Money Life with Chuck Jaffe

David Trainer, founder and president at New Constructs, put a pre-IPO Anthropic in The Danger Zone today, saying the $2 trillion valuation is "absolutely absurd" for a business that is burning tons of cash, facing vicious competition and "with no conceivable profit margin ... when it's being valued as if it will have profits bigger than the most profitable companies in the world today." He says Wall Street is using Anthropic's IPO as "exit liquidity" to cash out on the money they've invested privately in the company, but the deal is shifting the bag and pushing the trouble down the road, making it "an absolute rip-off for public investors." Trainer last used the "most ridiculous IPO" tag in 2019, on WeWork, where his research helped to scrap the launch; the company dropped its value, went public raising much less money through an acquisition and, ultimately, went to zero. Trainer says Anthropic's lack of earnings could be just as problematic. 
In "The Week That Is," Vijay Marolia, chief investment officer at Regal Point Capital, addresses Micron Technologies stock, which Wall Street has been wavering on despite its  latest quarterly earnings showing year-over-year growth of 1,000 percent (yes, that's real). With skepticism driving Micron's price/earnings ratio below 15 — more than 40 percent lower than the p/e for the S&P 500 — Marolia uses his firm's five-lens approach to break down why he thinks the market is making the wrong call on one of its true stars. Marolia also digs into the job numbers and warns about reading falling jobs numbers and rising unemployment as a sign of recession when the economy is still growing and the unemployment rate has not climbed out of a level that traditionally has represented "full employment." Plus, he discusses the pluses and minuses of a recent SEC proposal that would let mutual funds charge performance fees, bringing more types of investments to the general public, but with a new level/structure for fees.
In the Market Call, David Rosenstrock, director of investments and financial planning at Wharton Wealth Planning, talks about exchange-traded funds and putting them together in portfolios, noting that "the biggest risk [to investors] isn't the economy or market risk or inflationary risk, the biggest risk is that the portfolio is not properly aligned with the owner's goals and needs."

Steve Cucchiaro, chief executive and chief investment officer at 3Edge Asset Management, says that the market is masking potential troubles, flirting with record highs despite having "more than 85% of the S&P 500 companies in bear markets." As a result, he says investors need to b e prepared to get defensive, riding with the "short-term factors that are propelling the market higher" without losing sight of long-term factors that are likely to slow the market. Cucchiaro says that the price-to-sales ratio today is at an all-time high by a wide margin; while this doesn't say when a correction or crash is coming, it does suggest that when a correction comes "the amount that we are at risk is very severe." He says, as a result, long-term buy-and-hold will be very uncomfortable for investors who try to ride it out without getting defensive.
Anthropic's initial public offering could value the company at over $2 trillion, so John Cole Scott, president of CEF Advisors, looks at how investors can buy pre-IPO stakes using closed-end funds, interval funds and ETFs that work in the private markets, and says that getting exposure to Anthropic and other popular IPOs isn't the hard part, paying for the right wrapper is. Scott evaluates several funds of different structures to show what investors are buying, what they're paying per dollar of private exposure and why they need an exit strategy before they get in. He also discusses which fund and structure he would use for clients, and why some investors with different goals might make another choice.
In the Market Call, Jeff Auxier president of Auxier Asset Management and manager of the Auxier Focus Fund, talks value investing and says "the shopping list is growing," though he is expecting and hoping for "rougher, better times" and at least a modest downturn to make more stocks attractive. Auxier notes that in times when he foresees some trouble, he's looking for stocks with earnings "strong enough to be tennis balls" – bouncing through downturns – rather than "chicken eggs," which fall and splat.

Cheryl Smith, economist at Trillium Asset Management, says she is seeing "more economic warning signs," and worries that one of them — interest rates going up, but much later than might have been anticipated based on headlines — could be setting up a compressed timeline for increases, with the rapidity of the move creating more problems than would have surfaced in a slower uptrend. On the stock market, Smith says the rising interest rates will have an impact that, coupled with slower earnings and turns in the artificial-intelligence market make it that "You will see a considerably more difficult path for equities in 2027."
In the Market Call, Eric Marshall, president of Hodges Capital Management and co-portfolio manager on three of the Hodges Funds, talks about bottoms-up stock-picking and the small-cap market .
Plus, Stan Haithcock — best known as "Stan the Annuity Man" — returns to the show to answer questions, including one from a listener who is nervous about the stock market and looking to take some money out without losing the income stream that those dividends have been delivering.

Kristian Kerr, head of macro strategy at LPL Financial, says that the market has shaken off the impact of higher oil prices, leading investors to a sense of complacency, where they think only a much higher spike in crude prices will upset the economy. He feels, however, that "the longer we are at these levels the harder it becomes to ignore," noting that the same kind of thinking can also be applied to rising bond yields, where the market is deciding just how real the fears are, but where they can't ignore the issue indefinitely. Kerr isn't calling for a major market reversal, but more for caution and diversification, because he believes that at some point many of the fears over headline risks will be realized.
Author Daniel Goldie discusses his new book, out today, "The Retirement Answer: The 6 Key Decisions Every Retiree Needs to Make," which covers timing, Social Security , Medicare, distribution strategies, investments and legacy choices
In the Market Call, Aniket Ullal, head of ETF data and analytics at CFRA, discusses exchange-traded funds, which sectors appear to be in favor now, the difficulties in evaluating newfangled funds with options overlays or leveraged, single-stock strategies and more.

John Kosar, chief market strategist at Asbury Research, says this is "one of the oddest markets" he's seen, with stocks nearly at record highs, two-decade highs in the yield of long-term Treasury bonds, a war, tariffs, oil priced at over $100 per barrel, and yet less stocks are making fresh highs and the Magnificent Seven stocks are carrying the load for the entire market. If the "big gorilla stocks" falter — which Kosar says is likely at some point — the market could topple like a Jenga tower. Kosar isn't out of stocks yet, but he's watching volatility and more, prepping to play defense soon.
Josh Wein, portfolio manager at the Hennessy Funds, says that oil prices -- rather than Federal Reserve rate hikes — are "the big wildcard for the market" right now, noting that he expects the market to easily absorb the first two increases, and maybe more. One reason for that, Wein says, is that it's now earnings — rather than the Fed -- that are driving the market and investor sentiment. Wein, who manages 10 funds at Hennessy, says he expects a small rally as third-quarter earnings come out, getting better into the end of the year.
Jeff Muhlenkamp, portfolio manager for the Muhlenkamp Fund, explains in the Market Call why his fund is holding a larger allocation to gold and gold miners than ever before in its long history, discusses valuation concerns around earnings and talks about why the "hold" decision is as important as the buys and sells.