Chit Chat Stocks - Roku, Zoom, & Fastly with Beth Kindig

Episode Date: October 20, 2020

Your hosts Ryan Henderson and Brett Schafer interview technology analyst, Beth Kindig (20:50). Before the interview, Ryan and Brett tell their favorite stories from the week (1:35). The two discuss the future for brick and mortar (13:30). During the interview, your hosts Ryan and Brett, play devils advocate as Beth Kindig defends Roku (38:40). Catch Ryan and Brett on the back half (1:02:58) as the two cover fan favorite's like hot water (1:03:05), FMK (1:08:55) and anecdotal evidence (1:09:54). Enjoy the show! 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 october 20th today we have an interview with beth kendig we talk roku zoom uh even fastly as well and a little bitcoin at the end although that was just for about two minutes there but yeah it was brief uh but before we get to that we have our stories for the week what are you talking about i'm talking about a another exciting topic it is corporate credit worthiness um there's only six current companies that have a triple a rating um and if you don't know what that is i'll explain it when we talk about it but yeah the corporate credit is not it's there's a high risk for default out there right now okay and my story is the disney debacle uh we have two prominent fund managers basically battling it off so we're

gonna talk about that and then current state of thin twit and then on the back half as always we of hot water, fuck, marry, kill, and anecdotal evidence. Let's go. Welcome to Chit Chat Money. On this show, host Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now please enjoy this episode. All right, welcome in. You want me to kick things off?

Yeah, go ahead. It's the fun one, so. Yeah, the Disney debacle. Last week, Dan Loeb, am I getting that right? Yes. Dan Loeb from Third Point Capital wrote a letter to Disney stating that he would like to see them cut their dividend and go all in on streaming. I think a lot of people heard about this because it kind of got all over the news. And so Loeb is an activist investor and apparently he doesn't really he doesn't traditionally have like a super long time horizon most activists don't i imagine you come in you make change basically get some

shareholder value out of that change then flip it to the long-term shareholders right yeah but there's also some activists that are more long-term in nature anyways so in his letter he stated by reallocating a dividend of a few dollars per share disney could more than double it's disney plus original content budget so basically his argument was that cut the dividend entirely and just go all in on streaming and there was a little bit of backlash to this um some people were a fan of it some people weren't but uh chris bloomstrand who runs his own fund what's it semper augustus semper augustus yeah um berkshire hathaway expert if anyone i mean he's the go-to guy on them yeah he's a great investor great writer he wrote a rebuttal letter stating

that he opposes third point's views at one point in the article he says it seems concluding that the tens of billions even hundreds of billions of dollars being spent today on content by traditional players like warner media discovery viacom cbs fox and comcast nbc universal plus upstarts like netflix apple google and whomever else will equate to healthy returns on capital for those who outspend their rivals spend on crap and you might as well light money on fire i think i agree with chris here i know you're gonna ask a question here of whether i do agree i think i do agree um 100 with chris specifically with disney now if you're netflix you gotta build a brand and you kind of gotta you kind of gotta light money on fire because you're trying to see

what sticks you don't have mickey mouse already you don't have the lion king all the other whatever disney things that they own star wars and marvel um and i think yeah the the big point he's trying to get to is that the competition in general in the streaming wars is going to lead to probably lower returns lower value returns than they would have got if it was just them and netflix you know i mean it's gonna be the roic will be what's the whole thing is if you're not high roic business and that's return for anyone that doesn't know that's return on invested capital i know a lot of people don't know what that is so that tends to attract a lot of competition and in turn the roic tends to decrease because competition provides dollars to the

competitors so it ends up being sort of i mean it's going to be a more crowded space as time goes on and that's i mean that's not a hot take by any means but i mean we can see netflix was the high roic business correct that's what you're inferring right and he goes on to state his ideas for capital allocation as opposed to just streaming he says retire a portion of the debt used to acquire fox as well as the debt taken out for liquidity to cover covid costs make any bolt-on acquisitions to add to profitability and disney's brand repurchase shares increase capex for the parks or the studio and media business which strategy do you like better um if you were a disney shareholder go all in on streaming or keep doing what you're doing essentially i think i agree

with bloomstram they have enough capital to invest in streaming and since they could probably spend like a third or maybe only half of netflix's budget and still get the same um quality and value provided to the the viewers just because of the disney brand where you have a few hits per year you can see them transitioning either from that movie business that was like eight movies or whatever per year or it was probably more like 15 if you go from pixar and marvel yeah and star wars like one a year uh they didn't have to spend as much money uh on like a ton of movies they could just do a few but they're all hits they could do that on streaming and they could be movies tvs documentaries whatever that could be a way to win and it's just a competitive

advantage because of their brand you don't need to try to become netflix when you don't have to be now amazon prime has to try to do that apple tv plus has to try to do that and a lot of other players do but disney has an advantage where they don't and they have a lot of other profitable businesses too i mean they're maybe not profitable right now right true true yeah but it just i don't i mean if you're in disney's position do you think it's really a good idea to go all in on anything no no like your advantage is that you are basically serving content not necessarily content but you're a media business across different channels yeah like who can repeat that i mean there's very few people that have the ip and the value across all different channels

that disney has yeah i'd agree yeah the only thing i'd agree with is retiring the dividend because they have a lot of debt they're gonna have to pay that off i'd rather just retire the dividend sure retire the dividend but that doesn't mean all those dollars go to solely streaming yeah i just you have to invest in what's going to have the high return on capital and since they're late to the game they have to use the advantage where they don't have to invest as much money but then they can invest in parks and other things that do have a high return on invested capital when streaming you know historically did but i don't think i mean it's really easy to see that all the dollars pouring in are going to have the same returns netflix had of the past five years right

