Best of Caller Questions

**Justin Klein** (0:01)
This is a special Invest Talk, Best of Caller Questions compilation program. Remember, the Invest Talk phone lines never close. Please call with questions, 888-99-CHART, 888-99-CHART.
They will be played and answered on an upcoming Invest Talk podcast.

**Luke Guerrero** (0:22)
8899 chart, 889924278 So how you get through and ask your question live on today's show. But before we get to the next segment, we'll answer a caller question that came in via that YouTube channel. And the comment from Ulam Spiral says, thanks, I'm enjoying this weekend video a lot. Do you have any views on residential real estate in the Bay Area? I'm looking to buy a house, but I'm worried there's a correction coming soon. The simple answer is yes. I would be worried about a potential drop in Bay Area real estate.
Thank you. I think there was a kind of AI kind of resurgence that started near the end of last year and into this year, and I think that kind of held the Bay Area economy together.
But if you start to see some sort of reduction in interest around big tech, and obviously I've discussed how the business of big tech is suddenly becoming very capital intensive, does that mean less room for stock options, for employees, et cetera? I think that could be a big factor here, and that would feed into residential real estate, especially in Silicon Valley. So I would, and I think in general, you just have overvaluation across most markets in the United States, and you're entering probably 2026 will be a year where prices broadly will come down. Now, it's going to be dramatic, it's going to be 8 crash in housing. No, no, it's just a multi-year correction. And I think it's already started and it's just going to be a slow slog, not a lot of transactions and modest declines for a number of years in most markets, including the Bay Area. Let's pivot back to an Invest Talk voicemail question right now.

**Frank** (2:19)
Hey, Justin and Luke, this is Frank from Los Angeles. I have a question about portfolio management.
I'm having a hard time figuring out the right allocation across equity, treasuries and corporate bonds, especially given the current micro environment. I was thinking about allocating 50 percent to treasury bond ETFs and the rest to just to value stocks, but I'm starting to think that I should probably allocate also something to corporate bonds, especially given how sticky inflation is. I'm 35 years old and I consider myself a value-oriented investor. Especially in this environment, I don't think it makes sense to take much risk.
Given this, what would be the ideal split across asset classes for somebody my age? Thank you very much and I'll be listening on the show.

**Luke Guerrero** (3:06)
Well, the fact that you're in your 30s, that's a far too conservative portfolio, 50 percent in bonds, maybe even more in corporates.
For the number one, for cash-like holdings, I'm okay with treasuries. Short-term treasuries, we use that as a cash alternative. But as a longer-term investment, no, you don't want to be in treasuries, especially any long-duration treasuries, 10 years, 30 years, et cetera. So your bond, main bond exposure should be in corporates. Now, it shouldn't be a large percentage of your portfolio, especially if you're an aggressive investor, it should be probably sub 20 percent of your overall portfolio. The rest should be equities, and I would lean on the value side of the market, and you're starting to see that side start to outperform once again. So hopefully, that gave you a little perspective, and feel free to schedule a portfolio review with me. Let's tackle another YouTube comment question. LexisDude59 says, Regarding Bitcoin as the canary in the coal mine, your thoughts? Yeah, you know, if you look at the correlation of Bitcoin and what it tends to correlate to, it's mainly a liquidity proxy along with a proxy for tech stocks. And this is very simple.
It's viewed as kind of a fringe asset to the traditional financial system. And it's furthest away from your consumer staples, dividend paying, safe stocks or bonds, for example. Right? Doesn't pay a dividend. And its use cases are very minimal outside of mainly speculation. So when liquidity starts to dry up, well, these are the places where capital is pulled out from first. And so that's why it tends to languish and tend to be correlated with liquidity. And then there's a lot of retail investors that their portfolios are filled with the names we just talked about. Right? Drone companies and profitless tech names or, you know, very expensive, highly shorted names by hedge funds, et cetera. And when things are going well, well, they can handle a little leverage. They probably own some Bitcoin as well.