Hard Lessons = Great Value. Stephen Kates Talks to A&G

Summary

---

Armstrong & Getty On Demand: "Hard Lessons = Great Value. Stephen Kates Talks to A&G"

Date: June 24, 2026
Host: Armstrong & Getty (A&G)
Guest: Stephen Kates, Finance Expert, Clock Tower Financial Consulting

---

Episode Overview

This episode dives into recent turbulence in the tech stock market, exploring whether it's a signal of a broader crash or simply a blip. Jack Armstrong and Joe Getty (A&G) bring on Stephen Kates to break down the market’s movements, the continuing role of AI investment, and how individual investors—especially young people—should think about market ups and downs. The discussion emphasizes the importance of learning from financial setbacks and developing a long-term perspective on investing.

---

Key Discussion Points & Insights

1. Context: Recent Tech Sell-Off ([01:11])

• The episode opens as Armstrong recounts the recent, sharp downturn in tech stocks:
  • Nasdaq dropped 2.2% in a single day.
  • Philadelphia Semiconductor Index fell nearly 8% in one day.
  • Major stocks like Nvidia, AMD, Intel, and Micron experienced significant losses.

2. Is This a Tech Bubble Bursting? ([02:17])

• Stephen Kates: "Honestly, it's neither. It's not a bursting at this point...Yesterday was just a bad day."
  ([02:28])
• Kates explains that while it was a significant drop, it's not the start of a broader collapse:
  • Markets showed signs of stabilizing the next morning.
  • Global factors (notably a 10% drop in the South Korean market) influenced investor skittishness.
  • Ongoing concerns include Micron's upcoming earnings and broader skepticism about AI investment.

3. The Value of Market Downturns for Young Investors ([04:35])

• Armstrong shares that he recently opened index funds for his teenage kids, partly hoping they might experience a "crash" early and learn crucial investment lessons.
• Kates: "To have those lessons early on is ideal...Understanding the way the market moves and what is and isn't normal is one of the most foundational things that you can understand."
  ([04:59])
• There’s discussion about the misconception that markets go up unstoppably—young investors should learn volatility is normal.

4. Can AI Investment Deliver? ([06:13])

• Kates responds to a ChatGPT-generated question regarding whether the trillions spent on AI will be justified by profits:
  • Kates: “It's a legitimate question...companies like OpenAI lost $20 billion last year...” ([06:13])
  • Big tech players (Amazon, Google, Microsoft) remain highly profitable, but massive investments could become a risk if not matched by returns.
  • Small businesses and consumers are not yet widely seeing efficiency gains from AI.
  • If only major players benefit, while smaller companies don’t, the justification for the scale of investment falters.

5. SpaceX Stock & 'FOMO' (Fear of Missing Out) ([08:22])

• Armstrong asks Kates about the recent hype and drop in SpaceX stock following its IPO.
• Kates: “You're still happy, but you're not as happy as you were Wednesday of last week…almost everybody who bought post-IPO…may already be losing money.”
  ([08:37])
• Warns of future insider selling pressure:
  • “Five percent of the total SpaceX stock is available for buyers...another 40 or 50%...will become available over the next 11 months…That's going to push this price even lower.”
    ([09:32])
• The takeaway: be wary of following hype and expect volatility, especially post-IPO.

6. The Role and Pitfalls of Economic Reporting ([10:43])

• Armstrong critiques mainstream economic reporting for exaggerating minor market swings.
• Kates: “It is important to not get so in the weeds where every little market movement...sends you into a tizzy…Reacting to every little nuance...is going to drive you absolutely bananas. You have to have a longer view.”
  ([11:16])
• Emphasizes focusing on trends and fundamentals, not day-to-day moves or headlines.

7. State of the U.S. Economy—A Quick Diagnosis ([12:07])

• Armstrong asks for a “no spin, no politics” one-word assessment of the economy: Good, Bad, Poor, or Excellent.
• Kates: “I'll give you those four good things. There are some bad things and your circumstances are going to dictate...Hiring is slow, but most people still do have jobs. If you want to buy a house...life is pretty terrible because you just can't get one.”
  ([12:21])
• Armstrong summarizes: “It matters to your personal situation what the economy's like.”

8. Long-Term Lessons: Start Investing Young ([13:09] onward)

• Armstrong reflects on starting index funds for his kids:
  • "The most valuable thing you've got in investing more than anything else...is time. Time is the big multiplier...I wish I had done that...I don't care how broke you are, put money in your 401k."
• The importance of developing a long-term perspective and beginning to invest early is a core, recurring theme.

