Chit Chat Stocks - 2021 Predictions

Episode Date: January 5, 2021

This week Ryan and Brett discuss what predictions they got wrong and right from 2020 and also make their predictions for 2021. Although there is no interview this week, your hosts share this week's stories before the break. After the break, as always, you'll hear who is in hot water, buy-sell-hold, and anecdotal evidence. Enjoy the episode! Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Watch this episode on YouTube: https://www.youtube.com/channel/UCG5Ni-SI-jyrEsoNUhqftNQ/ Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

welcome to chit chat money today is tuesday january 5th we just wrapped up 25 stocks of christmas so this is the first show of the new year so a bit of a different schedule no interview today because uh well honestly it's really hard to get an interview uh anytime in the new year or around the holiday season and we don't feel like bothering anyone so we're gonna wait until next week for our first interview but we do have our own things we have our 2020 wrap-up new predictions um what else what's your yeah i guess we should explain you know for people that haven't been you know if you came on to the show i know a lot of people started listening during the 25 stocks at christmas thing if you started then our typical schedule is just

tuesday we do a show with an interview and then talk about the big financial news of the week and then some other segments that you'll probably get used to thursday is a deep dive show on a specific company and then sunday's also a deep dive on a specific company so gonna be a lot of stock analysis and everything is focused on investing but yeah today we're gonna do the 2020 wrap-up and then heading into 2021 and how did how do you think 25 stocks at christmas went for us now i tried to go in with a low bar because i knew this our first time doing it i think we cleared that bar wasn't perfect uh probably give us a uh a minus b plus i from what my expectations were definitely wasn't perfect but yeah i mean it was all in the interviewees too people seem to

like it and uh it was kind of a hassle to get it all together 25 days in a row wasn't uh super easy but it ended up being a pretty big success and chit chat money is catching steam we are third in the caymans yeah we are yeah so ryan was doing some deep yeah doing some deep research um we are big in the cayman islands so if you're you know wiring some money and uh trying to evade those tax laws i guess we are the show for you and uh if you're who is it down there raul powell from uh real vision if you're listening um thank you uh okay what uh what's your news story for the week and you should start titling it you know like something cool okay yeah third point takes activist stake in intel there we go great title descriptive okay my uh my title is peloton is

moving outside the home it's basically just an acquisition of pre-core which i know is a while ago, but we haven't done a show in a while, so I'm going to cover that. But without further ado, here you go. Welcome to Chit Chat Money. On this show, host Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. Welcome in. I'll kick things off with my story, Peloton. Once again, sorry if this is from a

while ago and you've already seen it covered, but Peloton acquired Precor, and Precor is one of the largest global fitness manufacturers in the world. And I think it was a $420 million deal. they paid 420 million in cash which came as a surprise to me they have i think more than a 42 billion dollar market cap now it depends i don't know today was a down day so it could go anywhere but is it weird to you that they didn't use stock um it would have been like one percent of the market cap yeah it's tough it's tough because on one hand they are cash flow positive um and they've only been cash flow positive for a few you know months here or maybe a few quarters so i mean you're kind of thinking all right we can pay for this with cash but we have a high expensive

currency now with our stock trading at a sales ratio in the 15 to 16 range um they may have done a stock offering that's might be something we should have looked up like a few months ago so if they had that stock offering and then they use that to buy or they have like a convertible note or another bond offering and they use that to buy um you know pre-core that's kind of inadvertently buying it with stock yeah but i would have rather had them buy it with stock i wonder if they offered i mean because they can always like i've heard that when a company's getting acquired sometimes they just prefer to have it all in cash yeah i mean if you're pre-for yeah tied to a lock up or if you know everyone thinks that this is a work from home stock and they're all about to get

a bunch of a work from home stock and then stuff reopens and they're screwed that's potential yeah there's potential there but there's also um i think when someone acquires someone with cash that ceiling's a little bit higher yeah so they may have had to pay more if it was all in cash or sorry in all in stock uh so they said in their press release this acquisition is expected to establish peloton's u.s manufacturing footprint enhance r&d capabilities and accelerate growth of commercial verticals uh so i actually really like this acquisition i wrote a paper on it on the motley fool feel free to check it out get my numbers up oh paper paper really all right all right yeah a full 400 word paper yeah uh really extensive but uh yeah so pre-course got

two manufacturing facilities so one is on the east coast and think in north carolina and then one is on the west coast right next to our offices actually in oh bill no way really kind of interesting we'll have to uh we'll have to go check them out wow it's on the ground research uh but yeah so i think the big gripe with peloton was that their like backlog was so big that uh people were waiting like months to get their bikes which it's not you know people hear that for ferrari and they're like great they have so much demand or like boeing they're like great tons of demand you don't want that for like a christmas toy that you're gonna use you know so uh yeah they were importing all the bikes and treadmills and stuff from asia which was

extending how long it took now with the manufacturing on the east and the west coast hopefully they can get it to the u.s consumers faster um and i think that's largely what the acquisition had to do with also pre-core has a lot of relationships with gyms hotels commercial buildings so um you know if you've been in one of those little hotel gyms you've probably seen like a pre-core uh elliptical elliptical i don't know they might do treadmills yeah um so yeah i guess the vision there for peloton is that those relationships slowly start to uh the the gyms and hotels start to buy peloton devices instead and then you can you basically if you're a peloton member you can go use the bike sign into your account right from there your subscription and

