Chit Chat Stocks - Airbnb, Zillow & Telemedicine with 7 Investing

Episode Date: October 27, 2020

Your hosts, Ryan Henderson and Brett Schafer are joined by the entire team at 7 Investing (20:00). Prior to the discussion Ryan and Brett share some of the best stories from the week (2:50). Catch the group discuss telemedicine (23:20) and its growing potential. Ryan and Brett ask an assortment of questions about the real estate market (38:40) and 7 Investing responds with perfect answers. As always, stay until the back half to hear who is in hot water (1:07:15), FMK (1:16:03) and anecdotal evidence (1:17:28). Enjoy the Show! Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Watch this episode on YouTube: https://www.youtube.com/channel/UCG5Ni-SI-jyrEsoNUhqftNQ/  Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney  Visit our website to see more from your hosts Ryan and Brett: https://www.chitchatmoney.com --- Support this podcast: https://anchor.fm/chit-chat-money/support Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. Today is Tuesday. I have completely forgotten the date. October 27th. October 27th. Hot start there, huh? Yeah, that's a great start to the episode. But we have a big interview with, I mean, actually big, eight people. Yeah. So the whole 7investing team, which this is the perfect time to announce that we are now partnering with seven investing um and so what's the whole deal do you want to explain yeah so um

i guess we'll do a big explainer on this first one but we are going to be partnering for their subscription service so if you are thinking of subscribing to seven investing which we would highly recommend it typically costs seventeen dollars a month but you can get with our promo code ccm a ten dollars off your first month so if you go to their website and you go to the subscribe page that'll say a question do you have a coupon and if you type in ccm uh you'll get that uh ten dollars out the first month and that helps us you know with our show and then also helps out investing because you're subscribing so it's a win-win situation and it helps the investor you because they actually have really good advice i i loved some of the recs this month and we're not

allowed to say any of them but who had your favorite recommendation i can't uh i can't i I don't know. I can't say specifically. I like Steve's. Steve's? Yeah, Steve's is good. Steve's is good. They're all good, though. This is our hook to get you to go sign up, I guess, because it actually – it's super useful. And it's also – I mean it's $7 essentially using our code. So there's no reason not to do it.

But before we get to our interview with all six members of 7investing, we have our stories for the week. What are you talking about? I am talking about Goldman Sachs, and they are – I don't know. They're in trouble again. they're always paying fines so they officially had to pay fines and take back some compensation for people that were in management during the one mdb scandal and i'll explain all that is further during the news story okay and then i'll be talking about duncan brands potentially going private so that's a pretty big news story apparently biggest of the week probably and

then we have current state of fin twit some interesting stuff there and then as always we have hot water fuck mary kale and anecdotal evidence let's go welcome to chit chat money on this show host ryan henderson and brett shaffer interview industry experts and riff on the world of investment as a quick reminder chit chat money is a ccm media group podcast ryan and brett are not financial advisors anything discussed on chit chat money by ryan or brett or any other podcast guest is not formal advice or a recommendation now please enjoy this episode all right welcome in you want me to kick things off yeah go ahead okay so duncan brands is

potentially going private this week news came out the duncan brands apparent company of duncan donuts and baskin robbins chains is in talks to sell itself to a private equity backed firm at an implied valuation of roughly nine billion dollars the private equity backed company is inspire brands inspire brands owns arby's buffalo wild wings sonic jimmy johns and more um seems like two out of four are really good brands they're jimmy johnson those are all they're all recognizable brands they're all recognizable but two out of four seem like one of the two of them like jimmy johnson buffalo wild wings people really like yeah i mean people like sonic they like arby's just not us i guess yeah i guess i was thinking more personally um estimates say that

they would be taken private at a per share price of $106.50 that's a 20 premium to what shares were trading at before the announcement that's um yeah this is one of those times where insider information would have been great you know yeah i'm sure there were some people that were trading it we're so close to getting that yeah yeah we're right there uh but last year duncan reported 1.4 billion in revenue with more than 240 million in profits does that seem like a bit of a premium to you at a nine billion dollar valuation yeah if their profits were 240 million for sure uh they're not the number one brand in this space they're not the i don't know they compete with starbucks a lot yeah and it's not a fast-growing market with high margins so i mean who knows though but

pe you know private equity they get to do whatever they want with it and it seems like a typical if you're going to buy someone out like that you really have to pay up for it especially when the business itself isn't distressed and i don't think they are you know right now at all Dunkin' has been private before, but the private equity firms took them public in 2011. I think they were owned by like three different ones. But Dunkin' actually took the donuts out of their name to more directly compete with Starbucks, which I'm not – I'm like, all right, donuts is gone now. Your coffee is better than Starbucks. I don't get that.

But yeah, what do you think about that? I mean, do you think – and Dunkin' Donuts is more of an East Coast restaurant. Do you think they'd be able to compete on the West Coast with Starbucks? It's tough to say, but I would guess no. And it's probably why they're going to get hurt by not being able to grow very much. I mean, they have the lockdown market with the Northeast, and everyone loves them there. But they're not coming to the West Coast and doing what Starbucks has. I mean, you said here they don't have any stores in Washington at all.

only a small number on the west coast that's probably for a good reason yeah and yeah i mean that it's just tough it's just tough starbucks has a great brand people love them out on the west coast and even you know the kind of rocky mountain area as well so have you ever had dunkin donuts yeah i've been to dunkin donuts at an airport i think it's fine it's nothing to write home about though which is why i mean that's just a personal opinion but with these restaurant type companies even like coffee chains it's tough to see what kind of value you're going to get when buying them out for more than a 20 times earnings multiple i mean yeah if you're thinking like comparing it to a software company or a dominant player with a huge moat uh that has a ton of

recurring revenue yeah i mean 20 times earnings seems solid but for duncan i mean that's expensive i mean they must have a plan with what they're doing also i'm sure they've done this before They've acquired Jimmy John's, Buffalo Wild Wings, Arby's. They must have a sort of plan intact. But their track record is solid. I just thought it was interesting. It doesn't really affect – I mean I wasn't planning on investing in Dunkin' Brands. Anyway, yeah, that was one of our first fundamental analysis episodes I think.

We actually deleted it because it was so old. I remember going over them and thinking back. We didn't really know anything about the business, but it's still not – I mean it's an interesting story. it'll be cool to see what happens when they're private but it's not it's not the type of business we typically like to invest in at all i feel like us saying that we don't think duncan would like succeed on the west coast is going to be a huge trigger warning for the east coasters yeah i mean i'll say um i don't think starbucks would succeed as well on the east coast i know they have more they have more penetration than duncan no well east coast is different than northeast

so northeast is all duncan i mean starbucks does try to move over there and they have shown some popularity but people love duncan in uh it's true the new england area it's very true all right what's your story okay goldman sachs uh they had a one mdb fine some of you might know what that is uh it is 6.5 billion dollars that were looted from the malaysian investment fund with the help of some goldman employees so they're back in the day i think it was 2012 2013 uh there was the malaysian investment fund and there's this crazy man uh he is i think hiding out in china now and i'm forgetting his name but it's not important to this article um you know he bought a 250 million dollar yacht with the funds that uh malaysia had and he financed the wolf of wall street which is

quite ironic um that the wolf of wall street was financed with you know dirty money fraudulent money but currently uh goldman sachs has been in a lot of trouble and they're actually clawing back 174 million dollars in compensation that former uh ceo david solomon or sorry current ceo david solomon and ex-ceo lloyd blankfine blank fine blank fine blank fine excuse me thank you uh over the relationship with that uh you know 600 million dollars in fees were paid to goldman during that time and it was proven that they knew it was an illegal scheme and that the bond traders were acting nefariously just trying to get the fund uh money over to goldman which it sucks uh but that's just kind of how the world works there it's not a huge story and it's just interesting

