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Rich Habits Podcast
Special Guest: Bilal Little, Nvidia Invests $5B into Intel, & Fed Rate Cut Reactions
00:49:27
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- [00:01]
Austin Hankwitz
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- [00:58]
Robert Kroke
Race the rudders. Raise the sails. Raise the sails.
- [01:00]
Podcast Host / Narrator
Captain, an unidentified ship is approaching.
- [01:02]
Robert Kroke
Over Roger, wait. Is that an enterprise sales solution?
- [01:06]
Austin Hankwitz
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- [01:27]
Podcast Host / Narrator
Xena.com presents the rich Habits Radar, a new Friday episode of the Rich Habits Podcast where every Friday morning we're coming at you with the biggest headlines impacting you and your money. My name is Austin Hankwitz and I'm joined by my co host Robert Kroke. The three things sitting at the top of our Rich Habits radar this week include Nvidia investing $5 billion into Intel, China and the United States, reaching a deal for the US to take over operations of TikTok and Jerome Powell announcing a 25 basis point rate cut on Wednesday. Now be sure to stick around as we have a very, very special guest joining us from the New York Stock Exchange. A little interview here in the Next call it 1012 minutes, so stick around for that. Robert let's dig into our first story.
- [02:11]
Robert Kroke
Yes, Nvidia announced a 5 billion dollar investment with intel, sending Intel stock up 30%. The two companies will now co develop chips for PCs and data centers. Combining Intel's processors with Nvidia's graphics technology.
- [02:27]
Podcast Host / Narrator
Nvidia will acquire intel stock at dol per share, giving Intel a significant financial boost as they face the continued challenges from competitors and rising costs. Now remember, the United States government also took a 10 stake in intel last month and now their Investment is up. Drumroll. 55%, roughly $5 billion in a month. So hedge fund United States. I need to somehow get in on that one man.
- [02:54]
Robert Kroke
And here's why that matters for your money. Nvidia now dominates AI and accelerator computing, while intel has struggled to maintain manufacturing leadership and market share. By partnering, intel gains access to Nvidia's market leading technology and a critical infusion of capital, giving it a chance to remain relevant in both PCs and data centers. Intel's CEO Lip Bu Tan noted that the partnership positions intel to innovate across its portfolio with while leveraging Nvidia's technology.
- [03:26]
Podcast Host / Narrator
All I'm saying is that Robert called it. Robert was saying, he's like, listen guys, if, if the United States is in on intel, so AM I. And 30% after that one. So shout out Robert now. Up next, China and the United States reaching a deal on TikTok. So the United States and China have agreed in principle on a framework that would require ByteDance, which is TikTok's Chinese owner, to sell or otherwise relinquish control of TikTok's US operations. The aim to avoid a US ban of TikTok. Now, TikTok's US operations are on track to be controlled by Oracle, Silver Lake and Andreessen Horowitz, with the US investor base kind of holding about 80% of the company. The plan is to spin up a new US based TikTok with an American led board. And yes, of course, one of those board seats is for the U.S. government.
- [04:19]
Robert Kroke
Yeah, and existing users, just so everyone understands, would shift to the new app built by TikTok engineers using algorithms licensed from ByteDance. Oracle will manage the user data from its Texas facilities. And the deal pushes the TikTok ban back to December 16 while US and Chinese negotiators finalize the terms. So here's why it matters. TikTok's algorithm is arguably the crown jewel here and the US is insisting it stays in American hands. The deal also signals that Washington and Beijing can cut deals even on highly sensitive platforms without blowing up the markets.
- [04:58]
Podcast Host / Narrator
So Trump says he's reached a deal and will confirm it with Xi Jinping soon. Dance's revenue rose by 25% in the first half of this year. They've got an internal valuation of 330 billion. So that's pretty wild. But for investors, this is a reminder that even regulatory drama can create massive upside. If you find the right spots, why does it matter? Houses come together. TikTok's here to stay. Seems like we're good to go. And as what Trump said in the beginning, he's going to have a stake in it. TikTok's going to benefit from the hundreds of millions of users. Yeah, hundreds of millions, I'm sure. Users here in the United States. He gets a board seat, maybe some stock in a company. I'm sure someone's got stock in Oracle, which has been going crazy. I'm sure they're going to benefit from all this. Keep an eye on this one. Pretty interesting, especially how Oracle just seems to find their way to slide on in there. So, Robert, wrap us up with our last point here for the episode's top three.
- [05:51]
Robert Kroke
Yeah, the Fed cut rates, signaling more cuts this year. And next, the Federal Reserve just delivered its first rate cut in nine months, shaving a quarter point off their benchmark and flagged the possibility of two more rate cuts before years end. Yes, for sure. Jerome mentioned recent softness in the labor market as outweighing stubborn inflation, now focusing on preserving employment rather than lowering inflation.
- [06:19]
Podcast Host / Narrator
So here's the deal. 11 out of the 12 voters backed this 25 basis point cut. And the new Fed governor, Stephen Myron, was the one that actually was one of the 12 that did not back it. They wanted a half a point cut, ended up, of course, going with 25 basis points. Jerome Powell sort of framed this decision as a careful balance. Right? You got the risks of a cooling labor market now outweigh the inflation concerns. The path ahead definitely is not clear. The only thing that is clear to me is that I will finger, fingers crossed, hopefully be able to refinance my mortgage at a lower interest rate in the coming 6, 9, 12, 18 months, baby. Come on now.