you automatically have all your data and stuff like that um so i guess that's the part where it's taking it outside of the home they also said that they're adding a hundred new employees to their research and development team uh they have like hundreds of patents around ellipticals and so really peloton or pre-core pre-core uh okay and so they did they get those patents through this which helps them possibly expand their uh product suite so if you i mean i don't know if there will be a peloton offering for an elliptical but and most peloton members are probably like why on earth would i use that but if it just uh attracts older people who cares like it doesn't change you you know you're just getting more bang for your buck with your subscription uh but just

all in all, what do you think of this price that they paid? And then sort of what do you think it actually provides for them as far as opportunity going forward? Yeah. So I don't know anything about what PreCore's revenue numbers are. So I'm assuming it was a fair price. It might be a little bit inflated on like an earnings multiple or something like that. But, you know, compared to their market cap, 400 million is not a big deal, but it is a big deal for Peloton to try to make the community offering the subscription offering have it have more of a competitive advantage because there's companies like nautilus there's companies like i mean there's a few other competitors you've seen a lot of copycat yeah nordic track there's a lot of competitors out

there now with the hardware that's similar now peloton has the scale where they can make it slightly cheaper but again these things are all going to be two thousand three thousand bucks But the differentiation for Peloton, if you believe in the company, it has to come from that subscription membership. And if they can get it into a bunch of hotels, into a bunch of apartments, into a bunch of gyms where you can do a cross membership with the local gym and have that Peloton instructor already there, that could be a big competitive advantage for that subscription offering. How much is that worth? I'm not sure. And there's a lot of variables at play. This is a very dynamic system.

uh but i think it's probably smart because i can hopefully build that moat over time um they i mean it's tough to go ahead also like if you're going to the gym and let's say i mean there's plenty of people that go to the gym and ride on those stationary bikes if you can do that with your peloton and gyms are starting to reopen there's less reason for you to churn yep yep yeah they're all i mean the key is like from a really fundamental standpoint is they want to limit churn and this could hopefully help people do that say if you're a travel person if you're a business traveler and you can get at say i don't know what you're a marriott member or hilton member or something like that and every one of those hotels you can partner and be a peloton member and do a

real class there i mean i think that'd be you know that would add the value to the subscription for sure yeah definitely all right what's your uh story okay yeah i'll i guess i'll try to come up with a real headline um third point i don't even know yeah they took an activist stick yeah come on well you're complaining about my uh next time not creativity here uh so dan lobe um his hedge fund third point he's actually a resident fin twitter now um he is a new i think what three months ago yeah he's a yeah classic new boil on uh twitter right but no no he's a new but he's a new member no yeah i was just trying to make the uh the animal spirits joke but the yeah they took his hedge fund third point so it's not just him um has taken a one billion dollar stake in intel

It is an activist stake, clear activist stake. Intel is supposed to explore, quote, strategic alternatives, which is, as we know, the classic activist lingo. Some more details. Third point is asking Intel to immediately do something to strengthen its position in the PC and data center markets. They talk about how Intel has lost its leadership position to TCM, which is Taiwan's semiconductor, and Samsung. those are the two bigger competitors one obviously in taiwan the other one samsung in south korea the other companies have gotten down to a five nanometer chip if you don't know anything about semiconductors smaller just equals faster and then while intel has been stuck at about a 14

nanometer chip for a few years now which has really lagged them behind on speed and i mean when it comes down to these things it's all about speed versus you know the price you're going to to pay. I mean, you're not going to choose something that's slower. Yeah. I mean, I don't know chips that well. I'm not going to pretend that I do, but from anything I've read, they are dropping the ball. It sounds like AMD on one side of it and AMD and NVIDIA are on one side sort of taking market share. And then on the other side, Taiwan Semiconductor just doesn't look good for Intel. I might also note that I don't think there's anyone more passive aggressive than an activist investor yeah they're very uh passive passive aggressive and actually uh the you know

the vc josh wolf we're big fans of him and they're it's interesting to follow what they do over at lux capital um he had a whole thread i think a year ago or something like that but basically outlined the same plan so he was like all right you're welcome dan for giving you the strategy for an activist hedge fund so a lot of people have been saying that someone needs to take an activist stake in intel for a while now especially because there's also the geopolitical risk where the united states itself might not want the semiconductor technology to all be in east asia you know what i mean so intel is like a strategic and foreign partner or something like that and uh it's just going to be interesting to see how this works um i guess i'll tell have a quote here from

the letter uh if you're the intel ceo um or the chairman of the board or whoever here um you're probably feeling a lot of heat i mean it's not a job anyone wants right now but i'll read a quote from the letter here it says from a governance point of view we cannot fathom how the boards who presided over intel's decline could have permitted management to fritter away the company's leading market position while simultaneously rewarding them handsomely with extravagant compensation packages not a good look that's a nice way of saying you guys are all overpaid Yeah, and Dan Loeb in The Third Point is famous for really mean and passive-aggressive hedge fund letters. I think that's where you're getting that stereotype from.

