Small caps woke up: is the rally finally broadening?

This is InvestTalk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Luke Guerrero. InvestTalk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States. Here is KPP Financial Portfolio Manager, Luke Guerrero. Hey there, everybody, and welcome back to InvestTalk. I'm your host, Luke Guerrero, and today's Wednesday, August 19th, 2026. As always, we've got a great show planned for you today. We've got plenty of financial news to talk about. We've got a recap of what went on in the market today, and of course, bring you stories that matter and answer your finance and investment questions. To that end, before we talk about today's show topics and the market today, let's tackle this caller question now. Hi, Justin and Luke. This is Steve calling from Missouri. Love your show. I'm interested in the Vanguard Morningstar Mid-Cap Value Index Fund, FNVAX is the ticker symbol. Thank you. Well, Steve, the Vanguard Mid-Cap Value Index Fund is actually VMAX. V-M-V-A-X, V-M-V-A-X, not F-M-V-A-X. And what it does is it seeks to track the crisp U.S. mid-cap value index. Like any Vanguard fund, it has a low expense ratio. It looks like the expense ratio of this guy is about seven basis points is what I'm seeing here. Let's take a look real quick. Yeah, about seven basis points on this. Now, it has just under 200 holdings, pretty broadly diversified in the way that it attacks the market here. And it's got some familiar names at the top. Your Marathon, Petroleum, Valera, Energy, Phillips. It has actually pretty decent energy weight to it just because it is within the mid-cap space. You know, we talk about a lot about value investing, about the size premium. And in a lot of ways, it's a lot of value investing. And in a lot of ways, the mid-cap area is a bit of a sweet spot between risk and return. It's big enough to be stable, but it's small enough to still grow. And this one has done pretty well this year. I mean, it's up quite a bit year to date. It's up about 19.01%. And that's because value has just been outperforming growth in 2026. And historically, mid-caps, they tend to outperform large caps. And small caps do very well as well as mid-caps over longer periods of time. So this is the type of fund you'd want to get into to tilt towards those areas that historically have shown higher expected returns over the long run. Especially when you consider the PDE here is like 15, 16 within this fund relative to the S&Ps, like 20 to 22 over the past couple months. So, you know, I think if you're trying to get mid-cap value exposure, you're trying to, you're trying to do it in a market cap weighted, broadly diversified way, just like many other Vanguard funds, not a better way to do it. That is VMVAX, the Vanguard Morningstar Mid-Cap Value Index Fund. Thanks for the call. We had a great show yesterday. Justin talked about the trillion dollar interest bill that nobody votes on, because the government's own borrowing costs now shape monetary policy. And that means a lot, for long dated bonds, and why central banks around the world have been buying gold at the fastest pace in years. He also answered a question on Chevron Corporation, ticker CVX. If you'd like to hear that answer or hear more about that story, I encourage you to check out yesterday's episode of InvestTalk. And remember the best way to never miss an episode is to subscribe wherever you get your podcasts. All right. Onto today, where we have a pretty important, focus point with respect to how the market has been moving, because small caps have really woken up. And a lot of people are asking is the rally that we've seen finally broadening. We saw the Russell 2000 set a fresh record close last week, even as large caps struggled. So we'll look into the leadership rotation, what it historically signals and how investors should think about size exposure without chasing what has been, a multi-week move. We'll also touch on the latest report from the Fed on household debt and what it's actually showing. Talk a little bit about housing insurance and how housing coverage costs are now starting to rival people's mortgage payments month over month. And should we have time at the end of the show? Bit of a discussion on the cost of living adjustment for social security and what that means for anybody who is drawing it in retirement. Or we'll be drawing it soon. We also have some voice bank calls ready to play, including one on owning physical gold versus gold stocks. Another question on Apple ticker AAPL. And as always questions that came in from the comment section of the InvestTalk YouTube channel. And we're going to do a break. Please remember you can call any time and leave your questions on the InvestTalk voice bank. If you're listening to our live stream, we're on AM 1220 in the Bay area. I encourage you to pick up that call. Pick up that phone and dial 888-99-CHART and ask me your question live. Up next, we'll talk about today's market activity. There are a few things that make KPP Financial special. One of them is parallel investing. This means they invest right alongside their clients. Here's how it works. When KPP Financial makes a trade for their clients, Justin Klein makes the same trade for