- [06:58]
Robert Kroke
And here's why it matters for your money. Payroll growth has slowed with only 29,000 jobs added over the summer. And unemployment is now at 4.3%. Fed is nudging rates down cautiously, keeping a close eye on jobs while letting inflation run a little hotter, an approach that is used to stabilize the economy without shocking the system. So the moral of the story, own assets. It's the only way to weather any storm.
- [07:27]
Podcast Host / Narrator
Well beyond that. Robert, we were talking in our Tuesday live stream that takes place every Tuesday night for two hours in the Rich Habits Network. And we had a chart that we had shared that showed the performance of the S&P 500 over the following 12 months after the Fed cuts rates for the first time, while the S and P is near all time highs, not in a recession. And after they pause for like six months or something, I think the average return happened like four or five times in history. The average return is like 17. So fingers crossed the markets continue to trend higher up and to the right. I think we've got the perfect storm. We've got this deregulation, the weaker dollar. We've got rate cuts, we've got tax cuts from the big beautiful bill. We've got all these things happening. Own assets now is more important than ever to be a net buyer of assets. When we say that we're talking the S, P 500, the NASDAQ, BL chips, single stocks, cryptocurrency, precious metals, real estate, it doesn't matter. Own an asset that will appreciate over time. You will thank yourself in three to five years from now.
- [08:29]
Robert Kroke
Yeah, don't listen to all the naysayers. As Austin always says, bears sound smart and bulls make money. And we always want to make sure you guys are understanding where the markets are going and you're in the markets as buyers.
- [08:42]
Podcast Host / Narrator
Now joining us as our first Friday Episode guest is Bilal Little, Director of Exchange Traded Funds at the New York Stock Exchange and host of ETF Central Podcast. With nearly two decades in financial services, Bilal has helped raise more than $15 billion for leading asset managers through his work at BlackRock, Harbor Capital and now the New York Stock Exchange, where he helps firms navigate the fast evolving ETF in digital asset landscape. He's also the author of the Money Standard and a passionate advocate for financial empowerment, having taught nearly 10,000 young people the fundamentals of money beyond the markets. Bilal has served on several leadership boards, partnered with the Boys and Girls Club to provide hundreds of thousands of dollars in support during the pandemic, and volunteered globally through Habitat for Humanity. He's been featured in outlets like A Black Enterprise and Wealth Management Magazine and brings a perspective rooted in both professional excellence and service. We are thrilled to welcome him to the Rich Habits Podcast, specifically our Friday episode Rich Habits Radar. And also Balaj got an award. I think it was last week I saw it maybe this week saw on his Instagram talk about that. Introduce yourself. Give us the quick and dirty below.
- [09:58]
Bilal Little
Guys, look, thanks so much for having me. I'm really excited to be here, I gotta tell you. Look, I spent 20 years in this business and it's exciting to see what you guys have been Building and for me to be a part of it. So just by background, so people get a better sense of who I am. I've spent the bulk of my career in distribution, so raising capital for asset managers through the Advisor channel. So I would go and consult financial advisors for BlackRock, for Newberger Berman, for Harbor Capital, and actually a digital asset manager as well. So I got a bit of a background there, there. And it's been really unique to see the evolution of the wealth management space. Right. And my career somewhat always followed ETFs, which has been ironic. Back in 2015, I left Neuberger Berman and I actually joined BlackRock. And at the time, you remember, obviously they had acquired iShares and you had this sort of proliferation of the ETF space. So it's been really exciting. But throughout that time, I've always been a cheerful giver. Which leads to your comment about the award. Not only is it biblical for me, but it's also rooted in just the fundamental belief that we have to be good humans. And I've always had an affinity for the advisor community, not only for the fact that I was working with them, but I think they actually do some very important work for families. Inheritance wealth planning, tax planning, not only access to investments, but it's actually about giving back. So the award that I received was from the association of African American Advisors, also known as Quad A. It's the largest nonprofit group of advisors in the country. It was started by lacount Davis. He is the first ever black CFP in the country. And look, there are different market segments for everything. And I think capitalism is naturally inclusive. So these advisors were servicing a portion of the community and they've been growing and they represent advisors across the spectrum. Merrill lynch, ubs, Morgan Stanley, Edward Jones and the like. So There was about 800 people in the room and it was really exciting to. To receive the award. It was called the Spirit of Vision, A Leadership Award. So I'm really excited about that.
- [11:55]
Podcast Host / Narrator
Well deserved, man. Congratulations on all you've accomplished and we're honored to have you here as our first guest on these Rich Habits Radar episodes. So, Robert, why don't you kick us off?
- [12:04]
Robert Kroke
Yeah. Our first question, and I'm really excited about the episode, so thanks for joining, is what innovations or trends in the ETF space are you most excited about over the next two, three, five years? Because like you mentioned, there is such a proliferation leading into ETFs and the growth of ETFs. Austin and I love them. We believe in everyone should have a bag of these ETFs, you know, to build their base and build their wealth. So walk us through what you're most excited about in the near future in the space.
