The Financial Hour · Hour 2 · November 14, 2026
Nvidia Without Jensen Huang: What the CEO Shakeup Means for Investors and Retirees
The Tom Dupree Show | Dupree Financial Group | dupreefinancial.com | 859-233-0400
By Tom Dupree, Founder, Dupree Financial Group, with James Dupree, and Michael Dawahare
This week’s Financial Hour started in Laurel Canyon and ended up in Santa Clara. Tom Dupree, James Dupree, Michael Dawahare and Elizabeth Dupree spent most of Hour 2 on the biggest business story of the week: Nvidia, the company at the center of the artificial intelligence trade, announced on Thursday, November 12 that its founder, Jensen Huang, was out as chief executive. Along the way, the panel talked about price discovery, corporate governance, California’s billionaire tax vote, smart glasses, inflation and interest rates. The thread running through all of it is one Tom has been preaching for 48 years: know what you own, and know why you own it.
Key Takeaways
- Nvidia’s board announced Jensen Huang’s resignation on November 12 and named CFO Colette Kress interim CEO, and many retirees own the stock directly or through index funds.
- One person, even a brilliant founder, can become the biggest risk in a company, so leadership and governance belong in any analysis of what you own.
- The panel agreed that nobody knows yet where Nvidia’s stock settles, and that price discovery will play out over earnings, peer reports and investigations.
- Tom said he can’t invest in Nvidia right now because the facts an analysis depends on could all be changing.
- Hot inflation, oil, shipping and insurance costs suggest interest rates may stay higher for a while, which matters for anyone living on bond and dividend income.
From Laurel Canyon to Silicon Valley
Tom opened with California Dreamin’ by The Mamas & the Papas. Cass Elliot lived in Laurel Canyon above Los Angeles, where so many musicians lived and played together that it became a breeding ground for the 1960s California sound. Michael rattled off Crosby, Stills, Nash & Young, the Eagles, Eric Clapton, and Frank Zappa with his guitarist Lowell George, who went on to form Little Feat. Tom added that Zappa kicked George out of the band for doing drugs.
After the break came Wilson Phillips, the late 1980s trio built around two daughters of the Beach Boys’ Brian Wilson and the daughter of John and Michelle Phillips. That took Tom back to his trips west from Houston in the early 1980s: a rented Lincoln Continental at LAX in beautiful downtown El Segundo, city lights a good 35 minutes before landing, and a first trip with his buddy Van McCrary to Newport Beach and the Andy Williams tournament in La Jolla. California, Tom said, just blew him away. Put enough talented people in one place and things get created. Laurel Canyon did it for music. The Bay Area did it for technology, and it’s home to Nvidia.
What Happened at Nvidia This Week
Here are the facts as they stood when the show was recorded. On Sunday, November 8, Nvidia’s board opened an independent investigation after reports that Huang had been the target of a foreign intelligence effort, and Huang admitted to an extramarital affair in an email to employees. U.S. authorities reportedly concluded the woman, a former executive at a Singapore company that bought Nvidia chips, was a Chinese intelligence asset. China has rejected those claims. Then on Thursday, November 12, Nvidia announced that Huang had resigned as president, chief executive and board member, effective immediately. Chief Financial Officer Colette Kress agreed to serve as interim CEO while the board searches for a permanent successor, and longtime director Harvey Jones became the board’s first-ever chair. The company filed the announcement with the SEC in a Form 8-K. CNBC reported that the board had decided the night before to oust him, and reports of relationships with other women followed.
Tom called it a strike through the heart. America is trying to hold its lead in artificial intelligence, Nvidia’s chips are central to that, and the story reaches all the way to the White House. He was also disappointed personally, because he liked Huang’s story, which has a Kentucky chapter. As a young boy in the early 1970s, Huang and his older brother were sent to Oneida Baptist Institute in Clay County by an uncle who mistook it for a prestigious boarding school. It was a hard experience, but Huang has spoken of it as a turning point, and in 2019 he and his wife funded a new dormitory and classroom building at Oneida, which Tom remembered as Huang giving back to the school that woke him up.
Never Discount the Human Element
Tom said he was a little speechless, so he turned it over to the panel. Michael’s first point was the one every investor should tape to the refrigerator: “Never discount the human element.” The boards, CEOs and executive teams who draw up plans and carry them out are human beings. Huang had a security detail numbering in the dozens, Michael noted, all of them with his safety in mind, and look what happened anyway. Tom wondered whether Huang had become something like a little emperor, with people looking the other way. Michael said that’s the only conclusion you can come to.
Governance was a big part of the story. Nvidia’s board did not have a formal chair until this week, and several directors have served for decades, a couple of them since the company was founded in 1993. Michael called it sloppy governance. He also pointed out that once relationships with employees and direct reports came to light, Huang had violated the morals clause of his contract, and a public company simply couldn’t keep him. Shareholder lawsuits were already being filed. Elizabeth added that being investigated by the federal government might be a problem too, and Michael agreed it depends on what investigators find. House committee chairs had already asked Huang for a closed-door briefing on November 18.
Tom tied it back to judgment. If a person can’t conduct his or her personal affairs well, you have to wonder about their judgment in business. For an investor, that’s not a moral lecture. It’s part of the analysis.
Price Discovery Starts Now
Michael’s next point was that now we get price discovery, the market’s process of figuring out what a company is really worth with new facts on the table. That process has a calendar. Nvidia reports third quarter results on Tuesday, November 17. Its peers report over the following six weeks. And the regulatory picture gets clearer when the new Congress is sworn in.
The panel also talked about circular financing, where a company invests in the same customers who buy its products. Michael said that in the dot com era this was nicknamed a Barney deal: I love you, you love me, and we trade business back and forth. Tom compared it to keiretsu in Japan, where big companies like Mitsubishi or Toyota would invest in their own suppliers. It looks wise, Tom said, but in a sense it’s dead money, because you’re already doing business with them, and it turns a free market into more of a fixed one.
Michael pulled out two old Wall Street lessons. The first is one Elizabeth makes all the time: do your own research. Nvidia is covered by analysts worldwide and tracked by millions of people, and nobody had this story. The second: watch the chart. Nvidia hit a record close of $239.24 on October 6, about six weeks before the show, then started breaking down before any of this was public. Michael said one short seller had already published a note questioning the circular financing and the Singapore relationship. Tom said the market always seems to know things that aren’t out there yet.
Michael called the selling after the news a capitulation washout, with some of the largest one-day swings in market value and volume on record, give or take. Tom said he’d seen the stock as low as $148. James did the math: with roughly 24 billion shares outstanding, every dime the stock moves is worth about $2.4 billion. Michael noticed that in a single day traders bought about two months’ worth of options, nearly all of them calls, which are bets the price goes up. In plain English, many traders don’t think the circular financing put the company at risk or that Huang was a spy. They think he did something really stupid. Institutions are watching what could be a generational opportunity, Michael said, but nobody knows yet. You have to stay objective.