I love a good passive-aggressive activist letter. It's exciting. I mean, it also gets the other investors in— We're going to explore alternatives. Yeah, we're going to explore strategic— You're going to be fired. Yeah, we're going to explore strategic alternatives. That's kind of how Jack Dorsey is probably feeling at Twitter.

But the only question I have here, does Intel have any appeal to you with an activist on the board? I kind of know your answer with Intel because you don't really know. You said before you don't understand them as well. But what do you think? I mean, it's a huge name. Yeah, no, I lack conviction in the company. And Gavin Baker once wrote a piece on Medium about how he tried to invest in like this CPU market. And he's a really smart guy.

And he was basically saying, after all this research I did, I was completely wrong. And it just makes me feel like if he built all that conviction and was completely wrong, I have a better chance of being wrong. So, yeah, no, that doesn't really appeal to me. But I always like to see activists take any stake. It's always entertaining. It is always very entertaining. Yeah, it's weird because Intel seemed to have the ultimate moat. They had such great economies of scale.

No one could touch them for decades. And now they just eroded that over like one decade. They were one of those like Microsoft. It was them and Microsoft where people were saying that this is like it's almost unapproachable because the thing about these semiconductor chips is you have to invest like $10 billion a year to get to the scale where you can actually be profitable and have the technology. So the fact that Intel let this happen and just go to whatever the other two competitors are, I mean, there's a few others, NVIDIAs and GPUs and things like that, but it's interesting. They've dropped the ball over the last few years here. I think I'm starting to get the understanding for why a lot of fund managers choose to stay at a certain AUM, like not go over it. Because I think they have like $16 billion in AUM.

And so that sort of limits what they can invest in that gives a meaningful return. And you start like if Dan Loeb had like $500 million in AUM, I don't think it would be spent investing in Intel. Yeah. Oh, yeah. I mean, and you can also take an activist stake. I mean, this is back to the Buffett days in the 50s. I mean, he was taking activist stakes in, you know, Berkshire Hathaway, and they were like a $10 million company. If you can take activist stakes in a lot smaller ones, it's not going to be on CNBC, but it's actually, you know, meaningful for a smaller company like that.

Okay. I'm going to go ahead and get out my—because that's all you have, right? Yeah, that's it for that story. All right. Current state of Fintwit. I think there's one obvious one that we have to talk about. Okay. Because we missed all of December.

uh so bitcoin is back uh if you're on twitter you already knew that um honestly if you were anywhere you probably knew that yeah i heard a bitter dilemma like how does how do you know if someone does crossfit they tell you yeah i don't know if someone owns bitcoin they tell you well hey they actually mentioned it on sunday night football last night so that's when you know the top is coming in okay uh but i mean did anyone have a better 2020 than the tesla and bitcoin bros no that's right hell of a year for them yeah and it's very disappointing to me because i typically i don't want to say anything but yeah yeah it's um uh i'm just not i'm not excited i will say all the kids i knew from college that i was like this guy is full of it are dancing around

me right now as far as we're trying to go yeah a lot of people are talking to me in similar strategies you know most of them aren't trying to be um rude yeah they're trying to be rude they're just saying like hey look you gotta invest in tesla dude you gotta invest in bitcoin this thing's soaring and here's that concerns me it concerns the other thing you know what buffett didn't do or any great investor didn't do is they'd never invested in something and then they're like anyone who doesn't is an idiot that's typically a bad sign yeah your whole goal is to just get mass adoption from everyone else it's probably not an asset that maybe you're owning it for the wrong reasons yeah i should say bitcoin uh seems like the purest ponzi scheme of all time it's so

probably triggering a lot of listeners right we apologize no i mean i'm saying it's like the psychology part that pisses me off it's such a pure ponzi scheme because they admit up front everyone admits up front that there's no intrinsic value which means the price can be whatever it wants which means there's no defending what the price shouldn't be like how low it should be which means you can defend it at any high price so i mean it's like that's to say it can go to a million dollars or you go to one dollars i wouldn't be surprised today jesse livermore was like does anyone want to call the top on digital tulips which if you don't know is from like the whole tulip mania thing and the amount of anon accounts in his mentions trying to describe like the

financial system to him i was like dude this guy's the smartest brilliant most brilliant people on twitter yeah and that's uh the pseudonym if anyone's thinking about the real jesse livermore He did die in the Great Depression. Okay, that's all I had. That was basically what Twitter's been all about for the last month. Yeah, that is true. I may have to start muting Bitcoin, but we'll see. We'll get another week.

It's kind of entertaining. All right, I did a poll right on New Year's Eve because I want to do this over the next three years. I'm probably going to update everyone every six months or so, but don't hold me to the fire on that. I said, starting January 1st, what will have a better three-year performance? One, FanMag, which is Facebook, Apple, Netflix, Microsoft, Amazon, Google, equally weighted, or Berkshire Hathaway B-shares.

81% said FanMag, and only 19% said Berkshire. What are your thoughts? I might agree. I might agree. I feel like I've been betting against FanMag for the last two years, and their returns are... I just kept saying law of large numbers, but that applies to Berkshire now, too. So it's like, I don't know.

