Chit Chat Stocks - 2022 Predictions

Episode Date: December 28, 2021

In this year's predictions, we discuss our predictions for 2022 as well as reflect on our predictions from last year. Listen closely as we laugh at our previous predictions and reveal our ideas for the new year. Enjoy the show! Special promotion through the end of 2021: Subscribe to 7investing with the code "money" and get $100 off your annual subscription: https://7investing.com/subscribe/ Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney Contact us: [e-mail] Timestamps Reflection | (3:05) 2022 Predictions | (17:45) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. 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. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guests is not formal advice or a recommendation. Now, please enjoy this episode. Welcome to Chit Chat Money. Today is Tuesday, December 28th. We're actually recording this on December 20th, so we're about a week early to it, but we're going to give ourselves

the holidays off. So we wanted to get this one out early. And we have our 2022 predictions episode. Listeners actually really enjoyed this last year, so we decided to keep it up. We look back at some of our 2021 predictions, see what we got wrong, what we got right. And then we try to make some new bold guesses as to what's going to happen. What else do we have on the agenda? Yeah, we have more of a 2021 year in review. We're going to go through three of our favorite not so deep dives from the year. If you missed them, we can go back and listen to them.

Kind of our favorite either companies or just sort of not even that we like the stock, just kind of the business and the analysis in general. and then some stuff we like from the year books, TV shows, podcast episodes. And yeah, we don't have not so deep dives and deep dives, the traditional schedule on the last week of the year. So we always like to fill it with one of these special episodes and it seems like it fits right in because it's right at the end of the year. Okay. And before we get started, we want to give a fair warning here. We have a holiday discount. You only, I think if you're listening this before the new year, you have a limited time to use this. But if you use our code money at 7investing, you get $100 off the annual. Am I getting that right?

That is correct. $100 off the annual subscription for life. So it's typically $399 or $349. I cannot remember the exact number. I should probably know that. But $100 off that is a pretty significant discount. They were doing $50 off, which is with our original one, but now they've upgraded it for the last two weeks of the year. Should be awesome. I mean, this is a way, if you've ever thought about 7investing and you've been on the fence, now is the time to get it. They're a fantastic research service. And if you sign up through our promo code money, I mean, you're getting it at a significant discount for the quality of the service they're providing. It is normally $399. And if you're a recurring

listener to Chit Chat Money, you've probably heard a lot of the 7investing analysts on here before. we love them. We love looking at their recs. It is sort of a new ideas funnel for us. And so I think a lot of people should use it that way. Yep. Limited time offer too. So it's about to end. So if you ever thought about it, don't put it on the checklist. You got to go do it right now. Okay. Now we wanted to give a little bit of transparency for all the listeners because a lot of the people like listening to us. They like communicating with us. So how has the show changed in the last year and then what to look forward to in 2022. Why don't you get started? Okay. So how it changed in the last year. In the summer, we decided to switch from the old

schedule. If you're a new listener, you probably don't even know, but we used to do a Tuesday episode that revolved around kind of current weekly events in the markets and stuff like that. Different news events, different kind of stories. Really, it was all over. We kind of had freedom to choose whatever. Me and Ryan would bring in individual stories and then we'd talk about them. We decided to ax that and only do that on a quarterly basis with Ian and Brad because there really wasn't enough going there. We felt like we were repeating ourselves a lot and we switched to two episodes a week instead of three.

And now we have the same Tuesday. We have the not so deep dives, which is the, as everyone might know by now, you know, the standard stuff that goes up through a individual stock in about 30 to 45 minutes, typically our first look at a stock. And then on Thursday, we try to bring on every week another person, an analyst, someone that knows a stock well, someone that knows a business well, and go through and ask them just a bunch of questions about a stock, why either they like it or maybe don't like it. We're trying to get someone that is an expert on a specific security, get them on and ask

them questions for about 45 minutes to an hour. Yeah, that one is a more thorough deep dive. And it's usually someone who we can kind of coin as the expert on that business. That is the person we think of as an expert for the business. I wanted to give some numbers too. So Spotify gives us a wrapped. If you're on Spotify, you know that, but they also do it for podcasters. And so our downloads were up a lot this year.