okay what about your story okay uh this was a financial times article and it was outlining how and why corporate debt ratings have suffered over the last 40 years and especially in 2020 So a little history, Franco Modigliani and Merton Miller won a Nobel Prize in the 80s for starting up the M&M theory, which states that because interest payments are tax deductible, and now when you say interest payments, that's interest payments on a debt that a company is holding or a bond, the value of an indebted company actually may be higher than one without, specifically because of that tax deductible. strategy that you can employ now couple that with the lowering of interest rates since the 80s i mean it's been four decades of lower interest rates and now we're at zero for the foreseeable future and corporate debt has ballooned so it's just like i mean you it's really easy to see why inclined to borrow when interest rates are lower yeah and simple and when there's those tactics tax deductions that was a perfect storm of all right companies are going to borrow because it's

useful for increasing earnings per share and that's how typically how they get paid there's a nice quote in here from a financial analyst in the 80s they said equity is soft debt is hard equity is forgiving debt is insistent equity is a pillow debt a sword that's pretty eloquent um i think it makes sense so equity might dilute shareholders a lot but debt if you use it correctly is better but it can also lead to you know easier bankruptcy right it's more alarming when you see high debt numbers but it can be a like huge advantage like a huge tool to propel growth and i think people tend to overlook that especially if you have um you know stable cash flows and you can get debt at a low interest rate which not everyone can get um because which i'll

say below here um so four decades ago 65 companies had a triple a rating for their bonds now triple a rating just means that's the highest level that's the top credit worthiness by the ratings agencies that was in the 80s about six percent of companies now currently there are only five total companies with triple a ratings and only 14 even meet the single a threshold that's i mean it's very concerning and you can see that with covid you know this debt has come back to bite investors and companies they're around 88 bond defaults in q2 on its own the question i want to discuss before we get to state of fintwit is will this shift companies from using debt to instead raising equity even if it dilutes shareholders and you have to go in at a lower

price than your current trading price to make sure they have a resilient balance sheet will we see a transition you think from from equity yeah using debt um sorry using equity to finance the company instead of debt yeah i mean i feel like we're starting to see that why i'm curious why the credit worthiness is down is it just so more stringent rules around like it's just it's just the quality of the company and how much debt they have so it's basically a triple a rating means you're almost guaranteed that the company is going to pay you back and then like a b or whatever or even a triple c that is means that the rating agency and they're not perfect but they estimate that it's going to be if you're a bond holder you might not get made whole you know

hypothetically if you have issued more debt it makes it harder to have triple a rated debt in the future sure yeah because it essentially is risk yeah or to yeah because they lower that rating just to make it so it doesn't entice uh executives and you know it gives it makes the debt like hard to pay off just you know intuitively like that old debt is still there so you're not going to be able to pay off that new one right away yeah i mean it was an advantage for people with resilient balance sheets in in 2020 i mean they've been companies with resilient balance sheets did really really well my only concern is though if interest rates stay this low i don't know why companies would stop financing themselves with debt it's really just the bad companies that

are getting a lot of business just like always that's yeah i mean that's really always the problem with debt is like yeah you might have stable cash flows and so it doesn't make it totally risky but there's always that element of like potentially huge risk where you can't pay it off at all and we saw that in with some businesses due to covid if you have a lot of debt and all of a sudden your business is completely halted then you've got a problem and then there's 88 bond defaults in q2 that's a lot yeah okay um current state of fin twit i'm gonna be talking about the gavin baker article okay yeah um yeah you just want to do that first because i got three short ones yeah so gavin baker wrote a piece on brick and mortar retail um i thought it was one

of the best articles i've read in a long time just right off the bat it was basically just highlighting that, yes, we've seen a shift of potential future financials come sooner for the e-commerce businesses. And that's great. And that's obviously boosted the stock prices of these e-commerce businesses. But what we're going to see is a long-term shift of the category leading brick and mortar retailers. And so he goes into this in depth. I thought the fourth paragraph specifically was really good. So I'm just going to read it. And then I have a question for you. He says, the value of a physical retail infrastructure has been clear since Amazon made their largest acquisition ever, Whole Foods. Brick and mortar stores have tremendous online value in

addition to enabling true omni-channel commerce. Nothing matters more for an e-commerce company than marketing efficiency expressed either as gross margin payback period or the ratio of customer acquisition cost to lifetime value. Brick and mortar stores significantly lower online customer acquisition cost by improving marketing efficiency higher click-through rates higher quality scores for ads consumers are more likely to trust a brand they have seen in the real world ironic in a world where customer acquisition cost is the new rent that one of the best ways to lower your online rent is to pay rent offline for physical stores so he also says brick and mortar stores also enable b-o-p-i-s buy online pickup in store and the in-store return of items

purchased online which consumers value economically bopis or b-o-p-i-s right is always will always be cheaper than same-day delivery and large numbers of consumers are highly cost sensitive my question is do you think e-commerce has a ceiling as a percentage of overall spend it depends what you classify e-commerce as i think there's a good chance i mean like directly direct deliver online and it delivers to you i feel like that has a lower ceiling than people think yeah this is why i mean if amazon didn't have aws it would be a lot smaller um and if they didn't well there's also some of the ancillary stuff like prime video but yeah i mean amazon.com it has a ton of competitors right now and i don't think the growth is infinite like nothing has infinite