himself and KPP. On the same day, at the same price, and same percentage. No front running, no special treatment. Learn more about parallel investing at InvestTalk.com. It was a positive day overall for stocks across the board, though most of the market did give back earlier gains. We saw it finishing near the session lows on the day. The Dow was up 22 basis points. S&P 500 up 21. NASDAQ up 16. Small caps have another day of outperformance. The Russell 2000 up about 50 basis points. One other thing we saw was breadth was pretty solidly positive. The equal weight S&P outperformed the market cap weighted index by about 80 bps. And the big winners on the day undoubtedly was the healthcare sector. Big tech did well as well, especially Apple, Tesla, and Amazon. Some software names, home builders because of this rate move, were some of the other outperformers on the day. And then another thing that we've seen, rotation out of these semis, out of these memory names. This definitely was another day for that rotation. On the bond side, Treasuries were a bit firmer. We saw some curve flattening, especially the long end. We saw yields down anywhere from 9 to 10 basis points. And then we saw gold and silver rallying up 2.8% respectively, while crude oil settled up pretty modestly at 40 bps. But overall, it was a pretty choppy trading session with respect to oil. Now, in terms of what caused this, you know, there wasn't much. On the additional news front, I mean, we saw this big Treasury rally, this significant bull flattening move as a result of the Treasury announcement that they're going to ramp up their buyback operation for long-term papers. So that, at least in the interim, provided some support for yields. Now, understandably, there's a lot of skepticism. Is it actually going to durably pressure the long end of the curve over the long term? I'm in the camp of probably not, but at least for today, certainly helping those more rate-sensitive sectors. The other big driver of news, U.S. and Iran, really not much from an incremental perspective there. You know, there was some news coverage of U.S. operations to start to move oil through the Strait of Hormuz. But I mean, the president himself saying that negotiations are essentially done at this point. So the market really waiting to see what the next move is there. On the data front, there wasn't really any notable economic data activity today. There was a Treasury auction, about $16 billion of 20-year bonds. I think that was notable because foreign demand was below recent averages. We had the July FOMC minutes, which showed many officials saying a hike is likely needed if inflation didn't decline. And those same officials noting that the inflation risk is probably skewing a bit to the upside, something we certainly, certainly see as well. Looking ahead to the rest of the week, we get initial claims in Philly Fed Manufacturing for August. We'll be out on Thursday. Then flash PMIs for August. We'll catch up. off the week on friday all right let's take a look at this youtube comment section question it says could you take a moment to review ticker rol looks like the multiple has slash is contracting due to earnings projections interested in it as a core holding thanks let's pull this person up right now rol is rollins inc it is a global pest control company so it has some familiar brands they got over 40 brands including orkin home team pest defense they operate in 70 countries and most importantly to me there's a bit of a diversification in their business here about 45 other percent of the revenue comes from the residential business about 33 from their commercial and then 21 from this division termed termite antelope and ancillary and also notable pretty solid history of growth i mean they have 25 consecutive years of top-line growth that's pretty solid now most recently this company's been hurt and they're down 39.59 percent year-to-date down 32.53 percent over the past three months down 37.42 percent in the past 52 weeks i mean it's approaching it might actually beat it soon yeah it recently dove down below its 52 week uh low it hasn't been as low as this since well the end of 2023 and the reason being is okay you have revenue growth but that growth was pretty modest you also and you mentioned multiple contraction but what i'm more concerned about here is other things contracting i.e margins and guidance you know before the most recent earnings organic growth was guided to about seven percent or i guess they said at least seven percent now it's down to about six percent you saw incremental margins revised down as well and i mean how much do you think that's going to change over the next few years i mean it's going to be how much debt does this business have they got 777 million in debt on a 17 billion dollar market cap company so not too much debt on their balance sheet they're not too overly leveraged here but really you know you find yourself in a position where okay margins are contracting for a reason price is falling for a reason guidance not looking great for a reason so in spite of what is 99 consecutive quarters of revenue growth in spite of it being in an area that tends to be a bit recession resilient things aren't looking good things