I think it was like 500 or 600%. Now we did have a comp. Yeah, 2020, we did pause for some of the years. So, you know, that is, we're choosing the comp numbers, as you might say, or not comp numbers, the year over year revenue numbers, we can put a good chart crime in there. Yes, but we did cross half a million total downloads for the full year. So that was kind of a milestone, I guess, for us. We're hoping to get to a million this year. And we also had 967 people on Spotify that listened to us more than any other show. So if you are one of those people, thank you. We were really excited to see that. I guess you would call that customer loyalty. That's great.

Yeah. You're probably listening to this right now. So thank you for being such a loyal listener. We'll hope to put out just as good of stuff, even better stuff in 2022. Now, what to expect in 2022? Now, well, I think a lot of the same. We only started this new format less than a year or less than six months ago. I think it was in August would be the exact date.

And we really want to do that for the whole of 2022, build up the deep dive catalog, build up the not so deep dive catalog. I think by the end of 2022, in the not so deep dive format, which is a bit confusing, we used to call those deep dives back before August. So that is a bit confusing. I know you're probably confused hearing that. But I think within that format of going over to individual stock, just between me, Ryan, and then either Ian and Brad, or sometimes just me and Ryan over a company, we'll probably have a hundred of those by the end of the year. So hopefully the catalog will just get better and better. Yeah, great. And the other thing that we will have is we will have our quarterly roundtables with Ian and Brad. We will have new seasons of the history of financial markets, which is kind of a separate show, but it's us sort of just going through different decades. oh that's true financial markets um and we're trying to do some quarterly roundtable stuff with seven investing as well i think we'll flip-flop between their podcast and ours

um we haven't decided a full schedule not yet but we still want to do something recurring with them because uh i don't know we both want to see each other do well so yeah so that's a bit of a life update for us uh if you are a recurring listener or maybe even if this is your first time thank Thank you guys for making it fun for us. But now, now for the more fun discussion. Last year, you posed the question, a poll on Twitter, who would have better returns, Berkshire B shares or the fan mag, I guess, index, which is Facebook, Amazon, Netflix, Microsoft, Apple, Google. Am I getting that right? Correct.

And then at the time, the poll, 81% of people chose fan mag, 19% chose Berkshire. who has been right so far. Yeah. So we're only one year in and I have to say it is pretty darn close. This was what I calculated on this date. So a week from now, it could be slightly different, but the total fan mag equal weighted. So I just did equal weighting 16.67% had the 2021 year to date performance of each of those. And then, you know, weighted it on that 16.67% if there's contributions and then summed them up fan mag equal weighted has done 31.2 percent this year and berkshire b shares are up 31.4 percent this year so really really close pretty much a wash uh you know basically excuse me basically equal if you round down to 31 percent uh so i

think the jury's still out um but yeah and we've got what two more years two more years yeah i I think now I would be less confident in Berkshire after seeing some of the numbers that some of the fan mag companies had put up and the valuations of those, well, Microsoft and Google's have expanded, but some of the other valuations have come down. So I don't think it's going to be, I would be less confident in Berkshire from now just because I don't know, they haven't maybe done much. They haven't accelerated the buyback too much,

but I don't know that company that well, but either way, I'm still excited to see. And so far the 80%, I guess, technically i've been wrong but it's basically wash okay now we're gonna review our 2021 predictions um and i can say confidently that i got i think i think i got mine right no i'd say i got mine wrong it's kind of hard to tell yeah we had the same prediction uh last year so if you go back and listen to the show from a year ago uh we both thought that the ev the electric vehicle uh industry i guess was in a bubble and we thought it was going to burst um and did you say you ran some numbers on it to check i was just looking at all the different popular companies i mean

stuff like tesla and rivian rivian just went public so it's hard to compare but they are still sky high there's a few others that are still lucid lucid still i believe is up like 100 this year so we were totally wrong on those but there are a lot of others that are down like 70 this here like uh lordstown uh nicola might be down like 40 and it was already down quite a bit fisker quantum scape stuff like that so it was a mix i'd give us maybe we were 30 right because i still don't think the bubble if it is there and i think a lot of people i mean it's basically consensus now that it's the bubble and it's just kind of when is it going to burst i i think we're wrong i don't think it's burst you know what i mean like we're definitely wrong in that regard