growth um and there's a well-capitalized competitors like walmart target that are using their stores to their advantage now uh something they didn't do for what until like what 2017 2016 probably right when amazon bought whole foods it is yeah i mean it's something to think about like everyone was saying that e-commerce is going to kill brick and mortar retailer well i think it's just going to kill bad brick and mortar retailers so the good ones will survive and it's just going to be a harsher environment if you're not on the top of your game i mean yeah not only will they survive i think they're going to benefit from all the capital that these other companies have poured into making it really easy you know like consumers are aware

of buy and buy online and pick up yeah like you don't like if someone were to try to start that like a target were to try to have started that it would have been really difficult really cost intensive but now it's really easy for any leading brick and mortar retailer to just add it to their functionality yeah i agree i agree strategy and it's also going to help yeah i mean it's going to help all right i just think about it okay macy's jc penny they're bad businesses in 2020 they're going to go bankrupt or they may have already gone bankrupt i can't remember since i was gone this summer it's going to help the leading brands and companies in the new category So the two examples I like are Revolve Group and Stitch Fix, where they're going to eat up all those new dollars, and Amazon will as well, where the brick and mortar is kind of going away, but then there's going to be room for expansion in brick and mortar, but also in online, where e-commerce may not grow as a whole, taking market share or whatever you'd like to talk about with that, but the winners will be able to eat market share from that total pie, even if the whole pie isn't growing.

Even during, I think Gavin Baker put this in his article, but even during this COVID crisis, Amazon's market share of e-commerce spend decreased. Yeah, that was an interesting note. People don't think about that. Now that it's so apparent how much capital or how good of a business that really was, it's attracting a lot more competition. Yeah, it'll be interesting to see who wins. I mean, Walmart is putting up a big fight here, and, yeah, it's cool. I don't know. I don't invest in those companies, but it's cool to see who will win.

Yeah. All right. What do you have kind of set up into it? Okay, here's an interesting story. I don't know what book it's from, but here's the quote. It starts out with this, kind of in the middle of a sentence. Buffett did that after the Capital Cities deal in 1985. He sat for three long years without buying a single common stock.

and then when coca-cola fell to attractive levels he staked a fourth or so of berkshire's market value on that one stock patience followed by fairly aggressive conduct yeah do you think you could ever sit for three years assuming you had a permanent capital structure without ever making an investment that's three years that's basically just slightly longer than we've ever been in investing hypothetically i would like to say yes but i know for damn sure that i cannot and current at least currently i mean he was like 60 at that point so maybe when you're older you know but i mean imagine you're getting more and more influxes basically of capital yeah like i guess if your capital is fixed it's possible if your companies are performing really well and they are you know

fairly priced and you don't want to add to them but if you're getting more and more capital that's really hard to do yeah probably not good to do well it ended up being really smart for them but i think you have to have the capital if you have the berkshire structure it works out but if you don't have something like that it probably won't yeah all right is that gonna is that i have no i have two more sorry i just gotta open these tweets okay this one's another buffa one i don't know why um here's a riddle for you see if you can solve it which born buffa deal is this he paid 40 times earnings for a capital light business with large growth opportunity loyal customers and a winner take all economics multi-bagger over a six-year period for which was money losing for five

consecutive years pursued growth via discounting you're probably not going to get it but i have no idea buffalo evening news what makes you think i would even come close to getting well no i knew you weren't going to get that but it's just interesting to see that that was what the business was like in the years i think it was 90s yeah when newspapers were a thing they were they were great businesses interesting all right what's your third one third one one second hope it's not bucked again or else okay uh oh it's coca-cola again so two for two on coca-cola uh basically the it's too long to read here but there was a town in florida where there was one man in the 20s and 30s he was a banker he noticed that everyone was still buying coca-cola and he told

told the whole town to buy coca-cola shares and now the town is the richest uh town in the united states i think or at least was at one point on a per capita gdp and everyone there's like 67 of their inhabitants they were dubbed coca-cola millionaires that are just living off of their dividends on coca-cola shares i mean that dude must have been such a good salesman like imagine getting your entire town to buy the same stock but then it's kind of a camaraderie around it you know like we're the coca-cola town but probably we're buying non-stop coca-cola yeah and the stock did phenomenal so good i mean good for them good for that dude he's probably made a business well he's dead now but yeah too bad um okay well that's gonna do it right yeah okay and next we

have our interview with beth kindig what was your favorite part okay well i guess the whole thing when we talk about roku well how she identified that talk about zoom you know investing in that currently and then we talk about fastly for a bit i like the fastly part well i like it because you know we had another smart investor on tim byers who loves fastly but and they're both kind of in the same market they both invest in sass and they're technology focused and then beth she doesn't she's what quote cautious is that what you like to say cautious about fastly she's not shorting or anything but it's not something she likes so it's good to get that other take because you want to see those contradicting opinions.