---

Memorable Quotes

• Kates ([02:59]): "I think we've all been conditioned over the last couple years to expect that, you know, if the market is not going straight up, that something is wrong. And that doesn't happen. Sometimes we do just have bad days."
• Kates ([11:16]): "Reacting to every little nuance of the economy or the stock market is going to drive you absolutely bananas."
• Armstrong ([13:29]): "The most valuable thing you've got in investing more than anything else in the world is time."
• Kates ([12:21]): “Hiring is slow, but most people still do have jobs. If you want to buy a house...life is pretty terrible because you just can't get one.”

---

Timestamps for Important Segments

• 01:11 — Overview of tech sell-off and market stats
• 02:14 — Introduction of Stephen Kates
• 02:28 — Is this the tech bubble bursting?
• 04:35 — Educating young investors via index funds
• 06:13 — The big question: will AI investment pay off?
• 08:22 — SpaceX post-IPO performance & “FOMO”
• 10:43 — The media’s role in market panic
• 12:07 — "No-spin" state of the economy
• 13:29 — The “time” advantage in investing

---

Tone and Takeaways

The conversation is pragmatic, good-humored, and reassuring—grounded in the reality of market volatility and skepticism toward panic or hype, whether coming from media or market sentiment. The primary message: Weathering downturns is an opportunity for valuable lessons, especially for new investors. Slow, steady, and informed participation—with a long-term view—trumps reacting to every headline.

---

For listeners—key advice:

• Don't panic over bad market days; they're normal.
• Learn investing basics early; use downturns as lessons.
• Time in the market beats trying to "time" the market.
• Know that headlines often exaggerate daily swings; focus on your goals and broader trends.
• AI and tech investments still need to prove their long-term worth, especially for regular businesses, not just giants.

---

Transcript

[A]

This is an iHeart podcast guaranteed human

[B]

this July 4th, come celebrate at America's Block Party hosted by America 250. America's Block Party is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum.

[A]

Experience music, performances by major artists, patriotic tributes and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history.

[B]

It's more than just fireworks.

[A]

Join this landmark celebration and get your America's Block Party Tickets now for $17.76 at america250.org LA hi, it's Karen in Georgia from My Favorite Murder. We cruised around LA in the Hyundai Ioniq 5 and dove into the fascinating life of actress and inventor Hedy Lamarr. Want the full story? Take a listen. She starts dating Howard Hughes and in fact she helps him design a faster plane. So she finds the fastest bird and the fastest fish and sketches out a drawing of what the two would look like as a plane. And that becomes the plane that we know today. And he calls her a genius. Check out our new episode spotlighting groundbreaking innovators like Hedy and Lamar and Billie Jean King presented by the Hyundai Ioniq 5. Goodbye.

[B]

It's been quite amazing that during a war and a war that in particular had a ton of unknowns throughout it, the stock market continued to set records. A lot of the reason the stock market has been setting so many records over the last couple of years is the all the AI tech stuff. The the biggest companies in those top tier stocks that are driving so much of the gains, tech companies and they all got scared about AI just the other day all of a sudden at the same time, which is kind of interesting how that would happen like that. The Nasdaq. Nasdaq dropped 2.2% on Tuesday alone. The Philadelphia semiconductor index fell nearly 8% in one day. Stocks like Nvidia, AMD, Intel, Marvel, Micron, Sandisk all got hammered. What is going on there? I wanted to talk to an expert because I am certainly not. And Stephen Cates joins us. He's a finance expert, Clock Tower Financial Consulting. Stephen, thanks for taking a little time for us today.

[C]

My pleasure. Happy to talk about this kind of thing.

[B]

Great. Because, well, is this the bursting of the tech bubble that a lot of people have been worried about or a mini burst or what is it?

[C]

Honestly, it's neither. It's not a bursting at this point. I mean we can look at what the market has done just in the first six minutes of the market open. NASDAQ is up half a percent Obviously that doesn't erase yesterday's drop, but it's not a continuation. We're not careening lower on the second day here. Yesterday was just a bad day.

[B]

Just, just a singular bad day, like with no greater significance.

[C]

I mean, that's what it seems to be. I mean, you can look at, you know, where the market's moving and, you know, if we were careening lower, opening another 2% down, well, that would certainly show some signs that there's continued concerns, you know, a risk off attitude from investors. But, you know, I think we've all been conditioned over the last couple years to expect that, you know, if the market is, is not going straight up, that something is wrong. And that doesn't happen. You know, sometimes we do just have bad days. Yesterday, you know, there was a catalyst for that. Semiconductor stocks were down and down a lot. And going into yesterday's open in the U.S. south Korea, which is incredibly exposed to semiconductor stocks, was very negative. It fell 10% in their market. That happens before the US market opens. And so that did affect us. And that was one of the reasons that investors were a bit skittish yesterday. Micron has earnings at the end of the day today after the market closes. That's a big earnings announcement. They're a major player in the semiconductor space. So there are some things going on that investors are concern about. But this doesn't appear to be the bottom falling out of the market. It was a bad day. We seem to be slightly recovering today across the NASDAQ, the S&P, the Russell 2000, which is small cap stocks. And that's good to see that we're seeing a little bit of a bounce.