It will probably fizzle out one company at a time over the next 10 years. Something's going to happen. Either these companies are going to be amazing and they're going to grow at an astounding rate or the bubble is going to burst. And I'll be interested to see what happens. Okay. And what was your second prediction? My second prediction goes back to that poll I did, which was Berkshire Hathaway will outperform FanMeg in 2021. won. Again, this is pretty boring. It was basically a wash, but technically I guess I was right by 0.2%. I don't think that's a victory or what would you call that? Just

basically a wash. Get my money back. Yeah. My second prediction was that the end of COVID would mark the initiation of a roaring 20s like period. Do you think this is more of something you want it to happen or i listened back to it and this this was basically just me hoping it would happen um and i would not say it's totally up i mean i'm putting end of covet in air quotes because it hasn't that part hasn't happened yet so i have no way of saying that this is correct so i'm going to go ahead and say wrong on that one wrong yeah re-up it for 2022 maybe or is that a teaser or no that's not in your top not in your top five yeah it's yeah i don't know it was pretty boring uh predictions last year i think we were a bit burned out after doing 25 stocks at christmas

so i remember kind of rushing through this and not having uh i think we got better more thought out predictions this year hopefully all right best podcast episode tv show and book that you read in 2021 okay what uh what should i start with first go podcast episodes okay this one and i couldn't go back uh if you follow our newsletter which is just on substack that we we send out or i do it i send out the every sunday a recap of the week and uh i link to some stuff that i like and one of them is a good listen quote unquote so that's a podcast and i went through some of the recent ones sorry i didn't go all the way back all through all 52 but there was one under uh what's the show called acquired which i think a lot of people know of it's a show that's way more popular than ours

and it was with nzs capital we've had someone from on there on here before john bathgate who was talking semiconductors but they went way deeper than we did on this episode and they had another person from their company slash fund uh what was his name brinton uh then they talked complexity investing which is kind of their big theme and semiconductors i learned a lot from it and it goes for about an hour and 44 minutes i really enjoyed it it was out in november so it's not stale yet uh i would definitely recommend for that for anyone who is interested in i i wouldn't even say us all anyone that's interested in individual stocks will like this one okay for me uh i came across the wall street journal podcast this year uh what one is it uh well it

it's called the journal the one with the orange the journal it's a co-production between wall Wall Street Journal and Gimlet Media. And this is obviously, it's 100% recency bias. But the episode that they had that's called The Fallout from Turkey's Economic Experiment, I thought was pretty fascinating because they had a reporter that had been there and kind of had boots on the ground research. So I really enjoyed that episode. There were a lot of other episodes as well. I thought Bill Brewster's conversation with David Gardner was a lot of fun to listen to. Yeah. And it's hard to remember though, because these are all recent in the last few months with podcasts, the shelf life, it's hard to remember. It is. Yeah. It's low shelf life. But the other

one that I would say, I mean, this was the most listened to podcast for me was the Berkshire annual meetings. But it's hard. They all kind of blend together. So there isn't really one that stuck out or at least one episode, but it's just hours of great information, especially him from the nineties Buffett in the nineties was, uh, those were really fun to listen to. Um, so that was kind of my favorite podcast, I guess you could say, but they should, you got to speed that one up though. It's like he go, he sits there and says, um, a lot. If you know, he takes a sermon, he takes, oh man, he takes a long time to answer, but usually it's good stuff. It is. Uh, all right. Favorite TV show. I think I know what you're going to say, but

uh succession um i mean that's anyone in if you're listening to the show you like investing you probably like the financial world you gotta watch this show on hbo max it's fantastic yeah it was uh my favorite show as well season two was better though season three was good or still season three is still great but i think season two is definitely a lot better i thought they were both i thought season three was pretty good now see it rewatch season two i mean think about The Boat, The Ending. The last episode of season two is definitely the best episode of the series. Okay. Favorite book that you read? Yeah. So I try to just focus this on one that people would be interested in for investing.

And one that is more historical that was pretty easy read is called Bubble in the Sun. It outlines the bubble in Florida in real estate in 1925 to 1929, right during the roaring 20s, the great market bubble during that time. And an underrated part of it was the real estate bubble. I can't remember a lot of the exact details because I read it back in the spring, but I mean, you had Charles Ponzi, literally Charles Ponzi himself down there. They would send, yeah, it's called bubble in the sun. You'll be able to find it, just search it. They would send out flyers and I have to remember the details, but they would send out flyers across the nation and just tell people there's like guaranteed returns if you sent them money for