Opportunity or Off Limits? The Panel Didn’t Agree
This is where the conversation got good, because the hosts didn’t all see it the same way.
James looked at valuation. Historically, he said, Nvidia traded around 30 to 40 times earnings while growing about 100% a year, and fast growth can justify a higher multiple. By his count, Nvidia recently traded near 20 times earnings while AMD traded near 100, which told him the smart money may have priced in the risk before the retail and institutional capitulation. James also passed along word on the street that several key executives, including the person behind Nvidia’s CUDA software, had warned the board they would follow Huang to Elon Musk’s Terafab chip venture. That had not been confirmed when the show was recorded, though CNBC did report that Musk said it would be an honor to hire Huang. Elizabeth mentioned online photos of employees leaving flowers outside headquarters. James said nobody wanted him to go, because his risky bets paid off and took a startup past $5 trillion in value at its peak.
James also raised a relationship point that hits close to home for an advisory firm: if you were a customer with a direct relationship with Huang, would you keep sending the business? Michael’s pushback was that Nvidia’s products are superior and an engineer mid-project is the last person who wants to switch chips. Tom put it bluntly: “There’s not a chip you can change to.” Some selling money still rotated right into Broadcom and AMD, James said, and Michael explained that institutions often must keep a set amount of sector exposure.
Michael brought some history. People owned Johnson & Johnson through the Tylenol tragedy and Chipotle through its food safety scare, and both came back. Apple and Amazon lost most of their value in the dot com crash before becoming giants. Tom said this is different. Michael said he wasn’t claiming it was or wasn’t, only that no one knows yet. Let another card come out of the deck.
Then Tom explained why he can’t invest in Nvidia right now. Everything you’d use to analyze it, its businesses, what it does and where it makes its money, could be changing. Huang wasn’t a caretaker CEO. Elizabeth called him the face of the brand; Tom said he was the guts of the brand. Michael said institutions run decisions through investment committees all the way up the chain, and for now nobody will pound the table to add to this position. Tom figured most of the volume right now is traders, not owners. James agreed, adding that in markets like this, technology stocks get more volatile and you can get underwater fast.
Traders, Owners, and Your Index Fund
Michael drew a useful line between ownership and trading. By his estimate, passive index investing now accounts for close to half of the S&P 500, and the so-called Magnificent 7 technology giants make up around 45% of the index. Those shares mostly just sit there. As Tom put it, every S&P 500 fund has to own its set amount of each stock, whatever the headlines say.
On the other end of the spectrum, Michael explained 0DTE, which stands for zero days to expiration. These are options that are created and expire on the same trading day. They don’t exist at 9:30 in the morning, and they’re gone by 4:00 in the afternoon. Michael called it a hootenanny of trading from Korea to all over the world every day, and it explains a lot of the wild moves you see on a screen.
Here’s why that matters to a retiree. Tom said a lot of listeners probably own Nvidia in their IRAs, and plenty own it without ever choosing it. If you own an S&P 500 index fund, you own Nvidia in proportion to its size. When one company and one person can move the index this much in a week, it’s worth knowing how much of your retirement rides on a handful of names. As Elizabeth put it during the break, this is a perfect example of why you need to know what you own and why.
There’s an income angle too. Nvidia pays a token dividend of about a penny a share each quarter, so nearly all of what an owner earns comes from the stock price going up. That’s not a knock on the company. It’s simply a different job than the one a retirement income portfolio is built to do. At Dupree Financial Group, our investment philosophy starts with cash flow: dividend-paying stocks and bonds that put income in your account while the market sorts out headlines like these. Dividends are not promised, companies can cut them, and all investing involves risk, including the loss of principal. But when part of your return arrives as income, you’re not depending entirely on a stock price to pay the bills.
California, the Billionaire Tax, and How We Govern Ourselves
Tom’s trip down memory lane led straight into politics, and he connected it to markets the way he usually does. Despite all the impediments he believes California puts on business, the Bay Area still produced the AI industry, and Nvidia is headquartered there. This month, California voters rejected Proposition 40, a proposed one-time 5% tax on the net worth of residents worth more than $1 billion. Tom’s read was that even in a year when voters went heavily Democratic, they weren’t willing to confiscate money from the golden goose, the people who create the jobs. The measure split Democrats, too. Governor Gavin Newsom opposed it.
Tom remembered when California wasn’t like this, back in the 1980s, when Ronald Reagan came out of California. In Tom’s view, Reagan was maybe the most popular president we’ve ever had, more than Trump in many ways. Sometimes, he said, he feels like he’s lived too long and seen too much, and other times like he hasn’t seen anything.
Michael approached it as a student. His view is that Reagan’s 1980s immigration amnesty permanently changed California’s political structure into more or less a one-party state, and he was careful to say he wasn’t making a value judgment. He’s also noticed that as Sun Belt states industrialize and recruit companies, which is what investors want, they are becoming more Democratic. He doesn’t lose sleep over it. As a professional investor, he tries to stay politically agnostic and focus on policy, not politics, and he closed with a line often credited to Winston Churchill: America does everything wrong until it eventually gets it right.
Tom brought the hour together. The important thing to him isn’t politics, it’s government. How are we going to govern ourselves? And at Nvidia, he said, they did not govern themselves well.
Price Discovery Is a Search for the Truth
Tom offered one of the clearest definitions of investing you’ll hear. Price discovery, he said, is really a search for the truth. What is this company truly worth? The job is to line up the price you pay for a stock as closely as you can with the intrinsic value of the business. Talking to management is part of that. Tom called it value discovery. Michael said that’s exactly why professional investors like meeting management in person. You want to see how they carry themselves, how they look, how they answer questions, all of it.
Tom was honest about the opposite approach. You can throw money around at things, he said, and you’ll usually lose it. He confessed he’d bought some Cisco for himself that very morning after liking its chief executive’s interview on CNBC, was already down, and joked that maybe the guy’s a doofus. Elizabeth jumped in: it was a personal, speculative purchase, nothing on the show is a recommendation to buy or sell, and you should talk with a professional before investing. Then Tom tooted Michael’s horn saying Michael works harder than anybody he knows at digging into companies. That digging is the point. In-house research is how we try to learn what something is really worth before we put a client’s money in it.
Smart Glasses: The Next iPhone or a Niche Product?
Michael’s latest digging had him watching smart glasses. Warby Parker began taking preorders on November 12 for its first glasses built on Google’s Android XR platform, with hardware made by Samsung. Michael said Google is the primary maker in this push, though Meta and others have their own versions, and he expects prices from roughly $300 to $800. The glasses can take a picture without pulling out your phone, give you directions, and tell you what’s going on around you as you walk down the street. Michael said the makers have put the facial recognition genie back in the bottle for privacy reasons.