You always say, like, how much more can it grow? But then it's continuing to grow, almost all of them, in the double digits. Yeah. So it's kind of hard to feed that. Yeah. I mean, some of their earnings aren't, but, you know. Yeah. I mean, I would take most of those, Facebook, Google.

The whole regulatory pressure thing, I'm not even sure that's a problem. Yeah, Facebook and Google seem like they're at some, you know, very reasonable prices right now. I would say if you broke down FanMag into its parts, so you take Amazon, sever the AWS business, and you take Facebook and sever Instagram, you take Google and you sever YouTube, the market cap combined will be higher. Oh, yeah, but that's not the question. sure but i'll take i'll take fan mac all right um i don't know i that's one of my things for our 2021 prediction so i'll keep mine that's where it was inspired by that so i'll keep my prediction for later okay is that all you have yes okay 2020 wrap up i've got a whole bunch of questions here so the first one is two things that we got right in 2020 um for me i'll be honest

the only thing i got right happened to be my stock picks because i could not accurately predict anything else that happened in the world apparently what was yeah you were uh you did call bottom on square yeah i didn't put truthfully not even an irony way like you did uh spotify we well i was thinking more around the thesis but we called the whole podcasting thing uh sort of changed of the narrative and we think it did uh and that's true probably had an insight to that being that we have a podcast um the other one uh transition to ctv uh seems like it accelerated so i guess we got that right as well oh we did accurately predict the demise of we work yeah which everyone did but we were still right yeah so uh i guess i don't know anyone that was optimistic about we

work if they went do you think they could have gone public today through a SPAC yeah yeah that's what we're sponsored by SoftBank yes I mean that that's what worries me right now is that we were could have gone public today and that thing was a duster fire like SoftBank could have done every one of the private rounds and then SPAC'd them like you're themselves SoftBank yeah oh gosh so crazy all right it makes me a bit sick okay well what did you have right in 2020 okay this is a bit of a all right i got this right but i was looking at you were sending me our old show notes uh from our 2020 show which was very depressing and i'll tell you why because these are two things i got right one we were saying five stocks we were looking at for 2021 yeah um and i think christmas

list is the christmas list yeah we were trying to do something like that and i believe i said match group which i already owned and i said c limited solar edge and something else that did well but i got uh it was yeah so i said c limited and solar edge which have both done phenomenally this year c limited has absolutely crushed it guess how many shares i actually owned of c limited or solar edge well i know how many shares you own you own zero i own zero yeah so if i would have just you called zoom right well uh yeah we don't need to talk about that one yeah i wrote at the ipo that zoom is the ipo to watch this year i'm pretty sure that was a part of your five no that was year five oh was it yeah but either way and you also had stitch fix which we

did but but it's neither here nor there uh but i i was technically right about those things but um financially you were wrong financially i was wrong and it's just heartbreaking it's it's very heartbreaking yeah yeah that's tough all right um any others nope those are those two okay two things i got wrong oh last year so we did this we asked i think this same question of 2021 or 2020 predictions and i predicted that we would not see a 30 percent drawdown for the entire decade that took all but all but two oh my god wow sorry sorry for laughing i think it worked it worked out yeah you know yeah i was fine and it was quick but uh yeah i was instantly wrong on that so and i think i think i was just predicting that to be like ultra contrarian

because everyone was already calling top before the the covet happened so uh what do you know what i predicted i was forget probably that tesla was gonna go bankrupt that was probably it yeah well that obviously i guess we were wrong about that and then uh i was totally wrong on peloton i thought it was just for rich people um and now it's i've kind of flipped my thesis on them i guess uh the other one i thought robin hood traders would have been washed out by now and you know what we keep seeing these little mini stock bubbles like in individual mini stock bubbles and i keep thinking like how long can this go on for like how long are we going to see like things like hertz be revived i don't think it's ever going to go away uh yeah i don't know

wall street bets we talked to the founder of wall street bets jamie i think was his name i forget Rogozinski? Rogozinski. Yeah, tough last name. But we talked to him. It's a powerful place. Groupthink is a powerful concept. Yeah, they have a lot of firepower behind those call options,

and they can do some manipulation on some smaller companies. Yeah. It's just not quite illegal yet. Yeah. I mean, if you have been on Wall Street Bets and you've been on Robinhood, you've been in a good spot. Yeah, so Robinhood, yeah. Yeah, I would have thought Robinhood would have been washed out as well,

but they're as strong as ever. yeah okay uh what do you have okay these are simple i thought uber would be worth a lot less in 2021 than it is and i won that bet yeah we had a bet for airbnb oh wait maybe not anymore no it ended it ended um we should it was a long time ago but it already ended if it ended now would be a lot closer because airbnb had that crazy ipo but yeah i thought uber would be worth a lot less and it is not i also thought that tesla would be worth a lot less and as we all know it is not it's worth about 10 times more yeah um so yeah that was the you can see why we don't short yeah yeah i mean we are pretty uh bad at it i guess yeah we're i'm really i can't be bad at

theoretical shorts forever so the uh the appeal is always there though yes yeah it definitely entices you oh yeah robin hood making it as easy as they do makes it even more enticing that's that's all your that's what you got wrong okay uh one lesson uh for 2020 what did you learn this year okay i think a lot of people learn this you find out what companies you actually believe in when they all fall 35 yeah so there's a few companies i owned i was probably only one or two that i realized when the stock dropped i was like yeah i mean this was either like a dumb value play or it was something that I didn't actually believe in. And I just read some things about that. And I kind of figured out that I can never really, you have to