these land plots in florida and they'd get down there and it would just be this little swampy area and people it was it was a gigantic bubble um and yeah it's exciting miami you know people yeah it's reminiscent of what happened in you know 2007 too as well um but yeah interesting uh i went with and this is not nearly as niche but uh snowball which it was just my first time yeah what's that yeah that's uh that's probably something no one's ever heard of it uh yeah i i was looking back to the books i've read and you know what a little pat on my back i did a little more reading this year than i did last year uh which felt there you go okay but snowball was good it's if you're interested in buffett like most people are uh it's fun to kind of go through

his entire life yeah don't get discouraged after the first hundred pages you gotta get through those and then no it really heats up when they had the solomon brothers crisis i think that was the most exciting part of the book for me the second one uh and this was us talking our book or this is me talking our book um is the spotify play i thought that was a pretty good book pretty good read about the early days of spotify and kind of how it was built uh the last one for me i know i'm using i'm using three and one yeah i'm gonna go amazon unbound with a third they were all pretty close uh but i thought that was another good one um and those are all kind of business related so amazon about yeah it's good definitely good um all right anything else nope

you cheated you had three i don't know i know i know i could have picked one anyway all right uh we're gonna have a quick ad break and then we got our 2022 predictions on the second half this episode is brought to you by lakinta by windham here you are miles from home and ready to start your vacation. Good thing you're staying at La Quinta by Wyndham. They have free high-speed Wi-Fi to stream all your favorite movies. And in the morning, get fresh waffles with their free bright side breakfast. Or squeeze in a workout at their fitness center.

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Restrictions apply. Welcome back in. Brett, I'm going to let you go first. You have your five predictions. Okay. I'll say them and then we alternate or should we, uh, let's alternate. So in case we steal any, you know, uh, and these are in, uh, they're not in any confidence order.

First one I have, and this one's a bit complicated because there's two things in here. So inflation will be lower than the 6.8% number. It is right now for the full year on average, you know, they take the monthlies, but at the end of the year, the 10 year U S treasury will be higher than it is right now. at 1.375%. What are your thoughts on that one? I was thinking about going with an inflation one as well. And yeah, I agree with both those points. Yeah. I should say first, my prediction is that four out of the five of these will be wrong. So don't take these seriously. They're just kind of fun. There's no way we're investing after these, but they're just kind of predictions you might

talk about at the bar. Yeah. It's a prediction that our predictions will be wrong. Yeah. Yeah. I agree with both of those. I think inflation stuff. It's it's so strange because there's obviously no hyperinflation. Like you, I'm a consumer. I know. Like, I go to the grocery store. I order food.

Yeah. I think you always see the people tweeting out this stuff and you can say, Oh, where did this person live? Oh, yeah. What is it, New York or San Francisco? OK, yeah. I mean, well, you guys get paid to earn a year. I think we're OK.

like in any other spot i'm sure there's inflation out there but um i don't know i don't want to be some fat apologist but that's kind of what i am some things have gone up in price they have yeah uh but i think it's going to revert back i mean it seems to me and again there's a lot of variables here like it's a supply chain thing and it'll be solved after the holiday season semiconductors might take a little longer time because there's a big lag time and some of the other stuff might have a bigger lag time but i think that i don't know it goes back down to the two three percent range well there's a lot of variance there and then the 10-year treasury though is is really it's it's manipulated quote unquote by the federal reserve because of their uh stimulus program that

they're doing so i think once that stops the 10-year-old rise to a more normalized rate and we'll see a convergence uh of inflation and the 10-year treasury hopefully at something more normal around two or 3%, something like that. That'd be a deal. But I know that's probably not going to happen. Okay. That plays well into my, one of my predictions, which is we will still be talking about supply chain issues in a year. Even, but they might. Yeah. Even if it's like. Labor shortages, I think will still exist in a year. I think,

I mean, unless that's fit, I haven't really kept up on that information, but I hear people talk about it all the time. So I think, I think it's still going to be around. I think the shipping stuff is, is a chronic problem. And I heard Jake Taylor kind of talking about it as sort of this, and there was another person that's more, uh, I think familiar with the shipping business. Um, and it's like, he was saying like, no one's in charge. Like there's, you can't, it's not a problem that can be easily fixed.

And Jake Taylor kind of referred to it as a complex adaptive system. And they tried to like put a task force on it. And they said it's like trying to put a minimum speed limit sign on the 405 highway in California. Like, it's not going to solve traffic. It's a very tough problem to solve, and there's no one really in charge. And apparently the ports aren't communicating. So it's like the congestion is tied to individual ports. I think it's a problem that will persist at least for the next year.

