Chit Chat Stocks - 5 Stock Market Predictions For 2025

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Starting point is 00:00:47 Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM media group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. Welcome in. This is another edition of the Chit Chat Stocks podcast. We actually have our special annual review, 2024 annual review, 2025 predictions episode. I believe this one, given how the calendar works out and our weekly release schedule, is coming out on New Year's Day. So welcome to the new year, everyone. We are recording this, and I hope our takes

Starting point is 00:01:45 of this episode don't age so poorly that they are wrong in two weeks. Well, we are recording this on December 19th. So if anything happens between now and then that we aren't talking about, well, we can't time travel. So we're going to be talking about our best performing stocks of 2024, also our worst performing stocks, kind of go through our big winners and losers in our personal portfolios. We're going to talk through our 2024 predictions, what we got right, what we got wrong. Spoiler alert. A lot of stuff got lost. Well, we were betting against the Magnificent Seven. A lot of stuff did go wrong. We're going to talk our 2025 hot takes, some of the perpetual bets we have out there, the Uber versus Airbnb for longtime listeners. We have

Starting point is 00:02:30 that internal competition going on here, Berkshire versus FanMag. And we're going to review our favorite podcast episodes from Chit Chat Stocks that we think people should go back and listen to as we get into the 2025 year and keep this thing going. So, Ryan, welcome into the show. Anything for the listeners before we get started on this first segment here? Well, all our takes, spoiler alert, all our takes were wrong last year. So if you're looking for- I got the closest, though.

Starting point is 00:03:04 One of mine got somewhat close. If you're looking for a contraindicator, if you need something to bet against, stick around because we've got some predictions for 2025 that uh might just all be wrong again so uh yeah it really does show how hard it is to invest on a quarterly basis or trade like that it's just a game that is so hard to play and we're pretty bad at it but it's fun to make predictions if without your money behind it anyways yeah this actually brings me back to when we did the show 2020 my prediction was bold that's the whole point is bold predictions and it was that we would not see a 25 broad market drawdown for the entire decade and

Starting point is 00:03:57 that lasted three months and the indices dropped by 30 i thought the fed was those year at the end of 2021 you said that no no going into 20 like when covet hit the the broad market collapsed oh yeah that was a long time ago to be fair you were like 20 years old at the time so you know you can say it's true that's true okay let's uh i guess we want to kick things off we're going to be talking through our best performing and worst performing stocks of the year and not only just naming them, but kind of what went right and whether or not it's something we can replicate with some new stocks, I guess. 2024, Brett, what was your best performing stock? Yeah, let's get into mine first. It is Coupang. Wrote it up as a stock I was adding to at $14.25

Starting point is 00:04:51 in January of 2024. Stock's at $22.56 today, or it was at the close yesterday. So a 58% gain from there, about a 58% gain in 2024. If I look at what I said in my personal journal from January 31st of this year, I essentially said it's a high quality business with an expanding moat, led by one of the best business leaders of our generation, or one of the best young business leaders of our generation and bomb suit kim i said their prime like rocket wow subscription service locks in customers and provides them with incredible value proposition free shipping discounts on grocery fresh grocery delivery discounts on coupon eats access to their video streaming service and i didn't really have any short-term catalysts i guess i talked about the

Starting point is 00:05:49 successful Taiwan expansion and the fact that I was very confident that their international revenue could just grow at a very quick pace for a long time. We're starting to see that. So maybe that's part of the deal here. But I also, I really think given where it was at the time, a $21 billion enterprise value, I trusted the unit economics. I trusted looking at coupon versus say Amazon's estimates of how their e-commerce operation can be profitable in the United States in a richer market. And I thought that if coupon can get anywhere close to that, then the stock is incredibly cheap. And so far it seems to be working out. Yeah, that was one of my best performers as well. And of the ones that have performed well for me, this is maybe the one that

Starting point is 00:06:39 had the least change i guess in the thesis between 2024 and 2025 like the reasons i was optimistic about coupon a year ago are the same reasons i'm optimistic about it today there wasn't that much change in the business other than them acquiring uh what's it called the luxury yeah and that's nice that that was a distressed essentially play and kind of no downside it's only a quarter's worth of cash flow you know they can get it right could be a big upside especially with how you know dominant luxury and fashion is in the south korean market what's nice about coupon is that it is just a great thing about one where you are right about a moat expanding is that you have no worries about oh should i sell this now i'm just it's so nice just having

Starting point is 00:07:33 something you're extremely comfortable with just sitting on in your portfolio you have no worries about it each quarter they do fine the moats expanding and versus our cost basis there's there's nothing to worry about as as of now that could be a big jinx for 2025 who knows you know anything can happen but it's not something that i go oh it's up 50 i should really sell that it's a good thing about not being a you know deep value play yeah the the moat expansion i think generally speaking mode expansions happen just through gradual execution so it's not the kind of thing where you constantly feel like you have to make a decision uh it's just easy to hold and that was fortunately a good year for us with that one what was your i guess we have the same

Starting point is 00:08:21 worst performing one so why don't i go to my best yeah this actually surprised me because So I went to my Schwab account, which is where I still hold most of my stocks, and I did not know what my best performing stock was. So I went, checked, and I thought I had sold this company, but apparently my order did not get filled, and I never went back and checked. Nerdy, we were doing our small cap of the week segment. We do that every week on our Power Hours, or at least we've been doing it this year. and one of the companies was this online tutoring marketplace and it really wasn't a very good business and still isn't in my opinion a very good business it's kind of on the cusp of profitability and growth is stagnating but it was trading really really cheap i think it was basically