that i don't know goldman sachs can do all that and get away with it no it's just like name a time that you've heard about an investment bank for a good reason yeah i mean sometimes i think you don't hear about them because people that's their job that's their job yeah do you think the fine was big enough i mean should management i guess they have new management now but should management have been totally wiped out from this deal because this is a terrible look for them and it shows that there's probably still these nefarious actors at the company yeah definitely yeah i mean yeah there's it's never it's never gonna stop i'm sure they're going to constantly do things that are not in the best interest of most people but they

make a lot of money doing it and then they get fined yeah it seems like they're above the law almost where it was almost so they got 600 million dollars in fees and i don't know if they have to pay all of that back but just having these clawback compensation things of 174 million dollars it's really not it's like all right well we we did this illegal thing we have to pay a little bit on the back end but in reality we got a lot of cash up front for doing this stuff why wouldn't we do it again yeah it's just i don't know i've never been a fan of most investment banks i don't understand especially generally the value prop especially goldman sachs like cool you can take a company public and just charge them a bunch of fees what else what is the point it seems like

it's slowly dying um they still have a lot of power out there but it seems like it's slowly dying yeah yeah well they can do a lot of derivatives they do they can pay phds uh to do complex derivatives yeah that's probably the best thing that comes out of an investment bank is one smart investment banker starts a fund with some of their assets yeah and it ends up being decent and it feels like in in aggregate it's just gonna have market level returns right because you have so many investors there what what's gonna there's no differentiated factor it's you i mean i've always been at odds with the fact they have analysts in basically the same company as the as funds that own the stock yeah like you'll never like

if you're an analyst for that company you're not going to write something like if jp morgan or some investment bank is taking a company public are you going to write a bad piece even and they all there's there's studies out there that oh it's not studies it's just kind of people looking at history that the only uh that they ride the market wave so like in 1999 or 2000 it would have probably been 1999 there was zero sell recommendations from these analysts which is just like you're not doing real analysis and the only way you're putting it out there is so the price either you know they'll lose their job if they say something that's against their firm's belief it's just it's just uh they're unnecessary jobs in the first place i know i might get some

act for that but they just they're not helpful i don't know okay current state of fin twit um how much i mean i only have one note it was like a bad week for tesla oh you want to talk about that yeah i guess i mean i mean earnings were better than people thought we haven't talked about tesla in a while but they had to recall i believe it was more than 48 000 cars from china due to suspension failures and then there's also been all these videos of their beta full self-driving thing yeah it's criminal which like i mean it isn't working very well which is whatever i mean it's probably doing more than the videos are highlighting like the video is obviously highlighting their flaws but if there are flaws none of the other cars signed up to be on the road

next to a tesla with a beta full self-driving software i know you're uh you're you're preaching to the choir here i don't um i don't enjoy it i think it's highly dangerous uh and i hope cars are autonomous in the future but this isn't the way to do it yeah i wish it was true that they could do this right now that they could have full self-driving but beta testing this stuff on the roads with no regulation in no closed environments with drivers that aren't like licensed to do this specific thing i heard that cruise or waymo it could have been one of those has a driver obviously they have a license beforehand train for a month to make sure they can be behind the vehicle because it's an entirely different experience where you have to be looking for certain things and those

are in closed systems it's it's ridiculous but apparently the stock price is going up so it's all fine um which as a long time listeners um yeah they know our stance on that they know our stance yeah for any new listeners sorry we're not the biggest fans but yeah we'll break uh we'll break your bubble there um but all right what don't hate us for it okay this was a interesting thing from chris bloomstrand at semper augustus had a nice thought experiment uh so here's the scenario one billion dollars in net income is reported you got that cash flow statement shows one billion dollars in non-cash stock-based compensation which translates to two billion dollars in operating cash flow okay but they spent two billion dollars on cash to repurchase shares and one billion

dollars in dividends if the share count and stock price are unchanged how much does the shareholder make isn't it like one billion yeah they have an extra one billion dollars in their pocket and a little hard to follow but yeah yeah also it's i mean what was the point of the tweet though it's basically to show that people use stock they like expense stock based compensation to so it's it's kind of like okay people do stock based compensation and they buy back stock the stock price goes nowhere you know what i mean and you pay out one billion dollars in dividends that's your only form even if you're you're cash flow positive it's or sorry even if that's a non cash expense it's still like i don't know one of the examples where it still should be kind of

treat it as an expense especially if you're treating share repurchases as the opposite of that if the stock price is the same huh i don't know it's just no that's a fascinating experiment uh experiment but i think a lot of people got it wrong in the mentions yeah and the thing is there's a lot of different ways you can go about it right where if you think the company's overvalued undervalued it's not like there's one hard rule here which makes it so interesting um how people like to value stock-based compensation on their own um cash flow statements that they make for themselves or their own analysis that people are doing on a company okay did you have anything else uh yeah i have two others hopefully they are shorter sorry let me load them up here okay

there's a guy here his name is his last name is pabrai i think he's a very famous value investor he said quote i do not run dcfs or use excel to figure out intrinsic value it violates the fifth commandment i thought he's gonna say amendment commandment that's strong okay if you can't do the math in your head and with the fingers on one hand it should be a pass whether the 10-year t bill currently yields zero or five percent makes very little difference in my thinking on the investments i'm making what are your thoughts kind of up our alley a little bit although we use excel sometimes but yeah i mean that i have found that and i'm like not incredible at math but i have found the the deeper you dive into a company the easier the math gets like it's very

simple mathematics um and as far as the interest rates go i mean they do matter in certain instances if the company is known to take on a lot of debt yeah i know especially to finance growth i don't agree with the last part but then someone quote tweeted and said wonder why it took him 15 years to hit his high watermark which was a good little burn uh but i think he's still a pretty good investor all right last one here let me load uh load it up okay this is interesting so this is from citron research uh this is from power lunch they call it the most compelling ipo of the year and it's not a tech company hear from the ceo of compass pathways on their groundbreaking research to win approval for the use of magic mushrooms what yeah public company you can just invest in

magic mushrooms as a public company now like shrooms like the yeah like the drug yeah well it's a mushroom like psychedelic mushrooms and that yeah i they're going public they're going public yeah how's that the most i mean it's the most compelling business yeah i i assume it's a back with no revenue as we'd probably expect in the fall 2020 but okay that's funny though right yeah i mean i wouldn't have thought there's like a full business behind that apparently there is apparently there's gonna be it's the most compelling one airbnb snowflake uh what are the other ones lemonade tech company lemonade those aren't compelling potentially no no well procore that's all you you love you love procore but not as much as magic mushrooms not as much as

uh what is it called compass or something yeah they don't have to say magic mushrooms in their name okay well we have our interview next with all six members of seven investing um any highlights for you uh i mean i covered health care and that was with simon max and austin we talked a little about that we uh max is kind of an expert in biotech stuff and we talk about the differences of what biotech is kind of the basics we'll have to get max back on to do like a 40 minute interview specifically on all the stuff he covers but yeah i mean that's fascinating because that's something that's seems like a complete back black box to me but all those guys are good all the analysts that are fantastic and there's a reason we uh you know have that partnership with them so i hope

that goes well going forward and the whole theme of the discussion was around disrupting legacy systems and so or some older systems and the two that we highlighted were health care and i talked about real estate yeah with matt steve and dan right yeah your focus mainly on the eye buying upstarts that have a lot of capital flowing in right now a lot about redfin zillow all that stuff so here you go cox panoramic wi-fi includes advanced security to help protect all your connected devices you'll get real-time alerts oh like this one so you don't have to worry about malware. Or when your kid downloads a song from a shady link. And now all your computer can play is red color, red color, where are you? All blocked thanks to advanced security included with Cox

