the war ending soon, just because it's acting like it will.

Just a now off tomorrow, but have no fear we have put together a best of show for you, and we will be back on Monday.

That being said, it's still got plenty of time to answer your finance and investment questions, so give me a call at 888-99Chart.

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It's good to Todd from Sunnyvale listening on AM 12 at 20 in the Bay Area. How can I help you?

I don't know. I haven't missed a program by you or Steve or Justin in like six years. I really appreciate the program.

We appreciate you. I have a question about, yeah, yeah. I have a question about stock. I'm down about 22% in OLD.

Yeah. And it seems to not have real short interest right now. She's got a good balance sheet.

I just don't know why it's not more profitable. I just don't know maybe a lot of competition from China. I don't know.

Yeah, let's take a look at this name. OLD is universal display corporation. It's a new Jersey based company that essentially license their IP and provides materials because they own the core phosphorus and OLED technology.

So they collect royalties and sell these emitter materials to Samsung to LG and other panel makers for every OLED screen produced last quarter.

They reported revenue is about 6.6% year over year growth essentially in line with what the estimate was earnings per share actually had a beat by about 9%.

And on full year their net income did hit a record looking at 26. It looks like they guided to gross margins of about 74 to 76% of the wide range.

Reflecting that there's, you know, genuine uncertainty around really how much flow they have from customer orders.

Now you maybe say, okay, well, they beat in Q4, you know, what's, why are we seeing some some issues here? Right. Well, one of the reasons is because markets are forward looking their guidance was kind of flat.

They didn't upgrade their guidance at all. In fact, one of the most more distressing things that investors hate to see is compressing margins. So net margin is set to compress from 37.2 to 33.9.

EBITDA margin from 45 to 43 and then return on equity from 14.3 to 11. And so that's, you know, one of the things that kind of reinforced this continued selling this persistent downtrend.

And then you throw on top of your tariff uncertainty on consumer electronics on smartphones on TVs and potential demand softness.

And so that's really what can be compressing these multiple. So why you like it is because it's essentially a royalty toll booth, right. Every OLED panel made has to give them money.

There's no manufacturing risk. It gives them a pretty long runway, but revenue growth. It's staggering. It has low single digit growth over the past five years. It's only 8.7%.

It's only supposed to grow from 650 billion to 673. I'm sorry, million. Excuse me. This is upcoming year. And so it's kind of just a depressed growth story to me.

And then you couple on. It's got some pretty weak momentum and technicals and has been on a really a downtrend since 2024.

I think there's just a lot of opportunity cost you're eating by by staying in this name when it's just done so poorly compared to its peers.

That makes sense. Awesome. Well, thanks for the call and thank you for catching all the programs. We really appreciate you.

You bet. Thank you very much. I feel it's keep moving and drop in a fresh listener question now.

This is me from Atlanta, Georgia. I have a question for a stock or or see.

It has been going down for quite some time because of the death on the balance sheet and how aggressive we have been building AI data center.

But lately it has started the going up your last few days. Do you see or foresee that this is the bottom of this?

Sure. And it will start going up. I have been part of a vocal recently got laid off, but I still believe in their business model where they have built in data centers to cater to the large language models down the line.

What are your thoughts on that? Will they recover from the debt or is it you know too early to say anything about them? Thank you.

Look at Oracle Corporation. Of course, the enterprise software and cloud infrastructure giant. So they do databases. They do net suite and they're rapidly scaling their cloud infrastructure.

That's become the primary AI training platform for open AI for meta for X AI amongst others. Now, Oracle is a name that we did used to hold for our clients. We sold out of it a while ago.

And I will answer the first question pretty quickly, which is this is the bottom. I don't tell you to hear if it's the bottom, but diving into the numbers a bit looks like revenue grew 22% year over year last quarter non gap EPS beat estimates and cloud infrastructure grew about 84% year over year to 4.9 billion.

I mean, these are solid numbers here. They hit a 52 week high of about 300 and some odd dollars per share. I mean, it was training up around three 20 at one point.

I believe in the middle of 2025. And then it's just been a persistent beat down ever since they've collapsed to as low as like the 120's at a certain point now they've paired back some of those losses training about 178.

And it's stage a pretty massive recovery this week up 27% percent for the week on track for the best weekly gain since 1999.

And what really drove that was the partnership with blue energy expanding their power deal and renewed software sector strength.

Now, the ball case here is that the 553 billion RPL. I mean, it's a binding committed customer revenue. It's not a pipeline and OCI is 84% growth.

That means Oracle may be the only hyperscaler adjacent name, not burning its own balance sheet to build AI capacity, but gross margins of have compressed.

From, you know, EBITDA margins, albeit look better in the future, you go down to return on equity. It's fallen from 85.8 to 33.7 by 2027.

Free cash flow went negative. And so it's put itself in a pretty precarious position. I mean, it is one of the most probably dramatic reversals in large cap tech.

They do have a huge backlog, but the debt load, the margin compression, the RPO to revenue conversion risk. It means that this is a high conviction call if you invest in it.

It requires a bit of a long runway in patience. I think at this point, the reason we don't hold it anymore is that the debt for me is a bit too much.