either, I mean, you can learn about companies from other people. You can pick up things from Twitter, from ideas, but you have to really like, I think I heard them talking about this on value after hours. They talk about this a lot where you have to internalize the idea and make sure you understand why you would have conviction or why you do have conviction in it. Because if something dips 30 40 percent um you got to be confident that the business is still there that's really interesting because we had matt cochran on i don't know however many times ago and he said his big advice was you can't borrow conviction uh yeah that's another way to say and i used to think like man well you know you can kind of borrow conviction someone else gives you a good

stock idea and you take it or whatever uh but when things go poorly then it then you start being like okay, let me read some of these earnings reports again and try to understand the business. I feel like I definitely went through that this year where you're starting to go through the balance sheet over and over again to see if they can actually weather the storm. And I also learned that if something you own goes up 100%, you may be taking more risks than you think. Yeah, which is a shame because it's funny. I sit there and I'll be like, this is undervalued, this is undervalued.

and i'd be like this could be twice as big and then it gets twice as big and i'm like i don't know if i really believe in this anymore that's like i've been shouting this the whole time and that can i can that can teach you some things as well yeah um okay one lesson for me is i remember always thinking like uh why aren't people more aggressive during drawdown so you know like when you look back at whatever spy charts you just always look at 2009 you're like well if you would have just bought the bottom over and over or bought as it was going down like or you held you'd be just fine but then like this year i kept having the feeling as we were coming back like i didn't have that much trouble when we were selling like when everything was selling off because

really it took like three days to drop 30 percent well two weeks but still that's really rapid and then it was when it came back up and i was like all right this is fake then i started to lose conviction i was like this is uh propped up it's not real and i felt like everyone was thinking the same way yeah it's a little bit of a investor psychology there and so it's weird i don't know i guess just things are never as bad or as good as they seem chances are just like be more practical it's probably not going to end in the best case or the worst case scenario yeah unless you're uh i mean for example we talk about this a lot but this is really the big lesson we learned this year In March, when we at Research Square, we knew that company inside and out.

And we understood that the seller business was going to be screwed for a while. The PPP loans and all that stuff did end up helping. But if there was no federal support, that part of the business was totally screwed. But we understood the cash app would be really beneficial from something like this. So we basically underwrote that the cash app is probably going to be worth upwards of like $40, $50 billion. dollars at some point that's kind of what we would you know estimate on what they're i mean whatever there's a lot of factors that go into it um so we're investing on that solely on that but then we get that i mean you just get lucky that the federal government bailed out the seller business

almost and yeah you know that's just kind of like another 50 billion dollar business that got added on top i mean you can't say that was skill when that company 7x to like that but the other thing is uh i think brian chesky at airbnb was like uh companies are either broken by crises or defined by them or whatever and at the time i was like all right that's just bullshit you probably tell yourself to like uh keep morale going at the office but now like looking back on it some of the actions square took um where they were helping out their sellers instead of saving costs or i mean that's probably helping them a lot now in the better times and so i think that uh it feels a lot more real and it uh now that we've kind of gone through it it just feels like a more powerful

statement yeah yeah okay uh 2021 predictions you want me to go yeah sure all right first one the ev spec bubble will burst sometime this year did i steal yours you stole mine yeah so the ev spec bubble i consider all those companies that are pre-revenue the ones that are basically like nicola but don't have a ceo that's just lying all the time uh they're just overvalued not just overvalued in a fraud but you know there's companies like what's the ticker qs that's valued at 50 billion when they're down like 40 this morning oh great so i'm already making that prediction fantastic uh and then you know i put tesla in that as well because they're valued as much as the entire auto market and are going to need upwards of 20 million vehicles produced

they're going to have to invest upwards of 50 billion dollars in capital there's just there are i was trying to calculate their roic it's under two percent so which is below the weighted average cost of capital which i still um don't understand too much about weighted average cost of capital but i understand that you don't want something an roic number you want to always be above two percent because if your cost of capital is typically around two percent and your returns on that invested capital are under 2%. That means the company is becoming worth less. But suffice to say, my first prediction is that the EV SPAC bubble will burst.

And if it doesn't, go ahead. No, mine's the exact same. I think the EV market now, this isn't like a bet against electric vehicles. There will be definitely some winners, and yes, the future is probably electric. uh but the winners are probably going to be the incumbents it's like really hard to just build an auto business from nothing and uh yeah i think companies like nicola who still has somehow a valuation i don't even know how that's possible doesn't it have a 10 billion or yeah neo uh all right charging stuff like the like uh tesla i think will be a part of the ev market

but it will probably shrink i think the capital is coming in early it feels like cannabis from 2018 yes there's going to be success uh but most companies will fail or do poorly and returns are going to be hard to come by i will i am confident saying that as a whole the ev specs and you know tesla and neo put them in there as a whole these companies are going to return not even if they take over the entire auto industry the returns will be i mean they'll be flat they've already priced in that dominance of the entire auto industry what other returns are there whatever i'll go to my second one do you want to go all right it relates to that fan mag berkshire thing i do think that berkshire hathaway will outperform fan mag in 2021 this