Panoramic Wi-Fi. Advanced security must be enabled in the Panoramic Wi-Fi app. Restrictions apply. today we are welcomed by the entire seven investing team so it's uh what an eight member show yeah member interview a total okay um and the only person we haven't had on the show before is max chatzko am i saying that right yeah okay um so max we're going to ask you a few questions before we get to the bulk of the interview um so how did you get your start in investing and why or how did you end up joining seven investing well i started investing back in college which was actually during the great recession um so i was like 18 or 19 i was buying my first stocks uh actually bought tesla at the ipo and then i sold it a few months later

like a knucklehead but uh you know it's good you're naive when you're younger and you just try to figure it all out. But, uh, yeah, so that's how that went, I guess. Um, how to join seven investing. Simon wouldn't stop calling me, man. I tried to change my phone number, tried blocking them. He's worse than those people trying to find you for your car warranty. You know, um, no, uh, Simon and I, and all of us were probably talking about seven investing before it was called seven investing. So, uh, I joined, uh, agreed to join earlier this year, just had to, you know, the timing had to be right, but, uh, it was an easy decision because I mean, this team here. Everybody's great experience, great backgrounds, everybody covers a different

part of the market. So it's pretty easy to make the jump. Yeah. And it sounds like you have sort of a special niche, if you will, in the biotech biopharma sort of industry. What led you to that? And do you, do you also see that as your specific niche? Yeah. So here at 7investing, I'll be covering renewable energy, and I call it living technology. So it's mostly biotech, but, you know, biotech covers a couple different sectors, biopharmaceuticals, which is more healthcare based, industrial biotech, so producing chemicals with microbes, and then a couple other areas that are as big right now, but you know, agricultural biotech, biotech animals. So there's major subsection there. What led me to that? That's just my technical background. So I have a couple

different engineering degrees in bioprocess engineering. So I'm scaling up fermentation systems, or as I call it, we just get to get to make beer and wine and things like that, but also vaccines. So anything you can make with a living organism in a fermentation tank or cell culture. And then I have a degree in material science and engineering. So I focused again on on biomaterials and tissue engineering, but I also did some, a lot of work in electrochemistry. So energy storage, batteries, things like that. Wow. That's a, that's a pretty impressive background for an investor for sure. I guess we'll have to go deeper from maybe an individual interview one time, but we're going to bring on the first three panels here. It's with Simon,

Austin, and Max. You guys probably know Simon and Austin from any previous interviews or from investing. And we're going to be talking about healthcare. And the first question I have directed at Simon, but anyone can chime in if they want. So the story for 2020 is specifically healthcare has been telemedicine. And we saw that big Teladoc and Livongo merger this summer. Looking forward, how are you guys thinking about the industry? And are there any surprises from what you were thinking about going into COVID and then where we're at now, like six or eight months in? Yeah, I'll go first with that one, Brett. And first of all, you know, we're really excited to have Max on the team. I think he joined when it was one investing. And, you know, being a fermentation engineer, we kind of thought that he'd help us brew our own beer. So it was a natural fit for the team. And to Livongo and Teladoc, you know, this is one that I've kind of gone back and forth

with because there definitely is an opportunity for telemedicine. Medicare is 55 years old in the United States. Now, it's approaching senior citizen status as a program, and we spend $3 trillion a year on that. So I think that there's finally the realization that the prices of things can't just keep going up in health care. We need to find ways to get the cost of health care down. And going remote, obviously, is one opportunity to do that. Doctors are signing on board, and Teladoc has risen to become one of the platforms to really support telemedicine.

The thing that kind of caught me off guard with this acquisition of Livongo was that Livongo had been a publicly traded company for less than one year when they actually announced the acquisition. And here you've got one stock that is more than a four bagger in less than a year, buying another stock that's also a four bagger in one year. So I mean, this is happening incredibly quickly. I think that to some extent, the impetus for the acquisition was that Teladoc didn't want to compete with Livongo building out a more complete platform. And Livongo didn't want to compete with Teladoc, getting better relationships with the patients at the end of the day. And so it's a natural marriage. The market is huge, $3 trillion a year. It's an opportunity to save costs. I think that going forward, there's plenty of opportunity for both of these companies with the same name. Yeah. And Simon, I'll jump in real quick too. Brett, Ryan, as you talked about, there's a lot of competition in this industry and we've seen it just explode and the need for it explode, right? So for a long time, it was like, is telehealth and virtual medicine even going to be a thing? They've really turned that corner now and there's more competition than ever. And these two companies combining, specifically these two companies combining, they've talked about it in some of their merger talk. There's a lot of cross-selling that they can do into each other's member base, because I think there's only about a 25% crossover. I'm not looking at it. It's not in front of me, of members. And so there's a lot of cross-selling that they can do into selling Teladoc services to Livongo members and then selling the Livongo devices into the Teladoc member base. And these two combining really gives them an offering with the network and the providers and the insurance companies and all of the patients that Teladoc has in their global network. And then the devices and the glucose monitoring and everything, the AI and ML delivered coaching that Livongo offers that really no other company can compete with. And so, um, I'm extremely excited, you know, there was questions about valuation, whatever,

but over the next five, 10 years, uh, very excited about these two companies. Yeah. Anyone else have any thoughts on that before we go on to the next question? Okay. All right. This next one, uh, this might be specifically for max, uh, cause it's about biotech, but I kind of want to, I mean, we here, we don't know anything about that industry and we didn't even know that there's two subsections that you were explaining about, uh, what's the

best way for someone to learn about biotech investing. And do you think anyone that, you know, really doesn't have the background or the degrees, can they be successful doing it? And if so, how should they go about learning it? Yeah, so I guess the way I look at it, I mean, and this is probably true for most investing, you know, there's basically like two approaches, right? You can do the top-down approach or the bottom-up approach. So a top-down approach in biotech might be, oh, man, I keep hearing about this thing called CRISPR gene editing, you know, you take like a 30 000 foot view you say oh well this is going to be great one day this will be big so i'm just going to buy all the crispr gene editing companies so that's one approach and

then the bottom up approach is you know trying to really take maybe more you don't necessarily have to have more of a technical background but at least try to understand some of the fundamental concepts so really dig in understand opportunities or industries or technology platforms and then pick your spots so maybe you don't buy all the crispr companies just focus on one um so that's kind of where my approach is bottom up it's kind of hard you know right it's it's seen as this thing that's very you know technical and um i don't know i hope i do a good job explaining it in my reports and things and my writing but uh uh yeah it's hard to like find good sources of information so i guess i would just encourage people to find sources or individuals you can trust people who

seem to be objective and and you know know what they're talking about so like people who just say oh crisper is going to change the world and that's in like all of their writing well i mean that's not adding a whole lot of value to the conversation so uh maybe try to find like more trade journals or things like that to uh kind of balance yourself out right because it feels like i mean someone from our point of view um it feels like a black box kind of looking into it so we kind of discredit it yeah it feels like biotech is probably one of the first things to go in the too hard pile like it's really easy to just anytime it's anything related to biotech just throw it aside But if you have, I mean, if everyone's putting in their too hard pile, that means there's, you know, more of an advantage for someone that actually understands the industry.