aren't looking good so you know for me i think the business at its core generally is good right it is a recession-proof business in times of economic stress they tend to do a bit well but you're not buying it for the same growth that you used to have and so does that justify this 30 times multiple here which by the way is at the low over the past five years until you see some sort of movement in momentum until you see some sort of reset here coming off of poor earnings is the next earnings going to confirm the trend here or is it going to reverse it for me in these types of situations i'm unlikely to buy into a name that has had such a poor move downward both both from a pricing perspective but i think it's going to be a good thing for us to be able to buy into a name that has had such a poor move downward but from a fundamental perspective as well so for now at least on ticker rol that is rollins inc gonna have to pass thanks to the question as i'm sure you're aware our 24-7 invest talk voice bank never closes that's why we call it 24-7 so you can leave your finance and investment questions anytime at 888-99-CHART our work continues after this quick break it's official total lifetime downloads for the invest talk podcast are now more than 63 million luke guerrero is here now taking your calls live invest talk 888-99-CHART i don't know if you saw this but the new york fed released its q2 2026 household debt report just about a week ago and some of the numbers are pretty stark total household debt hit 18.8 trillion the aggregate delinquency rate about 4.7 percent that did improve slightly from q1 and on the surface i mean it seems like big numbers but probably still healthy given consumer power but we always talk about this right if you look at the top line of things if you just look at the headline you're not really diving into the real story and when you look underneath you see two very different economics are uh or rather two different economies are borrowing in two very different ways and understanding this divergence matters more than quantifying what those numbers are the aggregate delinquency rate again i said it improved which is is good news right but new delinquencies the flow into trouble that actually rose for bunch categories for auto loans for for mortgages and continue to stay very elevated for credit cards i mean the fed's own economists flagged that the stock delinquency rate is rising for reasons distinct from the flow rate what the heck does that mean it means fewer people are entering delinquency but the ones who are are staying in it longer they're not leaving they're not curing they're stuck and the credit card number itself i mean that is probably the most stark number to me balance is more than 90 days past due went from 7.6 percent in q3 of 2022 to 12.8 percent in q1 of 2026 that's a 68 percent increase in the share of credit card debt that's seriously delinquent in three and a half years while the stock market was hitting all-time highs and unemployment was below 4.5 percent then you have auto lending originations hit 211 billion that's the highest quarterly volume in the history of the new york fed's data lenders are approving more borrowers including more lower score borrowers even as transitions into the new york fed's data delinquency are rising so you have a bunch of subprime auto delinquency at 60 days or more and that's hit levels that ratings agencies haven't seen since they begin tracking it in the 90s think about what this means we're simultaneously at record high auto loan originations and record high subprime auto delinquencies lenders are extending more and more credit to riskier and riskier borrowers while the existing cohort of risky borrowers is defaulting at under 20 percent and that's a lot of riskier and riskier borrowers while the unprecedented rates that is the k-shaped borrower in one data point the top of the income distribution is borrowing responsibly against appreciated assets the bottom is borrowing to survive and they are falling behind so for you i think this matters in a couple ways first the consumer spending data that's been holding up the economy it's partially clearly being funded by credit extension that has a growing delinquency tail when the fed or or uh who doesn't know a lot of the car data bank of america credit card data shows spending holding steady part of the steadiness is running up credit card balances at 20 plus percent interest that's not sustainable consumption it's borrowing against a future paycheck that might not come and the other thing the auto lending bubble that has implications for subprime abs asset-backed securities backed by car loans investors in those securities are exposed to rising defaults just like people were in 2008 not to the same extent of the proliferation of debt but they're exposed to rising defaults debt but still important and banks and finance companies extending these loans are building portfolios whose credit quality is getting worse and worse even as the volumes hit record highs now do you see the pattern you have to understand the risks inherent in this continued level of borrowing and position your portfolio accordingly all right let's move back to the best talk voice bank you