Michael isn’t prejudging it. If people really like these, we could have another iPhone on our hands, and we’ll know after the holidays. Tom described an ad for a man with poor eyesight who uses the glasses to learn where he is and what’s on the menu. Michael said that’s the kind of product that catches on, because it makes your life better, the same way Lululemon built a business on fabric that fought sweat and skipped the dry cleaner. James has owned Meta’s glasses for about two years. They carry a small white light when recording and won’t record if you tape over it. Tom thought the market may be a small slice of the population, and added that things move fast while the same old human problems remain. Michael pointed right back at Nvidia.
Inflation, Oil, and Why Rates May Stay Higher
Before the hour ended, Tom wanted to talk about bonds. Bond prices have backed up further, which means yields have moved a little higher, after some hot inflation numbers. The government’s latest report showed consumer prices rose 0.4% in October, more than expected, and a number of economists now expect the Federal Reserve to raise rates at its December meeting. Tom pointed to electronic components that have gone way up, oil that’s still high and food that’s still high, and said he isn’t sure the Fed can fix this just by raising interest rates.
Michael agreed. The first fix is getting oil down, and that has nothing to do with whether the Fed sets its rate a quarter point higher or lower. To him, what inflation does next is tied for the most important question for investors heading into 2027, and history says an oil spike takes about six months to bleed through into prices. Elizabeth raised something that sounds backwards: there are oil storage problems right now. Michael explained that so much oil is flowing from the Gulf and the Western Hemisphere that parts of Southeast Asia are short on room for the extra barrels.
James thought much of today’s price is a risk premium, extra cost built in because Middle East conflict could flare up. Michael said some version of that premium has been there since Iran’s revolution in 1979, and insurers like Lloyd’s of London have been happy to charge for it. Shipping and insurance costs, he said, are things the federal funds rate can’t touch. Tom’s conclusion: rates may stay high for quite a while.
How long is quite a while, Elizabeth asked? Tom said a slowdown is one thing that could bring rates down. If high prices cause a recession or business slows, including AI spending, demand for money drops. For retirees, higher yields cut both ways: new bonds pay more income, but existing bonds lose value when yields rise. Investor.gov has a clear guide to bonds and fixed income.
Why the Economy Has Avoided a Classic Recession
Michael closed the hour with a theory that’s been written about a lot this year. Outside the brief pandemic downturn in 2020, the country hasn’t had a meaningful, drawn-out recession since the Great Financial Crisis. The prevailing explanation is that since about 2010, the economy has been led by technology companies that don’t carry much inventory. In the old economy, cars piled up on dealer lots and clothes stacked up on shelves, and working off that excess inventory tended to cause recessions. Then the iPhone took off, Amazon found its footing in e-commerce, and in 2022 ChatGPT arrived. Tom called it a good point, and it’s a reminder of how much of today’s market rests on a few technology companies and the people who run them.
What This Week Means for Your Retirement
Put the hour together and a few lessons stand out for anyone living on a portfolio, or getting close.
First, know what you own and why. If a large share of your retirement sits in an index fund or a handful of technology names, a week like this one hits you whether you ever bought Nvidia on purpose or not.
Second, people are a risk factor. One person’s judgment can shake even the most valuable company in the world, which is why leadership and governance are part of our research.
Third, income gives you room to be patient. Nobody on the panel claimed to know what Nvidia reports Tuesday. When your portfolio is built to produce cash flow from dividends and bonds, you don’t have to guess, and you’re less likely to be forced to sell into a panic.
Finally, don’t trade the headlines. Stay objective and let another card come out of the deck.
If you aren’t sure how concentrated your portfolio is, or how much income it actually pays you, a personalized portfolio analysis is a good place to start. Dupree Financial Group is a fee-only fiduciary in Lexington, Kentucky. Visit dupreefinancial.com or call us at 859-233-0400, and we’ll sit down, look at what you own, and give you a straight answer.
Frequently Asked Questions
What happened to Nvidia CEO Jensen Huang?
On November 12, 2026, Nvidia’s board announced that Jensen Huang had resigned as president, CEO and board member, effective immediately. It followed reports that he had been the target of a foreign intelligence effort and his admission of an extramarital affair. CNBC reported that the board had decided to oust him. A board investigation is ongoing.
Who is running Nvidia now?
Colette Kress, Nvidia’s chief financial officer since 2013, is serving as interim CEO while also remaining CFO. The board is searching for a permanent chief executive and says it will consider both internal and external candidates. Longtime director Harvey Jones was named the board’s first-ever chair as part of the same announcement.
I own Nvidia in my IRA. Should I sell?
We can’t answer that without knowing your situation, and nothing on the show is a recommendation to buy or sell. The panel’s view was that nobody knows yet where the stock settles. Start by learning how much Nvidia you own, including through index funds, and how it fits your income needs and timeline.
What is price discovery?
Price discovery is how the market works out what a company is really worth once new information comes out. Tom calls it a search for the truth: lining up a stock’s price with the intrinsic value of the business. For Nvidia, earnings, peer reports and investigations over the coming weeks will drive that process.
Why might interest rates stay higher for a while?
October consumer prices rose more than expected, and much of the pressure comes from oil, shipping, insurance and food costs that Fed rate moves don’t directly fix. The hosts noted oil spikes take about six months to work through prices. A business slowdown is one thing that could bring rates down sooner.
About The Tom Dupree Show
The Tom Dupree Show is hosted by Tom Dupree, founder of Dupree Financial Group and a 48-year veteran of the investment business. Each episode covers the financial topics that matter most to retirees and those approaching retirement, in plain English, without the Wall Street spin. The show airs Saturdays on NewsRadio 630 WLAP. Dupree Financial Group is a fee-only, fiduciary Registered Investment Advisory firm based in Lexington, Kentucky. The firm manages separately managed accounts focused on income-generating, dividend-paying portfolios. We don’t sell products or earn commissions, and we’re structured to minimize conflicts of interest. Past episodes are available in the market commentary archive at dupreefinancial.com. Hear this week’s full conversation on the podcast: 11-14-26: Nvidia CEO Shakeup and Retirement Income.
Schedule a Complimentary Portfolio Review
If this week’s Nvidia news made you wonder how much of your retirement rides on one company or one CEO, let’s look at it together. Schedule a complimentary portfolio review. No cost, no pressure, just a straight answer. Call: 859-233-0400 | Book online: dupreefinancial.com/book
The information presented in this article and on The Tom Dupree Show is believed to be factual and up to date, but we do not guarantee its accuracy, and it should not be regarded as a complete analysis of the subjects discussed. Dupree Financial Group is a registered investment advisor, registered with the Securities and Exchange Commission. All information presented is for educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. Any references to securities or market performance are general in nature. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. Please consult with a qualified financial advisor before making any investment decisions.