Anyone else have any points on that? Simon, you want to? I think that's a huge reason to invest in biotech is exactly what you just said, that you've got a huge portion of the investing population that's just not going to go there. And that means that there is not a saturated, I mean, this is not a super efficient area of the market. You've got opportunity that's not being factored into the stock prices because people don't know how to figure it out. That's one of the biggest reasons that I'm really excited to see the recommendations that Max makes for 7investing. Definitely. Definitely. All right. Anyone else before we move on to the next one? All right. This one will start with Austin. So, I mean,

another trend, I guess, sort of in the healthcare space, but also in fitness is connected fitness. And that's very trendy right now. We, you know, it's in the early stages of being a giant industry. the question I have, you know, is this the next like big industry? I guess that's kind of a vague word, but is it going to replace gyms having all this connected at home stuff or is it a little overhyped? And then a second question, um, do you think anyone can compete with the Apple watch or are they going to have the dominant position, um, in that like with healthcare connectivity and all that stuff? Um, are they going to control that market? Yeah. So, you know, people have always been looking for creative ways to improve their fitness or whatever. I remember, uh, when I was

a kid and everyone else on the seven investing team was already grown up. Uh, I remember seeing infomercials of like ab things that you could wear on your, on your abs and they, uh, make the muscles contract on your abs and that gives you a six pack. Right. Um, so everybody's been looking for the magic pill for fitness, health and fitness. Right. But, um, I think we're actually entering an age where technology data, internet connectivity is good enough now to really start to bring these, um, different devices and different options into people's homes and give them, um, great training, great coaching, great tracking and data. And then the ability to do it, uh, whether you're locked in your house for coronavirus or a busy work schedule or just

whatever, you can do it on your schedule and not have to go to the gym at a certain time. So I definitely think the industry is, is here to stay. Um, there's going to be winners and losers in the industry for sure. And Apple coming out and announcing, um, their Apple fitness plus or whatever, you know, as part of this subscription package and then what they're doing with the watch. I think that just validates the industry. So I think there's definitely some companies out there that, um, can compete with, with Apple, or I wouldn't even call it competing with Apple because there's going to be room for, for multiple winners for sure, because it's a, you know, a, a multi-trillion dollar industry, um, especially globally. And so I don't think

the question is who's going to compete with Apple. I just think it's who has products and services that really hit home with consumers. The trends are going in the right direction. They continue to grow and they have an offering that differentiates them from others. Um, so those are the types of companies that, that I look for. And, and even everything like, um, you know, an example, personally, I just bought good RX, um, which isn't a fitness company, but it in same thing with, with Teladoc and Lubongo, like we were just talking about, people are just getting more and more health conscious. And so virtual health, telehealth, connected fitness is definitely an area that that I'm interested in. And there's a lot of winners there for sure. Okay, Max or Simon,

do you have anything on this topic? Or do you want me to move on? Okay, this one's for everyone, I guess we'll choose whoever wants to go first can go first. This is a broad question. What trend or subsection of healthcare are you guys most excited about? You know, maybe for the next few years or even the next decade i'll go first um so i'm i'm interested in if i had to like pick one i mean it's hard for me i guess but um i would go with cell therapy so uh the great things um potential on paper anyway for cell therapy is um you know we can kind of armor a cell to be a therapeutic agent right so we can put these different things on the surfaces of the cell and then put it into a patient's body and it will do different things in different environments so

whether it's within the tumor micro environment or the tumor uh secretes something to try to defend itself well maybe the cell therapy does something different or you know it can help to trigger uh immune responses to help a patient's immune just immunity already overcome uh tumors or inflammatory diseases so it's kind of like this you know swiss army knife therapeutic agent and it's really the first time we've been able to do that now that adds a lot of factors of complexity and variables so manufacturing them standardizing dosing i mean the fda has already come down recently on on some of these so um but yeah cell therapy is a big one for this decade i would say all right well i've been oh go ahead yeah simon do you want to go next yeah i was

going to say my trend that i'm watching is genomics in oncology so right now uh we're really kind of at a quantum leap in healthcare where you're not just having doctors subjectively determine what cancerous tumors are and characterize them. They're actually able to use genomic sequencing to figure out what the tumor is in various different ways. And so where are we going with this? Well, right now, doctors kind of have to take tissue from a cancerous tumor to characterize it. They have to use a scalpel and get in to see a patient. It's really harsh on the patients. It's really expensive and time consuming and everything else. There is a field right now that is finding ways to detect cancer earlier in its stages, where it's no longer

a stage three, stage four cancer, you have to take a biopsy from you can actually detect it in the bloodstream, look for biomarkers, all sorts of other really cool things, and sequence it. And so what does that mean? Well, if you can start treating patients at the early stages of cancer, that's a really really high uh or much of an improvement for the survival rates for the patients that's a win for them it's a win for the doctors because they've detected it and they have better patient outcomes that's also a lot less expensive than having to go through chemotherapy and a lot of that patient um stuff that they're going through right now for for treating cancer so that's something i'm really excited about i think it's a lot of value for a lot of people

there yeah i mean just have real quick comment uh mental health is an area too uh that i think especially with COVID is, is going to, uh, we're going to see a lot of growth. There's a lot of like private companies doing mental health. I'm excited to see, um, public companies with, with some mental health offerings. All right. Well, that sounds, those are some good picks. Um, those are interesting topics. Uh, we have one last question here is I guess it's a fun one to wrap things up for this section. Um, it's with, for Max and I guess Simon's included here too. What is the gene sequencing bet you guys have? And I mean, what are the two sides of that? all right so in june 2018 simon and i made a bet about the future of dna sequencing so reading dna

the bet was i bet that in 10 years so in june 2028 alumina would be worth 40 billion dollars or less which was equal to its market valuation at the time we made the bet and that nanopore sequencing would have at least 50% market share of the overall sequencing market. And it had 0% in June, 2018. And if I win, I think it's double or nothing, Simon. It is. Yep. He has to come find me somewhere in the world and hand deliver me $200. So I'll be in the Amazon rainforest if it's still there in June, 2028. And he'll have to bring a mosquito net and come find me. With $200 in hand even that is just such a typical investor bet too like that's so nerdy youtube like that you bet like such specific terms like that no one would understand otherwise yeah it's like a three-term

derivatives contract all right uh i think that i got a question max max why did you think alumina back then why did you think alumina would be wouldn't wouldn't grow over the next decade i think so alumina is worth i don't know it's probably worth 40 or 50 billion dollars right now i haven't looked um so even at the time it was worth 40 billion dollars the total global gene sequencing market was worth like four billion dollars so investors have always been pricing in that illuminate is just going to keep dominating and i don't think they're looking over the horizon because uh at least on paper and there's some things that still have to be worked out but nanopore sequencing it's not necessarily going to replace what illuminate does but it's going to

open it up to many many more markets the luminous market cap is about 48 billion right now by the way i look forward to taking max's money this is going to be great it's going to be yeah i think i'm not smart in this area but i think alumina's i think max i think you're going to have to find simon at a beach somewhere and deliver him 200 funny we go back and forth on like oh man i think we're going to lose this bet and each of us has said that so like when when they uh decided to acquire grail i was like oh well that could make them worth more than 40 billion by in 10 years but we'll see. I don't know. I still feel pretty good about my bet. Yeah, we had a long time. I will also be in the Amazon rainforest in 2028. So come find me, Max.

Okay. It'll be a mall by then. All right. Before we get carried away, I'm going to move to real estate. That is our next industry to talk about. And this one is going to be me, Dan, Steve, and Matt. Um, so I'll start with Steve first. What are some of the faults that you see with real estate as it currently is and what problems do you think could be fixed? Oh man, where to begin? Um, anyone who's bought a, bought or sold a house, the traditional way kind of knows what's wrong with the process. I mean, I've, I mean, since my wife and I got married in 2006, you know, we, we bought three houses refinance several times and every time you don't you don't really look

forward to the the whole adventure i mean real estate deals they're often the largest transactions people make in their lifetimes and because of the size of these transactions buying and selling real estate usually ends up being this arduous inconvenient expensive months-long process and you know showings and negotiating back and forth with buyers and sellers people backing out trying to get realtors to accept lower commissions. Sometimes you end up with a ream of paperwork at the end, a deal might even fall through then, and, you know, fees along the way. It's just this, I mean, all of that can be improved. And I feel like it's not just ripe for disruption, but actively being disrupted as it stands by some of the bigger players and in the

online, you know, digital real estate space is where we're sitting now. Yeah. I've never had to buy a home myself, but it sounds like there's just a lot of friction in the entire process and it's not just one fix. Right. Yeah. And it's, there's just so much, I mean, you know, like Zillow, for example, they want to be this sort of one-stop shop that handles the entire process, you know, and there's, there's a lot of places, um, that you can, you can improve the process and, and it's, it's getting better quickly. I mean, even now, I mean, I can compare the first house I bought in 2006 to the place we bought five years ago. And the process was so much easier, you know, just thanks to companies like DocuSign and, and, uh, you know, just the platform

being able to find what you're looking for, uh, was really the first area that, that kind of offered that disruption. You didn't have to be shown around by an agent anymore. So that was something that happened quickly. Now, a trend that has sort of caught on and I think a lot of investors are really optimistic about is iBuying. And if I'm not mistaken, there's a few different models of how iBuying is done between Redfin and Zillow. So first of all, what is iBuying for anyone that doesn't know, how did those models differ? And then do you think that that is a sustainable business model? Cause I've heard a lot of people say these margins are way too slim. It's not going to work in the longterm. What do you see the outlook looking like?

