Inside the Mind of Wall Street’s Father-Son Duo: What Most Investors Get Wrong | Ep. 239 with Ken and Connor Mahoney Founders of MahoneyGPS
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Hey everyone, welcome back. So I'm fired up right now because the markets, Wall Street, I mean, there's so much action. I was there last week in New York at the New York Stock Exchange. Always what a great experience to just be in it. So that's why I'm excited for Ken and Connor Mahoney. And I know you all, I mean, 36 years combined experience or over 36 years on Wall Street. You do a lot of things. You help

advise and you have a lot of amazing clients that you work with as well. And I can't wait to learn more about the pulse. We were just talking about, you know, recent IPOs and everything, but I'd love to hear, you know, right now,

If somebody asks you, what are you looking at most when it comes to the markets? What would you tell them? Well, I would say first of all, I'm glad you enjoyed your trip to New York Stock Exchange, right? Corner abroad and Wall Street where capitalism thrives. And it's amazing. Companies come public there and then shareholders trade these things back and forth. Just again, I'm sure you felt the energy. It's awesome. Hey, this AI, we're probably the second or third inning. You know, there's a lot of negativity about headlines.

tariffs and all, but at the end of the day, there's so much money being spent. I think Amazon's going to spend $103 billion for AI and data centers, Microsoft, 93 billion, the race is on to build faster and better. And look, we want to follow the flow. And one other thing, I'm sure Connor has some comments here too. You think about 2020 and COVID and how much money went to diagnostic and medical devices, right? And all this stuff. Well,

Well, just fast forward five years from now, instead of it being healthcare, thank God COVID's out of our hair. Now the huge amount of spend is in technology to keep up with one another. I think what's really interesting is I'm looking at a lot of different institutional positioning or, you know, people are actually starting to short up here, which I think is

It adds more fuel to the fire, which is good. And basically looking at longer term positioning and options. Looks like, you know, new highs are inbounds. It seems like the path of least resistance to touch 6100 or so. And then we'll have some type of triple top and see if we get through there. But the way positioning is looking right now, looks like we could just squeeze into the last few weeks of June, the end of the quarter.

is my take. So how do you see the IPO? We were just talking about the, the circle IPO that just happened. What do you, you know, it seemed like a lot of excitement pulses good around, you know, how people feel. Are there more potential IPOs coming? What, what can we expect there? Yeah, I do think having core weave was a crazy IPO. I know it took a little while for us to get going, but as low as 40 up to like 160 in the matter of maybe a few weeks or a month,

Then you had ETOR. That one's done all right. And then Circle went pretty crazy. I think it was indicated at $30 a share. And then when so much bidding for it went actually live at 60 and all the way up to like 130 something. So we're definitely one of those maybe a little frothier periods. I do notice that we're getting a lot of small caps starting to move. So maybe late cycle bull market. I still think longer term bull market, but that's

shorter term, we're near a little blow off top. We need some rest, I guess. It's been kind of crazy. So when you're looking at the markets, is there something that you're looking at

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

When they have stronger earnings, good things happen, right? They build up their balance sheet. They do buybacks. They raise their dividend. They buy the competition. They buy personnel and so forth. So, so many good things happen in that cycle when companies have really strong earnings. And again, we have such a strong tailwind because so many companies want to get their chips up and running, get their data centers up and running. And those companies are the picks and shovels of this. The

huge AI boom, well, they're the winners because they got great earnings and they're going to pay shareholders very well between stock dividends and buyback. I was just...

listening to somebody talking about the future of like robotics and humanoids and, you know, as AI and AI and robots kind of merge like physical robotics could be self-driving cars, could be literally a robot that's with us. I think we've seen, you know, some companies talk about that. How do you how do you see this in terms of of not just AI being in the computers that we're using,

but now moving it to physical things. I think it's actually, I mean, I think we could all agree it's a little scary maybe, but I do think, you know, there is going to be adoption of these technologies. There already is. I can't tell you one person that doesn't use like chat, GBT or rock or some other service like that, basically daily. And, and,