I'm going to take the other side of that now that arguments sound logical, but I'm going to say it's not going to be a problem by the end of the year. see who's right i i'm gonna take the other side i think maybe this is wishful thinking it'll be solved in 2022 uh you got a lot of brain power on that right now it is a very complicated issue some of the predictions are putting it all the way out to 2023 2024. yeah but i don't think anyone knows anything so they don't you know what i mean yeah so uh i don't know why i feel this but i just have a feeling it's probably wrong but i have it just feels like we oversupplied ourselves and then one thing that gets me is that chart of how retail sales just totally went up uh five years above trend which that helped overclock the ports i don't think that can continue it i don't think

anyone and savings rates are back down below 10 so no one has any money to spend anymore like they did have that glut of spending after the pandemic start so i think those will be helpful factors but again there are so many factors i'm not too confident in that assertion okay um all right uh what's your next one okay i might be stealing this from you because we talked about this before the show uh the value factor will outperform the growth factor in 2022 even after this little December sell-off we're going through that has hit the growth factor harder. Okay. Now, one of my predictions is that the growth factor will outperform the value factor in 2022. Nice. So, we're already at odds here.

So, should we put a bet on this? Yeah. One share of the growth index or one share of the value index? I don't want to own either, so… I'll get the value. How about one share of Boston Omaha? Something that is not in our fund that we're both both interested in and is at a small share price of about $25 a share. So that's easy enough. All right. Sure. Now the reason I'm going to give some justification for my thesis, which is fan fan mag fan mag plus Nvidia accounts for more than 40% of the

growth ETF, the Russell I shares or I shares Russell 1000 growth, whatever it is. Do you think Nvidia is a drag or a positive there? No, I haven't looked into Nvidia that much. So I, I'm not going to have any sort of statement on NVIDIA, but the other ones, every time I look at those companies individually, I have a hard time saying that they're expensive

or that they're overvalued. Yeah. And if the thesis, if the growth ETF performance is pretty much all based on the FANMAG, I don't think value is going to be able to outperform it. Yeah. I think that could happen.

which which makes me think every time why i'm not just long fan mag yeah the one thing um i think that could happen but the one thing that gets me is the other 60 percent uh less confident in as a whole i know there's probably individual pockets of those right now and then the top heaviness makes me a bit concerned that if one of them falls and disappoints like if one totally i I don't know if it's hard to see in vision, but you know, some things you can't envision and stuff's unpredictable, but if something, if one of the big companies with, with the other one's success, it's hard to tell.

I think having one of those not do well or totally disappoint would, I mean, that's the, the top heaviness. It just makes it tough. I don't know. I mean, do you have Facebook totally disappoint over the last year? No, I'm looking at the numbers all. i did the numbers for the berkshire thing and all of them were positive worst performer amazon six percent netflix nine percent facebook twenty percent uh let's go up to apple thirty five thirty six percent microsoft forty nine percent google sixty five percent although google's still

really cheap they've just done really really well as a business this year so yeah all right if I'm Boston, Omaha share. That's the bet. All right. I'm good with that. We'll revisit it in 2022. I'm good with that. Or 2020, Jan 1, 2023. Yeah. All right. What's your third one?

Third one. No, did you, or you're taking it? Yeah, because mine's the growth. Third one, and this ties into the growth and value stuff, but the ARK Innovation ETF will finish the year in 2022 lower than its current price of $95 a share. What are your thoughts on that? You know, I had one written in here that they're AUM. across all of their funds will sink below $20 billion.

I wouldn't wish that on anyone, though. That one's tough, right? No, it wasn't really. It wasn't like saying all the... You know, I looked at the ARK Innovation ETF and a lot of those companies I really like. So it's not some bash. And that's where a lot of their AUM is based.

But I think they're going to have a flood of redemptions because I think a lot of their ETF investors look at it retrospectively. And when they see like down 20% year to date, it might be less exciting to invest in that yeah i still yeah let's look at their top holdings tesla roku teledoc zoom coinbase unity spotify twilio exact sciences and telia i don't know what those last two are i'm sure they're biotech or something i like some of those some of those valuations have come down a bit i still just don't understand the tesla part it's just such a high waiting