Yeah. So I buying, um, stands for instant buying for anybody who's not, uh, you know, familiar. So, I mean, relatively speaking, it is, it's, it's instant, you know, compared to the traditional process. So, uh, I buyers like Redfin, Redfin or Zillow, uh, open door, for example, they'll step in. Uh, they usually use the data they've collected. You know, sometimes they'll use artificial intelligence or machine learning models to learn about certain geographic areas or neighborhoods to be able to make, uh, an instant offer on your house. So you can request this and, you know, it's mostly big metropolitan areas right now, but you can hop in. If there's an eye buyer available in your region, you can say, give me a, give me an offer and they will

give you an offer right there until you will pay this much for your house. And you can say yes or no. And, uh, you know, there's no showings, um, you know, depending on who's doing it, they might require a cursory inspection to basically make sure there aren't any major issues with the house. Uh, but they, they all generally offer, you know, some sort of service where they'll go in, uh, they'll let you, you know, they'll fix, make minor repairs. Uh, you don't have to deal with scheduling showings. You don't have to, you know, bicker back and forth about what you need to fix. They'll just take care of it all. Um, basically, you know, they know exactly what they can pay, what it's going to take to fix it and what they can turn around

and sell the house for, uh, at a modest profit. Uh, but that's the problem, you know, you brought up. It's like how the margins are slim. And depending on who you are, you need to be careful about which houses you buy. So Zillow and Redfin are approaching the iBuying market having really different backgrounds and primary sources of revenue. So Zillow, for example, historically generated most of its revenue from advertising brokers listings. So they have their premium agent thing, you advertise a listing, they make money that way. Redfin, on the other hand, focuses primarily on real estate services. And, uh, that's mostly commissions, uh, on home sales by Redfin agents. So, um, you know, Zillow is a lot bigger and they're working on scale, uh, than

compared to Redfin. Uh, so they're taking a more aggressive stance and they're, they are, they're losing money. So you look at Zillow, um, I think they said, uh, last quarter that they lost around $1,500 per house. But they also said that was within their expected range as they're really early in the process. So as they scale, they think they'll be able to actually generate meaningful profits, 400 to 500 basis points of adjusted EBITDA margin as they scale this process. But Redfin doesn't really have that luxury. So that's kind of where you run into. So Zillow can make a lot more offers than a smaller company like Redfin can. Do you think it'd be hard for like a startup to just go right into iBuying without sort of a backbone to keep cash flows maybe stable like

we've seen with Zillow how they have sort of the app business? Yeah it's hugely capital intensive so that's the that's the really big challenge is that you run into you know Zillow's going in you know they're buying a few hundred houses and selling I think they sold a huge amount of them it was like 1400 houses last quarter because they were basically scaling everything down as they kind of suspended things during the pandemic. But you know, they, as they scale, you know, you got to have big lines of credit or a lot of cash to handle this. And it would be really hard for a small kind of up and coming player to do

this. So I would almost consider a company like Redfin, you know, which is a four and a half billion dollar business could to be, you know, a tiny player in this niche. um matt unless anyone has any other comments on that yeah dandy i see uh do you have any yeah yeah i'll jump in a little bit like so they're also incredibly vulnerable to market conditions so they come in they make a three hundred thousand dollar offer for my house if i sold it in the private market maybe i'd get 310 but there'd be real estate commissions there'd be other things there so i do a little bit better it's good for me the market takes a tiny downturn and it's worth

285. And then they put a new kitchen into it, but nobody likes the new kitchen. It's a really risky business for really low margins. And they think they can get really smart and good at it. A lot of people have thought that with real estate over the years. I'm very skeptical of this space. That's one thing that I was actually impressed with when the pandemic happened, how quickly they wound it down. Everybody just suspended activity right away. And they said, I think the average time it takes them because of how smart they are with the data they have, it was like 30 days to, to sell a house on average is what they're running into. So they said, you know,

pandemic hit, they stopped everything. Things came back. They ramped everything just as quickly. So I think it was kind of an excellent exercise personally in how fast they can pivot if need be, if the market takes a turn for the worst. So do they keep a lot of, I mean, I don't know if you know this, But do they keep a lot of houses on their books at any given time? Or is their goal to turn that over as fast as they can? Because I'm imagining like an 08 type incident where they have a bunch of houses on their

books and it destroys their balance sheet entirely. So Zillow, I actually brought up the data from last quarter because I couldn't recall what it was, but I think they said in the second quarter, they sold 1,437 homes and only bought 86 and they ended with 440 homes on inventory so basically they they said holy crap this is this is getting crazy so they sold you know over 1400 homes and brought their inventory down by like 75 percent in a single quarter so uh that was what was really impressive to me i'm like zillow basically saw the writing on the wall said this could be bad maybe and uh so i mean but still 400,000 on inventory isn't small. Except it isn't bad. And now they don't have any inventory.

Yeah. Well, and there's no inventory to build up. So they've been ramping aggressively. So that's one of the things I'm going to be really curious about. And actually one of my topics for 7 Investing Now tomorrow I want to talk about is what we're going to expect when it comes to Redfin and Zillow, who both report earnings early next month. So it's going to be interesting because demand is bonkers and inventory is nothing. Okay, Matt, I want to bring you in here. Are there any companies that you like in the real estate space? It doesn't have to be a disruptor. I know we've talked a lot about Redfin, Zillow, Opendoor, anything, any other businesses that you like? Well, if you exclude those three, I mean, the one thing that has never appealed to me,

and maybe probably one of the things I like best about being an investor in stocks is I'm really lazy. So it has never appealed to me at all to buy a rental property and have to worry about somebody else's plumbing problems on a Saturday or anything like that. And while I don't currently own any REITs, real estate investment trusts, I think there is, that's a great way if you want exposure to real estate in your portfolio and you're lazy like me and you don't have any type of handyman skills, it's a great way to get exposure to real estate without having to go get a rental property and have to deal with headaches that tenants bring and and things like that so i mean i i think that's a fantastic way to to get exposure and for me being lazy and

not wanting to deal with headaches um it's a you know you don't have to worry about addictions uh or a tenant not paying on time or a leaky roof that you have to fix or just something bad happening to a single home uh you know where that can sink your investment uh like mildew in the walls or a sinkhole or just something specific to that house, a fire. I mean, there's just lots of things that can happen if you go and buy a single rental home. And I think REITs are just a fantastic way to get broad diversification in the real estate market. Yeah, definitely. It sounds like you're getting a lot of the upside of real estate while instantly diversifying away much of the risk of buying an actual property. Yeah, absolutely. And then also, I mean,