one isn't really that exciting of a prediction and i have less confidence in it because it's all about you know one year time horizon it's kind of hard to do and i don't really we don't really like investing in either of these companies anyways because they're all large but i do think from where berkshire is priced right now if you outs you know um take out the cash on their balance sheet i haven't paid much attention to berkshire in the last year uh i haven't looked at any other earnings or anything like that but i yeah i do think fan mag um i don't know i think berkshire outperforms them a bit of a rotation there yeah i hate i hate betting on rotations because that's just a tough thing to do over a short period of time but um i guess yeah because

we're just having fun with this okay uh this is more of a decade prediction but i do think the end of covid will sort of mark the start of a roaring 20s like decade and i i there's a lot of pent-up demand for partying for travel for celebrating i mean i know a lot of people that are like can't wait to go to the bar it feels and i don't think there could be a more uh polarized political spot that we're in now so i think that will become easier over the next 10 years uh i think environmental awareness is sort of higher there's all that money pouring into esg i feel like first comes capital and then comes the actual change hopefully uh and so yeah and i think people are kind of urge irking to pile back into cities and i know a bunch of the older people that listen

to this podcast like yeah no way but trust me a lot of single people our age are looking to get into the cities it just feels like if uh the vaccine is well adopted and it works this maybe is a baby boomers type situation maybe maybe it uh i mean this summer i don't know what's priced in but i think this summer um the travel boom is is i mean people are talking about it but i think like it's still underrated how insane it's gonna be like it's almost it's a consensus that there's gonna be a travel boom because you can kind of see that there's the pent-up demand i think that's just you know two-step thing you just got to think about but i think people are underrating how big it's going to be it's going to be insane everyone wants to travel for like three weeks

next summer they're all everyone wants all the rich people want to go to europe and stuff like that yeah there's i mean there's also the you know the markets give people like a fake sense of uh financial stability you know if you have a lot of money in 401k or whatever you think you're richer than you are. So I don't think liquidity is going to be an issue in this. So it's not like we're coming out of some depression. It just feels like a lot of things are prepping up well for the 20s. Oh, and the savings rates have been off the charts. I mean, people joke about putting my stimmy in Dogecoin, but in all reality, the savings rates have been so high that people are going to want to spend money on things other than, I don't know, a Zoom subscription this

summer yeah um okay favorite podcast of 2020 what do you have yeah i try to keep this investing related so i just didn't invest like the best with jesse livermore who we talked about earlier um that's his nickname the real jesse livermore it it's just a reference to the jesse livermore who lived in the early 1900s who was considered to be the best trader of that era um and yeah he He had a show out with Patrick on that show that everyone knows about. And it was just great. It was talking about how the economics are working right now, and he's one of the only people that can explain how the economy works

in relationships to markets, large-cap growth, small-cap value, how it all works together. And it's just a fascinating lesson you learn a lot. Yeah. Mine's probably a little more basic, but I like the business brew with our friend Bill Brewster and Dan McMurtry. I like that one in particular. Good one.

And then this one's not investing related, but the podcast, the Spotify original series where they like explain the inner workings of the office production where it's Kevin Malone's like the host. Oh, really? Yeah. He brings on all the guests. So Jim Halpert, which John Krasinski, all those people. That's pretty interesting. And it's from Spotify. Yeah.

As everyone knows, yeah, for the Spotify bowl gang, right? okay favorite tv show from 2020 uh this one's not that investing related because i mean there's really only a few um i like to yellowstone it's kind of business related um it's about this guy who owns a ranch in montana and has to defend it from new people that are uh trying to you know take over the land it's really valuable build like a ski resort things like that um a lot of a lot of fighting as you expect in montana a lot of gunfights stuff like that okay yeah i think i watched like the first two episodes but uh maybe i'll get into it again i'm gonna go mandalorian pretty basic uh but you know any disney fans uh or any star wars fans know that that was a pretty

good series yeah really really propelled disney plus right definitely they hit that first show they got it they got uh perfect okay uh book book uh i kept this one investing related uh it's called The Number. I forget the author's name, but if you just look up The Number, I think it'll show up. It's about how the earnings per share number evolved and became The Number, where if someone had an earnings beat, you know what I mean? They announced just the number for earnings per share and everything reacts all based on that one number, how it evolved, how companies manipulated it, how it ended up turning into fraud in the early 2000s with the telecom companies, Enron, et cetera, things like that. It sounds a little bit nerdy, but for anyone that's interested in

investing in individual companies, I think it's really insightful. It goes through all the history of that. Okay. Mine was quality investing. I don't know if you've read that one. I have not. Who's it by? I'm blanking on the name and it's kind of a bland name of a book, but I don't have the author here. I think it was kind of done by a fund. Like if I'm not mistaken, it felt like it was in the uh like tone of from like a funds perspective okay and they really go into like what actually drives businesses and then what drives performance which in turn driver drives returns uh so that one was interesting then the co-founder of netflix i'm blanking on this book name as well wrote a book a long time ago from his perspective so it's not reed hastings it's