Starting point is 00:09:10 a defunct spac and the ceo has acquired i believe it's like north of 20 percent of the overall company, like the whole company in the open market in a matter of a few months. So I did not sell it. And I guess it's up 70% in a few months. So on a percentage basis, that is my best performer. And for no business performance reasons, that is my best performing stock, which just goes to show in the short term, like Brett said, very unpredictable what can happen. But you kind of read the corporate dark arts a little bit there. with a small cap taking a small position there it's not something you made you know don't make something like that your entire portfolio but it was a idiosyncratic situation where you had an

Starting point is 00:10:04 insane amount of purchases in the open market have you sold it now did you decide to sell did you officially check if the order got filled uh no i i haven't sold it it's it's not going to get filled because i did like a limit order sale i can't remember what i did it must have been something i must have done it poorly like i got a week or something like that yeah my uh what do they say weakness and internal controls my personal weakness and internal controls yeah gotta clean it up yeah so now i think i'm just gonna let it sit he the ceo continues to just buy the company. It seems like he's somehow going to take this public company private all on his own. But let's talk worst stock performance of the year. I think we both got the same one

Starting point is 00:10:53 here. You want to talk about it? Yeah, it is Harbor Diversified. Take care of HRBR. And don't worry, everyone. It's not trading right now, so there's no way. I think you can actually sell it if you already own it, but you can't buy it at the time being, which is it's in a weird situation. The stock is down 57% year to date. I think this is a lesson in sizing risky positions accordingly. That's the note I made. Now, Harbor Diverse FUD is a microcap company that trades at about, I think, under their net cash on the balance sheet. Well, definitely right now, but even before this trading halt went through. And they're a regional airliner. they changed contracts from united to american airlines and that all these things happen because

Starting point is 00:11:44 the pandemic and the pilot shortage and stuff like that and they're kind of working through that and they had a dispute with united they thought they were they were going to get owed money by them went to trial they didn't get any of the money they had to restate some of their financial statements because of this but i think given how small of a company they are it's going to take them a while and they didn't file their annual report until i think it was last month so they're behind on their filings and given that they've become delinquent uh not tradable nt it's kind of next to the position in my brokerage account and given the fact that you can't like you know schwab ibkr public you can't trade it trade it there anymore or you can't buy shares you can

Starting point is 00:12:28 only sell it while the price has collapsed and i honestly still like holding it and waiting to see what the outcome is here but didn't do too well in 2024 yeah i mean this just goes to small caps right like i just talked about one small cap that's up a lot and nothing nothing positive has happened in the business with harp diversified i would say it's in a better place business-wise I think it's in a better place business-wise today than it was a year ago. They've got the new contract with – I think it's American. And it seems to be going well. They're kind of making progress there.

Starting point is 00:13:08 And it's probably today a cash flow generative business that is trading for less than the cash in the balance sheet. But with that said, it's down 50% from a cost basis because anything can happen with these illiquid securities. And there's almost two different games. There's the business performance and the stock performance. And with small caps, they can be completely uncorrelated due to really unforeseen factors. This is one of them. And you can't – I mean you really can't have a worse situation than everyone can sell and pretty much no one can buy. It's really hard to make a stock go up when that is the case.

Starting point is 00:13:47 So yeah, it's the biggest loser on paper. We'll see. We haven't sold it yet. I haven't realized those losses yet. Yeah. I'm hoping that the company bought back a lot of stock while these people are forced sellers. And I do think the stock is still cheap. it is one that you literally have a difficult, I can't buy anymore right now. So again, it's a

Starting point is 00:14:09 very risky position. It's one that it's a small percentage of the portfolio. Do not make this a large position. And it's one of those with a high risk, high reward. But you got to be, as Ryan mentioned, you got to take the... There's going to be some hits in micro cap and small cap land. There's going to be some big losers. You just got to accept them and know that if that's strategy and that's the type of stocks you want to own it's part of the game volatility yeah and this was a lesson totally learned the hard way for me on position sizing i i made this way too big of a position you're younger though you got you know money coming into the portfolio you can think of it that way it's not like you made it a big position when you're you got a seven figure

Starting point is 00:14:52 account right the idea part of it was that i was just gonna buy it in big one one big bulk so i didn't have to pay a huge commission on it and if i then i could just add to everything else over time but yeah it was a mistake i think with these things the way to go really especially high risk small caps is to make it a small position and if it does work out it'll become a big position over time but that's true and we're still going to be bag holders in 2025 unless they get updated on their filings and we'll see what happens there we have no idea what the numbers were in 2024 so that's how far behind they are on their filings but hey fingers crossed we'll see we'll see what happens they did i did see now this is some real bag holder digging

Starting point is 00:15:36 on their careers and hiring page they did have someone uh an accounting position that got filed and one of the things was your duties were going to be for this new role that they're hiring for is working with sec filings and filing 10 q's and 10 k's so i think that's a good sign that they're going to try to file it's hopeful it is hopeful that kind of makes me think someone left um that's true that is true but yeah um let's talk our 2024 takes that aged not too well you want to go through your first one here yeah so okay these were 2024 hot takes these are ones that we did at the end of 2023. And we said, look, Gutfield, we're not making any, say, investments based off of this. But this is what I think is going to happen in 2024. My first one was

Starting point is 00:16:32 that the big three tobacco stocks, Altria Group, British American Tobacco, and Philip Morris International, on an equal weighted basis will outperform the MAG-7 on an equal weighted basis in 2024 on a total return basis well i was wrong not because the tobacco stocks did bad i think overall they probably had pretty solid returns i should have the numbers there but i'd say you're pretty good no one would be upset with those returns but hey look mag seven absolutely crushed it my idea was that i think you copied in my notes from the time that mag seven had an average pe of 50 with only one of them likely under earning today i guess nvidia proved that incorrect but the tobacco stocks are trading pretty cheap i still like