Show transcript
Elizabeth Dupree: To the financial hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Joining us this week Michael Dawahare, James Dupree, and here’s our host, Tom Dupree
Tom Dupree: So anybody familiar with popular music o- over the last 60 years, uh, this, this is a song c- called California Dreamin’ by The Mamas & Papas. And The Mama was a lady named Cass Elliot. Uh, she’s probably the most famous member of the group. Uh, and she lived in a place called Laurel Canyon, which is where a lot of the musicians of the day lived, and they would all get together and party and have dinner and probably smoke pot. And a lot of music was created out of Laurel Canyon, or let’s put it this way, it was, it was a breeding ground for what we would call the ’60s California sound. And, uh, I can’t think of all the musicians that, that lived there, but there were a bunch.
Michael Dawahare: All of them.
Tom Dupree: Yeah. And if the-
Michael Dawahare: Crosby, Stills, Nash & Young, the Eagles created their sound there.
Tom Dupree: Yeah.
Michael Dawahare: Clapton hung out there as often as he could.
Tom Dupree: Frank Zappa.
Michael Dawahare: All of them. Frank Zappa and his guitarist, uh, Lowell George, who went on to form Little Feat. It’s endless.
Tom Dupree: Do you know that Frank Zappa kicked Lowell George out of his band for doing drugs?
Michael Dawahare: Right.
Tom Dupree: So, uh, he was … Frank Zappa was an interesting guy in his own right, but- He was an
Michael Dawahare: intellect …
Tom Dupree: he was. Towering intellect. Um, okay, so the thing that we, you know, I don’t, I don’t know that we’ve yet woken up to what this means for the biggest driver of markets these days, which is AI and the, the, the trade around it. The, the Mack Daddy in a sense of, of AI, the former president of NVIDIA, uh, is, is now former because- He did some really stupid things. Um, he’s not a stupid person, but, um, he compromised himself with a woman who was a, a Chinese spy. You’ve heard all about it probably. Um, this goes all the way to the White House. Um, it– Since America is trying to maintain its lead in the whole AI industry, uh, and the NVIDIA, um, GPU chips, or whatever you wanna call them, um, were, were paramount to that happening, um, you know, this is, this is a strike through the heart. He, um… Jensen Huang was terminated by the board of NVIDIA, and, um, and now it’s turned out he, he l- he had l- s- sounds like two other affairs. And so he just… I find it really disappointing because I like the guy. It was a success story like you like to hear. I mean, he came to Kentucky at age 13 to, um, a, a place called Oneida Baptist Institute, which is… It’s in the backside of Clay County, which is already in the backside. And, you know, I, I… He had a very unpleasant experience there, but it woke him up, and he, he now gives them quite a bit of money. And, um, but I- I’m kinda speechless about it, so you guys jump in
Michael Dawahare: Never discount the human element. We’ve, uh, learned that lesson many times, that the boards and the CEOs and the executive team drawing up plans and executing are human beings. And, um, this Jensen had a security detail in the dozens. So he had all sorts of people around him who had, in theory, his safety and security in mind, and yet look what happened.
Tom Dupree: So he was basically kind like a little emperor, and they looked the other way when he did stuff like
Michael Dawahare: that. That, that’s the only conclusion you, you can come to. Uh, and now we’ll get price discovery. The, the company reports earnings Tuesday night. And we’ll see the interim CEO is the current CFO, who came to Nvidia via an acquisition of an Israeli company. And she did not like some of the circular financing. So-
Tom Dupree: Well, where, where he’s investing back in these companies that are, uh, that they’re buying-
Michael Dawahare: That in- … product from … in the dotcom era it was called a Barney deal. I love you, you love me, and you exchange-
Tom Dupree: Well, it’s- …
Michael Dawahare: business with your customers. I-
Tom Dupree: It’s what slowed down the Japanese economy. They call it keiretsu over there. Yes,
Michael Dawahare: right.
Tom Dupree: Explain that. The- they … Well, um, a big company like, uh, Mitsubishi or, or Toyota or somebody would invest in their suppliers. And in a sense, that’s dead money when you do that because you’re already doing business with them. It’s … It, it, it, it seems like it’s a wise thing to do. It’s better probably to let the free market … ‘Cause now it’s kind of a fixed market now. You’ve, you’ve basically, um- Done something that looks like good idea, but it isn’t.
Michael Dawahare: Sure. So for the listener, we’ll throw out some old Wall Street expressions, and some of them get back to the point Elizabeth makes all the time. Uh, do your own research, or if you’re a investment firm, be responsible for doing your own research, because this company is covered by analysts all over the world. It’s tracked by millions of people, and no one knew the story.
Tom Dupree: Yeah, that’s crazy.
Michael Dawahare: Maybe it was unknowable, but it would just go to show you do your own work. Also, the chart- How
Tom Dupree: many knew it and didn’t wanna say anything?
Michael Dawahare: That- that’s out- There was one short seller out with a note on the circular on the, on the, uh, deal with the Singapore company of which this lady in, uh, Asia is caught up, and she worked for them. Uh, but it was also, which we talk about all the time, it was in the charts. Stock hit an all-time high maybe six weeks ago, and then inexplicably started breaking down. So another expression is- And
Tom Dupree: the, and the market always knows stuff that is not out there.
Michael Dawahare: That would be- It,
Tom Dupree: it,
Michael Dawahare: it
Tom Dupree: seems like it always
Michael Dawahare: does … that, that would be true, but then the market’s also forward-looking. The Which I think the listener would wanna know this. The technical behavior of the stock on the capitulation washout yesterday was unprecedented
Tom Dupree: Stock got to 148, it l- I saw, and it had been a week and a half earlier at, in the 230s.
Michael Dawahare: Um- Yes. And so the largest market cap swing in one day, the largest, uh, volume traded in one day, give or take.
Tom Dupree: James was saying every 10 cents a share on that stock is $2.4 billion.
Michael Dawahare: And, and I’ll l- let James hop in next. And two months of options buying occurred yesterday in Nvidia, and most of them, if not virtually all of them, were calls, meaning the market participants believe that stock is going up, which means they don’t believe that the circular financing put the company at risk. They don’t believe Jensen was a spy, think he just did something really stupid. So now the price discovery begins. They report next Tuesday. Their peers then will report over the next six weeks. We’ll see what the regulatory issues are when the new Congress is sworn in. Um, and so if you’re an institutional investor, you are paying super careful attention to what could be a generational opportunity. We don’t know. You gotta stay objective. James?