the other guy uh and that one was pretty entertaining as well not not right of a lifetime with bob eiger talking about the uh that was good i think that was like a 2019 one but uh this guy like uh he gives a better insight to how smart reed was than reed does in his book yeah okay yeah so that's pretty interesting uh but i think that's all we have for the first half we're gonna hit a quick break and then we have our hot water buy sell hold and anecdotal evidence cox panoramic wi-fi includes advanced security to help protect all your connected devices you'll get real-time alerts oh like this one so you don't have to worry about malware or when your kid downloads a song from a shady link and now all your computer can play is

red color red color where are you all blocked thanks to advanced security included with cox panoramic wi-fi advanced security must be enabled in the panoramic wi-fi app restrictions apply all right welcome back in next up we have hot water um you want me to go first i only have two yeah go ahead uh jack ma seems to be in hot water uh because uh this is a pretty crazy story but in october ma delivered a pretty scathing speech about chinese uh regulatory or regulation stifling innovation and this was kind of all around his ant financial thing and now he he can't be found which if that doesn't give you pause as an investor in chinese companies i mean i don't

know what does because we've seen everything in 2020 and i don't know if this is 2019 but uh like 2020 2020 the luck and coffee thing obviously that's a concern that should give a huge red flag to anyone investing in china and then this like the founder the richest guy in china if i'm not mistaken is gone yeah the richest guy might be the founder of tencent but who knows so apparently they just can't find him or they don't know where he is yeah he could just be hiding uh and he might not be dead or in prison or something like that but in all reality when the ccp has control over these they're essentially state-run enterprises you are betting on what company the ccp likes and that's just not a bet you can make you're also investing in these adrs which are typically

Cayman Island, uh, shell companies. Uh, I know it's a very complicated structure that they actually have. So one, if you're someone who like us wants to know what you're investing in and two wants to have a business that you can predict the earnings over the next decade that isn't controlled by an outside forces. Um, and yeah, I mean, why would you ever invest in China? Yeah. Uh, second one for me, I don't know who's in hot water for this. I guess a lot of people, maybe twitter but did you see the video of the boston dynamics robots just dancing around yeah those are i think those are overrated yeah those are overrated they could i feel like they could post uh like a video of it just walking around and everyone would be like this is it

this is the end yeah i've seen some uh jokes from like comedians and they're right like all right well you know how i defend that throw some rocks we'll put some marbles out there because if robots still cannot walk on anything that's not a flat surface so i mean it's it's all just uh for show it's a it's an entertainment thing yeah i think i feel like people overhype those oh yeah i mean it's like it's moderately more impressive than my roomba and i'm not uh i'm not sitting there applauding it all day yeah i mean yeah i don't know they're they're cool the first time now we've had like eight of them and uh yeah i mean not as exciting not as exciting okay that's the Only two I had.

All right. My other one, I had Jack Ma as well, so I have two others. Haven, which was the J.P. Morgan-Amazon-Berkshire-Hathaway healthcare partnership. That is officially ending. Does this show, is this a big statement on how healthcare is just so complicated? I mean, these companies all have like a million, no, not a million workers. Amazon and Berkshire may have close to a million workers. I know Amazon does, J.P. Morgan a little less.

They all have 100,000 workers or so. that is i mean they can't have the scale to do something i mean that's insane might have just stopped doing it and felt like their role wasn't that necessary but uh it's tough yeah you can't just enter there are certain industries that you can't just with all the money in the world enter like google tried to do fiber optic cable to the entire u.s and they stopped after what like a month yeah i know what google yeah google fireball was something i'm not sure exactly what that was but you might be on there's just certain industries that uh people that have been around know how it operates better uh and you can't really just manufacture that out of uh

out of tons of capital yeah i mean maybe this is a uh indicator that united health may have a larger moat than i mean people think that united health has a large moat but it may indicate that they have one of the strongest moats out there yeah uh anything else yeah so uber did you see this story i think it was just a tweet um an old i don't know if it's old but the company apparently used to spend about 150 million dollars on online advertising and then at one point they actually just stopped and then or sorry they stopped two-thirds of that ad spend so 100 million dollars worth. And they found out that it actually didn't do anything. Their, you know, renewal rates or their onboardings were the exact same. So it's just to show that some of these ad companies for

digital advertising, it's not just Google and Facebook. A lot of it's a black box and you have no idea if you're advertising on the internet, whether something is working, they can give you analytics and like you know we had this many eyeballs on it but i mean we tried advertising for the podcast one time and talk about like the least effective thing so ineffective i mean we were using twitter which is like doubly ineffective but uh but uh yeah i'm curious though if like that was just uber steak because uber could have had a network effect or sort of brand awareness that by then they didn't really need to advertise but i feel like this is companies that are not known yeah maybe maybe so okay he said kevin frisch the former head of performance marketing and crm at

uber told the tale of how ad fraud specifically attribution fraud ate at least 100 million dollars of uber's 150 million dollars online ad budget he said quote we turned off two-thirds of our ad spend we turned off 100 million of our annual spend out of 150 and basically saw no change either the ads weren't just working or i mean 100 million dollars and no change especially earlier in their days when they had you know they were trying to acquire customers i mean does that just show i think another example of this is when a company like say spotify larger company everyone knows about it when you search them on google they're going to be the first search result right but the companies that still spend for that search result ad where it has the ad for spotify or