Yeah, all right, 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 Beth Kindig. Beth is one of our favorite tech analysts here at Chit Chat Money, and you can find all her work at beth.technology. Am I getting that right? Yes, exactly. Okay. Before we get into our first question, Beth, welcome to the show. Thank you so much. Yeah. I'm really, really happy to be here. So how'd you get started just to begin with? Why'd you choose investing? I suppose I chose investing because I like to make money. I have found that I can make

other people money and I find it to be very exciting. So I guess when people talk about investors, they talk about like passive investing and active investing. I think that there's kind of a new movement for like educated investing, which is like people who they may not manage stocks every single day in a super active manner, trading manner, but they still want to be really educated and find that edge on the market. So when that started to happen, especially around tech a couple of years ago, I feel like, you know, I was perfectly suited for it. So I started to cover lots and lots of tech companies, hundreds of them about 10 years ago. This was around 2009, 2010. And so when I think about like tech growth, I think, you know, I've probably been doing it as

long as anyone can possibly be doing it because I started that long ago. Uh, most of that was in the private markets. It was a lot of the startup scene. Um, and I worked with like hundreds of startups on like how to talk about your product, position your product. Why are you better than the competitors? And I got to kind of see who went on to be, you know, big, a big success on the public markets. Um, so I guess when like you say like why investing, you know, maybe like why tech analysis. I think it would be hard for me to wake up and do anything else. Like I've been doing it for so long that it's just kind of how I spend my day. And if anything that I write can help other people make money, then that's pretty cool. And have you found that the early adoption

of products that you experienced in the private markets has translated well to public markets? like, is the investing style similar? Very, very similar. I would say that private tech investors and their education, including, you know, mine around how to find that needle in the haystack has proven to be completely invaluable for me when I analyze the public markets. And there's certain things like they'll like a lot of the Facebook investors early, they went ahead and invested in every social media app, every social media company, because there was just a mega a trend. And now I don't like invest in every single productivity tool on the market, but I'm not, you know, I'm not shy about it. Like I'll, I'll find a trend that I think a lot of

budget, a lot of money is moving into and I'll load up on, you know, one or two of those pure plays. Maybe I'll even go three. Um, because I know that like diversifying across a big trend is, is going to produce a big winner and then, and then a second really great winner. And maybe I'll cut my losses on the third, but it's really about those trends because what VCs are doing and the private markets is like, they don't have a lot of concrete information on the company performing. So they can't really look at like financial records and say, oh, they had, you know, 80% year over year growth. They've got to look at the trends. And so that has really influenced me. Absolutely. Right. All right. We're going to get more into your process, but I mean, you've been

in the industry a long time and it is a male dominated industry. Have you had any hardships or difficulties or any pros of, uh, you know, being a female in this industry, or do you have any tips for any women starting out as a female in finance? Yeah. I mean, I think we could have an entire podcast episode on that topic. Um, duly noted. Yeah. Uh, what I would say is like a couple of things. One is I would say that there's some fellows who are super supportive and they'll reach out and they'll say, keep going. Like we know, I know you're, you know, one of a few women in the space. You're one of a few women on Twitter. Just keep going. You're doing a great job. So if you happen to be hearing this, thank you. Like I truly like appreciate that

encouragement. Let's see, as far as like the broader topic goes, I would say that like it can create an echo chamber where what I have found, and in fact, studies have proven like the more diverse the management team, the more, the more the company is successful. So when they've looked at tech companies that have a really diverse management, those companies outperform those that are more homogenous and it's because it becomes an echo chamber and it can like become too much confirmation bias. So I think that like, if I were on a thread and everybody like looked like me and thought like me, I would probably get off that thread and go find a different thread as an investor, because that confirmation bias I think can really hurt your gains. And, you know,

when I think about like the finance industry, like for me as a woman, I would say that I rarely come across other women in this industry, but I've had an easier time in finance than in tech. I think like when you talk about Silicon Valley and you know, I've heard some horror stories around maternity leave. Like I've heard really bad experiences around real junior male employees being promoted over more senior women. You know, you might have like Sheryl Sandberg on like the management of Facebook, but how many women are moving beyond management to senior management, to director, to vice president, like that migration. And it would seem like Silicon Valley is the area where that would be like, you know, there would be more equal rights. Like it's

progressive, right? There's all this investment money pouring in, but I've actually found that it is like one of the worst offenders. And so I think that like from somebody who has been in Silicon Valley and San Francisco and mainly been in the tech industry. And now, you know, I've, I've been working in the finance industry for the last few years. I much prefer the finance industry, to be honest. So, you know, I think that it might be surprising for people to hear that about Silicon Valley, but they've got, they've got a little ways to go when it comes to addressing those issues. So, I mean, that's, that's very interesting. Yeah. How I would have thought it was the other way around. Yeah. But yeah, I think from the outside, you think like these

are big progressive thinkers, but you know, they, you know, there's actually been somewhat controversial comments made around how VCs will choose their, who they invest in. And, you know, I think that overall, in my experience, tech is not as friendly towards women as finance. So that's good to know. That's good to hear. All right. We'll get into the process then for how you actually make your investments. You know, the slogan on your newsletter, which I think, you know, has thousands of people

get that newsletter. I'm one included. The slogan is the best gains come from getting in front of the herd, which you mentioned a little bit before. How do you do that? What specific research do you go after? Sure. Yeah. So it takes a lot of time, like a lot of time. And I think that, um, that's where, um,

whether you use my service or another service, I know that you guys have worked with the Motley fool in the past and a couple others, like get a good service, because I think in order to get in front of the herd, you're going to have to spend a lot of time where we're like, the herd is interesting. Cause it's not just like, you know, in your mind, you might think it's a lot of people, but it's actually a lot of machines. So that's good news though, because the thing about machines is like, they can't really, you know, in a granular manner, figure out like what makes one tech company better than the other. Machines are basically looking for a lot of natural language processing. So what is the overall sentiment on Twitter or other sites that it

can scrape? They're looking for like price trend movements, like, is it breaking, you know, certain supports and, you know, breaking resistance and whatnot. And so like in that way, like if you have the right if you if you have the right angle and you have the hours to spend you can beat the machines and that's that's you know a big deal because once the machines pile in it's that's always the big goal the way that I do it and we did kind of talk about it is I talk I look really closely at trends trends that I truly believe have a very long runway so I'll choose like a trend and I know like a lot of budgets are coming in to that trend a lot of migration and I'll start to like really hone in on the products and I'll look for the products that have an advantage over

