Paul Winkler: All right, this is “The Investor Coaching Show.” I am Paul Winkler, and I’m as excited as I can be to be here.
A lot of times, these past few weekends, there’s stuff that I’ve been doing. I had to do a few pre-records, I apologize. But it’s always new stuff, even when I do that. I just got to be that way.
It’s actually me here today. Yeah. Really, actually sitting here, on this beautiful day. While some of you, Jeff included, I know are watching football. You’re watching football.
You’re doing the show but you’re watching, right? Right? Where is he? He’s not even listening.
Jeff: I plead the fifth.
PW: Okay, there you go.
Jeff: I wasn’t distracted or anything.
PW: No, you weren’t. You weren’t.
Jeff: Absolutely not.
PW: You’re funny, man. Okay.
Predicting the Future
Yeah, I’ve got a lot of stuff to talk about today. These have been an interesting few weeks. Last week especially, very interesting stuff happened.
I thought I would do some fun things here. Just imagine yourself in my shoes. You’re a financial person, and people are trying to get your attention to get you to sell their stuff. Because usually, what are you hearing out there?
As the public, you’re hearing the sales pitches from the investment advisors. But wouldn’t it be fun to hear what the sales pitches were that the investment advisors are hearing, that they’re shifting through? I’ll get into a little bit about that today. I think that’s going to be fun to get into.
There are a few things that have happened this week, several, several things, that I’m going to go back to past shows. I’m not going to play past shows or anything like that, but I’m just going to talk about ideas that, if you’ve listened to the show for a while, you’ve heard me talk about.
I’m going to get into them. I’m going to get into some of these ideas, and how, all of a sudden, some of this stuff is starting to happen.
I just think it’s kind of cool, because a lot of times, I’ll step out there, and I talk about changes, things that are coming about, maybe technological things that are happening. I go, “I think this is going to be something, I think this is going to be something.” Then all of a sudden, it becomes something.
I want to just say, “Hey, look, this is what we talked about.” Often, the things that I think about that are going to happen, I’m terrible at predicting the future just like anybody else.
I always tell people, “You don’t have to be able to predict the future to be a successful investor.”
That is the premise of this show. Literally, it’s the polar opposite of everything else.
Holding Individual Companies
I don’t know anything else out there, I don’t know of any other financial companies on this station, companies that are doing any kind of, that I know aren’t necessary there.
I suppose, there are a few that are out there, I just know of them. But we often talk about the fact that you don’t have to be able to predict the future.
Typically, you’d say, “Well, he can’t predict the future.” You’ll hear people say that. But then you watch how they manage money, and you see it’s based on predictions about the future, so they’re talking out of both sides.
This is something I have often said is, “No way, not at all.” Don’t try to figure out which stock is going to be better than another.
When you’re buying and holding individual companies, you’re holding them why? Because you think that they’re going to do better than other companies like them. That’s your prediction about the future.
If you’re holding a portfolio that is more heavily weighted in one area of the market, like so often I’ve talked about here on the show, American investors have 80, 90 percent of their portfolio in large U.S. stocks. Well, you must be betting that large U.S. stocks are going to outperform small ones, for example. Or that they’re going to outperform international in the future. Or that they’re going to outperform small value, or emerging markets, or something like that.
That’s a bet, that’s a prediction, or you would be diversifying more.
Typically, I say typically, I say that being kind, I don’t ever see portfolios that well diversified across many different asset categories. A lot of it goes back to our way of choosing investments, which is short-term passive performance. What you’ll see typically are very, very concentrated portfolios in certain areas of the market.
Past Portfolio Concentrations
The example that I like to give was in the late ’80s, when I got into this business, and got my securities licenses, it was the polar opposite of what we’re seeing right now. Right now, we see very, very concentrated portfolios in U.S. companies. Well actually, in the late ’80s, you saw an incredible level of concentration in international. It was the opposite.
The people that I was working with, the older guys that I was working with at the big insurance company — well, I can name it, it doesn’t matter, it was the Metropolitan Life Insurance Company that I was working for at the time, when I first got my securities licenses — these guys were all telling me, “Paul, congratulations on getting your securities license. Now, go put all your clients’ money in international stocks, forget about U.S., because U.S. hasn’t performed for two decades.”
They were right. It hadn’t performed well for two decades.
Anybody with any sense, let me just end the sentence there, would have probably listened to them because it seemed sensible. It seemed sensible to go after what had just done so well.
Lucky for me, I was just saying, “I don’t feel like I know enough, guys, to do anything,” is really where I stood. I didn’t feel like I was well-educated enough to really make recommendations to anybody about anything.
