The Stock Market Is Falling Right Now (Here’s Why) transcript

All right, everybody. Welcome to the Everything Money Plus channel. I'm filling in for Paul while he is on a trip. My name is Sam. I'm going to walk you through what's going on in the market today. So, guys, the market is down again. And honestly, September has been one of the most volatile months we've had in a while. Yesterday was a big red day. Today, we're down yet again. Bond yields are making noise. They're causing significant panic.

Our investors are starting to get nervous. So, we're going to check in on the market and do a full stock analysis live right here for you. Let's start with what's going on right now. All right, guys. So, you can see on the board behind me as the markets just closed, we have the heat map pulled up. What's interesting is this is actually some of the most red that I have seen this heat map in a while. The one thing I do notice is what are some of these green companies?

Caterpillar, you've got Oracle, Crowdstrike, Texas Instruments, Marvel, Avo, Micron, AAT, Lamb Research. A lot of these companies are the beneficiary of this giant chip movement, this giant AI buildout. And the semiconductor industry as a whole, driving the entire market. I saw an interesting statistic earlier today that over 60% of the stocks in the S&P 500 are currently in a bare market which tells you what's been driving it these companies right so big tech has actually stayed pretty even or slightly up year to date which has helped but in addition to that companies like Micron like SKH these giant chip businesses especially in the memory space have driven most of the returns that we've seen so far this year now I'm going to go in and I'm going to pull up the biggest winners and losers from today.

See if there's anything really notable. So guys, this is one company that has gotten a lot of traction so far from our everything Money community in recent months. Bloom Energy. Talking about Bloom Energy, a lot of people who were looking into the cyclical commodities and energy type businesses found Bloom Energy before this massive runup. So now that the stock has absolutely gone exponential, it's a hot topic. In addition to that, CarMax is up 7% so far today.

And then in addition to that, the top losers, some of the big ones, FICO, Fair Isaac Corp. So, one of the main reasons on FICO why it's down is the fact that there are regulatory announcements that Fanny and Freddy are going to be allowed to put themselves up against the FICO credit score. Now, what else? Persing Square, the management company, which collects fees um for Bill Aman's Vessels, is down. Herk Holdings is down over 6%.

DraftKings just about the exact same. And then 10-centent Music and Entertainment Group out of China, which is basically like the Chinese Spotify, is down about 5% so far today. Okay, guys. One of the big themes recently in the market has been volatility, right? I feel like we had a couple of good months between March and now where the market was kind of up pretty consistently most days, weren't too drastic. I feel like a lot of portfolios were doing well.

That being said, September has been a rough month. I know historically a lot of people have told me that September is a rough rough month in midterm election years, but markets been down almost it feels like every single day so far in September. Stock market is hurting and one of the main reasons I have an article pulled up right here on bond yields. So question I get a lot in the community. Why are bond yields driving equity prices down?

Right? Warren Buffett had a famous quote back in the day that yields interest rates are like gravity on equity. Right? So higher interest rates lower equity prices. Why is that? Because again it's very simple. Monry actually said it in the interview that everything Money Paul Mo the team did with him. It's a lot tougher to tell if a company at 50 times earnings, which is again a 2% yield, right? So instead of price divided by earnings, we look at earnings divided by price.

That's your earnings yield. So 50 times earnings of 50 times PE is a 2% yield. It's a lot tougher to say that's expensive when we're coming out of COVID and interest rates are 1%. Right? Because what are you comparing that company 50 times earnings to? One of the things is bonds, right? Would you rather own bonds at a 1% yield or a company growing say 15% a year year-over-year at a 2% yield? That being said, when interest rates go from 1% to say 5%, what's the equivalent PE for a 5% yield? 20 times earnings.

So maybe when interest rates were 2 to 3% and the markets PE, the S&P 500 PE was 35 times earnings, the forward was 30 times earnings, it actually didn't look that unattractive. But the question was, are rates going to stay that low for so long? And guess what? They're not. So now we're seeing a lot of stocks potentially being repriced because of it. Now guys, a quick look at a company that has been beaten up so far in the past year and year to date in 2026.

Carnival Cruise. This is a company that was very popular coming out of COVID, right? The questions were, you know, are they going to be able to recover? Are they going to get back to standard revenue to standard profit that they were producing precoid? Well, this stock is up around 13.5% so far today. Our average intrinsic value estimate by our community is $35. So that's why people are having conversation, doing research about it, and figuring out if it looks as attractive today now that it's jumped significantly as it did before.

Right? That's why it's important to have a tool like Stock Analyzer, which you're going to see shortly when I run it on the next company we're going to talk about, which is FICO. Okay, so I have pulled up FICO in our software. We're going to walk it through the entire Everything Money process, the eight pillars. We're going to look at the analyst estimates, kometrics, and the stock analyzer, and I will show you what price you have to pay for this business today in order to achieve the returns you're looking for.

Now, first step, the eight pillars. We have seven check marks and 1x. The 1x is the PE ratio. That being said, you can see that earnings have increased from 542 million to 815 million over the course of the recent years. So the current PE is actually 17 times. The current price free cash flow is 14 times. Not too huge of a gap, right? So we have about a $200 million gap. 20% difference between free cash flow and profit.