there's so many specific REITs now too, like with cell phone towers. So if you, you know, if you want like a more stable, you know, income paying asset that, that pays dividends, you know, but you, and you're, you're not sure on valuations, but you know, that like 5g and internet of things, and you want to get exposure to those trends, you can buy a cell phone tower REIT like American tower or, or crown castle. You know, if you like data centers and you know, like you know while the cloud's taking over but you don't you're not sure again on valuations or what specific company to to uh to buy to get exposure to that you can buy data center reads you know and they pay they pay nice yields uh so you can collect an income and you you can play

it's it's a nice way to play certain sectors i think uh without some of the risks that might come from some of the more high-flying names if you're uh if you're really bold you could buy retail opportunity investments i have a small stake in that it's like shopping malls and stuff like that like outdoor shopping center yeah and i'm not bold i'm not really bold but i think uh i'm definitely not really bold like that you know but i think it's uh REITs can be a fantastic way to get just get exposure to to real estate uh without the headaches of being a landlord or you know and playing other sectors that if you don't know anything about could be like a safer way to play, but still gain exposure to the growth of the sector. For any angry real estate

investors, you can find Matt at Matt underscore Cochran seven on Twitter and talk to him about how he just made you mad because he talked about investing in stocks versus real estate. That's all I have. All right. Airbnb is a topic I want to talk about. So Dan, this question's for you. Airbnb is obviously not public yet. A lot of people sort of want them to be public. They have a pretty intriguing model. Do you think that they are disrupting the real estate sector or is it really just hotels and rentals? So they were, I don't know if they still are. Pre-pandemic, a lot of people here, I live in West Palm Beach or in Miami, bought houses. Probably 10% of my building is people that only live here two or three months a year and they Airbnb the rest of

the year. That's not legal in many places, at least not legal in terms of the law, but my building doesn't allow that, but it still happens quite a bit. All of those people, when the pandemic hit, went, oh my God, we have these unrentable properties. What are we going to do? And a lot of them sold them because it's been a hot market to buy and sell. So I do think they were disrupting real estate. Whereas, you know, I live here, I live here 12 months a year, and I would have want it to come in and buy and there's less inventory. Prices are artificially high. But I do think a lot of people who saw that as easy money are wary. There's a lot more cleaning expense now. You know, I'm someone, we have a second home and we let our friends and family

stay there. Even with it being friends and family, there's still damage and people don't clean out the fridge and they don't put the trash out the right day. So like all of a sudden you have like Airbnb people coming, you need property managers, you need cleaners, you need, it's not the easy money people think it is. Now there are some markets, you know, you have a great Airbnb in Key West. Well, you're probably clean it up no matter what it is, but you're also spending seven, $800,000 on a two bedroom condo. So yeah, there's been some disruption, but I think right now people are going to be really, really wary about buying a house for Airbnb, you know, until the market, the travel market stabilizes. Right now, a place like Miami is still a good place to be because

they can just long-term rent them. There's zero inventory for people who are looking to rent out our place where I am right now and move someplace bigger. And basically, if we don't look at something in the first day it's on the market, it's gone. So there is demand, but that like two-night, three-night rental where you could really make a much higher monthly rate if you had it rented out, you know, 70, 80% of the time, people are going to be a little scared of that would be my thought. Okay. So it sounds like the supply might be a little bit in danger. Is that what you're saying there? Yeah. Well, just if you're in a really hot area that people also live in, or especially here in Florida, where a lot of people have offices in New York that are

closed. Like my brother is living in Miami. His office is in New York. It's closed. He doesn't need to live in New York. Why pay five grand a month for a one bedroom where he could live on the beach in South beach for half that. A lot of people are doing that. That's going to end. So at some point, that demand is going to go away. And in theory, the demand to like, hey, I want to go to Miami for the weekend, get an Airbnb. But there's a lot of risk. People love that business. But I don't know if you guys, you have used Airbnb a lot. I'd say it's about 70-30 that where you stay actually looks like the pictures, that it's a good experience. I'm not a big fan of when a brand doesn't control its own experience so they can control the cash the you know the the how does everything behind the scenes go they can't control the place I rented in Miami that everything was beautiful but all the furniture was so modern there wasn't a comfortable place to sit in the whole house so it was really like not a fun place to stay or that it

was half a mile from the beach but the half mile was a dangerous not great neighborhood that you wouldn't want to walk through you know alone so like it's a business that i'm really really wary of although i am aggressively a customer right i i feel the same way and i feel like airbnb is always going to have that is customers don't exactly know what they're getting like they would with a marriott or you know if you're going to stay somewhere and you're staying at a hotel you know exactly what you're getting airbnb i'm sure there's some horror stories out there or at worst some i've had some we we rented a condo on uh on the beach in hollywood florida and the pictures were must have been taken in like 1982 because when we got there the place was dilapidated

the the air conditioning didn't work it had those like portable air conditioners that sound like planes are landing like it was moldy like it was awful and that probably isn't airbnb's fault but they need to do a better job of okay this has been verified we know this is this a lot of times you can read through the comments and see this place because i post a scathingly negative review of it they immediately had a hundred new positive reviews they were clearly paying a team of people to just go and do reviews they need to do the amazon model where clearly the reviewer is someone who stayed there as opposed to just like their ability to pack it it's not always a great experience and if that was just me it would have been fine but I was with my wife and son so we

actually left early even though we liked the the location we were in I've had a few bad ones and just ones where you got to be really careful like we rented a place that said it had three beds I didn't notice the two of the beds were single beds basically like army cots um so you got to be really careful and yeah if I book a night at the Westin I kind of know what a Westin's going to be like. Yeah, definitely. All right. Wrap up question for Steve, Matt, and Dan. Between Zillow, Redfin, and Opendoor, who I believe just went public through a SPAC. Correct. What company is most exciting to you guys? Matt, want to go first? Yeah, I'll go first. Sure. I'll take a pass on Opendoor just because I don't know too much about it, to be honest. And it's a company

I'm, I'm looking forward to studying and getting to know more. I, I really like Redfin. Look like everything Steve says that the problem with buying real estate, you know, at the beginning of the segment, I think is very true. It's a purchase that most people only make three to four times in their lives. And it's very complex. And Steve might disagree with me. But I think Redfin is the best bet for being a one stop shop in the future. And unlike Zillow, they don't have like a legacy business tied to the uh traditional real estate market that i think i just think it just makes me more weary of owning zillow shares than redfin uh you know i love redfins like you know it has another revenue line where it includes like mortgage origination services and title settlement

services and just and things like that um that i think can really grow in the future i love that they have their regular like brokerage service where you can like list a home for uh a one and a half percent fee and a one percent if you buy and sell through redfin but they also have a concierge service so if you don't want to fix up your home and and get it ready for pictures and do all that uh for for extra money like redfin takes care of all of that for you so i just really like what redfin has to offer um and i'm excited for its future and i'm a shareholder steve any rebuttal i i would i'd agree i own both zillow and redfin actually and uh i i'm i'm a little more excited for redfin in part because of uh it's relatively small size and uh i love how it's sort

of um it's disrupting kind of the the traditional commissions uh structure you know so come is it'll come in and you know one percent commissions or whatever and instead of you know three percent and and uh yeah so yeah i wish we had you know redfin they're not in my area uh but i think austin's bought did you buy or sell a house on redfin before yeah yeah used both traditional models zillow and then redfin and redfin was hands down far better experience but funny thing i would not be terribly surprised if zillow attempted to acquire redfin at one point and uh you know the I just in this in the same way that it came and uh acquired you know the was it truly I think yeah so yeah I mean it's not afraid of big deals like that and uh so that wouldn't surprise me at

all I I don't I know less about Opendoor but I know it's an interesting app-based interface and it's sort of breakneck growth I think they went from like 700 million in revenue in 2017 to like 4.7 billion last year uh so it's kind of wild uh and people speak highly of open door and i think their eye buying business is on par or maybe slightly ahead of where zillow is as far as scale goes but um so open door could be really really interesting and you know i might end up buying them too but uh at this point i'd say maybe redfin uh zillow and open door just because of my lack of relative knowledge. Okay. Dan, any thoughts? So if things go really well for Redfin, they make one and a half percent. To me, it's the margins here that are a problem. Now you did say,