I really went down the road of doing what I thought would harm people the least, selling health insurance, selling auto insurance, selling disability insurance, and long-term care insurance. Those were the types of things that I sold, as opposed to going where they were saying, “Hey, you got your license. Now go out and sell this stuff.”
But for me, I just love learning. So getting a license, you go, “Why would you go through all that trouble to get all of those licenses to do that if you’re not going to use it?” It’s just that I like learning.
Eventually, who knows? I just gather information.
I talk to young people all the time. I will say, “Just keep gathering information. Keep learning.”
Because you never know when there’s going to be something that just hits you like a two-by-four, where you feel like you’ve got to do that. “I’ve got to pursue that.”
As a matter of fact, I was having a conversation with one of my friends earlier today. We were out at a group picnic. This guy does a lot of counseling of people for careers.
He made a comment about how often people end up doing something totally different than they thought they would be doing, and how that changes. I told him my story, and said, “Oh, yeah, that’s exactly the way I look at these things.”
The Nuclear Power Boogeyman
But one of the things that happened this week was on CNBC. I hope, Nick, that we’ve got the ability to play audio here. Okay, we do. Good.
Yeah. What this was, it was nuclear. Remember a while back, I was talking about nuclear power.
I was talking about how, now they have this new technology, it’s a lot safer. It’s not the old days of Three Mile Island that we talk about all the time.
People make it into this boogeyman of “It’s this terrible thing. It’s going to ruin civilization, everybody’s going to die,” and all this stuff. They have modular nuclear reactors, very, very safe. Much smaller, much better built.
Instead of building a nuclear reactor on land, where you can have inconsistencies, let me just put it that way. That’s literally what they said in a lot of the articles that I read, that there’d be inconsistencies in construction. What they said was that you can make these things a lot safer.
Well, it’s interesting to hear how people’s opinions on things just radically change when all of a sudden, they have a need. That was what this clip is right here. Check this out, what Big Tech has to say about this.
CNBC Clip: For more on Big Tech’s plans to power AI using nuclear energy, we are joined right now by Mark Nelson, Radiant Energy Group managing director. How realistic is this, in terms of what does the timeframe look like? Because we’ve been talking about nuclear for a very long time, but getting it right and getting it soon seems to be the bigger question.
The timeline is absolutely going to be one of the fairest and first questions. I think without a doubt, we’re going to see this load for new AI locked in place with whatever power plants are available, as the long-term plan to deploy nuclear comes to fruition.
PW: Yeah. This is something that is in huge need for running AI. They’re looking at this and going, “How on Earth do we power these computers for AI without a lot of energy?” That’s what this guy is talking about.
Now this is funny, because it comes from an industry that was saying, “No nuclear! Stay away from it. It’s terrible, it’s awful.” And they’re going, “Oh, boy, it looks like we need this in order to make things work.”
Not in My Backyard
CNBC Clip: In order words, they’re going to figure out where they want to put data centers, make sure transmission is going to work, get whatever power they can available, and then build it up along with deploying a new nuclear.
But I think the bigger question is where is this stuff going to actually reside? Are they going to get the permits to do it? Is there going to be a whole not in my backyard situation still?
PW: Yeah, that’s been a big thing. NIMBY, “Not in my backyard,” because nobody wants this thing in your backyard. We look at, for example, other countries around the world that have walked away from nuclear, I think prematurely.
I think it has bitten them because of the political pressure to shut this stuff down. It has actually bitten them.
I look at this and go, “Well, what if?” What if, all of a sudden, you have a big tech company here in the United States … As a matter of fact, The Economist had an article this week about how “The United States is the envy of the world.”
Now we may have lots of problems, and we do, we hear about them all the time. It’s a political campaign season, we hear about our problems all over the place.
It’s funny because you’ll hear some politicians say, “Well, we’re doing better than the other countries around the world.” Well, yeah, because a lot of the other countries around the world are more advanced in their movement away from more capitalist motives. You look at how much regulation there is in other countries around the world.
You say, “Well, why are they having even more problems than we are?” It’s because they’re even further down that road.
What’s happening here is, now we’re looking at this going, hey, now they’re looking over here, this side of the pond, and they’re saying, “Hey, we’re the envy.”
I’m not necessarily saying that this is a reason to change any investment portfolio strategy if the portfolio strategy is correct. Let’s say that you’re well diversified between U.S., international, small and large companies, in value and growth, and all this stuff that I talk about.
But it’s just worth noting that the United States was ahead of other countries around the world when we had the personal computer, when that first came out. Literally, you would have other countries around the world operating on DOS — disk operating system. We were starting to use Windows ahead of them.
Therefore, what happened in the ’90s was the U.S. had a jumpstart on other countries around the world for that reason. Then later on, the international community caught up, and that’s when they benefited significantly from implementing some of the same software programs and tools that we were using ahead of them in other areas around the world.