- [12:34]
Bilal Little
Yeah, look, I think people need to One, just embrace the fact that ETFs are innovation. It's just technology. And when you think about technology, it moves in one direction. It is naturally about speed, efficiency, cost and security. And the ETF wrapper is that. But the innovation allows for some really unique developments to take place. So since we've moved past call it just indexing products into more defined outcome solutions, I think you're going to continue to see some growth. Obviously with crypto, there's obviously regulation coming out coming down from Capitol Hill, which will continue to embrace that particular space. You're also seeing some really interesting developments when it comes to structured or defined outcome products. So I don't want to name names, but there was an auto callable product that was listed not too long ago. They've raised over $200 million in the last probably two and a half months. But that particular product was purely going after $100 billion structured product space. And I think the more that we pay attention to outcome based investment needs, investors are going to need solutions not only with the silver wave of people retiring around income, but you're also going to have risk management tools that will be levered and pulled on. And then that's also different from an institution perspective versus a retail investor. Right. When you think about it, institutions leverage ETFs not only for trading capabilities, but possibly hedging the retail. They're leveraging these for long term investment solutions. So we want to make sure that we're mindful of what's being launched and how they're being launched and how they're actually being used. I think those are some of the things that I'm paying attention to.
- [14:05]
Podcast Host / Narrator
So definitely the innovation, the ETF wrapper itself is innovation. Right. Because we've talked about on the show in the past direct indexing. So it's like if you don't have VOO or qqq, for example, and you want to have the S&P 500 and its incredible performance and the rebalancing, everything goes into it, you have to direct index it. And turns out that's really hard to do if you don't have hundreds of thousands of dollars or someone, you know, doing that for you full time. So no, I really appreciate that perspective and it's, it's kind of like makes you want to take a step back and Say, wow, this is, this is actually really great. It's really inclusive, right? I mean, anyone with 5, 10, 15 can go invest in American capitalism now through these, these ETFs. So, you know, kind of piggybacking on that question is like, what do you think are some of the biggest growth opportunities for ETFs right now? I think you mentioned automatic call, something I'd never heard of that before. So is it like, is it thematics, is it automatic call stuff? Is it fixed income? Is it something else?
- [15:01]
Bilal Little
Yeah, so let me, let me touch on that actually. It's really interesting. Right, so it's called an auto callable product. So that's a structured product, meaning structured usually by banks or institutions. But they're leveraging the ETF wrapper as an access point and they've been able to hedge out some of the time component of risk. So if the bonds were or if the products inside of the ETF had a time component where they could be called that, that portion has actually been hedged out. Right. So that's a very important sort of selling point for investors that say, well, I like that product, but can it be made more efficiently? And the ETF wrapper allows this particular money manager to do so. But you asked an important question. So just thinking about innovation, here's the other piece that I didn't mention. I think you're actually going to also see more personality, or how should I say personality and high profile investors launch more products. So everyone knows about Tom Lee, right? And Funstrat and the success that they've had with the launch of his product. But then you had Dan Ives come to market as well, right? And that, that product is, you know, north of $700 million in less than six months. Bill Ackman recently launched here at the New York Stock Exchange with Aki, or if someone's leveraging that particular sort of title. When you think about that, there's brand, there's cache, and there's a little bit of quote unquote splash. From a marketing perspective, I think you continue to see those types of products launch in the market and actually receive some success. And then I think the biggest area that's going to be disrupted will continue to be fixed income. Fixed income market is twice the size of the equity market. But more importantly, need for innovation to continue to happen in that space. When it comes to precision, portfolio managers may want to laser in or focus in on a specific area within credit. The ETF wrapper is allowing access and it's providing a unique leverage point to receive the exposure that you want from a portfolio construction perspective. That will be the biggest splash I think over the next couple of years.
- [16:55]
Podcast Host / Narrator
That's interesting. I appreciate you sharing that perspective. I guess the only feedback I have is if you're dressing like Daniel Ives, you deserve to have an etf. I don't know if you guys ever see this guy on cnbc, but his, he's got some, some cool fashion sense. I'll say that.
- [17:09]
Robert Kroke
I want to unpack that a little bit further before I ask my next question and that is do you see in the ETF space? Because I read something the other day that said over 100 new ETFs in the crypto base would be approved in the next 12 to 18 months. Which that seems like a massive number to me. So do you see that as being one of the bigger sectors of this growth in ETFs right now in the next 2, 3, 4 years or where are you at on that?
- [17:37]
Bilal Little
Yeah, no, absolutely. One, you have accommodative administration to support that. Let's be very clear. There's an innovation run and push that the America needs to win. And I think once you get the administration behind you and you've probably seen or read about some of this stuff, it's called generic standards. They basically level set what will the standards will be to actually launch, enlist and market shortening the time span of 240 plus days to 75 and there's already north of, I don't know, 90 products already been filed. So getting some continued momentum behind that. You'll see that that that's nothing to to be surprised about that's going to happen now who and what types of strategies will win? I think look, that's to be seen, right? You have the XRP army on one end and you have the bitcoin army on the other end and then you have the Solana folks on one end. I think there's only so much money to go around but you will see people, not only retail but institutions lean in to these particular areas. One because again from an institution perspective the ETF will provide liquidity. So they are much more tactical in the way that they manage capital versus on the retail side. It's much more buy and hold. And if it's not buy and hold, they probably do not understand all the mechanics of some of the products that they're invested in anyway. So I think that's to still be seen. And then you also have just going back to your question Robert, about thematics like you're also having a rollback of like ESG based products. Right. Just from a branding perspective. So you're seeing closures there and you're actually seeing less marketing behind those types of products at the end of the day. Again, I think this is a capitalistic view. If you're naturally investing in your business, it will have an ESG tilt anyway. There's a sustainability component of all investments that any prudent money manager or in business person would actually need to think about. Like, let's just be honest here. Nobody wants to be blind. What is it called? Blockbuster.