the others. So it's not just market analysis and strategy. It's actually like getting your hands on the product, looking at why is there maybe a little more adoption with that product than the others. So I would say like micro trends is a big thing. I do use a technical analyst. I think when you're looking at tech, what I have found is even the very best tech companies go through massive sell-offs and it can really force your hand. I mean, I'm not going to say it forces weak hands because you don't have to have a weak hand to not want to experience a 30 to 40% drawdown on a stock. So I find that one day, what's that? Maybe, sorry, maybe even in one day with some of those companies. In one day. Yeah, exactly. And I find that technical analysis can actually protect you

a little bit there. So it's a little bit of both getting in front of the herd, but then reading where the herd is going and when, and using that technical analysis as well. What does your funnel look like? So sort of from, in terms of thesis development, where do you, from idea, like new idea to hitting the buy button, what does that process look like for you? Yeah. So this goes back to, so I have been to probably over a thousand tech conferences. I work really horizontally. And I think that that's kind of important. So when I'm hitting the button on a trend, I'm not stuck like in one trend. Like I talked to institutional analysts and like they're only media analysts and they'll over, like they'll constantly recommend Snapchat

like over and over again. And this is not a comment on Snapchat. I'm just giving an example. And it's because they don't really have a large, like understanding of the wider verticals of all the verticals in tech. So I'm like scanning, you know, and like in Q3 2019, I know like the market turned really cold on cloud. And I was like, you guys are nuts. Like cloud is definitely capturing all the budgets right now. And lo and behold, COVID came around. Without COVID, it still would have been a strong trend. So anyway, so it's kind of like a football team, you know, like I don't think the quarterback can run it into the end zone over like by themselves. So I don't, I don't try to push the button. I identify trends and I have an internal meeting with my team. And I say, Hey,

like, please watch this trend. Here's some top names. I really want to get into these names. And I pass it off to a portfolio manager and a technical analyst who runs it into the end zone, if you will. And, and he has complete Liberty to buy the stock when he thinks it's best. And if he needs to get back out and then get back in he has you know, full like, you know, I trust him completely to do that. So when it comes to pushing the button on tech, what I found through how he handles it is that it takes more than one person because you have in-depth analysis and then you have someone who's trading the markets. But the other thing is to, it might take a couple of times to get into the right tech stock because they can sell off so fast

and to not let that affect your conviction. Do you, having your background sort of in private investing like you mentioned um do you pay attention to that still like do you pay attention to a lot of where the private dollars are going as sort of um when you're identifying trends maybe like a future indicator almost yeah yeah i do so it's it's like juggling like i i have to like keep one you know i have to keep an eye on the active market and like where the public market trends are but yeah i mean i go to um i go to conferences all the time that are more emerging tech startup related. I just was at an edge computing, um, conference. And most of that is probably not going to come to market for another year or two. Um, so I'm always hunting

and looking for who strategically, because I mean, some of it is, um, through the acquisition process. So you'll see, uh, like edge computing is a great example. Um, there's going to be some really scrappy little startups there that'll probably get acquired, um, because the bigger players aren't going to be able to like develop that themselves. So when you start to see those acquisitions, that's kind of a, you know, that's a good sign. Telehealth is a great example. There's a private company that VC dollars are just pouring into right now. They're trying to compete with Teladoc. But, you know, that says to me, hey, Teladoc's probably a good stock right now. So watching all that is key. Yeah, absolutely. It sounds like you're focusing a lot on

whether it's through the tech conferences or whatnot you're focusing a lot on like the product itself and we're it seems like we're kind of at a crossroads now where we've seen this huge dispersion between the software companies and the more traditional businesses thanks to covid and people a lot of traditional finance investors are like well there's no moat in any of these businesses it's just a really good product i'm curious if you think having a superior product in and of itself is a moat for a business? It's a superior product and moat. I would say no, but I would also say that you should probably get really comfortable with there being few moats in technology. The whole industry is created from disruption. So it's all about how to disrupt

the other company, the competitor. It's very agile. So it requires keeping up on a lot of of product launches and announcements and things like that. So when there are, of course, moats, I would say the most, you know, the moats that might be the sturdiest or the most protected would be, you know, high switching costs. So does it take a lot for your developer team

to like relearn language or relearn a platform? What are, you know, could there be downtime and will your customers have a, less enjoyable experience because you're about to switch and it could create some friction there. So like when I think about Facebook, I'll just give an example because Facebook is so widely understood to some extent, is like I don't think they had a moat in social media until they launched Audience Network, which was an ad exchange that started to mine data whether you were in Facebook or not. And it was mining data because it was inside of all of the other apps acting as an ad

exchange. So if you had gaming apps or you had finance apps, they were using Facebook's ad exchange product to serve those ads. And that's when the moat started to set in because they were able to get in millions of apps. I think they, I don't want to say millions, but it was close to about a million apps. They were in the high 800,000 or something. And that was the moat was that like, now you've got so much data from so many people that even if a social media app has a billion users to compete with you um it's really all about like how much data you they were collecting so um there are i'd say there are very few moats um but that doesn't mean that you know you can't um you can't um forecast a great stock that doesn't have a moat if that