Regulation Problems
CNBC Clip: Has that changed?
It absolutely has changed. One of the first things I would say is that —
PW: This is the NIMBY thing, by the way. Sorry, I interrupted it. He’s talking about “not in my backyard.” He said, “Has that changed?” I’ll continue.
CNBC Clip: — almost every American nuclear plant was originally sized back in the 1970s and ’80s for double or triple the amount of nuclear power that eventually got built, with the turn away from nuclear in the ’80s and ’90s after Three Mile Island and Chornobyl. Existing nuclear plants have massive available transmission corridors, and you don’t have to get anyone’s permission to add more wire —
PW: See, isn’t that cool? You don’t even have to get permission is what he’s basically saying right here. This has been a problem all the time, regulation, regulation.
I talk about having your own little personal, private airplane. Being able to have something that you can take off, and go to work, and fly back, a la The Jetsons. But the biggest problem to getting that going is regulation.
Over in Europe, you’re having some of this happen where people are able to actually fly around various places. Even China. China is a big place where this is happening.
But it has been regulation that has hamstrung companies and the populace from being able to do these types of things.
CNBC Clip: — go through it if you aren’t taking any new land. Then at the nuclear plants, nuclear plants that have been operating for 30 or 40 years, now that turns into a strength because it means that everyone living around the plant knows about the plant. Perhaps works at the plant, goes to schools paid for by the plants. There’s a yes in my backyard that you’re going to see overwhelmingly in these projects.
In terms of cost, and in terms of return, given the way the technology works right now, do you look at this slate of big investments as major wins economically? Do they need to be tested to get to the next place because there’s going to be cost issues on the first round of these?
This is just the beginning. That’s what I’d say first. For example, this Amazon deal is much bigger than Google’s deal from two days ago. But it’s much smaller than Microsoft’s deal from several weeks ago.
Changed Attitudes Regarding Nuclear Power
PW: What I wanted you to hear there is that you have major, major companies behind this. Amazon, Microsoft, and you have Google. Of course, what’s going on is now that you have these huge companies that are super, super dependent upon this coming to fruition, now you start to see things move because they’ve got the capital to make sure that it moves.
Now what I think is so interesting about this is, and this is something they mentioned later on in the interview, for 10 years, they were against this. “No, you can’t do this! We can’t do this! This is terrible.”
He said, “Isn’t it funny how, all of a sudden, the attitudes have completely changed regarding the use of nuclear?” This hearkens back to how quite a while ago, I talked about a video that I’d see where this guy, he was very much an environmentalist. A self-proclaimed environmentalist.
One of the things that he talked about was wind power, he was talking about solar power. And he was talking about water, and taking running water, like how you have a river hydro plant or something like that, and you’re creating electricity through that means.
What this guy basically said in his video, he said, “This is something I have been behind for years.” He said, “I have come to the conclusion that this is no longer nearly as viable as we were sold that it was.”
That we should be able to create a whole boatload of electricity on this. He said, “I’m just no longer of that opinion.”
Now I’m going back, I probably saw this video, man, I think I’m going back five to 10 years that I saw this video. Maybe not quite 10 years. But it was a long time ago.
What he said in his video, he said, “I have become an advocate of nuclear for that reason.” Of course, a lot of people probably tried to shut him down over this because, “Oh, you can’t do that.”
But isn’t it interesting that now you have these big companies that have a lot of bandwidth and they have a lot of people’s ears, because people listen to what these people have to say, now advocating for this.
I think this could be really, really cool, because what is one of the biggest cost expenditures for corporations? It is energy. It is electricity. It is fuel to run the plants, to transport goods from here to there.
If we can have something that actually creates more energy more cheaply and more safely, that is something that can help reduce costs and increase profitability and earnings for companies. You look around and you go, “Wow! What’s going on out there? What could be going on out there?”
I think it’ll be really interesting going forward. I’m more excited than anything, that as we look at this, they don’t have the regulator hurdles that they had to be able to pull this off.
I think it’s going to be something that, like he said, people may want in their backyard because it creates jobs and it creates opportunities.
Exciting stuff! I think it’s kind of cool, but it’s something I’ve been talking about for a long, long time. As an eternal optimist, it’s always good to hear that you’re on to something.
Advisory services offered through Paul Winkler, Inc an SEC registered investment advisor. The opinions voiced and information provided in this material are for general informational purposes only and not intended to provide specific advice or recommendations for any individual. To determine what investments are appropriate for you, please consult with a financial advisor. PWI does not provide tax or legal advice. Please consult your tax or legal advisor regarding your particular situation.