- [19:33]
Robert Kroke
Yeah. Yeah. It's crazy because you think about the markets and how far behind Wall street was in crypto, you know, and now they're catching up and it's all hands on deck. And people say to me every day and ask me every day, is it too late for me to invest in crypto? And even though I've been an investor in crypto for over 13 years, I still feel like it's really early. And the growth of all of these ETFs, I feel like it's just a huge arms race where everyone's pivoting, get in the game of the ETFs in the crypto space because it is such a big market. But I agree with you. There's only so much money to go around. And so I think that's an important thing for all of our listeners to understand because everyone's not going to win in this party and in this game and in this race. And I think that's really good that you touched on that. So my next question, and our last question today is if someone is listening and want to build rich habits with ETFs, what's one of your simple principles or best practices that you would recommend that they follow? And I want to see how it differs from what Austin and I say, because you do this every single day and you're one of the leaders in the markets in this. And I just really want to understand it from your perspective.
- [20:47]
Bilal Little
I think this principle is fundamental to who I am. I think investors need to go slow before they go fast, keep it really simple. You need blistering clarity and confidence and conviction when you're going to make an investment decision. That does not mean you need to know everything. That means, you know, go slow at understanding concepts to understand the risk that's associated with said investment. Just to give you an example, There are over 4,500, you know, ETF products in the market today. The vast majority of people are very familiar with the index products of spy, ivv, voo. Right now, when we start talking about this arc of innovation and where products have launched and where are they going, not only just are you thinking about cost, you're talking about exposures. And to give you a concept that I think is very important on the ETF side, portfolio construction is the missing component from all of the conversations. What do I mean by portfolio construction? Diversification matters and how do I source the risk that I want in my portfolio? What zigs when something else zags? Do I actually have proper diversification? Am I taking on the right amount of risk? These are big level conversations that you need to go slow to consume. So when I say go slow to go fast, yes, you can just jump in the market with a splash with SPY or IVV or whatever. But I think it makes more sense when you say what are my goals? What am I trying to achieve? What's the outcome? If the goal is 10 years, then I need to think about solutions that can get me to that 10 year mark. So if you humor me for one second, I think this is a very important point right now. The Fed lowered rates. There are certain parts of the market that actually do better when the Fed lowers rates. I kind of shared this earlier with some friends that small cap equities is a great example of that. No one's excited about small cap equities from a value perspective. They've been undervalued for a very long period of time. They're probably significantly underweight in most people's portfolios. There are some of the most innovative names from healthcare, financials, tech in those spaces. But everyone's focused on the big tech names and I get it, that's the sexy story of the month. But if I'm looking at strong diversification, and I looked over the last three months because the Fed has already been telegraphing that rates would be lowered here you actually see small caps outperform the S&P 500. And tech, no one's excited about that. It's income, it's mega tech. I understand. But there are parts of diversification that actually matter when it comes to building a portfolio. So go slow to go fast and understand how market cycles work.
- [23:13]
Podcast Host / Narrator
I really appreciate you sharing that because it is the underpinning of everything we talk about on the show. Right, right. Making sure people understand not just, you know, what's happening around them and how to sort of react to that. If it is to your point with some small caps, like what, but you know, being diversified, but to not Just like be this consumer who, you know, drifts through life and it's just life happens to them. Like we want our listeners to happen to life. We want our listeners to be investors, not just consumers. Understand everything happening around you. And you know, I really take pride in being able to give as many actionable insights as we possibly can to all of our listeners. And it's funny you mentioned the small cap stuff because just on Tuesday night, this is coming out Friday morning. But people inside of our Rich Habits network, which seven day free trial, go check that out. I pretty much spent an hour explaining exactly what you just said and why I think the Russell 2000 is headed higher. And I've got a whole small cap portfolio right now in public.com dedicated that it's, it's up like 12% in the last four days. It's wild, but it's just like you got to know, man, and it's, it's cool. And here's, here's the best part about it, the best part and something Robert and I are really excited about is we get to unlock access to the experts. You are an expert, right? You are someone who is in the trenches every single day at the New York stock exchange. Understanding ETFs, understanding what's happening behind the scenes, everything as it relates to this entire, you know, financial market, we get to unlock that access now to hundreds of thousands of people that are going to tune into this episode. So Bilal, I'm so excited you joined us. Please come back. We'll definitely, definitely have you back. And be sure to tune in to the ETF Central podcast. Go to ETF central.com Bilal is the, the head honcho over there and do everything you can to support what blah and the New York Stock Exchange are up to.
- [24:55]
Robert Kroke
And my final takeaway and thank you for joining us, Bilal, is you just solidified and reiterated everything we say on a daily basis to everyone. And because one of our big messages is there's always ways to make money if you know where to look in the picks and shovels, the small caps in all of these kind of emerging sectors. And so I love hearing someone as astute as you in this business saying the same things. And it really makes me feel good about our message for our audience. So thank you so much for joining today.
- [25:29]
Bilal Little
Thank you so much for having me. If I can just leave you you with something. I love what you guys are doing as far as access to the community. That's really important information and access. Right. I've consulted advisors for 20 years. I've literally helped them build portfolios for the wealthiest families. So the fact that you guys are having these conversations on an ongoing basis, it means a lot. So thank you for the work that you guys are doing.