anyone and then below it's like well yeah clearly i'm just going to click on whatever it's going to go to the same site that feels like wasted spend as well okay yeah like uh and you know what it it's triggers me as a consumer when i have i think i've told you this but when there's the two links and there's the one that's promoted on google and there's the one that's not i clicked the non-promoted one yeah don't give money to google even though they go the same place like uh i don't know it'll i think a lot i mean it feels to me like a lot of that ad spend is wasted in this uber anecdote it's kind of anecdotal evidence but it feels to me like we may be on the right track okay uh you got some more right no that's it jack maul is one of mine buy sell holds uh the theme

is basically 2021 reopening stocks i think we've done a reopen one before but uh the three here are alaska airlines amc and disney oh i'll marry okay amc's out killing it or not kill sorry we uh we're selling selling amc and no respect for the theaters uh i'll be holding alaska airlines because i do think they have a solid brand on the west coast and they have a better balance sheet than a lot of airlines do and i do think that the travel is going to come back in a big way this summer and they can get there um but it's not a buy recommendation at all uh please don't think about it that way and then you know you gotta you gotta buy disney um that's just a permanent company out there they are at a bit of an inflated valuation right now however it's better

than an airline or a theater company yeah i probably go all the same uh anecdotal evidence i have two two go ahead go ahead both of these aren't really like super anecdotal but i've just noticed a lot of people that have never been involved with stocks or financial assets starting to give me advice yeah um and i feel like that's usually a top sign when like the charlatans start uh yeah don't need to call them charlatans but you know i mean it's it doesn't matter the ignorance optimism yeah i i get free i get fearful i get fearful that's really it's not like it's a bad thing on hinge i mean i've been getting these the a lot of these profiles are like oh i love bitcoin oh yeah all those are scams yeah maybe i had to just uh so i don't know

No, I mean, you don't want to tell someone that they're wrong because you may, I mean, they may be right, but you just want to let them experience something like this where they're getting very greedy, almost 99, you know, 100% of the time, things are not going to end up well for them. Hopefully they don't lose a lot of money and then they can learn how to be a real investor, you know, in the long run. I mean, we were there, you know, at the beginning, everyone's like that. And that also leads into my second point, which I had a friend sort of ask me about, you know, he's like getting started in investing or whatever.

And he's like, oh, I came across Brian Feroldi's profile. I don't know. Maybe he has an Instagram or something, but he came across Brian Feroldi and his content. And it just got me thinking, like, if I were going to tell someone to follow any one person at the start, it'd probably be him or a lot of the optimistic people that simplify things. Yeah. And sometimes I am in like disagreement with the over-optimism, I guess is a way to put it. But that's just me being like some hardcore value guy. And it's not even – typical investors with a long-term time horizon should follow that model.

Oh, yeah. That's where – I mean, look, it's where you should definitely start. And if it's not the strategy that works for you personally, there's a lot of other ways to go about it. You may just be an index fund guy. But you really should, if you're interested in investing in individual companies, you should be learning from people like Brian. Yeah, definitely. And yeah, I just – when he said that, I was like – That's good. That's good.

It's so easy to get the wrong advice. It made me think about how valuable what The Motley Fool is doing really is because they really are like the right funnel, the right entrance to the funnel for investing. Definitely. I'd agree. i don't know okay uh that's all i have okay uh mine is all right okay tobias lootkey who is a famous ceo toby lootkey well yeah that's his name both of his names uh ceo of shopify he tweeted that his kids accidentally got themselves a virus on roblox is that a red flag to you at all what do you mean by that so it's like they you know how the whole thing is there is it's kind of like social things um interactions in these environments that they make up and you buy like clothing or

items and stuff like that i think it forced them to buy things automatically so it's kind of like you know what i mean where this one code got them to buy things that would go to that person it's a tough that seems like a tough problem to solve um but yeah i mean they built the platform i figure like they could uh hopefully solve it themselves something to watch out for if you're looking if you're waiting for that roblox ipo um keep that you know in the back of your mind yeah is that just you trying to psych everyone else out from buying so exactly yes exactly any others yeah all right i got a question is this a fraudulent way to manage a value fund so this unnamed investment firm benchmarks itself versus the russell 1000 value index right but they own

mastercard in amazon that seems very misleading to me yeah i don't yeah i it just uh that like blows my mind that the benchmarks are so different between funds oh and you can choose your own benchmark it's crazy you can choose whatever you want i and i'm gonna venture i'm gonna benchmark myself against the 10-year. Oh, yeah. Perfect. Perfect. All right. I think that's it then. Yeah? Yeah. Okay. Well, that's going to do it. Thank you guys for listening. Hopefully, we'll have an interview for you next week. We want to remind you guys that we are not financial advisors. Anything we say or discuss here on Chit Chat Money is not formal advice or a recommendation. If you do have recommendations, feel free to tweet at us. I think it's

at chitchat money. We have our email, which is chitchat money. No, uh, chitchat money podcast at gmail.com. We've been getting a lot of recommendations, just got a new DM today. So we'll try to add that one in there. Uh, but yeah, thank you guys for listening. We'll see you next time. You