[B]

I just a couple of weeks ago opened a index fund for each of my teenagers, the high schoolers, and to get them into, get the app on their phone and they can follow it on a regular basis and put their Christmas money in there and that sort of stuff. And I thought maybe we get a crash and they, maybe that would be a good thing to have their first lesson of investing be that it doesn't always go up. I don't know.

[C]

Well, it's not a bad lesson to have, and I think to have those lessons early on is ideal. I learned that lesson firsthand, actually, in the industry, watching the great, you know, coming out of the great financial crisis. I didn't love that lesson, but it was, it was a valuable one nonetheless. You know, for a lot of people. Understanding the way the market moves and what is and isn't normal is one of the Most foundational things that you can understand. A lot of people have been conditioned to expect that the market just goes higher, that we get up, up, up all the time, 20% growth year over year over year. That isn't the case. We've been very lucky in the last five, even 15 years.

[B]

Yeah, I'm thinking we're going to time it perfectly for retirement to crash right when I need it. So I'm going to let you argue with Chat GPT. I asked it the question what can you tell me about the big tech sell off? And it said investors starting asking a question that they haven't asked much over the last year around the whole tech thing. Are all these trillions of dollars being spent on AI actually going to earn enough money to justify it? Is that a question there being the people are asking?

[C]

I think that's a legitimate question to ask and certainly people are asking that. It's a question of how long will it take for this to play out. Is there really a thesis here that can bear out in some ways when you look at companies like OpenAI or Oracle, you know they're spending a lot of money, the revenue is not quite catching up. I think OpenAI financials leaked recently and they lost $20 billion last year or something to that effect. So that's not encouraging. But you know, it is a, it is a situation where, you know, a lot of the companies that are involved with OpenAI or backing some of these AI ventures like your Amazon, your Google's, your Microsoft, they are still incredibly profitable companies and still earning an enormous amount of money. Where things get a little bit dangerous is if they continue to make, you know, make the spending larger and larger to the point where the revenues never grow, but the spending keeps increasing and they have to take out additional equity or debt to supply the funding for this. That's where things start to get a little concerning. We are potentially crossing into that threshold and we're going to need to see these companies and this debt actually start to pay off in some way. We're going to need small companies, regular companies actually to see efficiency gains. We're not necessarily seeing that profits for major tech companies have been enormous. But you know, your small cap companies, your regular mom and pop shops, you know, the everyday businesses all around our cities and towns, are they getting any benefit out of this? Are they even using it? If the answer is no, then it gets a little bit concerning whether this actually has. They're there.

[B]

So Friday before last we were talking about fomo. Fear of missing out around the Whole Space X stock and I didn't invest. If I had invested in SpaceX, would I be happy today or not? I haven't been checking.

[C]

You're still happy, but you're not as happy as you were Wednesday of last week. Today, if you. I think. And I'll have to see exactly where it, it opened because I, I didn't, I didn't look before we talked. So price is about $151. It peaked at over 220, I believe, or 215 or so. So we're down considerably from where we were just a week ago. Almost everybody who bought, possibly everybody who bought post ipo. So in the secondary market, you didn't get the IPO price, but if you bought after that, you may have already been losing money.

[B]

What you got, you got. You know, I'll tell everybody to turn off, turn off the radio just now. It's just between me and. Are you personally invested in SpaceX?

[C]

No, I'm not. You're not? No. The, you know, it was exciting to watch. I think everybody probably felt that fomo, you know, where could I have gotten some, right, you know, shares, and then, wow, what a pop. I'm up 40%, you know, or whatever that was from Monday to, you know, Friday to Wednesday. But now, if you bought the secondary market, you're losing money. And that isn't surprising because 5% of the total SpaceX stock is available for buyers. There is going to be another 40 or 50% of that stock that's going to become available over the next 11 months. And so there's going to be an incredible amount of insider selling pressure. People who are part of the company or they have been investors in the past when it was private, they're going to be selling their shares to actually create some liquidity for themselves, to actually utilize some of the wealth that they have created from being investors in SpaceX. That kind of supply coming into the market is going to push this price even lower. So there's not a good case for buying in now and expecting a profit over the next six or 12 months.

[B]

Okay, I'm really glad I asked. That's very interesting. I'm mostly in the prediction market. I've got a lot of money on whether or not Prince Harry and Meghan Markle divorce in the next year. That's mostly where I put my money. I regularly say that the stupidest mainstream reporting in all of journalism is economic reporting. Does mainstream economic reporting drive you crazy? Because the way they react to little market jigglings drives Me nuts.