know the number 888 99 chart hey guys kyle from texas here just calling about american electric power ticker aep down about 10 in it see what you guys think about it thank you guys love the show all right let's take a look at american electric power which is ticker aep it is actually a name excuse me it is actually a name that we own for clients in one of our strategies they are a electricity generation transmission and distribution company and you know they're down about two percent over the past three months in spite of that's still about nine point five percent year to date of about twelve percent uh over the past 52 weeks now most recently they had a bit of a mixed quarter. They missed Q2 operating earnings per share, but raised their four-year guidance and actually expanded its data center load commitment to about 69 gigawatts through 2030. We like this name, right? They are an AI power infrastructure utility at the largest scale. And although they had a bad quarter, I think the guidance, the CapEx plan, the earnings per share growth they've seen over the past couple of years still makes them a company that we want to hold for our clients and a company that I think is poised to capture a lot of the spending that has been going around from these hyperscalers. If AI data centers continue to grow and power demand continues to be there, this company certainly can stand to benefit, but understand the risks inherent in these utility companies in a rising rate environment. On the next InvestTalk, we'll look into this story, the dollar slide. And what it does to your foreign holdings. That's tomorrow, but we still got plenty of show today. I'm Luke Guerrero, and we're ready to take your calls anytime at 888-99-CHART. In the early days, InvestTalk was Jerry Klein and Steve Peasley. Now you're listening to InvestTalk. Now the torch has been passed, and a new generation of hosts is on the job. Justin Klein and Luke Guerrero. So when you've got finance and investment questions, don't forget to call InvestTalk, 888-99-CHART. The Russell 2000 has been having a pretty solid year. In 2026 alone, that index has had over 20% of the market. And that's a lot of money. And that's a lot 25 fresh record closes. It's up in the mid 20s. Year to date, it's leading the S&P by nine to 10 percentage points. It saw its first or its best first half performance since the 90s. And it said another fresh record close on Friday to close out the week while large caps didn't do too hot. And we've been covering this rotation all year. This, this rotation, this rotation out of a lot of these silicon names into industrial names into smaller companies. We've been covering the equal weight outperformance. But I want to spend a little bit of time today, yet again, because I think a lot of people have thought to themselves, okay, if if the small caps are doing so well, did I miss the boat? And for a lot of reasons, I don't think it's too late. But understand what you're buying, you always need to understand what you're buying and why you're buying it. So that you don't just chase returns. Because what's actually driving this is not just one thing. It's a lot of things that are happening at the same time. The big one is there's a huge valuation gap. At the start of this year, the Russell 2000 was trading at 18 times forward earnings versus 26 for the S&P 500. That's a 30% discount. Historically, small caps tend to trade at a premium to large caps because of their higher returns. And that's a lot of things that are happening at the same time. And growth potential. So the discount here reached a 25 year extreme last year. And that was, for a lot of reasons, unsustainable. And the market's been correcting that pretty much all year. You're also seeing this convergence on earnings. For years, the mag seven delivered 40 to 50% earnings growth while the rest of the market grew in the single digits. And that gap has absolutely collapsed. In Q2, we saw mag seven earnings advantage over the remaining names in the S&P narrowed to 8.3 points from 45.8 in Q1. And so when this earnings gap closes, math tells you the valuation gap closes as well. Money rotates from stocks that were expensive because they grew fast to stocks that were cheap because nobody wanted them. Then you also have interest rate sensitivity. About 40% of Russell 2000 companies carry floating rate debt compared to 10% for the S&P 500. Why that is larger companies have better rates. So in order to get a good rate in a low rate environment, you tend to go towards variable rate debt. And so when the Fed cut rates three times last year, small caps got an immediate cash flow boost that large caps just did not need and didn't feel. And even though the rate hike debate has in a lot of ways muddy the outlook, it's only a matter of time before the Fed gets to the bottom. And that's where we're going to get to. So let's talk about domestic revenue exposure. Russell 2000 companies generate the vast majority of their revenue domestically. So in a world of tariffs and trade wars and sanctions and or moves disruptions and dollar volatility, that benefits these names disproportionately. They're insulated from the geopolitical headwinds that weigh on multinational names. You have reshoring