makes sense yeah no that doesn't make sense um and speaking on products again i mean did you ever find there was a product or maybe a software app that you loved a lot and you never ended up owning shares in the company for any specific reason does that ever occur where you kind of you see the product and then you look at the the financials or maybe the industry and you're like all right i can't invest in this company yeah i would say that um for the most part i try not to be emotional because like or love you know i actually didn't like roku's channel very much but i was a big bull um you know just as an example of when i invest and i don't like the profit didn't like that particular channel um and we'll go into why i really like it as a company

in a stock, I guess. But, um, as far as, you know, like Netflix comes to mind, um, I was on like the news, you know, Fox business news and a couple other channels when Apple TV and Disney were coming out. And I was like, you know, everyone was like, Oh, Netflix is going to get dethroned. And I was like, I was like, there's no way Netflix is going to get dethroned. Like, um, you know, with subscription video on demand, these guys have it cornered. Um, but the debt obviously is a concern and so i didn't invest in that but i mean my prediction um was right and i should have so for sure like cnbc and the headlines get the best of me and i try to turn off my tv because of it um i think that yeah okay it's hard it is hard like there's times when you really like

a product and you want to like the business and you just it's it's hard to stay unemotional during those periods um all right we want to talk about roku and we know uh you've been a big advocate big bull for roku i believe it was your largest holding for a while i think you mentioned that on the seven investing show right uh roku zoom and nvidia are the yeah the three largest so we're uh big fans of the business as well and instead of just giving each other confirmation bias we thought it might be fun to play devil's advocate and i actually took to twitter and looked for some of the sort of bare theses what could go wrong scenarios and so we've drafted up a few and we'll let you sort of refute these i'll go first the first one is that connected tv

is really just a commodity business so roku has no real competitive advantage yeah so i think they're probably referring to the devices at that point because um you know like the smart tv um because roku is actually an ad exchange so it's an ad platform so um the whole point is you know you're reaching audiences and you're going to monetize those audiences through ads and so um it doesn't matter if it's your mobile phone your tablet your smart tv if it's a separate set top box um roku's going to capture every audience it possibly can that's streaming ott um so in that way um you know an ad platform is not a commodity okay yeah that makes sense i do think a lot of people um they did focus on the hardware when it came out because that's

what it feels like it was just a hardware business but people don't realize when you just look you know you just got to look at the income statement and it's top line it's right there it's right there they make all their money on advertising um but i'll get into the next one here uh a lot of people say because roku competes with big tech big tech will be able to sell their tvs and hardware for next to nothing and enter the market and compete with them this leaves the competition and roku like obsolete they're just going to drive down the margins yeah i think that we already see roku selling their hardware next to nothing and letting it impact their margins and they're doing that in order to become as ubiquitous as possible while the window is open. So we're dealing with a

massive market. I think people confuse subscription video on demand with ad video on demand. So Netflix has been around for a long time. Ad video on demand has not. And we know that because pay TV dollars, which is truly the market underneath the hardware is the pay TV dollars. The people that pay NBC and the football, CBS and NBC and ABC, those Budweiser, Geico, Pizza Hut, all that stuff, those big brand dollars. So we know that it's a very nascent market because pay TV ad dollars have not migrated. And in general, we still have a lot of problems over live sports OTT, live really strong live news options things like that it's very very new market so when it comes to the big tech giants you know Amazon and Google are both trying to enter that market or they've

entered the market and they're trying to compete very you know head-to-head with Roku right now Roku is the number one so how the question is probably not what if Google and Amazon knock out Roku the question is how has Roku done it this this for this long for the how is roku still number one you know right yeah they've been competing with them forever forever yeah they have what is it 43 million active accounts amidst all that competition now do you have any concern about xfinity or comcast at all because i know they're trying to enter this market as well um maybe like keeping people from switching over to roku no because i see it as international um i see the what's remaining as all international so

comcast isn't really an international they've already captured what they're going to capture in the united states yeah and i think it just starts to get too fragmented and uh you know i think that uh when it comes to like comcast and bc it's like you know it's kind of like apple like apple has more cash than any company on earth i mean more than banks and they could not i mean they're not doing that well in the OTT space, you know? So I think it's a really hard market. And I would look at the person, you know, the company and the people, the management team that has been killing it from day one. Yeah. Yeah. All right. Well, that leads to our third point, which is that Roku has no brand awareness internationally. I did have a lot of people from the UK in my

Twitter mentioned saying, what is Roku? So how, I mean, does their domestic success translate internationally or is it all about product or is it all about window sorry product I was just going to say is it all about just you know how the product won versus big tech can they just do that internationally yeah so I think that where their entry will be is that they are the cheapest best performing operating system so when you look at like TCL a lot of people are like oh TCL is going to dump Roku it'd be more of a concern that Roku would dump TCL because when you're like a manufacturer you want the worst thing that could happen to you is that you choose an operating system that has bugs or that doesn't have all the channels that people would want so roku has the

most channels and it's the most solid best performing operating system with no bugs so when you put it into you know when you partner with roku your smart tvs aren't going to have any issues and no matter what channel comes out people are going to be able to get it on your tv So I think that the smart TV manufacturers need Roku more than the other way around, and that's because they've built a superior product. They have the operating system, the hardware. They have this Roku channel that's getting better every day. And so when you're entering other markets, you want that bug-free operating system with the most apps. And Peloton chose Roku.