- [25:50]
Podcast Host / Narrator
Thank you, Robert. So much fun talking with Bilal. I just, I feel like I learned something every time I, you know, we met him at the New York Stock Exchange Partnership Day earlier this year. I think it was in February. We met him and just so grateful that he joins us here and hangs out with us and, you know, we have the support the New York Stock Exchange when it comes to the conversations we're having on the show. And it's really cool. Bilal sends me, he'll text me a picture of our show somewhere in the break room. It's up. It's everywhere. Because, you know, we're, we're licensed out through Cheddar. And so if you go to cheddar.com sometimes, you'll see our show next to Shark Tank and the other cool shows they, they have there on Cheddar. And it's, it's just so fun. So major shout out to the New York Stock Exchange. Bilal, ETF Central. ETF Central podcast. Go check them out. They're crushing it over there now, Robert, we've got our own rapid here. I've got three. You've got three. I'll kick us off. Actually, you kick us off. You haven't kicked us off before. Kick us off, Robert.
- [26:45]
Robert Kroke
I'm ready. I'm excited. So my three today that I'm most excited about is Grayscale. Got approval of the first multi asset crypto etf. That's right. Multiple cryptos in one etf. And the New York Stock Exchange just approved this recently. And the ticker for this fund is gdlc and it is the first of its kind. So it has Bitcoin in it. Ethereum, xrp, Solana and Cardano. So make sure you check out the weightings. And this could be great for people that are looking to get into the crypto space but don't want to manage it themselves and they don't want to maybe own five, six, seven different ETFs. So I love this for grayscale and I think it's a really, really cool product. So for me, that's number one. I love seeing all of this growth in the crypto space. Like we talked about in the Rich Habits Network on the live the other night, there are over a hundred crypto ETFs up for approval in the next 12 to 18 months. So I think it's great to see this kind of adoption and growth in the crypto space. My number two on radar today is mortgage rates dropped the lowest in three years. So after years of elevated borrowing, mortgage interest rates have just taken a sharp turn lower. And homeowners are taking notice. They're coming out of the woodwork. They're getting back into the market, not sitting on the sidelines, refinancing, looking at new products. And I think it's really great overall to get some of this inventory that's been sitting for a long time back and moving and people getting into the mortgage game. And right now a 30 year fixed mortgage rate has dropped to an average of 6.13%, which isn't back down to the 2 or 3% that we saw during COVID but it is a step in the right direction. And I think it's very important because I don't want to see people continue to sit on the sidelines waiting for that 2, 3, 4% again, because when that happens, if it happens, it'll be a bidding war for houses and multifamily. So it's always good to consider the fact that you could buy now where it's more of a buyer's market before the rates fully compress back down to these lower rates. And my last rapid fire today is quantum computing stocks see a huge rally. Austin and I have been talking about this sector for a long time and although I still believe it's very risky with high volatility, it was great to see a lot of good news in the quantum computing stocks that we've been talking about for a long time. IonQ is one of them. Honeywell just announced a new manufacturing plant that they're building in Chattanooga, Tennessee to develop these new technologies. That's right, Austin is in Tennessee. And then also D Wave, which we've talked about for a long time, which the ticker is QB is also seeing some really strong movement. And don't forget about QUBT as well. I love the quantum computing space. Just make sure you understand, don't go too heavy in it. It's still a ways off before we see a lot of use case here, but it is an emerging technology that I want everyone to be aware of. And these are the stocks that I've been following and taking small positions in.
- [30:00]
Podcast Host / Narrator
Yeah, that's awesome. You know, the rise of quantum computing was one of our three predictions to start this back in. I think it was the first or second week of January Qt Qtum, the ETF Qtum over the last six months is up 31%. Year to date it's up 27%, doubling the NASDAQ and S& P. So pretty cool to see that I've got some IonQ in my own portfolio here and I'm just having a good time. So my three rapid fire stories for the week are one, Crowdstrike surging 12% after their Falcon 2025. Eventually two, Lyft and Waymo partnering for Nashville Robo Taxis. And the third one you guys think is crazy, Krispy Kreme stock went up like 15 after the director of the FBI called it a good investment. Okay, let's dig into these. Kicking things off with Crowdstrike, my favorite cyber security stock. They're up 15 this week following their Falcon 2025 event. You know they have a Falcon product, but it's also a conference. Little play on Word Falcon. Y' all get it. So during the event, Management shared guidance for 20% growth in their annual recurring revenue, raising estimates from Wall street by hundreds of millions of dollars. Management also reiterated that their total addressable market will be expanding from 140 billion this year to 300 billion by the end of the decade in 2030. So if that is that, that's yalls wake up call own cyber security. We've been talking about it for two years now. It's definitely something to have have. The next call out is Lyft and Waymo's partnership for Nashville Robo Taxis. So Lyft, you guys know Lyft? It's the ride sharing app. They announced a collaboration to bring Robo Taxis to Nashville through a partnership with Waymo. Yeehaw. If you ask me. Now, Waymo rides will be ordered from the Lyft app, just like you can order from the Uber app right now in Austin, Texas. You just pull it up, it's a Waymo button. You click it. In Austin, here comes a robotaxi. Same deal feel is going to be happening here in Nashville. I can't wait to just one, download the Lyft app. I've never used it, but also two, order myself a Robo taxi here in Nashville. I just will not be getting in one of those if it's anywhere near Broadway. I don't think that's gonna. I think it's gonna work out great for anybody. Now my last call out is this Krispy Kreme stock. Pop. Thanks to the director of the FBI. So, as weird as it sounds, during an appearance before the House Judiciary Committee on Wednesday, the head of the FBI Guy was asked about buying stocks while holding a government position and he answered he owns Krispy Kreme stock because he sees it as a good investment opportunity, which caused the stock to go up some 15%. He's got up to $50,000 in stock of Krispy Kreme here. Don't ask me why. It's kind of funny. I don't own Krispy Kreme. I don't really even eat it. But that was definitely on my radar as something that was a very interesting account.