We were all a little skeptic of it at first, but you do see the actual applications of it. So I just think there is some adoption and, you know, we don't want these like Terminator. I've seen those Tesla robots. They're a little scary, but you never know. These could be very useful and practical in different ways as long as people are adopting to them and they're obviously under control or, you know, there are safety guidelines along the way. But yeah, that certainly is future. And, you know, we know companies are spending like crazy to,

boosts their data centers and AI infrastructure, takes a lot of computing power. And like Ken said, I do think it's early innings still for all these different AI applications, most likely. When you look at people that trade of different age groups or different ages,

Do you find that they're looking so, you know, I know Connor, you're in your 20s. Ken, you look like you're in your 40s. So when you're looking at these different age groups, are they looking at things differently or are they asking you different questions? Yeah, I think because of social media and so many resources, a lot of really good questions. I know for the older folks, so to speak, which I'm one of them, by the way, Daniel, I don't know. You know, they say, OK, now retire. I'm going to go to dividend paying stocks.

We don't like that. I mean, a lot of dividend paying stocks, you get your 5% or 6%, and many times these stocks, they cut the dividend, the stock could get cut in half. So the risk reward to us doesn't really look so great for a lot of people who are in their 60s or so that are looking for dividends. In fact, we'd rather just play their playbook.

Go with those fiction shovels, the Apple, the Microsofts, the NVIDIA. Have those names grow in your portfolio. Keep up with cost inflation and skim off a little bit to create some income. But again, it's a wholesale change, 180 degree change we see as opposed to buying dividend stocks.

when you retire. Instead, we still like to say growth, growth, growth, even through retirement, especially if you're going to live into your 90s, right? Right, guys? If we're going to live into our 90s, we definitely want that inflation hedge and stocks and real estate are really the two best areas to protect against inflation. How about you, Connor? Anything from, you know,

What do people in their 20s think about the market? I hope they're getting involved as soon as possible. I think the big thing to have is through work is passively investing in 401k. It's like, you know, it comes out of your paycheck, right?

You don't really have to think too much. Hopefully you just check the large cap growth or growth allocation, all stocks. We talk to people about that all the time, even in, even into your thirties or forties. That's not money you're going to use until you're probably at least 60 or 65 or older. I,

I just hope that people are investing to some degree in stocks primarily. And yeah, for more aggressive people, maybe they have a different account. You know, they can trade and stuff and look at Bitcoin or some of those more aggressive assets. But I just think a good play. You just have to start. You just have to have something. Let that compounding start.

And that's a huge, huge part of the puzzle, I think. Yeah, Albert Einstein, a pretty smart guy. He said the eighth wonder of the world in every solution is compound or compound interest. And it shows, you know, stacking returns on top of returns. And, you know, sometimes I'll get somebody retired at 60. They're like, I have a million dollars retiring account. I can't believe it.

But again, it was years of putting away pre-tax dollar cost averaging towards growth. But again, I love that Albert Einstein, who was, you know, a scientist, a physicist, not really an investment person, but he did say the eighth one of the world is compound interest. How are you feeling about crypto? And, you know, I have...

Bitcoin ETF personally. So, you know, I'm always looking at, are there more ETFs coming? I was just seeing, I believe the Vatican might be buying like a billion. I don't know if that's even true. Somebody, something I was reading, but new poll, maybe he's a, he's a trader there too. Maybe, but I know there's like a lot of people, a lot of traditional, uh,

investment companies. A lot of companies are buying in Bitcoin, obviously, you know, reaching those all time highs again. I think it's definitely it's a good trading vehicle for sure. I think I BIT, there's BITX, which is leveraged. There's so many GBTC. There's so many different companies basically getting involved at this point. I think, you know, it's come to the realization that

Not everyone really knows what Bitcoin is or does. We just know it's an asset class that is moving in price. So it's a good trading vehicle, I think, for people. It's hard to say...

The actual par value, right, is people say, oh, we can trade Bitcoin. It just was $101,000 two days ago, and now it's $110,000. So it's extremely volatile vehicle. I do think it's pretty speculative asset. But then again, like I said, it's a good trading vehicle. And more and more institutions seem to be getting involved, which legitimizes it further. I think there's some higher targets probably this year, $120,000, $125,000.