James Dupree: Yeah, and also, I think, I mean, historically, the, I think the stock’s traded around 30 to 40 times, uh, earnings. Um, and they were growing 100%. So in theory, if your company’s growing 100% year over year, you should probably be trading at 100 times earnings. That’s kinda how a earnings multiple works. You pay up for the, um, timely growth. Um, and also, a, a side point on the whole Nvidia thing. Um, so the board voted him out, obviously, and there are five board members that account for about 25,000 shares of stock, which is nothing. And they got a say. Uh, I think one of them was, like, the- They, they
Tom Dupree: make more in their board fees than they own in stock
James Dupree: Yeah, so the, those And then the key executive members, I forget the guy’s name, but he developed the software called CUDA. There’s a list of about five people that sent in a letter to the board and said, “If you don’t take back Jensen Huang, we’re all gonna go work at Terafab with Elon Musk,” which is, uh, a fab that makes chips and manufactures the chips. That’s, that would be with, uh … I think it might be with Tesla. I don’t think that’s SpaceX, but I might be wrong. Um,
Michael Dawahare: so-
Tom Dupree: You were saying that Jensen Huang is gonna … Huang is-
James Dupree: Yeah, he is …
Tom Dupree: is gonna go to work for Elon
James Dupree: Musk That’s, that’s, that’s the word
Michael Dawahare: on the street So what we, as a result of what James just said and other things, you’re going to get a ton of volatility over the next weeks as the headlines go back and forth. Um, and let’s just see the news, let the chart resolve itself. Um, if those folks leave and go to Tera, well, the sun’ll come up the next day, and it’s Nvidia’s board and management’s job to execute anyway
Elizabeth Dupree: Apparently some of … There’s some online pictures. Some of the employees have placed flowers outside the headquarters out, in front of the Nvidia sign as if someone has died. They’re in mourning.
James Dupree: So- No one wants him to go. I mean, he, he was the face of the company. He did all this innovation and he made some risky bets, and all of them paid off. And that’s why he basically took a startup to a $5 trillion company. And, um, you know, who else is, has the ability to do that?
Tom Dupree: Nobody. Certainly not the ex-CFO that is now the acting CEO. Why anybody would even imagine that that’s … This guy is one of a kind, and- As, but, but he, he, he-
Elizabeth Dupree: He couldn’t stay on, though … he
Tom Dupree: made a
Michael Dawahare: horribly- He could not stay on … fatal flaw. He- He violated, he violated the morals contra- Yeah, yeah … clause of his contract. He had relationships with employees and direct reports.
Tom Dupree: Yeah.
Michael Dawahare: And if you’re publicly traded, the lawsuits are already, you know- Yeah, it’s, it’s- … coming fast and furious. Most of those will get dismissed, but that one would be real if he wasn’t dismissed and had knowingly, openly kind of violated the, h- his contract. That’d be, that’d be something else. So he had no choice. So-
Elizabeth Dupree: I would say being investigated by the federal government might be a problem, too.
Michael Dawahare: It might be. It depends on what they find out. Yeah. It’s also, could also be a clearing event. I kind of like all that hysteria- Yeah … but, you know, Warren Buffett made his fortune buying the fear, which doesn’t mean that’s what should happen now. But, um, think about the, the, another, uh, investing, you know, you know, expression is what’s the news from here? Is it negative, neutral, or positive? The most likely outcome for Nvidia now is neutral to positive, unless the FBI investigation concludes something awful. That’s what market participants do every day.
James Dupree: Well, if I was, if I was a client of Nvidia and I had a direct relationship with, uh, Jensen Huang, I, I don’t know if I would wanna continue giving them business because, I mean, look at our business. It’s all based on a relationship. Sure, the service matters, but what starts the entire service? A relationship. So i- it’s hard to say if they’re gonna lose business or not because-
Michael Dawahare: Right. No one knows. The pushback there would be their products are superior. They have teams out- Yeah, they do have good products … this week fighting hard to keep that from happening. If you are the end user and you’re the engineer in charge of that project, the last thing you want is to change chips. So there’s all sorts of moving parts here, and there’s no reason to guess.
Tom Dupree: There are, there’s not a chip you can change to.
Michael Dawahare: That’s correct.
James Dupree: Well, there, there is no- Within
Michael Dawahare: reason, that’s correct …
James Dupree: there is no plan B. I mean, you know, um- I mean, you could go and buy AMD GPUs. I mean, they, they, they got everything. I’m pretty sure they compete with Dell in the server business, too. So I mean, it’s a really fantastic company, AMD. It’s why it trades at 100 times earnings. And it, it, th- that makes no sense to me because Nvidia is a better… was a better company than, uh, than AMD, and it was trading at 20 times earnings. So the market might have known and priced in that risk, and then you got all the retail capitulation, institution capitulation that really didn’t have any clue that this was gonna happen. But the s- really smart money did. Well, there’s a lot of,
Tom Dupree: a lot of
James Dupree: these people listening to this-
Tom Dupree: Uh, sorry about this. I keep hitting this phone.
Elizabeth Dupree: You got wandering fingers today.
Tom Dupree: Um, um, a lot of people listening to this radio show probably have NVIDIA in their IRAs. They, they, they probably own it. It’s a widely owned stock among retail investors. Yeah, there’s 24 billion shares, man. Yeah. That’s a lot
Michael Dawahare: of shares. Well, so was Johnson & Johnson when there was a terrible Tylenol tragedy decades ago. A lot of people owned Chipotle when someone may have actually spiked the lettuce and got people sick. Both of those companies roared back. Apple went to a dollar. Amazon went to $5 in the dot com crash. Um-
Tom Dupree: Michael, this is different …
Michael Dawahare: so-
Tom Dupree: I beg to dif-
Michael Dawahare: uh- I, I, I’m not saying it’s, it is or isn’t. Yeah. I’m saying no one knows.
Tom Dupree: Right.
Michael Dawahare: Sit back and watch, um, and let the, let another card come out of the deck. We don’t know.
Tom Dupree: Right. So, the, the, the thing that you should do… H- here’s why I can’t invest in NVIDIA. Because everything that you think you know about the company, in order to do a, an, an analysis of it, could be changing. Um, you know, um, if, if you look at their, their businesses and what they do and where they make their money, that could all change. Uh, we don’t know the full ramifications of the CEO leaving because he was an… He was not a caretaker CEO. He was an active investor- The
Elizabeth Dupree: face of the brand,
Tom Dupree: really … CEO, complete… Well, not only the face of the brand, the guts of the brand.
Michael Dawahare: I think you hit a key point. Institutional investors, now they have the, they have investment committees, and there’s an analyst and a PM and under, and a… And then it goes all the way up the chain. For the foreseeable future-
Tom Dupree: You can’t invest in it …
Michael Dawahare: yeah, they’re not these- they’re not gonna be pounding the table to add to it. There’s too much risk. Yeah. They don’t, they just don’t know.
Tom Dupree: There, there, there are no… I’ll, I’ll bet you, or I’ll guarantee you that 95% of the, uh, volume in the stock is traders. Uh, you know, people d- there… I, I can’t see any institutional investors- I think- … establishing or, or adding to a position …
Michael Dawahare: in the short term, uh, that’s a point to be respected.
