beware of this

hey everyone kevin here in this video

we're going to talk about one of the

things that i'm using is a core basis

for determining which companies am i

really excited about adding to sort of a

diversified pie of stocks these days and

which companies am i maybe slightly less

interested in adding to that kind of

diversified pie now this is not designed

to be guaranteed like this will always

hold true but i think it's really useful

for perspective and i call it the great

stock schism and the reason i call it a

schism is because a schism generally

represents a split right a split between

one half of let's say people or things

and another half and what i believe that

we're facing here is in the macro

environment this recession really of

recession of the rich versus the poor

and this affects what kind of stocks i

think will

be likely to have stronger fundamentals

not necessarily hold up higher because

sometimes you get this divergence

between fundamentals and stock price but

consider this for a moment who were the

people during the covet pandemic who

really made out like bayonets who really

made the most money well think about it

you've got on one hand

poorer folks who are more often

renters and then you have wealthier

folks

who more often own stocks

and own their own homes

well one of the beautiful things when we

look back at the covet pandemic for the

wealthier cohort which seems backwards

right was this

infinite bailout that we got from the

federal reserve which propped stocks up

in a beautiful v-shaped recovery

we also

had essentially this blanket guarantee

from the fed that don't worry any loans

that go bad we will cover which then led

folks and and congress to say you know

what let's just provide mortgage

forbearance you don't have to make

payments on your debts anymore so people

who had debts especially good debts

didn't actually have to pay those debts

at the same time as interest rates

plummeted so asset valuations were able

to skyrocket so homeowners won with

asset valuations going up stocks won

with essentially the fed bailing out

stocks and stocks going to the moon but

also think about forbearance for a

moment on home loans if somebody was

able to forebear 18 months of two

thousand dollar a month payments that's

thirty six thousand dollars which yeah

at some point they have to repay but you

add it to the back of your home loan

which is basically like not having to

repay it because it basically amortizes

to virtually nothing which is pretty

remarkable that's the beauty about

adding things to the back of your home

loan renters on the other hand yeah they

were able to not get evicted but in most

cases they still had to pay their rent

or pay it within the next year here you

could delay it for 30 to 40 years here

you had to pay within the next year

business owners or people who owned

assets like businesses they got massive

handouts of money not only were you able

to get a ppp loan that you didn't have

to pay taxes on but you were able to

write off that money as an expense so

you basically got a double deduction

here which was remarkable and you got

free money from the government which is

also quite remarkable

the renters and poor folks yeah you got

maybe a stimmy

or you got unemployment which was really

generous at one point you know the four

to six hundred dollar weekly uh numbers

is really really remarkable uh but

with the folks with wealth and assets

they're the ones who absolutely made out

like bandits in this pandemic and this

is a lesson right if you do not own

assets your number one goal in in your

life should be acquiring assets and

building your wealth that way this is

some of the most important stuff that we

talk about

in the programs on building your wealth

link down below in the psychology or the

strategies around building your wealth

with weather stocks or real estate

remember we've got that coupon code

expiring on july 28th mark your calendar

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me and recently gave out my cell phone