Starting point is 00:17:22 over the long term i do like from the beginning of 2024 investing in those big three tobacco companies on an equal weighted basis i do think they will do well through the market cycles but in one year mag 7 if you're betting against mag 7 2024 there was really nothing that you could do and that was two of my takes yeah nvidia is a prime example of sometimes mr market is really dumb or mr you know people say oh mr market's having a bad mood or whatever that's a way to justify like stock price coming down sometimes mr market and wall street can see a lot further than me and have better data and have a better eye on the ball because if we look back at nvidia this time last year and i think the stock was up an insane amount in 2023 i would have said there's

Starting point is 00:18:18 absolutely no way it has a great year again in 2024 at least like the year it has and that was just better foresight i think from uh bigger investors so uh yeah i think that not to the detriment of the um tobacco stocks i think they did perform well but ultimately just goes to show how impressive and durable these magnificent seven businesses are because i think we've had bets against magnum the magnificent seven for like other than 2022 it seems like every other year yeah hey look 2022 is the best year to be optimistic about them i will say we were but they've been just each and every year throughout the pandemic they just nominate and dominate the one thing i'm starting to understand as an investor and this is something

Starting point is 00:19:09 that you kind of internalize the more experience you have it it's very difficult to and maybe it's just what i think i'm good at and bad at like i'm very bad at predicting the momentum trades and whether something's going to continue and if the momentum type stuff or the one where it's betting okay nvidia's revenue growth is going to keep accelerating and growing and growing and growing if that doesn't slow down i'm not really good at predicting when it's going to stop or if it's going to continue and when i try to fade that with some of these hot takes which it's not like i'm shorting them or anything usually doesn't work but what can be some with something i think i'm better at is like a three to five year time horizon and i think that mr market is not focused

Starting point is 00:20:00 on that yeah if you look at the fang companies i think for pretty much every one of them five years ago we would have said these will be better businesses or these will be bigger businesses revenue and profit wise in five years we would have been directionally correct but at any time for the most part we probably could have said it feels overvalued simultaneously so So yeah, short-term, it's hard. It's just – it is above my pay grade and really not a game I want to play. Let's hop to my first hot take, which is kind of along the same vein. In 2024, I predicted that U.S. Treasuries would outperform the Magnificent Seven.

Starting point is 00:20:43 I was wildly wrong, unfortunately. You probably got a decent return with Treasuries because – Yeah, what was it? One-year Treasury? and it was yielding what at the time it was yielding 4.8 all right let's check her out let's see if you got any well i guess you really just what he got in the return it's at 4.27 so i guess well it was one year so i guess you got the principal back anyway so the the appreciation price doesn't matter too much but hey maybe if it was a longer term one you got a little of that

Starting point is 00:21:14 gain too yeah all right how about your second hot take here would you say it was right or wrong i think it's wrong and the prediction was the cable tv bundle model will finally collapse my idea was that the model will break for the disney's the foxes the paramounts the warner brothers discoveries of the world and my prediction was that disney was about to start their true d2c application for sports leaving even less of an incentive for sports fans i guess that's gotten delayed i don't follow the company that well but they seem to always say well our d2c app is coming soon and then it never arrives and uh the one thing i had was the nba about to renegotiate its tv rights deal which i think was that part ended up being correct because one of

Starting point is 00:22:02 the chunks went to amazon and the regional sports networks were dead and i thought we're going to get picked up by some streamers or the rights for that were turns out people move slow in this industry and we still saw a decline i think traditional pay tv household but as long as the bundle still remains as an option for customers i think that prediction proves wrong i mean what's weird what fascinates me about this one though just to follow it is that what is the end game of these is it eventually over or is the bundle going to remain and just translate to the youtube tvs of the world yeah i think that is like if you are the content producers you license them to the youtube tvs

Starting point is 00:22:54 which are just literally seemingly the ctv bundle replicated all over again and in fact you're not saving that much money it does well you're saving money from the cable bundle but it is frustrating when the only reason to buy the virtual cable bundle is sports rights and you pay 80 something bucks a month for some sports thing that 95 of the channels you don't you don't care about is it is frustrating yeah i don't know how this shakes out for the losers but what i my prediction would be that this is good for the sports leagues like potential bidding wars between anyone that wants your content in the streaming world i think that's probably a good thing and you can even chop it up a little bit between you can give some to youtube some to amazon some to

Starting point is 00:23:46 uh your nbc's of the world peacock it's i mean disney probably probably revenue accretive yeah and you're going from okay the only reason people are buying this is you and then you have this fee associated with it that is a small percentage of the channels that are offered to okay hopefully people are just buying like your sports bundle or sports content stuff and the fee you can charge is is higher because you actually can charge for what the value people are going at because it's crazy that people are willing to pay 80 90 100 bucks a month and truly the only reason that they get it is the sports but the sports rights holders in the leagues are still getting it or the channel scheme like the espans the foxes they're only getting i don't

Starting point is 00:24:32 know what it is four or five six bucks yeah it's interesting what's your what's your second one i predicted that the consumer discretionary sector would have negative returns for the year Now, this ultimately was way wrong, but the best tracking ETF for the consumer discretionary sector is – last year at this time, Amazon was 22% of it. So that's a little unfair. Yeah, because it's cloud and AI. Yeah. I don't know if it would have been totally right, but the other big companies that make that up are Starbucks, rough year. McDonald's, a little bit of multiple compression, I believe, also had a rough year. Comp sales started to decline. Nike, tough year. A lot of the big restaurants saw significant sales decline. And I think directionally, and in terms of the business performance, you look at the consumer discretionary category, especially the ones that are not value retailers, and they had a really tough time in 2024. But ultimately, yeah, it did not have negative returns at all.

