AMA Childless Cat Ladies Edition

There’s been a whole lot of political, social and financial goings-on over the past several weeks, and I’ve been fielding a lot of questions about it all from friends, family and particularly from you, The Deep Woods army. Fortunately, I have this platform to make my thoughts public, and I cherish that opportunity and I shall always treat it with the reverence it demands.

Given the various questions and issues on your minds, I thought I would do another “Ask Me Anything” or “AMA,” and this time we’ll call it the “Childless Cat Ladies Edition.” So, let’s begin, as logic dictates, with our first question.

My friend Charles R. offered me the following comment and question: “Jim, what did you think of J.D. Vance’s comments on ‘childless cat ladies?’ Aren’t you one of those childless cat ladies, too? LOL.”

Charles R. is a long-time friend of mine, and he’s one of those “intellectual brothers from another mother” that, if you are fortunate enough to find, really add value to your life. And as best friends for nearly four decades, we make each other laugh with our observations on the world. So, I knew exactly what he meant by “aren’t you one of those childless cat ladies, too.”

I mean, after all, I am childless, and I do have many cats. And while I identify proudly as a cisgender male that exudes “toxic masculinity,” I also have about a dozen barn felines on my ranch in Southern California, and I do love them all like one of those “cat ladies.”

Now, in case you haven’t heard the J.D. Vance comments referred to here, they come from a 2021 interview with Fox News that’s been plastered all over airwaves by the mainstream media, in which Sen. Vance said the nation was run by “childless cat ladies” who are “miserable.”

Courtesy of Shutterstock

Sen. Vance’s deeper point here was actually a defense of marriage and traditional family, and I take it as such. And that defense is fair enough. However, what Vance has said about people who don’t choose to have children is rather outrageously stupid. It’s also politically moronic.

I say that because Americans, childless or not, are ends in themselves. Each person is an individual first, and not merely some member of a tribe, or clan or even a family.

As an individual, you have a stake in the current and future success of your country. Just because Vance has chosen to bring children into the world doesn’t mean those that haven’t made the same choice have any less of a stake than he does. In fact, it’s quite an insult to individualism to make that claim, and as a defender of individualism, I couldn’t disagree with the Senator more on this issue.

Unfortunately, Sen. Vance added insult to injury with his comments, saying that childless Americans ought to pay higher taxes than those who have kids.

“If you’re making $100,000 [or] $400,000 a year, and you’ve got three kids, you should pay a different, lower tax rate than if you’re making the same amount of money and you don’t have kids,” Vance said during an interview with conservative activist and podcaster Charlie Kirk.

Yet, as my friends at Reason.com point out…

“…childless Americans actually do pay higher taxes than most of those who reproduce. That was true in 2021, and it is true today. That’s because of the child tax credit, which has existed since 1997 and has been partially refundable since 2001. For each dependent that can be claimed, a tax filer gets up to $2,000 credit — with up to $1,400 of that total being refundable, meaning that it gets paid out even if the filer doesn’t owe any taxes. As part of the tax reform package passed by Republicans during the Trump administration, the child tax credit was doubled from $1,000 per kid to the current level.”

So you see, Sen. Vance doesn’t even have his facts straight here, and I think it behooves him to do so if he wants to be a heartbeat away from being the leader of the free world.

Yet the wider, more important point, is that far from respecting the individual here, Sen. Vance wants to socially engineer the country with tax policy that punishes individuals for their choices. That’s not conservative, nor free market, nor freedom loving — it’s just another example of big government imposing its will on citizens — which is not okay no matter who does it.

Craig S. writes: “Jim, is it time to exit technology and communications services stocks here? There’s been a big correction in the space, and I am struggling with what to do with my tech and AI-related holdings. I also own CrowdStrike. Any advice here?”

Craig S., also a long-time personal friend and subscriber, poses a great question here. You see, for most of the past 18 months, stocks in the “Magnificent Seven” have been the biggest winners in the market, and they’ve helped propel the broader S&P 500 to new, all-time highs. Yet in July, there’s been a repricing of the tech giants, as their valuations and momentum definitely got over their collective skis, and hence we saw a pullback.

Yet, when it comes to companies in the “Magnificent Seven,” the fundamentals remain robust, and largely intact. That’s particularly true of Alphabet, Meta Platforms and Nvidia, which continue to dominate their respective spaces.

So, if you are playing the “long game,” I would not abandon these earnings powerhouses. I am certainly staying long in each within my own personal portfolio. That said, if you have robust gains in these stocks and you want to make sure you protect them, there is nothing wrong with peeling off some profits and keeping that money in reserve and ready to redeploy to new opportunities.