- [32:59]
Robert Kroke
Well, we definitely know that we're not listening to the head of FBI for stock advice probably. But it's kind of like the Nancy Pelosi in all of these congressman stories where somehow I don't know how they do it. They're the best investors in modern era, so they just really must spend a lot of time on their days off, you know, studying the stock market and what's happening to the future of some of the stocks they pick. So I love this call out. It's funny, I had not heard that headline. So I'm really glad you covered it.
- [33:29]
Podcast Host / Narrator
Well, to that point, there's actually a representative named, I think it's Ilhan Omar, who had a negative net worth when she took office in 19 and now her net worth is in the millions. Seriously, like, like that's real. So, yeah. How weird is that? I don't know the context behind it. Maybe she made some smart, cool investments, but she now has a net worth that's valued between 6 and 30 million dollars. So these politicians don't. I. Maybe we should just get into politics, Robert. You know, let's get into politics so.
- [34:01]
Robert Kroke
We can get the information ahead of everybody else and then we can go buy all the stock minutes before a major announcement or a major denial is going to be posted to the web. You know, because we are emotional creatures and people react to this. So it's crazy. And there's just so many platforms now that do this follow trading of all the Congress people and all that. And I always warn everyone because I don't think they realize that there is a legal delay before they have to announce when they buy something. And so many people just buy these copy trades and a lot of times it's long after the run up has already happened from them buying it because I think the window is 30 to 45 days before they have to announce it publicly for their stock buys. So that's a whole nother episode in a conversation for another time. But it's wild out there what Congress can get Away with, I'm saying, as.
- [34:50]
Podcast Host / Narrator
I've only done it once. It was Nancy Pelosi. See, earlier this year, she bought stock in Tempest AI. I've never blindly followed anyone in my life, but I was like, you know what? She knows something I don't know. So I put a thousand dollars in it. It's up 150% since I did that. So, Nancy, appreciate the, the 150 gain. I have no idea what you did or how you know it, but man, it's so weird. Okay, let's jump into our Q A of this episode. As you guys know, we answer questions on this episode as it pertains to entrepreneurs, solopreneurs, everybody that's out here earning more money, right? Dave Ramsey's mantra is pay off debt. Our mantra, let's go earn some more money. So our first question is coming from Rebecca G. Rebecca says, I run a small service business and I'm drowning in work. Everyone says hire before you're ready. But bringing on an employee feels overwhelming. What is the best first step? Should I look for a contractor, a part timer, or just bite the bullet and hire? Hire full time? Robert, you've hired thousands of people. I've hired about a half dozen. So we'll have different takes on this and different experiences to share. But from my perspective, I've always been in the camp of hiring. Feels really weird hiring someone, telling them what to do. Like, it just kind of, it's got a weird feeling to it. And so I can definitely understand how you feel overwhelmed. Step by step. What I would do if I were in your shoes is I would write down very detailed job description and list of responsibilities that you need someone to take care of that is going to make your day to day much more efficient. Maybe that is. I mean, you mentioned your service base. I have no idea what service you're selling, but be very crystal clear on what anyone's expectations would be if they were to come work for you. Because the last thing you want to do is hire somebody. They got in way over their head. You thought they'd be a good fit because you guys had, you know, you thought they were going to do this where they thought they were going to do something else. And now you just wasted three weeks hiring someone you didn't know need. So step one for me is to write out a job description and be very clear, written down exactly what their responsibilities would be on a day to day, week to week, month to month basis. The second thing I would do is I would carve out a budget as to what you can afford to pay this person. Now, a lot of people make the mistake of wanting to optimize profits, profits, profits in their business. Don't get me wrong, profits are very important, but they are, are they come second to your sanity. Right. And being able to have someone to work alongside of you or for you or whatever you want to define that as was an employee is very important and is worth sacrificing profits for. So figure out then too what you can afford to pay this person. And then three, I would not start by publishing this opportunity out to the abyss. You'll get the most random people, everyone. Oh, you paid the. Oh yeah, I can work for you. What? Don't start like that. If I were you, I would start by going to maybe your competitors. I would go to your peers. I would go to people you trust to understand your business. Ask them for recommendations. Hey, my name is Rebecca G. I'm looking for an employee that I can pay $19 an hour to do. A, B, C, X, Y, Z. Would you happen to know somebody or. I'm looking for, you know, advice on how to hire someone like this. Have you hired someone like that in the past? And if so, where did you find them? I would not start by just posting on LinkedIn or a job board. I would look for recommendations. I would look from within your own network of peers and competitors and that's, that's how I would go find somebody. Robert, you've hired way more people than I have. So how have you gone about this?