You can see shares outstanding are down significantly um over the course of the past 5 years. debt is at a manageable level and again free cash flow's increased so that debt is you know maybe now three times um the debt is currently three times the one-year free cash flow ROIC is huge next question I ask right this is important is the ROIC increasing over the past 5 years or decreasing up from 50% to 71% that is awesome to see this is a business that has been historically very strong and traded at a really high multiple in the past so what don't love is that you can see them kind of repurchasing some shares here over the course of time where they were trading at.

You know, let's actually give it a look. Let's see what price they were trading at and get an idea of where they were repurchasing some shares. And I know they've increased more recently, but this was a $2.4,000 per share stock. Now, it's a $600 stock. So, it is down massively um from where it was last year. It's down 60% 64% year to date. So, you know, the question becomes, were they wasting money at over $2,000 per share repurchasing stock?

I love the fact that they're doing it more heavily and more aggressively now that the stock has fallen, as long as it looks good on stock analyzer. So, let's look at the analyst estimates and then we will move on to run the numbers and I will show you guys what you really want to see. EPS growth, we can see 20% plus for the next two years and then tapering off a bit as we get out into 2029, 2030. revenue growth coming in at low teens for the next two years again then tapering off a bit.

So question is are they saying that they're going to lose a bit of their pricing power? One of the main topics of conversation around FICO which is causing the stock to drop so heavily in recent days is that the government is potentially looking at allowing Fanny and Freddy to offer something similar um to the FICO score the advantage that they have in that market. So question is, are they going to have significant competition?

Is that going to drive down revenue growth and drive down the overp profofitability of that revenue that they produce? Now I'm looking at 10 years of assumptions. We're going to go 6 9 and 12% for the low, middle, and high revenue growth assumptions. I know that this current year is significantly higher, but again, analysts are pricing it in as well. Number one, they raised prices dramatically this year. that could put pressure on their business especially if the government allows some you know loosen regulations around who can do what they do and then in addition to that I have gone with 33 38 and 43% profit and free cash flow margin again these two should equate out over time this is a very profitable business and a capital light business and then finally our third piece are multiples so our PE and price free cash flow what's a fair multiple to pay for this business at the end of 10 Remember that.

That's not today. That's at the end of 10 years. So, we start at the long-term average of 15 to 17 times earnings and consider what will that business look like in the future. If they're going to grow 6% for the next 10 years, what does that mean for the 10 years following? 2% 4%. Those are the kind of conversations you need to have in the community and with yourself about making good assumptions. And then finally, a 9% desired return to show our intrinsic value.

But guys, FICO is one of those companies most people have heard of but never actually thought about as a potential company to invest in. Everybody knows their credit score. Almost nobody has looked. What FICO, the actual business does, what it produces, how much money it makes, and whether the stock at today's price is actually worth buying. That gap right there between knowing a brand, and understanding the true business and operations is exactly where most investors get into a ton of trouble.

Because in a month like this September we've had in 2026 when the market's volatile, bond yields are spiking, and red days keep piling up, most people are making decisions based solely on fear. They're doing it based on gut and based on emotion. They are selling things they never fully understood when they bought them in the first place and they're going to regret it in the long term because they didn't have the patience to sit there.

What I just did with FICO strips all of that away, right? I do consider the story. I consider what's going on with the business and how it affects it. But I did not just look at how much it is down this month. I looked at the business, the revenue, the free cash flow, margins, growth assumptions, and then finally the stock analyzer is about to give me a specific price for this business. The price where FICO actually makes sense for the return that I'm looking for.

So all this you just saw, $7 for seven days. That's the cost to start a trial at EM. Come find out what it feels like to know the price to pay for a stock you're looking at instead of going off of a feeling and a hunch or what your neighbor told you. Click the link below. Come build with us. Come build your portfolio and sleep well at night. Now, we're going to go ahead. We're going to click analyze. And as you can see, FICO looks interesting, right?

This is why people in the community are having conversations about it. This might warrant me doing a blog post. We have 11% returns on the low end, 17% in the middle, 24% on the high end. And again, guys, this is a 10-year analysis, and that is an annualized return, including any dividends that the company would pay out. So, what's coming up this week, guys, we got big stuff. So, you are going to want to tune in for our Everything Money Plus videos tomorrow and Thursday.

Tomorrow after hours, we will be here at 4:00. Micron releases earnings, one of the hottest stocks, one of the biggest gainers in the entire S&P 500 this year. And then Thursday, one of the most polarizing stocks currently in the market. It is down 80% plus from its highs a few years ago. Nike, the consumer brand that is probably the most popular in the world, but right now is struggling. So, great earnings this week.

Lots to talk about, lots to look at. We'll be here to bring it to you. And then another note, we put out a video on our Everything Money main channel today on Uber. Again, this is one of the most discussed stocks both in the our community on X, on Yahoo Finance, on CNBC, all across the board. Their CEO just purchased with his own money, not stock options, not something from, you know, the company giving him a grant, $10 million out of his pocket in Uber stock at $70 per share.

Slightly lower than that right now. Go check out Paul's exact thoughts on it in a full breakdown.