You'll start to notice a lot of people will choose Roku first for their apps. and it's because like they're the number one and they're the bug free and they just work very seamlessly okay well so that would probably be their entry into other markets yeah right right and then the last one people have they you know they say that even though they have a good product um they have no moat and i know you mentioned before that moat may not even matter in this case but is there any concern with that i just and instead of saying they have no moat i look at why have they been able to do so well um and uh stave off these huge competitors amazon and google all all along and the other thing it goes back to saying like connected tv

ad video on demand is so new um and it pay tv ad dollars have not migrated yet so um when it you say it doesn't have a moat my response would be um but it's an incredible pure play and connected tv ads and i want to be invested in connected tv ads so i'm going to go with roku okay well another name that you have talked about before is zoom i think you and austin were like some of the earliest ones kind of but i believe beth you were the earliest to zoom if i'm not mistaken so want to ask a few questions about them last week maybe two weeks ago michael berry who is portrayed in the big short by christian bale for anyone that doesn't know um said we're at peak zoom do you agree do you think we'll ever depend on zoom as much as we do today

i think that we it'll always feel like we're at peak zoom it's one of those companies and those products that seems to be way over at skis but in reality you're dealing with phenomenal product market fit that's where like the private markets i think are a little bit sharper with this they truly believe the private markets truly believe that one product can rule them all so to speak and so they're constantly looking for that one product and they're looking for like where where does like user adoption occur so seamlessly and and become viral where you know you're sharing it with everyone around you that it can just eat up the addressable market and so I think the private markets kind of have that mentality where the public markets it just seems to come from a

lot of caution around tech it's like oh my gosh like what if zoom pulls back like you know I mean I had said in another interview I mean we're dealing with a company that posted up 355 percent year-over-year revenue I don't think we've ever seen that in any company in the history of the stock market. If we have, I look, I mean, please let me know. I would love to know who else has posted that. That is showing you exceptional product market fit. And I personally don't stand in front of those trainings. I get out of the way and I jump on board. But I basically was early Zoom. I covered it at the IPO in September. I said to my premium people, Zoom is going to be a viral product because of its mechanism at getting rid of passwords and sign-ons and having

to download software and every device and all this friction that cisco and the others create and then in january knox entered around 62 so we have an early track record with it um but you know as far as peak zoom usage goes i think that could create a lot of great headlines but that's again why like i think it's good to turn off cnbc and nothing wrong with cnbc other than it'll fill your head with um headlines that are more like clickbait you know and it's for entertainment so yeah i mean i guess i would say you know i'd say to him like tell me where is it going to go after 355 is it is it really going to settle down to the 40 50 range i i think we have a long runway right now for zoom and i think the financials show that so okay um they use a um

so they don't use a usage-based pricing model and the concern with a lot of people per seat, per seat, sorry. They use a per seat model, right? They use a per seat model, not a usage-based model. So do you think a hybrid work from home environment would affect them at all? Would people, you know, would it diminish any of their pricing power with their enterprise customers or to make them so maybe someone would choose less seats if they're, you know,

going to the office more often? Yeah, I think, you know, are we going to see another 355% year-over-year revenue quarter? Probably not. But is Zoom going to continue to lead the pack of cloud software and productivity tools? I think there's a huge chance it does. When it comes to the next phase of what we're going through is shelter in place or work from home, this kind of goes back to Roku, which is why I always liked Roku too from IPO, is that I like the management team and I have, you have to eventually think, you have to eventually say the person who did this is going to keep doing it. You know, it's like, I, so I trust

the Zoom management to continually innovate, to serve the needs of web conferencing and, you know, productivity tools basically. Yeah. Eric, it's Eric Yen. Is that what, am I getting that right? Yeah. I don't know how to say his name, but yeah, he is good. Yeah. another note you at the beginning of covid mentioned that you were interested to see whether or not a per seat based pricing model or a usage based pricing model would fare better if companies started cutting their budgets did you find anything out on that well it seemed like per seat got hit first uh we saw with like alterix and a couple others um slack even i'm i'm a slack i'm a slack investor um you know we saw that some of the

percy got hit um and now we're hearing usage might get hit uh some of the pull forward usage we saw that with fastly um netflix had warned way back when and i know it's not a cloud company but you know they had talked about the pull forward right from the very get-go on subscriptions um so this is where i where i'm at i always plan for both scenarios but i'm not a bear or a bull i never will be. I always am going to look for the best stocks in the market. That is just how I operate. But, and I feel like everything is going to be an opportunity to find a different stock if I needed to. But I think that the longer this draws out, we will see more of an effect on cloud software because, and that may seem like common sense for every industry, but tech has kind of

had a lot of optimism around it. And I think the longer this goes on, we're dealing with budgets, budgets are going to get really constrained and it's going to become maybe an issue so you know q3 q4 um could we could start to see more effects and that may seem like a no-brainer but i don't think the market is fully priced that in okay no that definitely makes sense with where things are trading right now um last one on zoom specifically i know this is it's hard to say with a 10-year time horizon but where do you see zoom looking like in 10 years or maybe even a little shorter. What other avenues do they have for growth here? Yeah, I had written about like hardware as a service, which would be Zoom phone, which they had already had. They were already

developing that prior to COVID, but like there's really no reason to have telecom hardware anywhere. So when you drive by like dentists or restaurants, hairstylists who have all been seriously affected by COVID and they shelter in place, like there's no reason for them to pay for phone bills. And zoom is working on that problem which is how do you just like they worked on like so seamlessly being able to just hit a button and be on a video conference what if you could just hit a button on your phone and make and make the call you know and it's not like skype where you have to have the connection or you know pay per you know i don't know skype is a little more clunky you have to have like the software downloaded and everything and um what if you could just immediately start

