Inside the Mind of Wall Street’s Father-Son Duo: What Most Investors Get Wrong | Ep. 239 with Ken and Connor Mahoney Founders of MahoneyGPS

0:28Hey everyone, welcome back. A lot of things you help advise and you have a lot of amazing clients that you work with as well. And I can't wait to learn more about the pulse. We were just talking about recent IPOs and everything. But I'd love to hear, right now, if somebody asks you, what are you looking at most when it comes to the markets? What would you tell them? Well, I would say, first of all, I'm glad you enjoyed your trip to New York Stock Exchange, right? Corner abroad and Wall Street where capitalism thrives. thrives and it's amazing companies come public there and then shareholders trade these things back and forth just so again i'm sure you felt the energy it's awesome hey we're this ai we're probably the second or third inning you know there's a lot of negativity about headlines tariffs and all but at the end of the day there's so much money being spent i think amazon's can spend 103 billion dollars for ai and data centers microsoft 93 billion the race is on to build faster and better and look we want to follow the flow and one other thing i'm sure connor has some comments here too.

1:29If you think about 2020 and COVID and how much money went to diagnostic and medical devices, right? And all this stuff. Well, just fast forward five years from now, instead of it being healthcare, thank God COVID's out of our hair. Now the huge amount of spend is in technology to keep up with one another. I think what's really interesting is I'm looking at a lot of different institutional positioning or people are actually starting to short up here, which I think adds more fuel to the fire, which is good. And basically looking at longer term positioning and options. Looks like, you know, new highs are inbounds.

2:04It seems like the path of least resistance to touch 6100 or so. And then we'll have some type of triple top and see if we get through there. But the way positioning is looking right now, looks like we could just squeeze into the last few weeks of June. The end of the quarter is my take. So how do you see the IPO? We were just talking about the Circle IPO that just happened. It seemed like a lot of excitement, pulses good around how people feel. Are there more potential IPOs coming? What can we expect there? Yeah, I do think having CoreWeave was a crazy IPO. I know it took a little while to get going, but as low as 40 up to like 160 in the matter of maybe a few weeks or a month.

2:48Then you had E-T-O-R. That one's done all right. and then circle went pretty crazy i think it was indicated at 30 a share and then went so much bidding for it went actually live at 60 and all the way up to like 130 something so we're definitely one of those maybe a little frothier periods i do notice that uh we're getting a lot of small caps starting to move so maybe late cycle bull market i still think longer term bull market but a shorter term like you know we're near a little blow off top we need some rest i guess um it's been kind of crazy. So when you're looking at the markets, is there something that you're looking at to, in order for you to really evaluate is something worth it or not?

3:28Yeah. It all comes back to earnings, my friend. It's always going to come back to earnings. So, you know, first of all, there's a process of elimination too, Daniel, where we're not going near pharmaceutical companies. They have a big target on their back for the administration. We're not, you're not going to find us in autos and airlines and some of these godforsaken retailers. You know, they say it's a stock market, but it's really market of stock. So the reason why we're in this AI lane is there's so much money being spent. And those companies' earnings, when they have stronger earnings, good things happen, right?

3:55They build up their balance sheet. They do buybacks. They raise their dividend. They buy the competition. They buy personnel and so forth. So so many good things happen in that cycle when companies have really strong earnings. And again, we have such a strong tailwind because so many companies want to get their chips up and running, get their data centers up and running. And those companies are the picks and shovels of this, this huge AI boom. Well, they're the winners because they got great earnings and they're going to pay shareholders very well between stock dividends and buyback. I was just listening to somebody talking about the future of like robotics and humanoids.

4:33And, you know, as AI and AI and robots kind of merge, like physical robotics could be self-driving cars, could be literally a robot that's with us. I think we've seen some companies talk about that. How do you see this in terms of not just AI being in the computers that we're using, but now moving into physical things? I think we could all agree it's a little scary maybe, but I do think there is going to be adoption of these technologies. There already is. I can't tell you one person that doesn't use like ChatGPT or Rock or some other service like that basically daily. And we were all a little skeptic of it at first, but you do see the actual applications of it.