The negative free cash flow is a bit too much. The compression is a bit too much. So it's still trading at 21 times price to forward looking earnings.

I don't know, I think there are better ways to play. And I wouldn't, I wouldn't think that, and I wouldn't confuse a three day trend for a reversal of what we've been seeing for the past six months.

That is Oracle, ticker, O-R-C-L.

So today's jobless claims came in at 207,000, down 11,000 from last week, and well below the 215,000 that economists expected.

Claims are in the lower end of their range for the year. On the surface, this continues the story we've been telling you. The labor market is stable. Companies aren't firing people, but the details, as always, paint a bit more of a nuance picture, and the vulnerability is building even if the headline numbers don't show it yet.

The Fed's beige book released yesterday revealed that businesses are responding to the war with a weight and sea posture. Several districts reported increased demand for temporary and contract workers, as firms remain cautious about committing to permanent hires. The Middle East conflict was cited as a major source of uncertainty, and that's complicating decisions around hiring, around pricing, around capital investment. That is the text book set up for a labor market that looks fine until it suddenly doesn't.

One economist drew a direct historical parallel that should be a bit sobering. During the 73 oil shock, it took about three months for claims to start rising in any meaningful way. We were seven weeks into this conflict.

If the historical pattern holds labor market stress from elevated energy costs would start showing up in May or June. At some point, the costs of oil, the costs of materials, the cost of inputs that have been squeezing margins are going to force companies to cut marginal workers to protect profitability.

At the same time, continuing claims ticked up to 31,000 or rather ticked up 31,000 to 1.81 million. The youth labor market remains particularly tough. Unemployment for 20 to 24 year olds, 6.4%, well above the overall 4.3% rate, and the continuing claims data doesn't capture young workers who never had enough work history to qualify for benefits or people who've exhausted their eligibility.

The labor market has certainly become more vulnerable since the war started and concerns about the labor market may eventually lead the Fed to cut rates this year, looking past the oil driven inflation hit.

Markets are right now only pricing about a one in three chance of a cut this year and it's pushed off into December. But there could be meaningful repricing hit.

On the manufacturing side, factory production dipped 10 basis points in March though it did grow in a 3% annualized rate in Q1 and rebound from Q4's 3.2% to decline.

Motor vehicle production dropped 3.7% mining output fell 1.2% and oil and gas drilling and actually declined 2.4%.

The measurement noted that energy producers remained cautious about increasing drilling despite higher prices, the same discipline story we covered weeks ago.

A pantheon macroeconomics economist warned that we're seeing what we're seeing could be a brief period of catch-up growth rather than a sustained manufacturing recovery given policy uncertainty, given higher rates, and the likely demand slow down from the energy shock.

Now the labor market is, it's one piece of the economy but it's held together through everything so far.

It's held together through tariffs, through immigration crackdowns, through AI disruption, and now a war.

It is the last pillar standing but every week the conflict continues every week, oil stays above 100 and every week businesses defer hiring decisions that pillar gets weaker.

The market's betting it holds. History suggests that bet has a timeline.

This is Invest Talk. We love answering your questions so let's grab another listener question now.

Hello my name is David from St. Louisville, California. Would you take a look at Capco Industries ticker CVCL? It's a manufactured home building company.

I've been buying the stock the last two months. What's your opinion on it? Thank you.

First off, Love, San Luis Obispo. That's where my fiance is from. Always a great place to visit.

Let's answer your question about CVCL which is Capco Industries Inc. Pull that up right here.

What it is is it is a manufacturer of factory-built homes and they sell them through independent retailers and company-owned locations with an in-house financial services segment.

So they're selling you the homes and they're also doing the mortgage lending as well as the insurance.

Now it's a small cap name. Looks like it's market cap is sitting around $3.9 billion.

It's got a little bit of debt, only $39 million in debt and growth over the past five years looks solid about 13.7%.

Now revenue in Q3 of 2026, their fiscal year 2026, up about 11.3% year over year, but net income was down 22%.

Earnings per share was $5.58 versus $6.90 a year ago. Factory capacity utilization declined to $70 from $75 a year ago.

Backlog fell to $160 from $2.24. That's a demand-softening story.

Now they did not provide formal revenue or EPS guidance, so we can't really comment on that.

I think one other thing to note that's important is they actually do have 100 million left in their share repurchase authorization, which is an active buyback program they've been using.

The stock hit a high of about $6.90, about $700 per share back in January of this year, and it's been downward ever since, down 27.9% over the past three months.

So what are you thinking is the reason to buy this? Well, manufactured housing is the most affordable housing option in the US.

And with the affordability crisis, that could be a meaningful structural tail, and it certainly could, and a recent acquisition gives them a footprint in the south and in the central part of the United States with a reasonable price, but at the same time, numbers are falling.

I mentioned them, capacity utilization, dropping to $70, backlog shrinking to $4 to $6 a week, net income, down to 22%.

So what I'm saying is that even a affordable housing demand is suffering, softening under rate pressure, and with that American home store integration, there goes some execution risk as well.