incentives like bonus depreciation, R&D expensing. You have investment from the CHIPS Act. And these flow disproportionately to domestic manufacturers and service producers. Now, not everything in small caps is fantastic, right? About 40% of the Russell 2000s still faces what a lot of analysts call a maturity wall because roughly 360, 370 billion in debt needs to be refinanced at rates significantly higher than when it was originally issued. Many of these companies in the Russell 2000 aren't profitable. The index actually includes hundreds, hundreds of speculative biotechs of those pre-revenue software names of zombie companies that have no business being in anyone's portfolio. And that's why an index that has profitability screens and invest in small caps is arguably doing better than the Russell 2000 itself because it structurally screens out some of these companies that don't make money, something we are always talking about you should likely avoid for long-term investing. Now, historically, when you see a leadership rotation like this, where small caps lead large caps by this margin, where equal weight beats cap weight by this margin, where breadth expands rather than contracts, it's one of the healthiest signals a bull market can produce. The most dangerous rallies are narrow ones, the ones driven by seven stocks, while everything else lags. What we've seen this year is the opposite. 65% of S&P 500 stocks are outperforming the index. The average stock is doing well. The concentration in mega cap AI names is the drag, not the engine that is pushing this rally higher in 2026. And so for all you out there thinking, okay, how do I think about this? Well, if you had meaning to add small cap exposure, I don't think this rally has fully priced out opportunity in small caps. The valuation gap that we talked about while narrower than January, it's still pretty wide from a historical perspective. But there are better ways than just attacking a small cap broad index. Profitability screens, quality screens on top of those things can help you eliminate some of the worst companies within that space. Sizing your allocation, understanding that putting 90% of your portfolio in small caps is far too much risk. Maybe 10 to 20 is something that is more approachable. Looking for international holdings that can benefit as well. And most importantly, not trying to time, but using the power of dollar cost averaging over months. These types of strategies are not chasing the areas of the market that are doing well. It's trying to catch up to a structural shift that still has a lot of room to run. Because the healthiest type of markets are ones where there's broad participation, and one where small caps, not just large caps, are doing well. All right, why don't we drop in a fresh voice bank question from 88899 chart. Hello, in this talk, Yannick from Denmark. I'm looking at adding some gold to my portfolio. Following your advice on an all with the portfolio strategy that I'm really keen on working on. So thanks for that advice in my last call. Now I'm looking at physical gold versus owning stocks that sell gold or profit from gold in some way. So take a look at PPFB, iShares physical gold what's the difference between Owning a stock within the gold industry or an ETF that consists of physical gold because there's a small fee for holding an ETF. So at the moment, I'd rather hold some gold stocks as I continue on my way to creating the all-weather portfolio. So thank you for your show. I'll be listening. Thank you. Bye. So it sounds like what you're actually asking is whether or not you want to invest in a physical gold holding ETF or a company that is a business that profits from gold. Now, the way it was phrased, it kind of sounded like holding physical gold bars, but I don't think that's part of your question. So we'll talk about these gold ETFs and also talk about gold stocks and a little bit of the differences. Now, for your physical gold ETFs, you have, or rather they have, golds. Gold bars that are sitting in a vault, right? You own the metal itself. It moves one-to-one with spot gold. So if gold is up 10%, the ETF is up 10%. There's no management risk, operational risk, no dividend. It can't go bankrupt. You can't have earnings misses. It is the simplest possible gold exposure when you're looking for gold as really pure insurance, gold as an asset class, or gold as a hedge. Now, the cost you pay for this is as major. The management fee you mentioned. Some of them are a bit more expensive. Some of them are far less expensive. But if you think about it, it is essentially paying for holding physical gold without having to store it yourself. That's really what this management fee is for. You should really think about it as. Now, when you're owning a gold stock, which for most people is a miner or a streamer or some of these royalty companies, you're owning a business that profits from gold. You're not owning the metal itself. And just like any business, you're going to have operating leverage. You could have a situation where gold's up 10% and the miner's up 20 or up 30 because costs are relatively fixed. So any increase in gold prices is going to have a multiplicative effect on the revenue and