Starting point is 00:25:44 At the middle of this year and in the summer, in late summer, this looks like a really good bet, excluding that ETF that includes a tech company. Starbucks, McDonald's, Nike, all down a lot. They've recovered a bit throughout the fall and the early winter here. But hey, I think that's partially right. I give you maybe your money back if it was a betting market. Yeah, I'll take it. All right. How about your third one here?

Starting point is 00:26:12 So this one was financials will be the best performing sector of 2024. My reasoning at the time is that generally stable interest rates mean they are likely under earning. And I guess that ended up being correct. Interest rates have declined a little bit, so they've been fairly stable in 2024. Second idea was that the consumer is fine, even though sentiment around the consumer is low. That ended up being correct, and that they're all trading at a discounted PE because of that. People are just really scared about these companies.

Starting point is 00:26:44 Well, what do we got here? Financial services up 27% year-to-date, but lost out to consumer cyclical, technology. communication services and i think that's it what's crazy is that when we did that show that was when we had stopped uh the investment fund and had it was like a strangely long period before we got our money back from just all the compliance and regulation stuff and i was getting ready for my personal portfolio frustratingly at the time i was like okay american express and ally I think are pretty attractive. This is in late 2023.

Starting point is 00:27:26 And then before I got my money back, they jumped a ton. So this, I think, prediction looked very right at the start of this year. But now it's kind of evened out as a lot of these tech communications and consumer stocks have caught up. Yeah, the timing on that was unfortunate. I would give you your money back for this one as well. I mean, it technically was not the best performing sector, but it was up there. One of the top four, it looks like. So good performance.

Starting point is 00:27:59 Yeah, we don't want to be the people that say, well, it's just, you know, if we exclude the bubble, it's like, okay, you know, you can't do that. It's, you know, the meme when there's one guy on the left up a thousand percent and it's like, oh, I'm doing so well. And then the angry guy at the right, just wait, just wait. You know, the crash is coming. It's like, all right, well, I'll still be beating you. Yeah, that's true. All right, my third one here could not have been more wrong, I think. Match Group gets acquired or is up 50% by year end.

Starting point is 00:28:32 I'm actually not exactly sure what the price was when I made this prediction, but it's not up 50% in the last year. No, I'm seeing at the start of the year, Match Group is about $36.50, and today we're at $31.60. sense when was it early was it was it spring i think we both decided to turn away from match group break up with the dating app conglomerate and not not invest in it anymore yeah i don't know if it was just chronic frustration with like poor communication from management that led to it But eventually, I was excited to no longer be a shareholder.

Starting point is 00:29:16 I just kept clinging to the, oh, it's cheap, it's cheap, it's cheap. And my theory here was that Bernard Kim had done a good job turning around Zynga and ultimately getting it acquired by Take-Two Interactive. So I thought Bernard Kim, who has come in as the CEO of Match Group, could maybe do the same thing. And it could be, if it's run well, it could certainly be a nice little cash cow for anyone that wants to acquire it. But I don't know who the acquirer would have been. And it seems like if they don't want these assets now, I'm not sure who would want these assets in the future. I don't know who would. I'm sure private equity would take them out for a pretty cheap price here.

Starting point is 00:30:00 But I'm sure that the company is saying it's too cheap of a price. yeah if they get offered 40 a share they're probably walking away now but maybe in a couple years if it keeps stagnating maybe maybe this year if it keeps stagnating they'll go for a take under this is one that i think the price action over a multi-year period just makes us turn away so if you're coming at it with fresh eyes and you're optimistic maybe that fatigue from us and the other people that have followed the story for a long time could present an opportunity for you here because of tinder's user growth even just stabilizes this stock is going to do well but i'm not confident if that it will i have no idea if it will i think tinder is going

Starting point is 00:30:43 to struggle would be my prediction it's just they tarnish the brand so much that it's going to be hard to come back from but anyway that that ultimately was wrong um and yeah if your thesis is a private equity buyout, that's probably not a good thing. They're not paying a major premium to get you. That should be the cherry on top. That should be the cherry on top of any investment thesis. This episode is brought to you by our friends at Yellow Brick Investing. Yellow Brick is an aggregator of the best stock pitches across the internet. By tracking thousands of blogs, newsletters, fund letters, podcasts, and more, they collect and summarize the best stock pitches and bring them to you in a single place. If you're a regular listener, you know that

Starting point is 00:31:28 we use Yellowbrick every single week here on the podcast to discover new investments or just find reports on companies we've already heard of. Try it for yourself. Simply go to joinyellowbrick.com slash chitchat and search a company or ticker you are interested in. You are bound to find a great report on just about any company. That's joinyellowbrick.com slash chitchat. All right, folks. If you're a regular listener to Chitchat Stocks, then you know that we use FinChat.io daily. FinChat is the complete stock research platform for fundamental investors. They have robust financial data on more than 100,000 stocks globally, including company-specific segment and KPI data. Want to see Google's cloud's quarterly revenue growth? FinChat's got it.

Starting point is 00:32:11 Like to track PayPal's take rate? They've got that too. And they recently added sell-side conferences and insider transactions to the platform. Best part is it's completely free to sign up. However, if you want to get unlimited data, you can use our link finchat.io slash chitchat to get 15% off any paid plans. The link will be in the show notes. All right, next segment, five stock market takes, five stock market predictions for 2025. As you just listened to, are i guess we didn't we weren't technically right on any of those but some of those were direction i think from a you know the not being confident consumer discretionary tobacco and financials looking attractive i i would say that you know some of that looked pretty smart so don't

Starting point is 00:32:59 don't you know don't fade all this but i have a hunch here on one of yours ryan and i'll let you go first because you have three and i have two one of these i think you're trying to jinx yourself for your portfolio that would be correct yes yeah all right what is your first one so i wanted to make these a little more stock specific the first one is not a single stock specific but i have been wrong i've been very wrong betting against mag 7 so i'm done doubting them and despite the s&p 500 trading at one of its most expensive multiples in years i think the mag 7 equal weighted which actually is it what's the new acronym we got broadcom in there as well i think it's batman batman okay i think i think because you have broadcom then

Starting point is 00:33:49 you can put all the a's in somewhere tesla meta nvidia and then the a's probably two eight one of them has two a's it's like batman or whatever yeah all right um okay so my first one is that the MAG-7 equal weighted will be up by more than 12% by this time next year. That's pretty good. That's underperformance compared to history. I think if you queued some of these individual investors, they would say, what do you mean? It's going to be up 50% again.