and yeah i have a bias against them i have a percentage of it yeah it has come down as a percentage of it it's down to seven point something percent uh but wasn't it like 12 percent at one point yeah but my just thoughts are if it's not it's just a like and it's it's not if anything on the business qualities i think roku's a quality business might be a premium valuation zoom's a fine business premium valuation twillio's fine business premium valuation i it's just a bold prediction with no it's just kind of a feeling that you know the valuations will come back more from uh the growth stuff will kind of reconverge with the average market multiple okay all right yeah i'll uh i guess we'll see i mean these are supposed to

be bold predictions so yeah i if it doesn't happen don't say i gotcha i hope anyone that has money in arc innovation etf uh does well we don't want anyone to lose money yes uh now i'm getting into my bold prediction and i made this prediction two years ago uh i made the prediction that we wouldn't see a 30 drawdown uh for the entire deck our uh you're gonna re-up this and two months in we saw more than a 30 drawdown so i'm re-upping it and maybe partially so that we can get a 30 drawdown and get a whole bunch of cheap prices that'd be great uh and if you're looking if you're looking for a uh bearish indicator i'm re-upping this now so what's what is it over this next year there won't be a 30 drawdown over the next over the next decade there won't be a 30 drawdown we

will revisit next year and if we're one out of eight years away you know that's that's check the box uh and i'm gonna keep re-upping it as long as it still works all right and uh you're selling volatility yeah yeah so that's my goal prediction and it's 30 drawdown in the s p 500 or the spy yeah the the spy spider as they call it i don't know what everyone has the i don't know why it's always spy it's just such a simple index but that's a story for another day what's your fourth one fourth one now we talked with uh bennett tomlin about this go listen to that episode if you want to know what tether is because it's a big part of the financial industry that no one really knows about but uh the tether this is my prediction is that the tether and i'll quote

this is saying potential fraud scheme because we don't want to say anything for sure there's just a lot of clues around and we're not exactly sure here and it saves us from looking bad in the future it saves us from looking bad the potential fraud scheme does not get unwound in 2022. i don't think there's any i don't see any reason why anyone will care yet there is an sec investigation into them right there is but there's been that stuff's been happening for years i don't don't, I just don't see any reason why it's, I personally think it's a bit sketchy what they're doing and it smells fishy, but it's one of those things where I'm like, hmm, what's going to cause it to collapse now if the narrative's all with them? Everyone loves crypto. Everyone's going

to keep buying. I guess there would have to be a huge narrative shift in crypto or something like that. But until someone figures out what they're doing at a level where it matters, I don't think they can do anything. And one thing that I heard is that the SEC never likes to do anything until the market price collapses on something. Because when the market price collapses on a fraud or something like that, say Enron, they can't be blamed because if they come out and say something's fraudulent and the stock's super high, in Tether's case, crypto stuff is super high and it totally collapses after they make that fraud announcement, people could say the SEC or whoever caused it, even though it was just them exposing them for fraud.

So I don't think, I don't know. This one, obviously not confident, but I don't think it's going to happen in 2022. I don't see any catalyst, but it's an industry I'm not an expert on. So. Okay. My fourth one, and I don't know how to measure this, but I think investors will look back on Square's purchase of Afterpay as one of the most overpriced acquisitions of all time. I think that I concur with that. That's a good one. Didn't think of that one. I totally agree. And I went and looked back at some of the worst acquisitions of all time, just to make sure that I wasn't being crazy. And aside from AOL, Time Warner, I guess that may have been, was that more of a merger?

Yeah. Merger, I guess, but still somewhat, you know. This is going to be right up there in the annals of history as one of the worst. And I say that as a person that loves the cash app business. Yeah, you know what? I was just on Venmo. Apps, piece of shit. I think BNPL was the most overhyped kind of trend of all time. Yeah, I agree.

I don't get it. And I think after pay, yeah, I mean, $30 billion. Now, if you look at it, I guess I don't know if the acquisition closed, but if Square bought with stock, whenever it was at... I guess it's less than $29 billion now. Block. You got to call them Block. What? I'm never calling them Block. I'm not going to do that. You got to call them Block. I mean, that's their name now.