James Dupree: Yeah. I think that’s true with the market right now and technology stocks. It… There’s not a lot of buy and hold investors right now because there is so much risk. And whenever, uh, in an environment like this, the characteristics of, of the stocks change. They get more volatile. So you don’t really wanna hold it for long because you, you could- Get underwater quick. So it’s, it’s main- like you said, it’s most of the stocks, I would bet 75% at least are just traders. And
Michael Dawahare: technology stocks- Well, there’s a difference between ownership and trading. Passive investing, index investing is almost 50% of the S&P. By definition, those don’t trade. The Mag 7 is 45% of the S&P. Those shares, uh, don’t trade. However-
Tom Dupree: Yeah, so every S&P 500 ETF or fund, they gotta own X amount of that stock. Right. And it just sits there.
Michael Dawahare: Right. However, there’s 0DTE, the audience has no idea what I’m talking about. Zero days to expiration. Those are options that are traded every day that don’t exist at 9:30 in the morning and don’t exist at 4:00 PM, and it is a hootenanny from Korea to all over the world every day with these bombs. That’s the stuff you’re seeing on a daily basis. In addition to some institutional investors, professionals would see this news and say, “I’m out. I’ll come back another time.”
Tom Dupree: Yeah, they’re not gonna be able to go in and make a, a solid assessment of this company.
Michael Dawahare: That, to me, that’s the most important point you’re making, is how could you professionally say you could do that right now?
Tom Dupree: No, you can’t.
Michael Dawahare: Right.
Tom Dupree: And whether that means you sell your position, some of them probably are.
Michael Dawahare: Oh, there was some of that, for sure, when the news broke.
Tom Dupree: Yeah.
Michael Dawahare: I’ll just come back and revisit it. That’s a professional approach. There’s nothing wrong with that.
Tom Dupree: And it
James Dupree: went right into Broadcom and AMD.
Michael Dawahare: Sure, you had a place to rotate it if you… Which m- if you’re an institutional investor or a hedge fund, you have to have exposure and in- You’re
James Dupree: gonna go for those other
Michael Dawahare: names in many, you, you have to, ’cause you have to have a certain amount of exposure.
Elizabeth Dupree: You’ve been listening to The Financial Hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Michael Dawahare, James Dupree, and Tom Dupree have been talking about NVIDIA. And if it’s not a perfect example of why you need to know what you own in your portfolio and why, that’s it. We can help you with that. Give us a call at 859-233-0400. You can also schedule an appointment directly on the homepage of our website at dupreefinancial.com. We’ll be back in just a few minutes with more of The Financial Hour. Stay tuned.
Tom Dupree: Hi, this is Tom Dupree at Dupree Financial Group. Imagine that your retirement investment account was managed by a firm that always had your best interests at heart, never charged you commissions, was financially aligned with your interests and not their own, and reported to you on a regular basis in language you could fully understand. If these things sound good to you, you should contact us and have us take a look at your investment portfolio. You might be surprised at how our approach could make a big difference for your retirement investment account. That’s Dupree Financial Group at eight-five-nine, two-three-three-zero-four-hundred and dupreefinancial.com.
Music vocals: Change things will go your way
Elizabeth Dupree: Welcome back to the financial hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Joining us, Michael Dawahare, James Dupree, and here’s our host, Tom Dupree.
Tom Dupree: Okay, this is, uh, three young ladies in this group, two of which were daughters of Brian Wilson of the Beach Boys. The other one Daughter of John and Michelle Phillips of The Mamas & Papas. And they, they, they were called Wilson Phillips. Uh, I don’t know what they’re doing now, if they’re still in business. But their harmonies were incredible, and, um, they, they kinda got started in the late ’80s. So, uh, uh, from Los Angeles. That’s back when LA Kind of a cool place. I, um, lived in Houston during that time, in earlier ’80s, and went out to LA a few times, and, um, one time I , I rented this big, uh, Lincoln Continental at, uh, LAX Airport in beautiful downtown El Segundo, and, uh, and drove all over town in that Lincoln. Uh, I mean, I went down to Long Beach and out to Pomona, uh, out east. You know, Los Angeles, if you’re flying in there at night, you start seeing city and you think, “Oh, I’m almost there,” and you’re 35 minutes from landing at LAX. 35 minutes. I mean, you’re, you’re already seeing full city. That’s how far east it goes, and then you’re just… ‘Cause, ’cause LAX is right on the lake or the Pacific Ocean. And, uh, I had a great time out there. The first time I ever went was with this buddy of mine from, a guy named Van McCrary from Houston, and we flew out to LAX, rented a car, drove down to Newport Beach, stayed at the, um, what was that place called? It was, it was just a, a motel, but… And we went to the, uh, it was either the Andy Williams or the Tony… It was the Andy Williams Open at, um, a place called, uh, what the hell is that? That, that golf course in La Jolla. Um, anyway, it’s, it’s got the big trees and, and, and stuff, and- It’s
Elizabeth Dupree: not Pebble Beach or am I wrong?
Tom Dupree: No, it’s not. That’s up near Ca- No … that’s up near San Francisco. It’s in Carmel. Um- I can’t help you well, anyway, the, the, the, the big famous golf course in La Jolla, um, and, uh, which is near San Diego. And, um, I was just… California just blew me away at that time. You, you… Now, interestingly enough, the whole AI, the, the, the whole, uh, business that we’ve been talking about, despite all the impediments that California lays upon businesses, and now they tried to do this billionaire tax, which the people voted down The people voted them, they went blue in droves, and yet they said, “We are not gonna confiscate money from the golden goose, the, the creators of these jobs,” which… But if you, if you look in the Bay Area And just look beyond the human detritus and look at the beauty of the area and, and, and I mean, it makes a hell of a lot of sense that that would be the place that… I guess NVIDIA’s based in California, isn’t it? Oh, yeah. Gotta be. Of course. Yeah. And, and it’s the biggest corporation in the world. There’s trillions of dollars of market cap in California-
Michael Dawahare: Five. Oh my gosh.
Tom Dupree: NVIDIA alone is five trillion … despite the fact that they’ve done everything to run off business, and I think that’s what… In the ’80s it wasn’t that bad. You know, Reagan came from California. Reagan was a very popular polit- maybe the most popular we’ve ever had, more than Trump in many ways. And, uh, I don’t know. I, I, I just Sometimes I feel like I’ve lived too long and seen too much, and then other times I feel like I haven’t seen anything. Michael, take it.
Michael Dawahare: Well, California’s a … And I don’t … Look, I’m a student. Uh, I study- Yeah, me too … stuff every day. I don’t, I don’t have the answers. I know that Reagan’s amnesty deal in the ’80s permanently changed the political structure of California. I’m not making a value judgment on it. Yeah. I’m not saying it’s good or bad. That’s just the reality. Um, it became sort of a one-party state after that.