Starting point is 00:34:20 Yeah, I think that's quite unlikely. But the 12%, that is a good year, especially comping a great year. So I don't know if it's a hot take or not, but yeah, that is my prediction. And you know what? The other thing is like, since we started investing, my, my thought has always been law of large numbers. How are they going to do it? How are they going to fulfill this valuation for a lot of these companies?

Starting point is 00:34:50 These great businesses tend to surprise to the upside and they are great talent attractors. They produce new businesses that are revenue accretive. I mean, why is Google jumping right now? Waymo. That was not a part of anyone's thesis 10 years ago. They continue to reinvent themselves. So I will try to back up my take. I am kind of hoping for once the performance is bad so that I can maybe outperform the market.

Starting point is 00:35:23 So it's a little bit of a reverse jinx. But there's something to be said for the absolute sheer quality of these companies. Yep. Or if you're Apple, that multiple can expand from 20 to 42. Not a bad, that's not bad for shareholders either. All right, my first one. Amazon finishes 2025 with the largest market cap in the world. This is excluding something like Saudi Aramco, talking about non-state-backed stuff. I'm stealing this one from our predictions and hot takes show from last year with investing

Starting point is 00:35:56 unscripted, where I said the exact same thing. You know, those are supposed to be kind of bold predictions, very hot takes, something that is unlikely to happen. I think after this year's run up, where it's done quite well, it's much more likely that they finish the end of 2025 with the largest market cap in the world. You have a earnings inflection. And the key is going to be how high profit margins can rise we're already hitting about 10 on a consolidated basis if we can get that to 15 and seeing a path to 20 which i think is not being priced into the stock right now we'll uh we could get there and the only thing holding them back might be their propensity to reinvest into science projects yeah and the bigger they get the higher that propensity

Starting point is 00:36:49 to reinvest in science. We have more money to spend on Kuiper. Good. Great. Okay. I like that one. I think it is doable. It's probably about a 30% increase

Starting point is 00:37:05 and a 30% decrease in Apple's stock to make that doable. Yeah. Amazon right now is at a $2.35 trillion market cap. Let me confirm Apple for you. I think it's like 3.78.

Starting point is 00:37:20 Okay. Wow. All right. PE of 41. My number two, and this might ruffle some feathers for anyone that loves this company. Palantirians. Yes. Spoiler alert.

Starting point is 00:37:35 I think Palantir will get cut in half. I'm not even sure if that's really a hot take. At this point, owning the stock might be the bold prediction. Because it's nothing. Actually, the economics look pretty good. It's a growing business. It seems like a good sales organization, good software, I guess. I don't really use it that much or never have used it or looked at it.

Starting point is 00:37:58 Well, you're not a general in the U.S. military, so. True. But – and they are profitable too. The multiple is simply ludicrous. They are trading at a forward price to sales of 49 times. That's insane. Yeah. Higher market cap than Lockheed.

Starting point is 00:38:23 That is really expensive. Do you know what the market cap is? Let me guess. $200 billion. $169 billion. I hear it's 100x from here. I've been told by reliable sources that it's 100x. This is one of those stocks that has developed sort of a cult-like following.

Starting point is 00:38:47 And I think probably the mystery around the business helps foster that cult-like following. Because a lot of people don't really know what they do, myself included, and probably a lot of the investors. Because they try to keep it somewhat discreet. And they use a lot of very sexy terms, like data fusion platforms. AI bootcamp. That keeps people guessing. So yeah, that is my prediction. 50% drawdown in Palantir.

Starting point is 00:39:17 We'll see if it happens. Who knows? Maybe multiple doubles from here. Send your hate mail to Ryan. I love a long-term, long Lockheed Martin, short Palantir pair trade. That's interesting. Okay. Just because of the market cap thing.

Starting point is 00:39:35 It's not like I'm uber bullish on Lockheed, but... Yeah, as I say, I hate relative market cap comparisons, but yeah, it's sometimes fun. They're technically in the same industry. Yeah, I mean, you could see a world in which it makes sense in the future if growth persists like this for Palantir for 15 years. Well, I've done some Motley Fool articles. You need about 30% revenue growth for 10 straight years and 30% gap operating margins. And then the current valuation, the current market cap, assuming no share dilution, is somewhat reasonable. So just have that.

Starting point is 00:40:14 You know what I should have done for this? I should have – maybe I'll try to do the math quickly while you talk about your second take. But when you think about companies that have compounded revenue at 30% for 20 years or even 10 years. Yeah, just 10. If you paid – I'll use Salesforce. Maybe I can do it. where i'll see what happens if i if i bought them it's uh 65 times sales if you can do this immediately that's that's impressive we'll see we'll put you on the clock what the earnings

Starting point is 00:40:44 would have been i'm gonna meet our friends fin chat here so uh feel free to take your time on the second take yeah i guess this is hey that's a good that's a good timing to uh to talk about our friends of fin chat use our link fin chat.io slash chit chat and you can do this complicated math in a quick manner save you time save you money give you more analysis all the sort of stuff that you can use to track your investments do research investment transcripts charting everything else finchat.io slash chit chat get a 15 discount on any paid plan all right my second prediction and this is a fun one i think nintendo's united states adr will double to $30 a share. So I think at some point in 2025, Nintendo's ADR will be over $30 a share.