- [38:26]
Robert Kroke
Yeah, I would say a few things to piggyback from you. I agree with Austin. I always like to look at it this way, especially with a startup like you're in where you're going to hire your first employee. I would look to hire somebody out of the gate. Gate where you're very open and you say, look, I want to give this a try. I want to do a test period for the job and a test period for the money of what their remuneration is going to be. Because here's why a lot of people I don't ever say up front, this job pays $19 an hour. That might be okay for some positions, but if it's your first hire, I would be more open and say competitive wages for the position. And then what I would do is say, hey, hey, Bill. Hey Mary. I want to give this a try. Here's what I would like to do because this is new for me. I would like to hire you for a 90 day period at an introductory rate that we can both handle and feel that is is okay for both of us. So both sides win and at the end of that 90 day period then we can renegotiate to a different rate if we decide to move forward. And the reason I do that is because because I don't want to put somebody on payroll, get them all set up in our systems, do all of this work. And also because it's time consuming, expensive, but also a lot of times if you give someone the top of their range and they don't perform as well as you'd hoped for the top of their range, you end up in a situation where you kind of have to fire them or let them go because they're not doing the job you'd hoped. So I like to give people a range where I say here's your introductory offer, we'd love to have you and at the end of that time then you say hey, I want to move ahead. I'm very happy. Here's what I can offer you now because the worst thing you can have is someone that's doing a pretty good job. But it drives you nuts every pay period that they're you're paying them more than you think they're worth. That's what I do. And then also just a couple other quick ads is always understand you need to be working on your business, not in your business. So as you grow the business, doing these key hires early helps you expand more and get the things off your plate. It's kind of like the saying you want to hire to your weaknesses. Whatever your weekend, that's what you want to hire. Keep the strength to you and hire away everything else because then you'll have a better ROI of your time on a daily basis. I'm not great with spreadsheets. Austin is. Guess what he produces or Christian produces all of the spreadsheets and data for this program and for the Rich Habits Network because that is not one of my strengths. So just always understand those things and I think you'll do great in your first hire.
- [41:07]
Podcast Host / Narrator
Our next question comes from Stephen L. Steven says my DTC Wellness brand has 40 SKUs and a few seasonal spikes including Q4 gifts in spring promotion. I'm out of space at home and debating between renting a small flexible warehouse with a part time helper or using A3PL. What's the decision framework that you would use? SKU Complexity? Kidding. Receiving SLAs pick pack fees, storage rates, freight consolidation, returns handling and control over packing. Are there any gotches that people miss when they jump to a 3 PL. Too early. Robert, I'm going to ask you to define what these acronyms mean one by one. One. So what is it? What is a sku?
- [41:53]
Robert Kroke
A skew is the barcode that is on each design within your catalog of products.
- [42:01]
Podcast Host / Narrator
Okay, so we know what a skew is. What is kitting and then sla.
- [42:06]
Robert Kroke
Yeah. So I'm assuming kitting is putting together kits where it's like a bundle. That's what I'm assuming they're talking about here. SLAs are your service level agreements. You're going to have those with your pick and pay pack or any 3 PL that you might hire.
- [42:20]
Podcast Host / Narrator
And then we've got freight consolidation, returns, handling and control. What's control over packaging?
- [42:27]
Robert Kroke
Yeah, I don't know what that is either. I'm assuming it's having inventory control. So you don't have too much inventory in your 3 PL. But I would say this, this is a tremendous question because they get it. The gotchas of what people miss when they're looking to jump to a three plus is which.
- [42:47]
Podcast Host / Narrator
What is a three pl?
- [42:49]
Robert Kroke
That is a shipping company that does all of your pick and pack and everything.
- [42:55]
Podcast Host / Narrator
Got it?
- [42:55]
Robert Kroke
Yep. So the big gotcha that everyone deals with, they don't ask all these questions. So many people go too early and they just forget and don't know all the fees you pick and pack fee for every single order. That's pick and pay, packed and shipped. You've got markup on packaging goods. You have slotting fees. So if you send three pallets to that warehouse thinking they need it, a lot of people will be like, yeah, I'm going to send all my inventory. And not realizing you're getting charged monthly for every package that sits in the warehouse. So that eats away your profit. So I think this is an incredible question for anyone out there that is considering getting away from working out of their garage, going straight to A3PL. I love your thought of renting a small flex space because you have control over your destiny. And I'm sure you can find rent that is low enough that will be way better for your bottom line than going straight to A3PL. Let me tell just one quick story for everyone that does have this situation in their lives. A lot of people don't realize when these three PLs are handling your product, if they have all of your product product, they're 9 to 5. So what happens on a Friday at 3pm if some big order comes in for 10,000, 20,000, $50,000 and they need it for an event or something special that's time sensitive and your 3PL says, hey, we're not doing that. We're going to send it out on Monday in normal business hours. So always make sure you understand if you have the place, you rent, your own, your own warehouse house, or your flex space, you have control of your destiny. Especially during seasonal rushes. Right now for us with silly bands, we're going into the busy, busy season. So sometimes they work nights, they work weekends, they work overtime, whatever it takes. Because remember, TikTok shop. All of these websites have timelines on how quickly your orders need to go out. That's why I like to control my shipping and I would get the flex space.