As for CrowdStrike, by now the whole world knows what happened with their disastrous quality control issues in releasing a defective software update that nearly crippled the global economy. Yet, ask yourself this: Why did one corrupted update cause such a big snafu throughout the globe? The reason is because so many people use CrowdStrike’s cybersecurity software.

For me, the ubiquity and widespread reliance on CrowdStrike’s products confirms that it’s the best company to own in the space. And once the news of the mistake subsides, and once CrowdStrike gets past any short-term financial impacts to its bottom line from the incident, it will be back to big moves higher in terms of earnings-per-share (EPS) growth and for the share price. So, my advice is to stay long CrowdStrike.

Ken C. writes: “Jim, I saw you judging the ‘Pitch Tank’ at FreedomFest this year. You looked like you were having a blast. What was that like, and did you enjoy it as much as you seemed to be?”

Ken, thanks for the kind words and the accurate observation as to the visible fun I was having judging the Pitch Tank. I’ve always wanted to be one of the “sharks” on one of my favorite TV shows, “Shark Tank,” so doing the live version at FreedomFest was a true joy. Not only were the pitches very well done and very interesting, but I also identified a couple of companies that I think have investable potential (at least from a venture capitalist perspective).

The experience was so enjoyable, in fact, that I’ve already agreed to be a judge again next at next year’s conference, which, incidentally, will take place earlier than usual next year, from June 11-14, 2025, in Palm Springs, California. Click here for your chance to get a special early bird discount on registration.

Finally, before I leave the subject of FreedomFest and the Pitch Tank, I want to personally and publicly thank my friend and colleague, Dr. Paul Wendee, for asking me to be a part of the judging. A true Renaissance Man, Dr. Wendee is an entrepreneur, venture capitalist, newsletter writer, professor, martial arts expert (he’s a Fourth Dan (4th degree black belt) Shotokan karate practitioner) and, like me, a fan of James Bond and very fast British sports cars.

In fact, last night, I had the privilege of guest lecturing to Dr. Wendee’s MBA class, and it was something that I truly enjoyed. So, here publicly, I want to say, “Thank you, Paul!”

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ETF Talk: Secure the Future with This Financial ETF

While the past may be history, the future is a mystery. Still, while no one truly knows what the future holds, we can do our best to make an educated and informed guess about what may be coming on the horizon.

Nowhere is this more relevant than in the stock market. Currently, the signs point to an uncertain future for mega-cap tech. Semiconductor stocks have taken a sharp turn lower over the past couple of weeks, and poor showings from Google (NASDAQ: GOOG) and Tesla (NASDAQ: TSLA) have put the long-term viability of artificial intelligence (AI) into question.

On the flipside, certain market forecasters are predicting there will be at least two Federal Reserve interest rate cuts by year-end. And the market’s not looking into a crystal ball to determine that. It instead is looking at the outperformance/rotation into sectors that benefit from a lower-rate environment, such as staples, energy, real estate and financials, the latter of which, in particular, is seeing moves higher.

So, how do we take advantage of such a future? By investing in the right fund for the job: the Financial Select Sector SPDR ETF (XLF).

Issued in 1998 by State Street, XLF tracks the Financial Select Sector Index, an index of S&P 500 financial stocks which are weighted by market cap. The fund generally invests at least 95% of its total assets in the securities comprising the index. Its cap-weighted portfolio avoids small-caps, instead focusing only on large banks and other beefy financial institutions.

Almost 80% of XLF’s holdings are in Finance, with another 18% being held in Commercial Services. Over 95% percent of its holdings are also U.S.-based. This allows XLF to offer efficient exposure to the heavyweights in the U.S.-financials segment.

Some of XLF’s top holdings include Berkshire Hathaway’s B-class shares (NYSE: BRK.B), JPMorgan Chase (NYSE: JPM), Visa (NYSE: V), Mastercard (NYSE: MA), Bank of America (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC) and Goldman Sachs Group Inc. (NYSE: GS).

Chart courtesy of StockCharts.com.

Currently, the fund has an expense ratio of 0.09%, and $42.07 billion in assets under management. As of July 29, the fund is up 5.45% in the past month, 6.77% in the last three months, 16.18% year to date and 25.26% in the past year. This indicates a healthy market for both financial trading and XLF as a whole.

While we can do our best to predict the financial future, only you can properly predict yours. You should always consider your investment goals and do your due diligence before adding any stock or exchange-traded fund (ETF) to your portfolio.

As always, I’m happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.

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In case you missed it…

Thoughts on Kamala the Lotus

It only took about 48 hours after President Biden announced the end of his candidacy for Vice President Kamala Harris to capture enough pledged delegates to be considered the new presidential nominee of the Democratic Party. The rush to anoint VP Harris as the new torchbearer for the party is, in my view, a pretty smart move politically. And judging by the record campaign donations over those 48 hours of roughly $100 million, the Democratic base is certainly excited about the new life Harris gives the party.