Starting point is 00:41:33 For anyone that doesn't know, ADR is just a synthetic stock that just tracks versus their, they're listed in Japan, but it just allows US investors to do that. Ryan, you come up with the math. I think I got it. Yeah. So quick, FinChat's good. FinChat's good. If you go to FinChat, look up salesforce's revenue over the last 20 years let's take it from 2012 if you paid 60 times sales in 2012 you would have been buying salesforce at a market cap of 183 billion dollars today assuming share shares outstanding don't change just to keep it simple sure today they have a market cap of 322 billion so revenue revenue would have 10x more than 10x and you would have gotten less than a double on your stock returns assuming share

Starting point is 00:42:26 count stays the same it's not true you're paying for a lot of growth is the moral of the story there yeah no palinders 100x ryan you just don't get it okay nintendo uh say it's gonna hit 30 dollars a share and the usadr just you know the yen can get wacky so we're just gonna stick with the US one. They're launching the Switch 2. I think they're going to have record hardware sales, record hardware velocity, where the rate of sales are going to be high just because there's a pent up demand. This is the longest cycle in between new hardware launches. I think the sales rate is going to be higher than any period except for COVID. Software sales are going to boom with new Mario Kart coming out in launch with the new cycle. We have the new movies coming out,

Starting point is 00:43:11 the theme parks that'll drive demand for these and the company will finally get the piano off its back that is the narrative around it being a unstable earner earnings are going to grow multiples going to expand and to get to the double without any share buybacks or like you know dividends and stuff like that getting included or the you know the net cash and stuff growing the enterprise value has to go from about 57 billion to what would that be 112 and a half billion so i think it's doable i'll probably take the under i like the thesis but i'll take the under that doubles all right all right this is one that's gonna be fun because we can track it yeah sure it's very maybe black and white jot down there that ryan will take the

Starting point is 00:44:02 under. Okay. My third hot take is in the same vein as Brett's first one, except a different company. Google will be the largest company in the world by the end of 2025. This will come predominantly from multiple expansion. We've seen this over the last two weeks. People have gone from Google's an AI laggard to Google is the future of AI. The whole quantum computing thing, I could see that getting hyped up. The recent model that they released

Starting point is 00:44:39 seems to be getting tons of buzz. Waymo is somehow becoming a part of the thesis despite being such an inconsequential amount of the actual top line. I think with all these exciting initiatives, we could see serious multiple expansion. Maybe I should change this to in a year from now, people are giving Sundar Pichai the Jensen Huang effect. Yeah, maybe.

Starting point is 00:45:09 Where everything he says is gospel. Yeah, he's just not as charismatic. He was trying to, in that deal book interview, he was trying to talk trash to Microsoft's stuff. but he did i gotta say sundar you're way richer than me and more successful but you sounded like a total nerd when he tried to talk trash to to microsoft he was like and do they use their own models and he's kind of looking around and people like what and he's like they don't we do well uh execution on the jokes can be a bit better but you know what's interesting here he'll have a press team that saves him yeah that's true uh you know what's interesting here market gaps of google

Starting point is 00:45:47 at amazon are very similar and i thought maybe we could do a competition here where if either of us is correct which means the other person isn't but also neither of us could be correct if either of us is correct on this one i think the other person buys a share for for that person sure so what we just venmo each other the share amount yeah company expense company expense yeah i guess um sure we gotta make it interesting right i mean i don't really i don't love google that much but yeah i don't even own amazon i do own amazon funny enough so yeah all right it's a bit weird maybe well i'll be happy if if amazon's company something out we'll say figuratively i guess yeah we don't have to do it but okay those are our five hot takes

Starting point is 00:46:48 for 2025 so just to recap the mag 7 ryan believes the magnificent 7 will be up more than 12 this year he also believes that i believe palantir will get cut in half and that google will be the largest company by the end of 2025 brett believes amazon will be the largest company by the end of 2025 and nintendo's united states adr will double there is an honorable mention here over 30 okay there is an honorable mention here do you want to talk about that one yeah we have five here and just you know five stock market predictions for 2025 that's a catchy title we had one that didn't make it through but it's one i want to talk about it's maybe our honorable mention that almost made my predictions and that is apple stock falls 50 all right listeners we've

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Starting point is 00:48:48 Lock in a 6% or higher yield with a bond account only at public.com forward slash chitchat stocks. I've been talking very bearish at Apple all in 2024. Ryan's heard it. the stock keeps going up. So I think I'm going to put my officially call my shot here with the stock trading at a PE of 41 and saying, can we say it falls 50% from its all time high? Is that a fair,

Starting point is 00:49:13 is that a fair, uh, sure to say? Yeah. I mean, it's basically at all time highs. So pretty close. What do you think of this one?

Starting point is 00:49:22 Is Buffett, right? This would, this would vindicate Buffett and that would make his trade in Apple even more legendary. If you got out at the top, that is true. The,

Starting point is 00:49:31 it is so hard to be bullish on apple just to be totally honest it's 42 times earnings this is a business that truly truly is not growing right now like go look at a revenue chart let's pull it up let's get our friends at finchette here ryan do a little share screen action I think it's down from... Trailing 12-month is perhaps down from the peak in 2021. That would make sense, in my opinion. Okay, Apple.

Starting point is 00:50:08 Total revenues. Last 12 months. Yeah, last 12 months. It has been flat for... Two years? Maybe there's another leg up here. Ten quarters. But I would be very surprised.