earnings of those companies. But volatility and leverage works both ways. So if gold is down 10, you're down 20. You're down 30. These companies can pay dividends. They also have operational risk, though. There are all the time you have labor strikes at mines. You have mining accidents. You have permitting delays. You have cost inflation. You have legislative regulatory risk. And so owning these companies are a bit more volatile than owning the asset class, which is already inherently volatile. But they can also be mismanaged. They can have bad acquisitions, cost overruns. Things that destroy value even as gold moves higher. And so I would say if you want portfolio insurance, not just a trade, if you're hedging against inflation, currency debasement, if you want zero company-specific risk, right? If you're looking to have a core gold allocation, that's kind of where you would own a physical gold ETF. Whereas if you're bullish on gold and you want amplified upside, if you want some income, again, because physical gold pays nothing, if you're comfortable with the higher volatility and higher risk, then that's when you'd want to own a gold stock. Either way, I think getting gold exposure, some gold exposure in your portfolio, certainly in this type of environment, is a good way to go. Thanks for the call. As InvestTalk, let's keep things moving with two in a row. Hi, Justin. Hi, Luke. I have a question about Apple. I bought it back in like 2015 and I've added some small lots over. Over the years to it, I think I have like $9,000 in cost and I think it's up to like $16,000. Kind of one of those stocks I've just kind of been buying little by little, just put in the drawer and just kind of leave it. Is that still kind of the take about Apple? Maybe just hold it and see how it marches up or should I take some profit? Because I got some lots I'm looking at that are like 1,000 to 100%. Just kind of wondering if I should just continue to leave it in the drawer and let it go up or maybe. Maybe try and diversify a little bit. All right. Thank you. That's a great question. You know, Apple is a name that we hold for clients in one of our strategies. We like Apple. I don't think I have to explain to anybody who Apple is and what they do. You know, the creator of iPhone, iPad, Mac, all this technology that is just pretty ubiquitous in U.S. and international consumption these days. I mean, they have a crazy amount of quarterly revenue. $109.42 billion. In their most recent quarter, they beat on revenue. They beat on earnings. It's a behemoth of a company. And they've done really well without really making much investment at all in the AI trade. You know, they're up 37.42% over the past 52 weeks. They're up 16.5% year-to-date. They're up another 2.19% today. It's a core holding for us because consumers spend and they spend at Apple. And that's been evidenced. That's been evidenced by all of the money they've been piling in for years and years and years to the point where they're doing annually almost $500 billion in revenue. Their operating cash flow is $151 billion. Free cash flow, $141. They have $54 billion in cash on hand and only about $89 billion in debt. Again, we like it. But your question at its core is something that a lot of investors, hopefully, face, right? This is the problem. I'm doing air quotes because you can't see me. The problem you want to have. Having lots, tax lots, in a company that are at such a gain that you're going to pay a lot of capital gains taxes. Capital gains taxes are the price that we pay for being right. And oftentimes people focus on loss harvesting. But loss harvesting means you bought something and the price went down. You should prefer to never have any losses to harvest. And just have to pay Uncle Sam. Unfortunately, it's something we got to do. Now, the question here could have many answers because your specific circumstance matters. If Apple is 3%, 4% of your portfolio, overall portfolio, the answer is fundamentally different than if Apple is 10% to 20% of your overall portfolio. You don't want to be in a situation where you. Now, obviously, you've held a lot of these lots for a long time. So this is unlikely to happen. But it still could, right? Prices go down. You don't want to be in a situation where you go from, oof, I really don't want to realize these gains and pay the government into a position where, ugh, now I have to harvest losses. Nobody ever went broke taking profit. And diversifying your portfolio is one of the most powerful ways that you can help to improve the potential, improve the possibility that you have a positive investment experience. So if it's a very large portion of your portfolio, even though you're going to have to pay taxes on it, and we help clients all the time with tax advantage strategies to lower their realization year over year, it's kind of one of the most powerful things you can do with advisor help management. Diversifying, taking profit, never the wrong way to go. Thanks for the call. This is InvestTalk. I'm Luke Guerrero. We have one goal that is to help you achieve your financial freedom. Our work continues after this break. It is our final break. So get your questions in now at 888-99-CHART. Every investor is working to build a secure financial future. How they get there, and when they get there, that depends on many factors. The more you learn about how the market works, the better your chances for success. So don't forget to call InvestTalk. 