Now, any fed rate cut that unlocks lending would be a disproportionate catalyst for Kafka versus site build home builders, because this is the rate sensitive lever, the market underweights.

Overall, structurally well positioned affordable housing play, yes.

But the near-term earnings compression and the slowing industry shipments kind of mean the stock needs either a rate catalyst or a clear backlog recovery before I would suggest deepening or entering a position that is Kafka industry zinc to your CVCO.

Well, folks, I forgot to mention our focus point today about this market recovery in spite of economic data we're seeing was actually the topic of the deeper focus video that we recorded this week, which will be released on our YouTube channel next Tuesday or Wednesday.

And I sat down for a 20 minute discussion, but all over the sorts of things that have been driving this market and whether or not the market has become fractured from reality.

If you want to learn more, you want to view that video, head over to our Invest Talk YouTube channel to search Invest Talk with two T's.

This is Invest Talk, I'm Luke Guerrero, we have one goal here to help you achieve your financial freedom.

Our work continues after this break, our final break of the week because tomorrow is a best of show. So get your questions and now at 888-99 chart.

Every investor is working to build a secure financial future.

How they get there and when they get there, that depends on many factors. The more you learn about how the market works, the better your chances for success.

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The SEC just approved the elimination of the pattern day trader rule. And if you're an active trader or thinking about becoming one, this is a big deal with some genuinely important caveats.

The pattern day trader rule has been in place since the aftermath of the dot com bubble in the year 2000. Finra created it to limit speculation by requiring anyone who wanted to make more than three day trades within a five business day period to maintain at least 25,000 in their own margin account.

If you had less than that, you were locked out of frequent day trading. The rule is kind of designed as a guard rail to prevent undercapitalized traders from blowing up their accounts.

The rules now gone. The SEC approved its removal on Tuesday and shares of Robin Hood and Wee Bull jumped over 10% on the news.

The average Wee Bull client is about 5,000 in their account, far below the old $25,000 threshold. For those investors, this is a meaningful expansion of access.

Now the proponents, they frame it as democratization. We will CEO called the old arbitrator arguing it till to the playing field in favor of wealthy investors. His pitch, quote, it just shouldn't be big brother saying you're not rich enough anymore.

And there's a point there if a sophisticated trader with $10,000 identifies a clear opportunity forcing them to sit on their hands because of an account balance threshold doesn't obviously protect them.

But the risks are real and critics aren't wrong either.

Capital market laboratory CEO was blunt removing the restriction makes it easier for undercapitalized traders to make more, quote, yolo shots in today.

And that can mean more freedom to lose money faster.

Academic research consistently shows that higher transaction volumes among retail traders correlate with greater losses, not greater profits.

The North American Securities Administrators Association argued the SEC hadn't made a strong enough case for removing the rule.

The timing adds another layer. Retail traders have been a growing force since the pandemic. They now account for up to 25% of daily trading volume on US exchanges, up from just 15% pre 2020.

Markets have become more volatile and headline driven with the Iran War creating exactly the kind of sharp injury moves that tempt impulsive trading, giving millions of small accounts the ability to day trade without restriction in this environment could amplify volatility during already turbulent sessions.

Now there will still be some guardrails instead of 25,000 traders will need to meet certain margin requirements based on their market exposure brokerages will still assess whether clients have sufficient knowledge and experience before granting access to options and leverage products.

But the hardgate's gone for the brokerage industry. This is straight forwardly positive.

More trading activity means more order flow means more revenue from payment for order flow, where brokers sell trade data to market makers and potentially more interest income from margin lending.

Robinhood and Weeble are obvious beneficiaries. Their entire business model is built on a high volume retail participation. For the market as a whole, the impact is a bit harder to predict.

More retail participation can certainly mean more liquidity, which inherently means tighter spreads, which benefits everyone.

But it can also mean more momentum driven sentiment, face trading that amplifies moves in both directions.

Mean stock style episodes where retail crowds piled into a name based on social media buzz could become more frequent and more intense without the 25,000 speed limit.

The new rules take effect 45 days after they're posted on Finra's website.

If you're a small account trader who's been bumping up against the PDT rule, this opens up opportunities you did not have before.

Just remember, opportunities come with risks and day trading has a long historical track record of separating overconfident investors from their capital.

The guard rail is gone. The responsibility now lies with you.

I'm Luke Guerrero and this completes another episode of Invest Talk.

Justin and I thank you for listening and encourage you to tell your friends and family members to listen to our podcast and enjoy our free downloads at both iTunes and Spotify.

While you're over there, if you don't mind leaving us a rate and review on iTunes and Spotify, we would greatly appreciate that.

And while you're at it, head over to our YouTube channel. Check out our videos, our exclusive YouTube content.

One more thing I want to mention is if this show made you think about your own financial circumstances, if you feel even remotely uneasy about your retirement plan about your children's education,

Justin and I implore you to schedule a portfolio review by heading over to Invest Talk.com and clicking on the portfolio review button.

It is a free and confidential service because sometimes it's just good to have a second set of eyes.

Independent thinking? Share its success. A reminder we're off tomorrow. So enjoy your weekend.

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