Starting point is 00:50:23 What hits the next leg up? The AI super cycle? You know what I saw Tim Cook tweeting about? They renewed Silo for season three and four, which I like that show. It's one of my favorite shows. It's a great show. But you got Amazon, Google, Microsoft, and Meta

Starting point is 00:50:41 pouring $50 billion a year into AI initiatives. Apple's got Apple Intelligence, which is not real, a flopped Vision Pro app, And what, Apple TV Plus? Yeah. Here's the part where I think he could be wrong. I think you are underestimating the abilities of big funds to buy this blindly. I'm serious.

Starting point is 00:51:14 Mainly passive. Mainly passive. They've got no sellers. Yeah. I mean, the passive- Except for Buffett. Yeah, true. the passive flows into apple are insane i saw i don't track this stuff i don't really know how

Starting point is 00:51:26 to track it but i saw someone say earlier this week that i don't know what the rate was maybe it was on an annual basis or a quarterly basis that the the smallest company in the s&p 500 on a market cap basis or float adjusted basis was american airlines it's got a market cap of like 10 billion and it gets 100 million dollars in flows a quarter from passive think of how much apple kits that is yeah it's nice if you're an executive at to be included in an s&p 500 company gives you a lot of stability without a lot of selling and it's it's very nice um didn't tell well yeah tell 2020 tell 2020 2020 tell 2020 happens excuse me can't finish that sentence true okay we had a bet i believe three years ago must have been yeah do you want to talk it over

Starting point is 00:52:20 here sure so it's airbnb versus uber if i'm looking at when airbnb went public it was 2021 so i'm guessing we made it around then because it must have been at the end of 2020 that's when they went public right i think it was earlier well look at this market cap chart here on the I think it was when it was private. Oh, we were just saying. Yeah. Well, okay. Okay.

Starting point is 00:52:45 That's fair. It was maybe when Uber went public and I was saying I was. So regardless, for a long time now, and it's not like we, I don't think either of us have ever owned these companies, but for more of a debate and argumentative perspective, Ryan's been more bullish on Uber. I've been more bullish on Airbnb. and we kind of had a bet that what about the end of 2023 or end of 2022 that Airbnb I said Airbnb would have a larger market cap he said Uber would have a larger market cap for a little bit Airbnb

Starting point is 00:53:17 was winning by a small amount but this year at the beginning of this year Uber really started to moon and take kind of expand a lead but they recently gave up a lot of these gains and I kind of like it being a perpetual bet. They're two companies tied at the hip almost, founded at the same time with the gig economy model sort of deal. And I don't know why, but they always seem very related. And I like this perpetual bet. We look here now, Uber is still winning the market cap about 125 billion dollars airbnb down to about what would you say maybe that's 80 yeah yeah what do you think what happens here what happens here what what what happens to this chart over the next couple of years so you're asking me who's larger in 2027 what's all how

Starting point is 00:54:13 about just next year next year who knows it's so that way more launches in two more cities 15 times earnings i think uber remains larger i do i like it in 2027 2027 uber remains larger i think by 2027 there's a chance airbnb catches them but it really depends on the whole yeah no no you know what no i'll take uber i'll take uber yeah i don't think it was gonna make much inroads by 2027 yeah maybe i can pull it up let's see what the net earnings are for each or maybe operating earnings for each of them you have any guesses um if you want to pull up airbnb i'm pulling up uber sure airbnb i don't know uber i know has become more profitable here lately

Starting point is 00:55:19 let's see last 12 months uber's operating income 2.68 billion dollars but let's look at gross profit airbnbs 1.6 okay and what's airbnb's gross profit 9 billion yep ubers is 13.7 billion so still they've maintained that lead from bottom line and kind of top line unit economics as well i can see airbnb catching them though okay i think it's i think both companies will probably actually have a similar growth rate maybe airbnb grows a little quicker but i think they're more developed of companies than people give them credit for despite them being kind of fairly recent concepts as in less than 15 years old i think maybe less than 20 years old it's i think they're like pretty mature i don't think

Starting point is 00:56:24 they're going to grow 20 plus they're definitely not going to grow supply 20 plus yeah true so i think you're going to get similar growth rates i actually the earnings multiples seem fairly comparable that's why they're that's why they're fun that's why it's a fun competition i'll take uber yeah i don't know if i'm taking airbnb but what i do know is if both of these if the narratives turn on either of these companies i could see myself owning them if they get cheap enough and we've talked about that a lot in the last half of 2024 or the last last month or so with uber here here's another perpetual update we have and it's a prediction i made at the start of 2021 i'm forgetting exactly what i said but i think it was including the five trillion dollar

Starting point is 00:57:13 companies at the time and not including tesla because i think they hit the trillion dollar in 2021 either way i only did the five old um mega cap companies meta platforms or facebook at the time amazon apple alphabet and microsoft so no tesla no nvidia no netflix no broadcom and broadcom was much smaller at the time i essentially said that berkshire hathaway would outperform uh these big tech companies from january 1st 2021 through the next three or five years and we can update them and what would this be 21 this would be four years now the competition is so close berkshire hathaway total returns since january 1st 2021 92.84 percent the equal weighted meta amazon out apple alphabet and microsoft

Starting point is 00:58:13 93.5 percent so barely beaten the buff dog that seeing the stat blew my mind i thought fan mag would have crushed them i had no idea berkshire returns were this good that is really impressive at the same Do you want to guess the two companies that have underperformed Berkshire on a total return basis from January 1st, 2021, and the three that have beat it? Well, I'm going to guess Apple's really close because I think Apple probably accounted for a lot of the equity returns. That's true. I guess it's a little bit circular there. Berkshire.