Matt said something I like. The idea that they would do mortgages where you're essentially making a mortgage payment as your commission, that's a much better business. So if their business wasn't actually buying and selling houses, that part I don't like a lot, but if they made that so easy for you that you used all the rest of their services. You got your insurance through them. You got your mover through them. That's where there's some money to be made. And that's the business I like. People ask about Rocket Mortgage all the time. And Rocket Mortgage is matching you to mortgages. They're also selling you all those other things. It's not a company I love, but they are kind of the dominant player in that space. And there's all this room to,

if you trust them, sell you all sorts of other stuff. That's where I think Redfin could go. i buying to me is insane you're taking a let's see the average two bedroom here in west palm beach is probably 350 you're putting 350 grand out so you can make 352 like it is a crazy idea again unless it's all about controlling the process and getting all these ancillary commissions and there's tens of millions of hundreds of millions billions even to be made in all those commissions uh you know it's why there's so many websites out there that have like you know text that's trying to get you to click on their thing to get a mortgage through them.

Directing those is big, big money. There's money there, but I don't know. I feel like there's better places to invest in any of these companies. The key to iBuying is going to be how the margin of safety they buy the houses for. So like to test it out, like I actually, I tried to, I just wanted to see what offer they would get me

like a few months ago on my house. And I just, I went through the process. I had to take some pictures. It was kind of a pain in the neck for – because it was just really a test, and I felt bad about it because I wasn't really doing it in good faith. However, like it was – the offer was insulting. And so like as long as the offers remain that conservative, I'm not too concerned about the iBuying stuff. It's when they get too aggressive with the iBuying that I would be really worried because there was a – there was like a huge margin of safety they had. like if i had like gone through with it and like accepted their offer i mean that's like

it it really was it was it was literally like are you kidding me like there's no way i would take this offer so i mean as long as they get that margin of safety on each house by just low balling uh um and these very conservative estimates i'm not too worried about it now you you see the future though like we're down the road like uh so they get more aggressive with that for growth or whatever, and how banks have done that in the past, where banks can be very conservative for a long time with how they originate loans, and then they get more aggressive and reckless, and that's what gets them in trouble down the road. So it would be something to very much keep an eye on, for sure. And it's definitely a danger. But the offer I got, I just thought,

right now, they're getting enough margin of safety on these houses where I'm not too concerned. Yeah. So one interesting point, a little statistic, I believe if memory serves Zillow's acceptance rate for their offers is like two or 3%, like pretty low. Like people like, yeah, sure. That'll work. Like if I don't have to deal with the rest of this, that's great. I don't know what it is for Redfin. But I want to say I read something about Opendoor, like the conversion rate for Opendoor leads is like 34%, which is just absurd. And I think it's like the ease of the system. So that's something to kind of keep in mind. This will be really interesting to see this kind of these iBuying wars accelerate. Yeah, definitely. I might give up a couple of grand to sell my house faster. I'm not giving up like 70 grand to sell my house faster. And it was more than 70 grand.

Like I would have been giving up. Like, I mean, it was literally like insulting, like, you know, but it made me feel good as an investor, like, okay, they're not getting crazy with this. it's a tough business to be in and even the you know some of their market is flipping it's okay this house needs work we can do that work cheaply and more efficiently because we have contractor teams in those markets but even that you're competing against all of these professional contractors who are also looking for those houses and deals it's a it's a really tough market doesn't doesn't mean they can't make it work i just sort of feel like there's companies that

have an easier path. Yeah. And it sounds like the customers that are selling their houses for those insultingly low prices are ones that are in like just a dire need to get rid of it. So I can't imagine that people that are doing it just to see what the Redfin offer is like just for fun are like, yeah, I'll sell my house for 20% less than it's worth. But anyway, we're going to get to the wrap up question. And we always have the same wrap up question here. And it's what is one piece of advice you have for any investors? Instead of going all the way around, we're just going to do one as seven investing as a whole. So what is one piece of advice that seven investing has for investors? Yeah, Ryan, I'll take this one and speak on behalf of the team that are saying that

we would recommend for investors is to think longer term. This is just directly related with our fourth seven investing principle, which is that time is on your side. There's so many short-term traders chasing profits on whether it's Bitcoin or COVID vaccines or pot stocks or whatever else it is. And you're up against algorithms that are just in and out of trade so quickly. And a lot of people think that's what the stock market is, but it's not. At least long-term investing has given you a much better chance of success. And Warren Buffett started investing when he was 10 years old. He's now 90 years old. He's got 80 years of investing experience because he's been able to compound and look at the long-term always. He reads multiple

newspapers every single morning. That works. And just when you hear about the things that we talked about on this call, you know, whether it's living technologies or genomic sequencing or the real estate market or cell towers or connected fitness, I mean, these are long-term trends. These are not things that are coming in and out in a year or two years. These are going to be in place for decades and it takes time for companies to enact their strategies and for management to really execute and so we really believe that the way to make money in the stock market is to embrace that compounding nature that it has and invest longer term okay love that answer um thank you guys all for coming and joining us on the show thanks for having us had a great time

all right welcome back in thanks again to seven investing the whole team for coming on really enjoyed it next we have our hot water for the week how many do you have i have two but they're good i think they're they're very good i have three i think go ahead go ahead okay my first one is amc is in hot water uh this one's real this week in a filing with the sec they cited of their concerns of staying alive if they don't find new sources of liquidity um those bonds i talked about might be in trouble so for reference in 2018 amc did 12 billion in sales roughly and in 2019 they did 11 billion in sales and so far in 2020 they've done less than two so yeah they are in trouble i believe they are 80 in terms of volume of people coming in and out i

believe it's 85 off the highs um they already had 5 billion in debt before the crisis i doubt anyone wants to lend to them right now i can't imagine that bailing them out makes a whole lot of sense because i mean you're bailing out a business that was slowly eroding anyways so you're basically catching a falling knife if you're government and also like it's not a necessity to go to theater so i don't think they would bail them out um well let me let me pinch you a little devil's advocate scenario for the bondholders bondholders don't uh they don't if someone files bankruptcy it doesn't mean the bondholders don't get made whole and you might get converted into equity during the new um when they come out of bankruptcy and then wouldn't you think that those assets are

probably going to get bought up by one of the streaming services or disney or any of the other big companies there's a chance of that right what there could be some their assets are the real the theaters who's gonna buy it netflix amazon i was gonna say why doesn't netflix just outright bid 300 million dollars i mean their market cap is 350 million roughly right now why doesn't netflix just give them a 300 million dollar bid and say we'll buy it yeah i mean they could just wait for him to go bankrupt and then try to buy him um out of that but what's the point of netflix having all that real estate i mean i don't know it's just another value add to the subscription yeah potentially people like to go to the movie theaters i i love the movie theaters and i'd hate

a no amc world but at the same time if i'm a business i don't know bailing them out makes a whole lot of sense plus you get five billion in debt on your balance sheet that's not helpful either yeah i mean netflix probably doesn't have the balance sheet to do it with all that debt but coming out of bankruptcy if the bondholders so maybe this is when if the bondholders uh don't get made whole and everything kind of gets wiped out um and i'm saying this as someone that doesn't know much about bonds so if i'm wrong please just go you know just let it go but the yeah the yeah i mean that could be nice for netflix if and get some of those assets without taking on the debt but then a bigger company amazon could easily do that um and add it to the prime subscription for