Now, while I don’t think Harris is the best candidate the Democrats could put up, I do think (and the markets think) that she has a far greater chance of beating former President Trump than the enfeebled President Biden had.

So, who is Kamala Harris? Despite her reign as vice president, there are still a lot of questions about her from the public now that she is vying for the top spot as de factor leader of the free world.

Almost exactly four years ago, when then Senator Harris was picked as Biden’s running mate, I wrote a piece titled, “Kamala Means Lotus.” Given her meteoric rise to the top of the ticket since Sunday, I decided to review what I wrote in that piece. Well, as it turned out, my thoughts on Kamala Harris are still very much applicable.

Four years ago, I told you that in Greek mythology, a lotus is a legendary plant whose fruit induces a dreamy forgetfulness and a sort of indolent stupor reminiscent of paralytic intoxication. That sense of intoxication (albeit infused with excitement of the “new blood”) is what many Democrats are feeling today, as they know that a “lotus” has become the party’s presumptive presidential nominee.

You see, “Kamala” means “lotus” in Sanskrit.

Perhaps she was the obvious choice in this most unusual election year. I mean, Democrats would have come under some serious racial, gender and prejudice fire from their own if the first Black female vice president had been passed over for, say, “another basic white male.”

Here’s what I said about Harris four years ago:

Kamala Devi Harris is…

• An experienced politico
• A graduate of historically Black Howard University
• Proud of her prosecution of business, particularly the “Big Banks”
• “The best-looking attorney general,” according to President Obama
• A bold and vocal critic of President Trump and other administration officials
• A woman
• A woman of color

Indeed, in the identity-politics matrix of the Democratic Party, this lotus is an intoxicating mix of all things “good.”

Of course, she isn’t immune to criticism from her own, and particularly from progressives. In fact, some in the far extremes of the progressive movement have called her a “phony progressive” and have criticized Joe Biden for selecting a “top cop” like Harris in the midst of the then protests against what they call “excessive policing.”

Perhaps the greatest take-down of this sort involving Harris was delivered during the 2020 Democratic primary debates, and by the most interesting Democrat to seek the nomination, my friend and fellow U.S. Army veteran Tulsi Gabbard.

During a debate in July 2019, Gabbard criticized Harris’ aggressive record as a “drug warrior” and essentially called her a hypocrite. Of Harris, Gabbard said she “put over 1,500 people in jail for marijuana violations and then laughed about it when she was asked if she ever smoked marijuana.”

Gabbard went on to express her deep concerns about Harris’ prosecutorial record, saying, “There are too many examples to cite, but… she blocked evidence that would have freed an innocent man from death row until the courts forced her to do so. She kept people in prison beyond their sentences to use them as cheap labor for the state of California. And she fought to keep the cash bail system in place that impacts poor people in the worst kind of way.”

Ouch!

Yet despite the critics on her own team, Democrats of all stripes have understandably coalesced in support of “the Lotus.”

Why? Because the Lotus offers up the promise of the one thing that unites all Democrats — the need to keep what they perceive as the “existential threat” of Donald Trump as far from the Oval Office as possible.

Finally, there’s one very “Deep Woodsish” observation of note here about Kamala the Lotus — she does indeed seem to have been aptly named.

You see, the lotus flower has an interesting life cycle. Its roots are based in mud. And in the marsh lands of its native India and Vietnam, the lotus is submerged each night into the murky rivers it calls home. In the morning, the lotus blooms again without a hint of muddy residue on its petals.

It seems like a fitting metaphor for a life cycle spent in the Washington swamp.

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The Day the Music Died

I was a lonely teenage broncin’ buck

With a pink carnation and a pickup truck

But I knew I was out of luck

The day the music died

–Don McClean, “American Pie”

On Sunday, I had the privilege of seeing American Troubadour Don McClean perform. Of course, he played his iconic song, “American Pie,” which is a meditative journey through our country’s cultural landscape from 1959 to 1970 (the song was released in 1971).

The main theme of the song is “the day the music died,” a reference to the events of Febuary 3, 1959, the infamous date of the plane crash that killed Buddy Holly, Ritchie Valens and the Big Bopper. The three rockers were each at the pinnacle of the music world at the time of the crash, and their deaths all on the same day of the same circumstance became largely referred to in popular culture as “the day the music died.”

If you know the song, or even if you don’t, give it a listen right now. For those who know it, it will undoubtedly bring back vivid memories from your youth. And if you don’t know it, you’re in for a musical treat, as it’s one of the best songs ever written. Full stop.

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

In the name of the best within us,

Jim Woods