Tom Dupree: It did.
Michael Dawahare: Um, and what I’ve learned in the last few weeks is, ’cause we’re … you try and learn every day. Uh, as the Sun Belt does what we want it to do for our investments, which is to industrialize and recruit and build out an economic infrastructure as they bring corporations to their states, they are becoming blue. That is just a, a simple reality. So what’s the new blue? I, I don’t lose a lot of sleep over that personally. Um-
Tom Dupree: Well, you’re smart not to …
Michael Dawahare: I, I don’t. I don’t fear it. Um, I try and stay, uh, politically agnostic as a professional investor and be policy not part, not politics driven. What’s the policy and what’s in the best interest of all sh- stakeholders and shareholders? And, uh, Churchill, I think it was who said, “America goes, does everything wrong until they eventually do get it right.” Some version of that.
Tom Dupree: The, the important thing to me is not politics, it’s government. How are we going to, how are we going to govern our- ourselves? What, what, what, what’s gonna be, uh, the, uh, important thing? Now, back to this Jensen Huang thing, they did not govern themselves well.
Michael Dawahare: Perfields are a great example of corporate governance. They did not have a board chair. That’s-
Tom Dupree: Well, the president was. He was the, he was the board chair.
Michael Dawahare: I think they didn’t have the formal title.
Tom Dupree: Maybe not.
Michael Dawahare: And so there was a lot of sloppy governance.
Tom Dupree: So it was kind of just an advisory
Michael Dawahare: board. Many had been there for
Tom Dupree: 20 to 30 years. Well, somebody
Michael Dawahare: was able
Tom Dupree: to
Michael Dawahare: fire him
Tom Dupree: because they must’ve, they must’ve gotten a board chair.
Michael Dawahare: Uh, they did after the fact. And look, no one was in the room. Uh, I, I think maybe ultimately he decided to fire himself or to submit his resignation because if you are having multiple relationships with em- with employees, that’s such an obvious flagrant violation. But that play’s come and gone. Now w- we’ll see, you know, what happens next. And, uh, your point about governance is-
Tom Dupree: If a
Michael Dawahare: person- Now we see …
Tom Dupree: if a person- Cannot conduct his or herself well in their personal affairs like that You have to think about their judgment in business.
Michael Dawahare: You got to, uh, something I think listeners might find interesting why professional investors like meeting in person with management. You want to see how they conduct themselves, their appearance, the manner in which they answer questions, all of it. You w- you want to see that
Tom Dupree: The, the, the thing that The thing that does well in investing is y- you’ve talked about price discovery. Price discovery, another way of putting it is a, a search for the truth.
Michael Dawahare: Sure.
Tom Dupree: Um, what is this company truly worth? It w- let’s, let’s make the intrinsic value as best we can line up with the dollar price of where it’s selling. Well, let’s, let’s, let’s make the, the sales price of the stock be close to the intrinsic value of the company. And one of the things you’re doing when, when, when you’re talking to management, it’s a form of price discovery. It, it, it, or value discovery. Absolutely. And, uh, that’s why it’s so important because listen, um, you can throw money around at things and you’ll usually lose it. Um, I’ve done, I, I remember I used to just, I’d like a stock and I’d buy it. I did that this morning and I’m already down, you know. Uh, I bought some Cisco just because I, uh, but I liked the interview with the head guy, but maybe he’s a doofus. I don’t know. He was on CNBC. Um-
Elizabeth Dupree: Nothing you hear on this show is a recommendation to buy or sell. Yeah. Please consult a professional- Right … before investing.
Tom Dupree: But, but this is what we have to do. It’s a … This is why, and I’m gonna-
Elizabeth Dupree: And you bought that just for yourself.
Tom Dupree: I’m gonna toot-
Elizabeth Dupree: It’s a speculative thing …
Tom Dupree: I’m, I’m gonna toot your horn, Michael. You work harder-
James Dupree: Don’t do that …
Tom Dupree: you work harder than anybody I know in the business at digging into companies. I mean, you, you, you are, you are assiduously-
Michael Dawahare: Well, that- …
Tom Dupree: digging.
Michael Dawahare: And- That is greatly appreciated, and here’s how timely-
Tom Dupree: And you have put me on some good things.
Michael Dawahare: No, here’s how timely that is. In this week, next week, smart glasses are rolling out.
Tom Dupree: Will Warby Parker carry those?
Michael Dawahare: They’re the, probably the single largest distributor at retail of them.
Tom Dupree: And who’s the maker of them?
Michael Dawahare: Google is the primary one, but there are others.
Tom Dupree: So- So it’s not Meta, it’s not
Michael Dawahare: Meta? No. Oh, they’ve got one too. So what we don’t know, I have no idea, we won’t have to guess. We’ll know after the holidays. Maybe the listener will get a kick out of watching. Are people really gonna buy 300 to $800 glasses that have a camera on the side and can kinda give you, uh, uh, real time- of what’s going on around you as you’re walking down the street. You can’t, they’ve figured out you can’t spy on somebody. You can’t, you can’t be, uh, uh, invade their privacy. But it can give you a snapshot of what’s going on around you. Well, it’s, it’s- If that happens, and I, I’m not gonna prejudge it- Does it have facial
Tom Dupree: recognition in
Michael Dawahare: it, or it’s- No, they have, they have put that genie back in the bottle.
Tom Dupree: Yeah.
Michael Dawahare: That’s what I’m talking about. If that happens, then we’ve got another iPhone on our hands. If people actually really kind of like it. Yeah. That’s happening this week, next week, into the holidays. I’m super curious to see how the American consumer adopts this product. If you’re a school, what do you do if these things get hot?
Elizabeth Dupree: So what’s the difference between that and the ones that, um, the Wayfair ones that Apple has?
Michael Dawahare: I think it’s all part of the same-
Elizabeth Dupree: Is there
Michael Dawahare: very, very similar? … category, but what’s kicking off- Everybody’s
Tom Dupree: gonna have their
Michael Dawahare: own version … what’s kicking off this week is a potentially the breakthrough product. It’s not $2,000. They’re 500-ish or less, and they can do all sorts of cool things as you’re just walking around. So let’s say you wanna take a picture, don’t have to take your cell, your cellphone out anymore. So- Say you want directions. Okay, am I going the right way or wrong way?
Tom Dupree: Well, I have no idea- So James- the way they’re being marketed. Uh, I saw an ad- Oh, what’d you see? I don’t … these guys with disabilities that it’s probably a very rare thing, but the guy doesn’t see well, but he sees well enough, and the, the, this phone tells him where he is, what’s on the menu. Okay. I
Michael Dawahare: think that’s the Apple one. That’s a great example of what we’re talking about. That really makes people’s lives better, which tend- Yeah … to be in consumption the products that go crazy. It ain’t complicated. Does it make your life better? Lululemon made, invented a type of fabric that you didn’t have to take to the dry cleaner and repelled sweat so you didn’t stink. Yeah. That’s , that’s a great product.