888-99-CHART. The National Association of Insurance Commissioners released something on August 6th that I think is, probably going to reshape how people think about home ownership costs. It was a first-of-its-kind national review of homeowners insurance, drawn from filings of over 700 carriers covering 2018 through 2024, and really the most comprehensive look at non-renewals, at premiums, and market stability that regulators have ever produced. The numbers are pretty sobering. Inflation-adjusted premium increases? Ran as high as 43% in the western part of the United States. 43%. Claim frequency and severity rose in every single region, with the sharpest moves landing between 2021 and 2024. That's not just a one-year move. That is a structural repricing of risk across the entire country. And the thing that I really want you to key in on are these non-renewal rates. per 1,000 in-force policies Non-renewals have climbed by 96% since 2018 in the Southeast and 216% in the West. Against 103 million policies in force as of 2024, that means hundreds of thousands of homeowners who have been dropped by their insurers and forced into the residual market, into fair plans, into surplus lines, or just going uninsured. And a survey I saw this week kind of puts a bit of a human face on the data. 39% of homeowners saw a premium jump over 20% at a single renewal. 44% say the premium now rivals their mortgage payment. Think about that. Nearly half of homeowners are paying as much or close to as much for insurance as they are for principal and interest on the loan itself. Now, there's a bit of a counterweight here. Across insurance businesses, premiums tend to change based upon prevailing conditions. We saw a bit of a drop in the Atlantic region as there's expected to be a below normal hurricane season, right? That could moderate loss expectations from insurance companies in the current year, which could in turn lower premiums. A lot of the rise in premiums has been due to increased claims and lower profitability. But I mean, the structural story really hasn't changed. Building costs more. Labor costs more. And after years of inadequate pricing, insurers are correcting aggressively all at once in ways that are repricing homeownership from the ground up and hopefully reframing how people think about things. And really, this connects to this housing market correction that we've talked about. The cities with the biggest asking price discounts, Florida, Texas, parts of the South, are also the cities with the highest insurance cost increases. Those costs don't show up in the sales price, but they sure as heck show up in the monthly payment. And by looking at a $350,000 home with insurance at $6,000 a year, that's a very different affordability picture than the same. Buyer five years ago, when insurance is $2,500, $300 a month that used to go towards qualifying for a bigger mortgage, now going to an insurance company instead. Meaning that insurance isn't a household chore anymore. It's a portfolio return drag, an affordability constraint, and increasingly, a reason why people choose not to buy a home at all. All right, folks, that does it for another episode of Invest Talk. Justin and I thank you for listening and encourage you to tell your friends and family that you're your friends and family members about our free podcast downloads, which as always, you can find it Spotify and iTunes. While you're at it, we'd really appreciate it if you gave us a rate and review and encourage you to check out our YouTube channel. That's Invest Talk with two Ts. Lastly, today's show made you think about your personal financial circumstances, whether or not you're really setting yourself up to achieve your financial goals. I encourage you to head over to investtalk.com to schedule a free podcast. And don't forget to subscribe to our channel so you don't miss out on any of our next episodes. And don't forget to hit the bell so you don't miss out on any of our next episodes. Justin and I speak with investors just like yourself, each and every day. Independent thinking, shared success. This is Invest Talk. Good night. Invest Talk is a trademark of KPP Financial. Because of the nature of the interactive dialogue inherent in the format of this program, it's important for the listener to understand that not all comments made will apply to them. Specifically, nothing said shall be taken to be investment advice. Or shall statements on this program be considered an offer to buy or sell security. Because such advice is rendered solely on an individual basis, and at times will require that the investor review a prospectus before investing. Invest Talk is a copyrighted program of Klein, Pavlis, and Peasley Financial, a registered investment advisor firm which retains all rights. For more information regarding KPP's investment advisors, call 1-800-557-5461. Thank you for listening. And your comments and questions are welcome on our 24-hour listener line at 888-99-CHART. Invest Talk is a trademark of KPP Financial.