- [44:59]
Podcast Host / Narrator
Now our final question is coming from Yena. Double you. Yena says, I converted my sole proprietorship to an escorp for my service business. Revenue is lumpy. Some months I make 40k, some months I make 8k. I know I need to pay myself a reasonable salary, but I'm unsure how to set it when cash flows swing like this. How do owner operators decide on their salary versus the distributions they pay themselves? And what cadence do you recommend for running payroll and handling quarterly taxes? And what red flags actually trigger IRS scrutiny for escrow corps? So I'm not an accountant. Neither is Robert. But here's my perspective as someone who runs an S corp, right? I pay myself a reasonable salary of about $80,000 a year. I run that payroll through Gusto, and it's paid twice a month on the 15th and the 1st. That payroll includes Social Security tax, it includes local taxes, it includes Medicare tax, it includes all the federal tax, everything that normal payroll would include. Gusto takes care of everything for me. They do all of the different types of payments to the government on daily basis. It's all hands off, and it's 50 bucks a month. It's worth it. It's so worth it. So how do you determine what that reasonable salary is? It's really hard sometimes, in my opinion. I think it depends on your business. I think a reasonable salary for a CEO of a business, an owner of a business, is anywhere between 20 to 30%, maybe of the profits of the business. Maybe it's a little bit less. It's less in my instance, but it's. It's definitely close to that range. Right. So I'd say 15 to 30% of your annual Prof. Is a reasonable salary for. For the. The owner and operator here. Again, not a cpa. Go do your own research. Talk to professional, not financial advice. Every disclaimer in the book. Now how do you like, navigate this with the lumpy revenue and lumpy profits? Here's what I do. I always have four payrolls in my business bank account at all times. So my payroll, I think on any given you know, payroll is just, just about actually I'm just going to do the math so I'll give you guys real numbers. So at any given time, I've got just about $12,000 in my business bank account because that's going to cover four payments to me as a owner operator running payroll. Right. So what that means is for you, let's say your salary is less, let's say Your salary is 40,000 or 60,000. Figure out what that, what that bi weekly payroll is to you. You, how much that bi weekly tax is that you're setting aside to cover for that payroll. Right. Because you're paying taxes twice here and then multiply it by four. And so for me, I think it's just about 3,500ish, maybe 3,200ish dollars every two weeks. So I multiply that by four and this gives me the flexibility where if I have a slow month, I can't pay myself. Like I've got two months of payroll sitting for me here in this business bank account where I do know for a fact over a two month period of time I work will generate revenue in my business. Think about it, not like so much an emergency fund, but a little bit of buffer between you and what could be a client that, that doesn't pay on a net 30, they pay on a net 45. Or a client that signed an agreement that said they're going to pay you 12,000 over the next four months and ended up, you know, bailing after the first month. Because you, you know, whatever happens, it's just a little bit of buffer that helps you navigate whatever happens as a business owner because, because we know as a business owner ourselves, it's, it's very turbulent sometimes.
- [48:28]
Robert Kroke
Yeah, I think that was an incredible breakdown and I really like it. And just a couple things I want to add that you alluded to, but I'm going to take it from my perspective. So many business owners that have lumpy income because we never know from month to month what it's going to be is when they have big months, they spend away and then when they have lean months, they put stuff on credit cards and they're tight on capital capital. So like Austin alluded to, have that buffer so you can make sure that your payroll is covered and all your expenses are covered for that 3, 4 month period where you're not spending big in the months you make big and then not having the capital around when you don't. Another thing I would add to this too is you want to make sure that you have yourself on payroll to get the tax advantages of being a business owner with an S corp. But you can always start smaller as well. Well, so then that way you're not draining so much in the lean months than you are in the big months. So that's another thing to look at as well. So just find a good balance for the amount to start taking this payroll in your S corp and I think you'll do just fine.
- [49:33]
Podcast Host / Narrator
And just make sure you're not overpaying yourself a salary because again, it's double, double taxed. So if you overpay yourself, you're paying tax twice where compared to just paying yourself a normal salary, a reasonable salary, 40, 50, 60, $80,000 in your instance. And then you give yourself those owner's distributions. The owner distributions are taxed at the federal level, but not taxed at the Medicare and Social Security level. So do that. You're good to go. As always, everyone, thank you so much for joining us on this week's episode of the Rich Habits Radar, our new Friday episode. As a reminder, if you enjoy these episodes, please leave us a comment telling us what you like. If you don't enjoy these episodes, let us know what you don't like. Just give us feedback. Feedback. We are always receptive to Yalls feedback. So many of you all come back every single week and we're so grateful. And if you just give us the feedback we can be better on a weekly basis. And if you do enjoy the Rich Habits podcast and all the value that we provide, please please please consider leaving us a five star review on Spotify.
- [50:33]
Robert Kroke
And always share the episodes with friends. We all have a friend or family member that isn't spending the time like you guys are to learn and really understand what to do with your money. Money. Share it with a friend. Share it with a family member. Leave those five star reviews and we appreciate each and every one of you stopping by every week.
- [50:51]
Podcast Host / Narrator
Thanks everyone. Have a great and Doug, here we.
- [50:56]
Robert Kroke
Have the Limu Emu in its natural.
- [50:58]
Austin Hankwitz
Habitat helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating.
- [51:06]
Robert Kroke
It's accompanied by his natural ally, Doug.
- [51:09]
Austin Hankwitz
Uh, Limu is that guy with the binoculars watching us.
- [51:13]
Robert Kroke
Cut the camera.
- [51:13]
Austin Hankwitz
They see us. Only pay for what you need@libertymutual.com Liberty Liberty Liberty Liberty Savings vary underwritten by Liberty Mutual Insurance Company and affiliates excludes Massachusetts packages by Expedia. You were made to occasionally take the hard route to the top of the Eiffel Tower. We were made to easily bundle your trip Expedia made to travel flight inclusive packages are atoll protected.
- [51:37]
Podcast Host / Narrator
Great weekend and we'll see you on Monday.