[C]

And it probably should. I love that kind of news, but that's just me. I don't think most people do. It is important to not get so in the weeds where every little market movement, every little adjustment to every economic report sends you into a tizzy. You know, the media promotes that kind of attitude where we have to react to everything and you shouldn't. Whether you're investing for your retirement and you're just trying to keep your sanity, or whether you're trying to figure out how is the job market, can I change jobs, Can I buy a house? You know, reacting to every little nuance of the economy or the stock market is going to drive you absolutely bananas. You have to have a longer view and you have to try to make decisions with the information you have in the moment you have it.

[B]

If you could give me a short answer on this because I got a break and I appreciate your time, but the no spin, no politics. What's the state of our economy? Good, Bad, poor, Excellent.

[C]

I'll give you those four good things. There are some bad things and your circumstances are going to dictate sort of whether you feel, you know better or worse about that. Hiring is slow, but most people still do have jobs. If you want to buy a house and you are a first time home buyer, life is pretty terrible because you just can't get one.

[B]

That's interesting. That's like the old. It reminded me the old saying of it's a recession if you have a job. If you lose your job, it's a depression. I mean, it matters to your personal situation what the economy's like. It's very much so, yeah. Okay. Stephen Cates, appreciate your time. Finance expert, Clock Tower Financial Consulting. Thanks a lot for coming on on short notice about the tech stocks.

[C]

My pleasure. Happy to do it.

[B]

Yeah, I need to talk to people like that regularly to calm down because as Joe says, everything's clickonomics and the money is to be made by the Wall Street Journal or CBS News or whoever to make it seem like whatever the stock market did up or down is a really, really big deal. When quite often it's not. It's just the market goes up and down. You gotta see trends over, you know, weeks or months to really start talking about it. I got more on that. But first I need to tell you about Simply Safe, which I absolutely love. Every time I pull away from my house, seeing the SimpliSafe sign right there to remind me that my house is protected with the system that I ordered from SimpliSafe I went online, I customized it to the house that I currently live in. The cameras, the sensors, all the different sort of stuff, it comes in the mail fast. I set it up myself in about 30 minutes. They'll offer help to you if you want, but you can do it yourself. It's, it's super easy. You don't have to be some sort of, you know, handyman to be able to do that. And no long term contracts because Simply Safe believes you're going to like it enough to keep using it. And it's dang, dang impressive if you want the experience. The same peace of mind that I do every time I pull away from my house. Which is why we've partnered with Simply Safe to offer this exclusive discount to our listeners. Right now you can get 60% off and a free outdoor camera, which is essential on your new system by visiting simplisafe.com Armstrong simply safe.com/armstrong. There's no safe like Simply Safe. Yeah, my, my kids, my, my brother actually had brought this up to them over Christmas and it took me five months to get it done. But they now have this, they both have a little index fund and hopefully I'm going to encourage them strongly to put birthday money, Christmas money, any money they earn from chores, that sort of stuff, at least part of it into that index fund and see how it grows. Because the most valuable thing you've got, and you know this once you' and maybe you missed out, the most valuable thing you've got in investing more than anything else in the world is time. Time is the big multiplier. I wish I had done that. Everybody says that it's so hard to convince young people that I don't care how broke you are, put Money in your 401k. I do not care how broke you are, put money in your 401k. It makes so much difference. You just, it's so hard to imagine ever being old when you're, when you're 25, you think, I'm never going to be 60. It just ain't going to happen. It's weird that human beings deny the reality of the calendar the way we do. Anyway, that's a topic for a different day. We got a lot more on the way. Stay here.

[C]

Armstrong and Getty.

[B]

This July 4th, come celebrate at America's Block Party hosted by America 250. America's Block Party is, is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum.

[A]

Experience music, performances by major artists, patriotic tributes and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history.

[B]

It's more than just fireworks.

[A]

Join this landmark celebration and get your America's Block Party Tickets now for $17.76 at america250.org LA hi, it's Karen and Georgia from My Favorite Murder. We cruised around LA in the Hyundai Ioniq 5 and dove into the fascinating life of actress and invent Hedy Lamarr. Want the full story? Take a listen. She starts dating Howard Hughes, and in fact, she helps him design a faster plane. So she finds the fastest bird and the fastest fish and sketches out a drawing of what the two would look like as a plane. And that becomes the plane that we know today. And he calls her a genius. Check out our new episode spotlighting groundbreaking innovators like Hedy and Lamar and Billie Jean King. Presented by the Hyundai Ioniq 5. Goodbye.