AI innovation is saving the US from recession: Jim Thorne

All right folks, a lot of people believe in what they call the 8020 rule goes back to a guy named Pardo Pareto rather the Pareto principles and and, and in that case it reveals that you know the majority of stock market right now just like life, right 20% making 80% of the moves and if that's the case, what does it mean from here? OK, so because how much longer Canon Canon continue, I want to bring a very special guest right now, Wellington Altus of Private Wealth Capital or Chief market strategist Jim Thorne. So Jim, I mean, I hadn't seen you so long. 25 years, 25 years. It's so weird because I was just reading a bunch of work and I and I stumbled on some of the work that you've been writing and then I going deeper into the rabbit hole and deeper in a rabbit hole. I'm like, this guy is brilliant. I didn't know I knew you. Let's talk about this 8020 rule or 2080 rule as it applies to the current market. When you go back to 1990, basically 3% of the stocks create all the all the stock market returns. So if we're using the S&P 500, let's do 3 * 5. That's 15 stocks, man. Hmm. So this is normal. This is normal. This is nothing. We shouldn't be going crazy. It's too narrow. It's scary red flags going on. The it's it this is this is normal for you, for us. I mean, we're this is normal. We don't really think about think about Buffett. Buffett when you look at the number one holding, whether he finds out where the cycle is and he'll own a ton of Coca-Cola or own a ton of apple, right? It's people are over diversified and I'm not, you know, not saying you shouldn't diversify, but the whole point is when you look at the data, then this is exactly what we should be expecting. No one should be surprised about this, Charles. So it's interesting that you say that because now you watch financial media, you got Wall Street kind of coming around a little bit in there and they're saying I'm gonna, I have a hard time getting my clients to buy these stocks. But for decades, for a century, they told everyone you got to be diversified. You got to own 50 stocks. Were they just trying to sell products? I don't, I don't think they've looked at the data. I think we lack context. I mean, at Wellington, what I'm allowed to do is basically call it like it is, balls and strikes. And look at we're going much higher. The leadership is not going to change. the Fed is late. Let's get over that fact and you know, position the portfolios accordingly. Let's talk about the Fed being late. Does that mean recession is inevitable? I mean, in in on a near term horizon? No, because what is saving the United States relative to every other economy in the world is the innovation that's happening right now. OK, If we didn't have innovation in AI and crypto in the United States, we would have a recession. That is what distinguishes the United States from every other market and every other economy. We see those charts, there's a chart from last week, it shows the US market is 65%, sixty, 4% in the global market. That and and folks are saying that's a sign again of being toppy, get out, invest elsewhere. You're saying. No, that's just a reflection of American exceptionalism. Yes, this is the place to be. I don't know, everybody's trying to make this way too difficult. Look at with all the stocks you talked about recently, all the innovations happening here, all the leadership is happening here. Why would you want to go in the, for example, invest in Europe? Tell me what's don't say it's cheap, Charles. Is that our go? Is that our go to? We're going to go there because it's cheap. It's cheap for a reason. You know, it's so funny, I say that all the time. Every year in January, that's what you get. You get two things go in small caps because they've underperformed. Go to Europe because it's underperformed. Yeah, it's underperformed for a decade. And your February note, it was really interesting. Echoes of history and financial markets in a post pandemic world in a subtitled Trump's shadow. How's this election playing into this market, or has it yet? It hasn't yet. And I think the interesting thing is going to be, I think we're very constructive until the middle of next year. And it's really going to be interesting to see what Mr. Trump does on this one issue. As far as I'm concerned, it's going to be fiscal responsibility. I think he needs to come clean and say, are we going to spend like we did, like the Democrats did, or are we going to have a little bit of fiscal responsibility? If he does that, then we have a secular bull market to the end of the decade, Into the end of the decade. Another issue is coming about. It's called financialization. It's bubbling up here a little bit. There's a lot of definitions. I'll give you an Investopedia for the audience. Countries have shifted away from industrial capitalism. It's sort of financial architecting, maybe companies buying back their stock instead of investing in CapEx, those kind of things. Are you concerned any company that issues debt or stock to buy back stock or pay a dividend is a red flag? All of the leaders that we've been talking about in the United States that are innovators, they're not doing that. If they're buying back stock, it's out of free cash flow. So, yes, it's a red flag, but I don't see it in the leaders in the United States. Hey, 30 seconds to go Evercore now, 6000. Last week, city got more constructive, I think costing went from 47 to 54, you say? Not at Wall Street's on board. FOMO begins now. Yes, that's good. And I would suggest you it's so interesting because they always talk about the dumb money, but they're the ones who are chasing the the brilliant folks down in the canyons of Wall Street. True fact. Yes, Sir, I would. What I would suggest to you is 6500 by the middle of next year, FOMO is about to kick in. And unfortunately in Wall Street, it's not when we first met where we basically did research and had contacts. Right now it's Johnny come lately and let's follow the herd. Great stuff. Glad to see you again after all these years.