sure um although i don't think a lot of people would like that um they all i think the sentiment would be negative like okay amazon's eating everything but then they'd be like oh i mean it's a good value proposition. Yeah. All right. My next hot water is SPAC negativity because I think it's over. Yeah. So according to a New York Post article, Bill Ackman wanted to take Bloomberg public via SPAC. Apparently, Mike Bloomberg would have been able to retain his ownership. But regardless, Bloomberg dismissed the rumors, said it wasn't true. And I'm not sure it really makes sense for big companies to go public via SPAC it's kind of like a hack for smaller companies because they don't pay all the fees of like an IPO but Bloomberg can definitely do that and retain

their ownership yeah there's no need for them to go public um Ackman just wants a piece of that this guy it's a high margin business right there would you want to see Bloomberg in the public markets apparently they did more than 10 billion in revenue last year yeah it seems like a really solid business they're they have i mean they have really expensive yeah they have the terminals cost a ton to use people use them people use them and the client the clients they have can spend to use them so i mean i don't know it seems like it can't cost that much to make the margins have to be upwards of 60 operating margins probably 65 unless they're spending a lot of money on on the news stuff or any of the other things and that's kind of subsidizing it but i don't know

seems like a fantastic business and i don't think mike bloomberg wants to get down to the public and be like yeah this is such a great business keep it on the low you know they'll keep making money by themselves as their lp or whatever they call it yeah uh the pizza industry is in hot water this week well-known ex-papa john ceo papa john schnotter himself yeah wrote a short report on the papa john's company on seeking alpha on seeking alpha that was the cherry he's a seeking alpha contributor yeah that was the cherry on top that he's on seeking alpha nothing wrong with seeking alpha but a lot of it's like and we know people that write on there uh a lot of it's like anonymous um blogger is a good way to make money or just get your word out there his thesis was

basically that their current success like their short-term success is all because people like pizza delivery during covid and and shack he was basically saying like no that doesn't really count their success doesn't count because it's temporary and then he went ahead and said also the pizza quality is worse since i left i bet yeah well he tried 40 pizzas right that's that's right he did 40 pieces in 30 days i love how yeah and first of all that whole spiel where he's like i can eat 40 pizzas in 30 days that doesn't make me want you as my ceo anymore or less well in december he said a day of reckoning was coming and i guess covet hit so he was kind of right for everyone but it helped their business yeah it's obviously nonsense he's just jealous i mean they got shack in there

doing a whole marketing type deal and shack's been really strong with all those things so when do you think papa john's will launch his fund if he's seeking off a contributor yeah he'll last longer than um i don't want to say he seems clinically insane yeah he is i mean if you name a company after yourself it's a it's a red flag just i mean oh bloomberg i guess but uh yeah all right um yeah what do you have hot water okay our guy this is coming up i guess a lot of 2019 things coming up uh fire fest billy mcfarland has been placed in solitary confinement you want to guess why why he launched his own podcast called dumpster fire and he was recording from prison hey you know what this whole new media operations from prison is kind of nice him

shkreli we may have to invest sub stack or is it just a typical blog it's just a newsletter it's free look at this he can't charge for it people that have been exiled by society papa john himself billy mcfarland martin shkreli these guys are now contributors yeah they're a part of the media empire they are i would love to see um i would listen to the billy mcfarland prison podcast if was at least if it was short enough um but right now he is in 23 hour a day solitary for the next 90 days so tough look for old billy yeah that's tough but you know he deserves it okay uh next what else do you have next one okay samsung ceo dead at age 78 but the rumor is that he was actually dead seven years ago so samsung owns this hospital in korea right and he has been

technically in um intensive care above and like the penthouse floor of this hospital no one's been able to see him and the reason people think they actually didn't announce his death until now is because the tax laws in korea say that if you have a you know the estate stuff or whatever the succession things you know how there's all those fees with that yeah you still have to pay the taxes even if it's in um stocks or equities so they would have gotten a fine on it or sorry they would have to pay taxes even if it didn't get liquidated so that's just a tough move and people say like there's this giant river that it's been um the death has actually been hidden for seven years fascinating conspiracy theory and it's one that's actually slightly believable

yeah that's sounds that's pretty interesting what was uh did do you have any other ones or that was my two there was that one about uh what was that that new ev company oh helium yeah that's a joke too what is it 7 000 price to sales yeah price sales 7 000 trailing uh 2022 it's more like 40 which is reasonable for an automotive company right but oh god all right whatever it's all a joke it's just it's all fuck marry kill the theme this week is reasonable spax if they were to happen i know two of them have happened but speculative hasn't uh bloomberg which won't happen but whatever open door and draft kings oh kill open door terrible margins mary bloomberg fantastic margins i'm guessing they have facebook like and google like margins um or adobe or

microsoft whatever you know something like that i mean the subscription's so much and a lot of it's already fixed implemented costs i mean it's it's amazing they just give out that free keyboard it it's it's printing money and then uh i'll fuck draft kings because seems exciting that wouldn't probably want to invest um seems low margin gamble yeah literally literally a gamble that's a good that's a good pun there what do you think yeah bloomberg seems like the safest company out of all those um so mary and then draft kings it's trendy right now sports betting in general is just trendy so um yeah probably bang them the numbers on the draft king it's just a lot of those gambling numbers those margin numbers the unit economics they seem poor um i know it's

exciting i know there's going to be a lot of dollars flowing in but it's just tough to see how the businesses can succeed or be that large like uh we discussed on the interview the economics on aggressive eye buying is a lot worse and it's risky yeah um okay anecdotal evidence uh what do you have okay well chipotle had earnings last week and every time i get it i always think we've missed the boat and i just it's probably the one that i think about each week like it was right there a lot of people could have seen it this is my anecdotal evidence too yeah i mean it's just it's tough like we we knew that they were gonna win in digital but the valuation was just it's just high i mean it's still high the food is remarkable i wouldn't call it remarkable

but it's great food it's not great food it's it's probably the best fast casual it's the best fast casual food out there i'll give them that what about panera panera is up there yeah those two were probably the best fast casual out there yeah yeah i mean it i get i get bullish every time i go and i use the app or whatever just solid anyway but everyone saw it i don't know okay my anecdotal i don't know if you have any more but that's it i've been listening to the annual meetings we kind of discussed this earlier from uh berkshire and they go all the way back to like 1994 and maybe 93 but they're on apple podcasts sorry spotify um yeah come on spotify get on that buffett at one point and people don't talk about this side of buffett but he said one of the best things about

being rich is being able to hate more effectively he's he's like when you're rich you can hire lawyers and accountants and rough them up financially and then if you're poor he was like all you can really do is maybe snub them from some turkey at thanksgiving spit in their sandwich yeah it's like people don't talk about the killer buffett but i feel like that killer sort of instinct or that sort of mean side is what has made him so successful well now he's like in the lore of investing itself so over the last 20 years he's kind of just been that that figure that we think about but back before the turn of the 21st century he had to get where he was and he didn't do it by being a nice guy um as a businessman he just did whatever um whatever you think about

how a businessman should operate, he did it in the best ways to return value to his shareholders. And that's what he did. And then over the long term, you know. Yeah. All right. Well, that's going to do it. Thank you guys for listening. Follow us on Twitter. It's our promo code if you're going to sign up for 7investing is CCM. And we'll have a link in the show notes if you want to use that. We'll do that as well. Yeah. Follow us on Twitter. You can email us chitchatmoneypodcast at gmail.com. We are not financial advisors. Anything we say or discuss here on Chit Chat Money is not formal advice or recommendation. Thank you guys for listening. We'll see you next week.

this family is on the brink of civil war on september 18th mob land the hit original series is back on paramount plus from the underworld of guy ritchie do you want to step up the ladder i want karma dead starring tom hardy pierce brosnan and helen murin do i have to do everything myself mobland new season hits september 18th on paramount plus