5:16So I just think there is some adoption and, you know, we don't want these like Terminator. I've seen those Tesla robots. They're a little scary, but you never know. These could be very useful and practical in different ways as long as people are adopting to them. And they're obviously under control or, you know, there are safety guidelines along the way. But, yeah, that certainly is future. And, you know, we know companies are spending like crazy to boost, you know, for data centers and AI infrastructure. It takes a lot of computing power. and like ken said do you think it's early innings still um for all these different ai applications most likely when you look at people that trade of different age groups or different ages do you find that they're looking so you know i know connor you're in your 20s ken you look like you're in your 40s yeah so i when you're when you're looking at these different age groups are they looking at things differently or are they asking you different questions?

6:12Yeah, I think because of social media and so many resources, a lot of really good questions. I know for the older folks, so to speak, which I'm one of them, by the way, Daniel, I don't know. They say, okay, now retire, I'm going to go to dividend paying stocks. We don't like that. I mean, a lot of dividend paying stocks, you get your five or 6 % and many times these stocks, if they cut the dividend, the stock could get cut in half. So the risk reward to us doesn't really look so great for a lot of people who are in their 60s or so that are looking for dividends. In fact, we'd rather just, you know, their playbook, go with those fiction shovels, the Apple, the Microsofts, the NVIDIA, have those names grow in your portfolio, keep up with cost inflation, and skim off a little bit to create some income.

6:54But again, it's a wholesale change, 180-degree change we see as opposed to buying dividend checks, you know, dividend stocks when you retire. Instead, we still like to say growth, growth, growth, even through retirement, especially if you're going to live into your 90s, right? Like guys, the 3S, we're going to live into our 90s. We definitely want that inflation hedge and stocks and real estate are really the two best areas to protect against inflation. How about you, Connor? Anything from, you know, when you're, what do people in their 20s think about the market? I hope they're getting involved as soon as possible.

7:25I think the big thing to have is through work is passively investing in, you know, 401k. It's like, you know, it comes out of your paycheck. You don't really have to think too much. Hopefully you just check the large cap growth or growth allocation, all stocks. We talk to people about that all the time, even in even into your 30s or 40s. That's not money you're going to use until you're probably at least 60 or 65 or older. I just hope that people are investing to some degree in stocks primarily. And yeah, for more aggressive people, maybe they have a different account. You know, they can trade and stuff and look at Bitcoin or some of those more aggressive assets.

8:02But I just think a good place, you just have to start. You just have to have something. Let that compounding start young. And that's a huge, huge part of the puzzle, I think. Yeah, Albert Einstein, a pretty smart guy. He said the eighth wonder of the world in average, listen, is compound or compound interest. And it shows stacking returns on top of returns. And sometimes I'll get somebody retired at 60. They're like, I have a million dollars retiring account. I can't believe it. But again, it was years of putting away pre-tax, dollar-crossed averaging towards growth. But again, I love that Albert Einstein, who was, you know, a scientist, a physicist, not really an investment person, but he did say the eighth one of the world is compound interest.

8:40How are you feeling about crypto? And, you know, I have Bitcoin ETF personally. So, you know, I'm always looking at are there more ETFs coming? I was just seeing I believe the Vatican might be buying like a billion. I don't know if that's even true. Somebody is something I was reading, but it's a new poll. Maybe he's a trader there, too. Maybe, but I know there's like a lot of people, a lot of traditional investment companies, a lot of companies are buying in Bitcoin, obviously, you know, reaching those all time highs again. I think it's definitely a good trading vehicle for sure. I think IBIT, there's BITX, which is leverage.

9:18There's so many, GBTC. There's so many different companies basically getting involved at this point. I think it's come to the realization that not everyone really knows what Bitcoin is or does. We just know it's an asset class that is moving in price. So it's a good trading vehicle, I think, for people. it's hard to say the actual you know par value right is people say oh we can trade bitcoin it just was 101 000 two days ago and now it's 110 so it's extremely volatile vehicle i do think it's pretty speculative asset but then again like i said it's a good trading vehicle and more and more institutions seem to be getting involved which legitimizes it further i think there's some higher targets probably this year, 120, 125, something like that.

10:07You know, if you look at like Fibs and IBIT option flows and different things that are out there, it seems like, again, I think I talk about paths of least resistances. Bitcoin is probably higher in the next, you know, few months, six months. I've heard some people say could hit a million dollars at some point. Yeah, I do think for some people, they see it's like their path to it's like a self-fulfilling prophecy and trading at times. is we all have this target in mind. We're going to all buy it up to these targets. And Bitcoin, like I said, has no earnings. It has no real fundamentals. It's kind of like a psychology trading vehicle.