Something like that. If you look at like Fibs and IBIT option flows and different things that are out there, it seems like, again, I think I talk about paths of least resistances. Bitcoin is probably higher in

In the next, you know, few months, six months. I've heard some people say it could hit a million dollars at some point. Yeah. I do think for some people they see it as like their path to, it's like a self-fulfilling prophecy in trading at times. We all have this target in mind. We're going to all buy it up to these targets. And Bitcoin, like I said, has no earnings. It has no real fundamentals. It's kind of like a psychology trading vehicle. So trading vehicle, yeah. Yeah.

And that's where the problem I have with it. One, let's put like 5% of portfolio fine. But it's like, I like business models like Microsoft, right? They're into LinkedIn. They have all the gaming under Xbox and Windows this and Windows that. I mean, if that's a real business, then, you know, the problem here is here's the problem I have with it.

Tell me one day I could take my wallet. I'm not telling my wallet, my coin wallet, walk into Best Buy or walk into Barnes and Noble and use it. Then I'm like, okay, we have something. So I'm still kind of a show me state. I'm older that I'm generation X. That's why you Gen Z folks have a different take on this. I like businesses with cashflow that are more predictable. I know this can go up in value. So some clients, I guess you could recommend a few percent of anyone's holdings, I guess, diversifying to it. But at the end of the day,

I can't use the currency. And I'm told the reason why we buy it is that someone else buys at a higher price than you. I'm told the reason why to buy it is that you could transfer your money around. Well, I can do that with Zelle. I could do a PayPal. I could do that whole bunch of other services. So until I get to me anyway, until I get to use it to buy something, well, I actually call it like a legit currency or legit. Right. Seems like, you know, people see it as inflation hedge, maybe a digital inflation hedge alongside like gold as being a physical one or whatever.

real estate or stocks in general. So it's an interesting phenomenon. It's pretty incredible. It's at SeaWorld. Yeah, I like how you put that, Connor. When I put money into crypto, I do just hope that it goes up. It is a self-fulfilling prophecy than maybe something that has a huge amount of uses yet. When it comes to the dollar, though, I'm curious about... I see... I think the dollar to the euro, the dollar was down...

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

Then Liberation Day, which turned into a real mess. And then, you know, and dollar went down and gold went higher and cryptos went higher. And, you know, but now you start seeing the homostasis again. You start seeing a balance. And again, at the end of the day, I still see the U.S. dollar being the world currency. Now, doesn't mean it won't have its bumps and bruises. But if you look at Europe, seriously, I don't get it. I mean, they over regulate. There's hardly any innovation there.

I just don't get it. I don't know how the Euro would be that. Japanese, they have their own issues. If your job at a healthcare facility includes disinfecting against viruses, you know prevention is the best medicine. And maintaining healthy spaces starts with a healthy cleaning routine. Grainger's world-class supply chain helps ensure you have the quality products you need when you need them. From disinfectants and cleaning supplies to personal protective equipment so you can help deliver a clean bill of health.

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uh with all the ingenuity that takes place yes we're trying to get better trades yes there's a lot of uncertainty but i still think the go-to currency will continue to be the dog you know further in because i have a lot of questions um i know you have an incredible newsletter that i read every day the good thing about your newsletter is it's it's funny it's informative it's fun to read it's easy to read which is something you know

I, I enjoy, I can only read something I enjoy because I'm, you know, if not, I'm, I'm like the, you know, ADHD, but if people want to get in touch with you though, they want to read your newsletter and everything. How can they do so? Yeah. So it's Mahoney, gps.com. M-A-H-O-N-E-Y, gps.com. Right there is our newsletter. Sign up for it. Um,

We have a lot of ideas, as you can tell, and bounce off a lot of ideas. We just love it. We live and breathe this stuff. And certainly it's an amazing, America's amazing to be able to have this opportunity to invest in the best companies, not in the US, but in the world. There's only one Apple, only one Nvidia, one Microsoft. I could go on and on and on.

truly innovative. And that's the spirit of America and the best companies in the world. And we have access to it 24-7, click, click, click. You can buy stocks all day long. It is such an amazing opportunity that we have. Well, this has been great. Ken and Connor, father and son duo, not too many in the finance space that we've gotten to talk to at least. So it's always great to understand the different dynamics and age groups, everything that you're seeing that you're working on. I know you're talking in like...

tons of media all the time but I just want to say thank you so much for joining us today I thank for having us Daniel great questions and make this kind of think through it and help your viewers enjoy some of the commentary that we have