That's my fourth. What's your last one? Fifth. Now, this one should be fun. I think Google finishes the year as the largest company in the world. in 2022. Valuation is decently low. It's 1.8 trillion. Apple's probably 2.7, probably 2.6 trillion now. Microsoft's like 2.5 trillion. Those are the only two they have to surpass. I think this is how it happens. Apple is the tougher one because the valuation is not as premium as Microsoft. Apple gets some struggles with the China relationship. I think there could be some stuff that happens there with the geopolitical stuff and Apple's so attached

that market there could be some things happening there the semiconductor supply shortage if that doesn't get resolved there could be some delays there although they have the the priority spot on tsmc so i'm not sure if that'll affect it but i don't uh i don't know i think there's just a i would be less confident apple's business finishes the year finishes the year yeah and microsoft it probably have to just be valuation stuff because it's such a steady subscription business where that comes down. But Google, yeah, I think they finished the year as the largest company in the world. I want to say I'm less confident in this one, but I definitely think it's possible, especially when they're training at and looking at the basic stuff, EV to EBITDA of like 20.

And again, call me out when I'm wrong. I know everyone loves apples. My fifth one, there will be less companies brought to the public markets in 2022 than there were in 2021. I don't know if that's that bold. Yeah, cop out. Yeah, it's easy. I think the public listing market is going to sour over the coming year, whether it's IPOs, SPACs, direct listings are kind of rare. But anyway, companies coming public, here's why I say it. There's been a lot of bad investments made in IPOs recently. There's been a lot of negative returns after people bought at the IPO. I think that's going to leave a stain on future IPOs, which means there's going to be less demand and less companies are going to want to take their companies public in

that kind of a market. Yeah. I don't think that's bold at all. I think that's already happening. It's definitely feels like the pace has slowed, but I don't have any numbers. Which is unfortunate because I remember like a few years ago, we were talking about how we wanted companies to stop saying private for so long. Now they haven't, they haven't. And it It turns out most of them don't look that great. They could have stayed private. Yeah. The financials have not looked great on a lot of them, but I don't know.

Never mind. I was going to say, can you still take like a venture funding round as a public company? Is that possible? No, I don't. That wouldn't. You can't do like a private round of sorts? It's not private because you have to, how are they going to get it? It's either debt or stock.

If they have the stock, public stock, you can have half the stock private. have a private debt round though right you could like i mean there's no difference because the debt doesn't have any i guess that makes sense yeah i was just thinking about that i'm like yeah i guess it makes sense that you don't want uh but vcs could make a invest i mean if you had a giant vc fund it could be a common stock offering uh buy some common stock from a public company yeah i guess but then you wouldn't get that artificial liquidity or artificial scarcity you know all right uh top three not so deep dives for the year uh what's your third third i'm gonna go with upstart this is from march but that was a good episode it's hard to say because we're trying

to yeah uh we call it deep dive then uh it was the same format you know not so deep dive was i mean it was under that same form i wish i had known that we were taking those but uh okay same format. Sorry. Upstart would be on there for me. Why don't you go through all of your three? Well, I'm going to find some recent ones. All right. Three, yeah. Upstart, I don't know. It's a very interesting business. I know it's a bit of a controversial stock, which makes it fun. I don't have any strong takes on it. I know Brad, who did the show with us, became a pretty big bull after researching the company. And the stock is, I think, going to be the top performer of the year or maybe since the IPO in December of last year. So yeah. And fun. Listen, uh, I would

definitely get into that one for the new, they kind of invented their new, a new business model, sort of, they're trying to disrupt the FICO score. It's very interesting what they're trying to do. Second one will be Vimeo. I thought that was a good episode as well. Interesting business. Um, I say that because the stock kind of collapsed like 60% after it's spinoff from a IAC. So the valuation got a lot better. And it's one I might have to revisit. I don't know, because the business looks interesting to me. Looking at it, I thought it looked like a good business. Obviously, valuation, it's hard to look at something when it's at 20 times sales and be attracted to the stock price. But I thought the business looked promising. And they're also doing something

interesting and trying to build out their own, like a whole new industry of video solutions for companies yeah it's a little my only knock with that one and i did i enjoyed that one as well and part of it is the whole like it came out of iac so did match group so did uh a lot of other stuff they have a good track record what's the holding what's is it booking hold no it was expedia it was expedia but they formed it into like a whole uh group of like travel companies it wasn't booking but it was something i i don't know they have a good track record and so it automatically kind of attracts you to the company i thought that was a good one i don't i think it's on for me it's kind of unclear uh they haven't done a good enough job defining the product for

customers it's kind of maybe it's because they had the pivot away from their youtube like solution uh but it was hard to like like i didn't know what they did going into it well i don't know they're growing pretty quickly so i think customers are uh they're doing fine but that's a conversation uh for another day if we revisit we've actually said uh spoiler for 2022 someone said we should do revisits i think we might try to do those that could be one to revisit like revisit stocks that we talked about a year ago then we might try to do that uh but that we haven't done any hard schedule on that so no promises first one was robin hood right at the ipo um i say this a bit to brag because we basically faded the ipo and so many people

are bullish on this and i don't know if that many people were bullish i saw a lot of people that like it maybe i i don't know a lot of people like it um he ended up right so we ended up right that's why i like it and uh but the show itself was good and uh the company is so interesting and their business model, reliance on crypto. There's a lot of various variables at play that I'm not even, I would never short, we don't short, and I don't think I'd ever go long Robinhood.