10:45So trading vehicle, yeah. And that's the problem I have with it. One was put like 5 % of portfolio of finance. I like business models like Microsoft, right? They own LinkedIn. They have all the gaming under Xbox and Windows this and Windows that. I mean, if that's a real business, then, you know, the problem here is here's the problem I have with it. Tell me one day I could take my wallet. I'm not talking about my wallet, my coin wallet, walk into Best Buy or walk into Barnes & Noble and use it. Then I'm like, OK, we have something. So I'm still kind of show me state. I'm older that I'm generation X.

11:21That's why you Gen Z folks have a different take on this. I like businesses with cash flow that are more predictable. I know this can go up in value. to some clients, I guess you could recommend a few percent of anyone's holdings, I guess, diversifying to it. But at the end of the day, I can't use the currency. And I'm told the reason why we buy it is that someone else buys at a higher price than you. I'm told the reason why to buy it is that you could transfer your money around. Well, I could do that with Zelle. I could do a PayPal. I could do that whole bunch of other services. So until I get to me anyway, until I get to use it to buy something, well, I actually call it like a legit currency or legit.

11:56Right. Right. Seems like, you know, people see as inflation hedge, maybe the digital inflation hedge alongside like gold as being a physical one or real estate or stocks in general. So it's an interesting phenomenon. It's pretty incredible. It's at SeaWorld. Yeah, I like how you put that, Connor. You know, when I put it when I put money into crypto, I do just hope that it goes up. It is a self-fulfilling prophecy. Then maybe something that has a huge amount of uses yet. But when it comes to the dollar, though, I'm curious about I see I think the year, the dollar, the euro, the dollar was down.

12:34We were just traveling somewhere and I noticed my money didn't go as far as it did last year, sadly. But what is there something that we can expect or hope to see in maybe this year when it comes to the dollar? And then on top of that, there's a lot of people talking and there's a lot of rumbles about things replacing the dollar and such. How do you feel about that as well? Okay, so I'll jump on that. So as far as the dollar, we still think it's going to be the world currency. There was some nicks in April where we had the Liberation Day, which turned into a real mess. And then the dollar went down and gold went higher and cryptos went higher.

13:11But now you start seeing the homostasis again. You start seeing a balance. And again, at the end of the day, I still see the U.S. dollar being the world currency. Now, it doesn't mean it won't have its bumps and bruises, but if you look at Europe, seriously, I don't get it. I mean, they over regulate. There's hardly any innovation there. I just I just don't get it. I don't know how the euro would be that. Japanese, they have their own issues. And, you know, maybe we're the prettiest and the ugliest contest, so to speak. But it's good enough because, again, America, with all the ingenuity that takes place.

13:43Yes, we're trying to get better trade. Yes, there's a lot of uncertainty. But I still think the go to currency will continue to be the dump. you know, further in, because I have a lot of questions. I know you have an incredible newsletter that I read every day. The good thing about your newsletter is it's, it's funny. It's informative. It's fun to read. It's easy to read, which is something, you know, I enjoy. I can only read something I enjoy because I'm, you know, if not, I'm like the, you know, ADHD, but if people want to get in touch with you though, they want to read your newsletter and everything.

14:17How can they do so yeah so it's mahoney gps.com m-a-h-o-n-e-y gps.com right there is our newsletter sign up for it um we have a lot of ideas as you can tell and bounce off a lot of ideas we just love it we literally breathe this stuff and certainly it's it's an amazing america's amazing to be able to have this opportunity to invest in the best companies not in the u.s but in the world there's only one apple only one nvidia one microsoft i could go on and on and on. Truly innovative. And that's the spirit of America in the best companies in the world. And we have access to it 24-7, click, click, click.

14:51You can buy stocks all day long. It is such an amazing opportunity that we have. Well, this has been great. Ken and Connor, father and son duo, not too many in the finance space that we've gotten to talk to at least. So it's always great to understand the different dynamics and age groups, everything that you're seeing that you're working on. I know you're talking in like tons of media all the time, but I just want to say thank you so much for joining us today. I thank you for having us, Daniel. Great work, friends, and make this kind of think through it and help your viewers enjoy some of the commentary that we have.