James Dupree: Right.
Elizabeth Dupree: So James, you have experience with the, um, the Apple version. What- No, it- What-
James Dupree: It’s the Meta version.
Elizabeth Dupree: Okay.
Michael Dawahare: Well, whatever.
Elizabeth Dupree: I’m sorry.
Michael Dawahare: What, what’s your experience with it?
James Dupree: Yeah, that it can take pictures. I got them, like, two years ago, and you could listen to music with them, too But now the Meta glasses are gonna have like a AI agent on them, which is pretty cool.
Elizabeth Dupree: Well, and what was interesting, um, is there’s some places that you could not wear those glasses, correct, James? ‘Cause it has a red light on the front to tell you-
James Dupree: No, it’s a white light
Elizabeth Dupree: Oh, it’s white. To tell
James Dupree: that- And it won’t let you, um, record if, if the, uh, light is like… If you put a piece of tape over it, it won’t let you.
Elizabeth Dupree: Oh, really?
James Dupree: For privacy reasons, yeah.
Elizabeth Dupree: So it,
James Dupree: it, it- That’s the whole reason it has the light.
Michael Dawahare: So what’s debuting in the next few weeks are aesthetically much more appealing. They look fashionable, and that’s a great, uh, story you told about the ad. I hadn’t seen that. This is someone whose life is changed- Yeah if this product works.
Tom Dupree: I think it’s a very small slice of the population.
Michael Dawahare: Right, but-
Tom Dupree: But anyway, it’s, um- Things are moving fast. Right. And yet in some ways, the, the same old problems that have plagued mankind- Sure.
Michael Dawahare: Humanity. Yeah. As fast as things are moving, look what Jensen just did.
Tom Dupree: It, it hasn’t, it hasn’t really changed. One thing I did wanna talk about before we were done is interest rates, uh, and the bond market. And, uh, we’ve, we’ve seen, uh, a further backup in the price of bonds, meaning the yields have gone a little bit higher, um, given, uh, some of the hot inflation numbers that we’re getting. Um, and, uh, I mean, uh, it’s … A lot of it is the, the, is electronic components which, um, have gone way up. Oil is still high. Food is still high. So, um, I’m not sure the Fed can get this dealt with by just raising interest rates. No.
Michael Dawahare: Uh,
Tom Dupree: I, I, I just don’t think-
Michael Dawahare: Who knows? Uh, I think you’re- I
Tom Dupree: don’t
Michael Dawahare: think- I think you’re totally right about that. There’s, first of all, get, get oil down. That’s a huge chunk of this. But it’s got nothing to do with whether the Fed rates at 5.25 versus 5.50. I- to me, you’ve hit on probably tied for first with the m- the most important issues into ’27, if you’re a professional investor, is exactly the point you just made. What does inflation do, and what’s the fix? The obvious fix is get oil down. If, if AI’s-
Tom Dupree: Yeah, but I don’t even know if that’s gonna fix it right now.
Michael Dawahare: It’ll take a while. Yeah. For sure.
Tom Dupree: It, it’s, it’s-
Michael Dawahare: We’ve got six months or so. We got a lot of history on when oil spikes. It’s six months-ish- Right … give or take, of, uh, of, uh, bleed through into prices.
Tom Dupree: If it’ll move ’em and, and, and get ’em to back up.
Elizabeth Dupree: It’s so crazy though, ’cause y- you were talking about how they’re literally having oil storage issues.
Michael Dawahare: That’s correct.
Elizabeth Dupree: But the-
Michael Dawahare: So much oil is coming out of the, uh, Gulf now and being produced in the Western hemisphere that we’re, let’s just say the number, uh, daily use is 105 million barrels, something like that. What we’re producing now and shipping now, there are storage issues on where to put all the- Yeah extra barrels throughout parts of Southeast Asia this week.
James Dupree: I think it’s mostly risk premium in the price of oil because there’s … I mean, Trump, like you said yesterday, he could just blow up all their infrastructure, and then it turbo spikes. So that risk, that risk premium has- Well- … kind of been the, the
Michael Dawahare: price right now sure. That, that … Well, but that’s been, there’s been a 30 to $50 risk premium a barrel of oil every day since 1979 when Iran fell. Um, and Lloyd’s of London was more than happy to charge that and then bank those deposits in their banking partners in, in London. That’s been going on a long time. But think about the point Tom just made. A big part of the spike in oil prices is the shipping’s more expensive. The insurance is more expensive. Yeah. All the things Tom’s talking about that have nothing to do with the fed funds rate.
Tom Dupree: That’s right. So interest rates may remain high for, for, for quite a while. That’s just the way I look at it.
Elizabeth Dupree: So how long’s quite a while? So the oil delay in the oil situation is, say, six months. What is the delay of interest rates when they sort of start-
Tom Dupree: Well, it takes something… H- here’s one thing that could make them go down. If the high prices begin to create a recession or- Sure … slowdown in business, if you begin to have a slowdown in business, then, uh, the demand for money starts to- O-
Michael Dawahare: oddly
Tom Dupree: enough- And a slowdown in the AI-
Michael Dawahare: Okay,
Tom Dupree: you’re- need for bonds … you’re, you’re
Michael Dawahare: kind of getting to it. There hasn’t been, there’s been a lot written about this this year, a meaningful recession in 20-something-ish years since the great financial crisis. And the prevailing thought as to why that is is because it’s been a tech-led economy since about 2010, and they don’t carry inventory.
Tom Dupree: That’s right.
Michael Dawahare: It’s the old economy where the cars would pile up in the parking lot, or the clothes would be stacked up in the shelves, and they had excess inventory to move. That tended to cause recessions. And since about 2010, when the queues took off and tech really exploded with the launch of the iPhone, Amazon really found their footing with e-com. And then in 2022, you got ChatGPT introduced. So we haven’t really had a recession because the new economy doesn’t really stock inventory.
Tom Dupree: That’s a good point.
Elizabeth Dupree: You’ve been listening to the Financial Hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. If you don’t know what you own in your portfolio, you need to. We can help. Give us a call, 859-233-0400. You can also schedule an appointment directly on the homepage of our website at dupreefinancial.com. Thanks for listening to the Financial Hour. It’s gonna make you wanna turn
Music vocals: around and say You know things will change. Things will go your way. If you hold on
Disclaimer narrator: The information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy, and it should not be regarded as a complete analysis of the subjects discussed. Dupree Financial Group is a registered investment advisor, registered with the Securities and Exchange Commission. All information presented on this program is for educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. Any references to securities or market performance are general in nature. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. Please consult with a qualified financial advisor before making any investment decisions.