Starting point is 00:58:58 Underperformed? they must all be in a similar ballpark one really is underperformed still positive but one is really underperformed you gotta think who's the biggest pandemic beneficiary I mean

Starting point is 00:59:17 Amazon ultimately benefited but I I don't know who underperformed on this list it's tough without looking at it I would guess Alphabet underperformed okay that is incorrect your first hunch was right amazon 35 returns sorry these fonts are low let me load up amazon 35 returns apple 91 returns so you're rock on there uh almost exactly berkshire

Starting point is 00:59:45 and then microsoft 103 alphabet 118 and meta top dog 119.5 wow i did not realize amazon had such a tough time from pre-covid all right who wins over the next three years though that's what i'm saying it was the end of 2020 so they were the biggest 2020 beneficiary when amazon just absolutely soared okay yeah that makes sense who wins over the next three years give me big tech yeah probably berkshire's done the multiples i think up there i don't i honestly don't follow it that closely nah boring i'll probably go to the meeting this year but i don't follow it very closely yeah it's boring who wins over okay uh sorry go ahead yeah there's just not that much excitement

Starting point is 01:00:40 and it's just like that i would have loved to own them 30 years ago when things were like the growth rates were still pretty solid but like there's the law of large numbers maybe it doesn't apply to big tech but it does apply to berkshire it applies to every company eventually yeah that's true all right not pound here though last segment last segment here favorite episode of 2024 favorite podcast episode that we did uh of 2024 what did you enjoy the most my criteria here is one that i think people should go back and listen because i find a lot of insights from this episode or found a lot of insights from this episode and i think any listener will as well especially when it regards to studying a company researching them formulating

Starting point is 01:01:35 a thesis or not and deciding whether to buy it and well it winds up with the my best performing stock of 2024. So maybe I'm seeing it through rose colored glasses. It is our episode titled Is Coupang Stock Really the Next Amazon with Speedwell Research. And it's essentially going through a comprehensive overview of Coupang's business, the stock valuation, all that good stuff. It was one of our most popular episodes of 2024. So I know people enjoyed it already. But if you haven't listened, you'll find it in the feed. You can search that title, it'll pop up on whatever podcast player you have and i think there's still a lot to learn from that episode yeah all right all right i'm cheating here i've got two i i instantly have this like

Starting point is 01:02:21 inclination to do uh to say whatever stock performed well that year was like one of my favorite episodes to do so i did enjoy the remitley one but i didn't want to just do stocks that did well so we started our investor research episodes and this might be recency bias talking but i really enjoyed studying david gardner and actually digging into some of his returns because a lot of the stuff i just hadn't realized and um kind of trying to adopt some of his philosophy i think of all the episodes i think i've said this before but of all the episodes we did on investors his is probably the one where i want to try to steal some lessons the most um drunken miller it's a little hard to apply some of the lessons he or his philosophy his approach same with some

Starting point is 01:03:12 of these others so i really like that one and the last one i'll mention uh we did a research episode on wise i thought that was informative didn't end up doing that well for me but i like the business today i still own shares and uh i recovered in the last honestly the last week it's done really well well they're an interest rate beneficiary true true everything's interest rates at the the end of the day at least in the short run yes that was a fun episode wise and remittantly i own remittantly i think you own both two companies that just put them on the watch list at least fascinating companies and have just really grown they're doing quite well Anything else, Ryan?

Starting point is 01:03:56 No, that's about it. You know what was not on my bingo card for 2024? Enron coin, Huck to a coin, Palantir hitting $200 billion market cap. It just goes to show how many surprises can happen in a year. So unpredictable. Yep. Any closing thoughts for the listeners as we head into 2025? Anything you want them to know?

Starting point is 01:04:24 about the show, about anything, you know, maybe I'll try to come up with something too. We're always looking to create new content, improve what we offer to listeners. We don't want to get stagnant. I want to get stale with our show structure. So if you have any ideas, go ahead, reach out, let us know. We also love when listeners recommend stocks and don't just say a ticker, but really kind of give us a little bit of a, you know, one paragraph, two paragraph elevator pitch really helps. Because the goal for this is to be a sounding board, a place where people can get equity research, hear investing discussions, and it helps if we hear back from audience members. So thank you all for listening throughout

Starting point is 01:05:08 2024. And here's to another good year of the podcast in 2025. I agree with that sentiment. Maybe I will give some parting words regarding investing in the market cycles and Mr. Market. Do not let the bubble get to you. What I mean by that is don't let the FOMO, don't let the fear of missing out, don't let your idiot neighbor who has 500% returns on fart coin get to you and stick to the strategy that you believe in that you know works over the long term the one that fits with you and eventually it'll work out doesn't matter if anyone's getting richer quicker than you very true yeah that is a nice nice advice it's hard and on the flip side don't become a permit bear yeah exactly yeah things in in 20 years

Starting point is 01:06:03 you're gonna forget this ever happened so don't long-term pessimism never works out yeah it's okay if someone is making money and they get 10x and some stupid meme coin that's fine it's fine it doesn't let them do that let them do that as long as we're speaking to ourselves here we're yeah exactly well that's why my advice this was my advice and what i want people to remember because it's something that i think everyone and myself included you have a hard time dealing with the keeping up with the Joneses. My neighbor's getting rich. What's happening? Everyone has that instinctually. Yeah. Just got to fight it a little bit. Yeah. All right. I think that's going to do it. You want to take us out?

Starting point is 01:06:45 Yes, I can. Thank you to all the listeners. 2024, hopefully you enjoyed this episode. We had some great stuff coming in 2025. More investor overviews, more stocks we're studying, more interviews with fun and insightful guests who can analyze stocks, sectors, all that good stuff. Let's hit the disclosure. We are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan, I, or any podcast guests may hold securities discussed in this podcast, may have held them in the past, and may buy, sell, or hold them in the future. Thank you, everyone, once again, and we'll see you in 2025. We'll see you next time.

Chit Chat Stocks - 5 Stock Market Predictions For 2025

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