number my personal cell phone number to

all course members and i've been going

through some of the messages and boy oh

boy i just have to say

really really some nice comments take a

look at this one 22 year old active duty

just want to tell you you have helped

change my life started following you

five years ago became a member in the

last year and i retire in two years at

five months from active duty and i will

be able to retire retire in large part

to you your inspiration for me to invest

in myself has helped me and i hope this

success story helps to keep you

motivated love you kevin thanks man what

what an amazing comment really shout out

to y'all especially uh course members

thank you so much for the kind words

anyway so let's talk about this schism

now because your goal is building wealth

and what do people with wealth do well

they spend it and this is where we can

get into the topic of this schism that's

happening right now in markets because

if we look at broad-based data

broad-based data like pmis we can see

some things that kind of look scary like

for example this latest pmi read we had

was the worst gauge of business activity

since 2020 the covid pandemic any line

under this little light blue or i guess

it's kind of like a darker blue right

here which i've marked in highlighted

red now any time we fall below that

which we just did we're falling in

contraction with manufacturing which

should be a good thing for helping

inflation move down but when we look at

these composites it's like oh my gosh

things are contracting okay but this is

where i think the schism is so important

because see the schism tells us that all

right if we have let's say a basket see

here's a nice little basket weave basket

and here's a little handle for it and

the entire basket is moving down right

it's getting weighted down

the nice thing is if we consider a

schism and we consider sort of a split

in this basket we might see that things

over here are becoming heavier and

heavier and heavier but things over here

aren't really becoming on net heavier

maybe some things are a little heavier

but a lot of things are still lifting

that up and this side here would be the

wealthier side and this would be the

poor side in other words the poorer

folks are having a harder time

compared to the wealthier folks and i

want to prove that point and then just

mention some takers that i'm at least

preliminarily looking at for uh the

potential for uh schism based investing

should we set so the the first thing

that i consider is that the wall street

journal just ran a very interesting

piece where they talked about how

consumers at a t

are starting to pay their bills

two days slower than average and that

affected att's cash flow to the tune of

one billion dollars

yeah in their quarterly cash flow now

that's because att has so many freaking

customers and we you might think to

yourself like dude what's the difference

if i pay in the 13th or the 15th right

you might think that's not that big of a

deal but when a t and t and mass and

millions of people on average are now

taking two days longer to pay their

bills it's a sign that people are

starting to get a little bit tighter

with their money capital one in their

last earnings release told us that

customer customer deposits quarter or

over quarter were down one percent

that's a a beginning of this sort of

decline of customer deposits going down

now capital one compared to more luxury

brands of either credit cards or banks

tends to attract lower fico score

customers so you're seeing a little bit

more weakness over at banks like capital

one versus let's say a credit card

company like american express and this

is why you're also at at t seeing this

slow down you're getting more of

exposure to people who are less wealthy

this makes sense i mean somebody could

be really wealthy and have a 150 phone

bill somebody can be really poor and

have 150 phone bill there's almost like

you almost have this equilibrium

between poorer and wealthier at 18 t so

when you see the entire sector a slow

down it's like okay it's probably being

driven by poorer folks and this is what

we're seeing at capital one as well

capital one ceo is telling us look

consumers are starting out at a stronger

position

than compared to prior recessions you

know they have uh their savings rate did

just fall to below pre-pandemic levels

but their debt service burden

multi-decade low and their cumulative

savings over the last two years have

been higher but we're starting to see

those headwinds impact the lower end

consumers okay this is understandable

this is what we would expect in

inflationary environment but what we're

not expecting is some of the insane

spending continuing or at least we

didn't think it would continue and this

is where american express blew my mind

and then i'm going to talk again about

some specific tickers about what i think

about the schism so american express is

just an example of a company that is

definitely appealing to hire fico score

customers uh and let me write that

actually on screen here uh higher fico

score customers higher net worth

customers and uh even the millennials

and the gen z's who are using the amex

cards usually lower default rates and

higher incomes and so one of the things

that we noticed from american express is

the following

spending on airlines which we know

there's been some insane inflation at

airlines somewhere to the tune of uh you

know 30 to 40 year over year well

spending on airlines folks is up 148

that's year over year so you're

definitely seeing a big boom while we're

already out of mostly out of you know

sort of reopening last last summer still

up 148

but then we have it's not just inflation

it is much more transactions says the

ceo to the tune of the fact that the

consumer is spending overall the amex

customer is spending over

30 percent more right now which is

absolutely remarkable gen z

and millennial spend is up 48

these are remarkable numbers in a time

where the recession fears we're here

this entire q2 right all of q2 we had

recessionary fears but what are we

getting amex saying dude our customers

ain't caring about a recession small

business spending up from 2019. large

corporations are spending more not

necessarily compared to 2019 but

compared to last year delinquency rates

well below pre-pandemic levels extremely

strong credit performance amex saying

you know what we are still spending

on ads which i thought was bullish for

the advertising industry but also still

hiring and i think this isn't like uh

binance clickbait it's actually uh they

are still hiring

and they're seeing more use of their buy

now pay later platform which is pay it

planet although that seems to appeal

more towards their younger demographic

they say but the big piece of this is

really that man american express is

telling us we don't know what's going on

other than the fact that our customers

have more money and they are spending

more and because they're spending more

we're going to advertise more we're

still hiring our millennials and our gen

z's they're spending more like crazy

we're not seeing a slow down in travel

and entertainment at all if anything

these things are booming right now which

is a different story than if you listen

to the nuance of the capital one call or

the earnings of att or some of these

other companies and so this is where i

want to kind of give you this this

bottom line with some tickers here and i

want you to think to yourself how does

your portfolio uh look in terms of the

schism right so if we have a schism

how is your portfolio divided uh and so

let's say this is uh just a typical kind

of rich versus poor right so uh an

example in my opinion

and i've said this since even before uh

january uh one of the best plays in my

opinion that that and and keep in mind

i'm talking fundamentals when i say this

fundamental place

when you have recessionary fears even

great companies with great finance

fundamentals can go down in value and

bad companies uh with with exposure to a

lot of risk can go up when we get risk

on rallies so sometimes you see these

like totally ignorant comments where

where like i'll make a video and i'll

say hey like here's a risk factor for

amazon right and then somebody will

write a comment like well amazon is up

three percent today guess you're wrong

it's like oh my god you just don't get

it whatever but anyway so quick

comparison rich versus uh poorer here

well what are some of these companies

been saying this one for a while here

obviously tesla what do we got over here

at t what do we got over on the poor

side carnival cruise lines but then over

here you could have like an n uh clh i

think norwegian cruise lines holdings

yeah uh norwegian cruella cruise lines

appeals a little bit to a higher income

demographic right come on folks without

a doubt and face

amex

potentially norwegian but disney william

sonoma i don't know what their ticker

symbol is it's not one that i've

invested in yet but whatever uh william

sonoma nvidia potentially

uh now there's a lot of pressure that's

been on companies like nvidia though

because there's this fear that like

there's going to be this big piling up

of chips which is probably true but you

wonder how much of that is priced in and

then you look at other companies right

and these are going to be like your more

debt exposed companies

hate to say it but like a firm it is it

is going to be more exposed to a riskier

cohort of customers and so there's

there's obviously a risk this is why i

said you don't want to own a firm in a

recession i said that since the day i

bought the company and that's why i sold

the company this is one of the companies

that you have to trade now if we get a

big risk on rally you can make some big

money on this or you could lose money

quickly but then again that would be the

style of the yolo right uh verizon is

another one over here uh capital one

would be another one so you do get this

very interesting schism that's happening

and what i encourage you to do is is i

would love for you to leave a comment

down below and say rich companies colon

list some poor companies list them as a

colon let's have a little bit of a

debate and argument i want to see what

some of your names are and maybe we'll

do some fundamental analyses on these if

you missed my fundamental analysis y'all

were asking for fundamental analysis if

you just missed my fundamental analysis

on netflix make sure you watch that one

as well i think that was a very good

video but youtube doesn't really seem to

love pushing fundamental analysis but

anyway thanks so much for watching we'll

see you in the next one i gotta go to

some screaming babies goodbye folks