It'll be very interesting to watch what they do over the coming years because they're so integral to the retail investment landscape and how they influence what people invest in, their business model is interesting, all that good stuff. It's down more than 50% from its IPO,

well 48 i guess from its ipo and i want to say like 80 from its highs yeah no yeah but you know that was that was probably one of the easier calls it felt like they went they went public at the time of like peak trading yeah i was participating yeah they had a guy down on dogecoin or they missed shiba inu it's just interesting that that's their business model um i don't know i just found that one fascinating it was fun to research i i think it would have been fun to listen to yeah and it's a very it's a business that everyone is relating to i'm sure there's a ton of users and to understand how that works i think it's pretty fascinating yeah um my third favorite was matterport i liked uh going through that business and especially how it plays

into the whole you know metaverse trend that's going on now um and it's just kind of it's really interesting technology so looking into it was fun um evaluation i thought it was crazy when we looked at it but i think it's uh it turned a bit sense yeah it turned into a bit of a meme it's like up or down nine percent a day or ten percent a day yeah it's up a lot i don't know interesting technology for sure it's fun fun to watch my second one my second favorite was latch uh it's a company we both i think like uh and it's it's doorknob technology in a sense uh but they it's basically like security and uh security software for big apartments and i kind of define entrance stop uh it replaces your key too yeah and so uh you can just if the the customer facing part

if we're not sort of an administrator at a giant apartment complex is you have an app and it's how you get in the door. You can just like put your phone up next to your door lock and you get in. So pretty convenient, pretty cool. And then my top one is Wise. Recent too. The multi-currency account. And it's, I think they are, we kind of like the remittance space or I kind of like the men's space. And they seem like they have sort of the most unique strategy. I know our friend Luis Sanchez has likened it to PayPal in the early days. And I think that's kind of an app comparison. They are trying to be the low-cost provider and trying to make money in alternative ways. So they're trying to reduce the cost of cross-border payments. And I think it's pretty

cool. And it's well-run companies also, like management. Founder-led. Yeah. And we're not saying these aren't like recommendations or anything. These are basically the ones that we're most interested to analyze ourselves. So it's probably the ones that people would be most interested to listen to. And why is this a fascinating business? The way they're trying to reduce fees for international transfers. I mean, it's one of those non-zero-sum ones throwing back to the NZS Capital where they're serving everyone and helping everyone while also taking a tiny slice of the pie through their technology they've built out. And it's fascinating to see if they're ever going to bring international transfer fees down to zero like their goal is.

It's kind of, it's a bold claim, but it's like this directional arrow that they can go after that's kind of like you're rooting for them because you want international transfers to be free. Yeah, 100%. Anything else or is that going to do it for the show? I think that'll do it. Hopefully, as you know, stick around for the next year. I know that we put out two weeks, so not everyone listens to every episode, but I hope you enjoy the catalog. Take a look back some of the shows you might be interested in this year there's a lot of stocks that we covered that are probably down like 30 to 50 percent now so revisit could be fun yeah we are hoping to get some nice deep dive out deep dives out with some analysts uh yeah yeah i don't know if you have

any companies you want us to look at or anything like that feel free to let us know hit the hit us up on the email yeah podcast gmail.com oh before we go uh please if you're on spotify feel free to leave us a rating uh you can one star five star whatever i guess we'd prefer it's right on the home page you might not look this up so you have to look up the podcast in your search bar right on the home page there will be a little star thing it's kind of hard to see they just launched it if you leave us a five star review it'll help us out okay uh that's much appreciated and uh thank you guys for a fun year here's to 2022 without further ado let's get to the disclosure. Brett and I are not financial advisors. Anything we say or discuss here

on Chit Chat Money is not formal advice or recommendation. We are, however, general partners at Arch Capital, so clients may have positions in the securities discussed in this podcast. Thank you all for listening. We'll see you next time.