making zoom calls um and then you know you in the middle of the country there's hundreds and thousands of phone lines and vacant buildings right now um so that's kind of where i see zoom going more phone rather than just video okay that's cool yeah that's an interesting idea um we have some extra questions that we put down here in case we had more time do you want me to go or you you want to go yeah i can hit the first one okay the first one is you've mentioned that you're a little cautious when it comes to fastly which ended up being rather good timing good timing for this interview why are you cautious about fastly okay so i understand that there are a lot of people that see you know the content edge network as the route to edge computing so okay a couple

things first of all uh we'll talk about edge computing in just a minute but when it comes to cdns which is truly what fastly is um there's a lot of competition and it's been competitive for 20, 20, let's see, what year is it? About 25 years. And so I tend to look for really brand new markets. And now I understand that, you know, content app developers will say that they're delivering content under 20 milliseconds, therefore it's edge. And I get that. But when I'm going to invest in edge computing, I'm looking for new use cases. So I'm looking for, you know, the people that are going to solve autonomous vehicles that are going to solve robotics manufacturing, because the robotics can communicate so seamlessly and so quickly that we can start to bring

manufacturing away from China into the United States. I'm talking like big problems that are going to be solved from edge computing. I'm not talking about Shopify's app, the content being downloaded way faster because of where it's hosted. I'm not talking about, that to me is an older market. And I saw the pull forward happen with the coronavirus and I get it because more people were home, more people were shopping, you know, and needing that content much faster. But for me, I like brand new markets. I like few competitors. And if there are competitors, I'm just saying that CDNs are sharky waters. Akamai is there, obviously Cloudflare, Fastly, those guys, and there's a couple other smaller ones, but then you've got Amazon moving in and

microsoft they're not going to let people on their territory for edge computing when it comes to true edge servers and where this is going to go they say like garner says 75 of the you know content data is going to come from the edge but that's probably going to be answered by the people who have the origin servers which is amazon and microsoft so i just think fastly is not as much of a slam dunk as the market thinks um and so i'm kind of i just kind of voiced that like back when they were doing when it was skyrocketing is like, for me, I don't see a slam dunk. It does mean they can't pull it off. And I'm always for everyone making gains, but I try to really stick with slam dunks. Okay. Well, that makes sense. All right. Before we get to the wrap up

questions, I have one that is kind of off the radar. I think you wrote something before that you are an owner of Bitcoin. And you said that people misunderstand that it reduces costs within the fiat system if i'm correct um so why do you own bitcoin and you may not anymore but um and then why do you reduce why does it reduce friction okay so bitcoin allows you to pay like if i want to pay you right now um i don't have to go through the centralized system and and that reduces fees so um the system our financial system is completely bogged down by fees and by mental then and this isn't just like you and me wanting to like fight against like the federal government or something like that this is like truly like even like hedge funds and big bond uh purchases

and things like that like they want they want a way to transfer money without it costing so much and being so delayed um so like we run our site off stripe stripe like completely robs us and like i i totally get that people like the product but um they take you know uh three to four percent And then anytime that there's like a dispute, they want you to pay for it, just constantly paying for these transactions. And there's no reason to because I could just pay you directly. Square is super interesting to me there as well, because I know Jack Dorsey is really into blockchain. And whether you want to call it whether you want to be into the Bitcoin market or if you just want to be in the blockchain market, change is going to come and people are going to adopt it very quickly because it solves all of

those fees that are just like they just pile up it's one of the most broken areas basically across most industries i would say financial payments and decentralization and blockchain have the biggest pain that they can solve and health care is that probably the other one we're like we're solving serious like um debt and and and and bills and you know payments like that don't need to be um you know piling up like that so yeah bring just bringing all those products to the 21st century right that's kind of for sure yeah those are two areas where uh so bitcoin going on back to bitcoin like i think people look at it as like this like really like rebel like thing but it's actually not it solves a lot of problems it was a genius protocol and it allows you and i to pay

each other without having to pay some middleman that we don't need anyways so okay final wrap-up questions we ask these to all our interviewees first one what is one financial saying that you disagree with one financial saying i disagree with how about like it's kind of like a philosophy i don't look for cheap stocks so um the idea that i'm going to find like discounted stocks and buy them up um or cheap stocks like when i look at the list of tech companies let's say take cloud software anything that's like a 10 price to sales or below like i've just found my garbage list you know like these are the companies that are least likely to make revenue in the future that are least likely to become profitable that have the worst margins and probably will never find product

market fit like for me like i don't go with discounted companies um so that would probably be the one thing i'm not saying pay you know 50 price to sales but um i am saying that you know this mentality to find companies that are discounted or cheap um that may work for warren buffett i don't feel like it works in tech and he most certainly didn't think so or that you know berkshire didn't think so either with snowflake which they bought into at like a i think they bought it around a 40 price of sales so in my industry cheap and value is not good okay that's cool all right the last question what is one piece of advice you have for anyone starting out in investing or if you want to make uh a career out of investing okay i guess one thing that i

would say is um i guess i will end with um do i have a couple minutes or yeah yeah we can we can yeah like when i when i think about the tech industry and the tech and tech stocks like what i but my piece of advice would be to not look at this like the dot-com boom and bust like i know tech is very expensive i'm not saying it won't revert to a mean but basically what we're seeing like if you pay attention um to uh the tiktok ban or the foundries and manufacturing for semiconductors being relocated, or what we just saw with coronavirus and COVID, where everyone suddenly had to migrate to the cloud and start using tech to communicate. We're dealing with the industry that's going to determine the world's most valuable economy, basically. And the United

States government and China have clearly communicated that to us, like very clear language, you know, as they're fighting over tech. And so the last time that this happened was not the dot com boom and bust it was probably electricity in the railroad and i wrote this to my subscribers the other day which is like um you know if the market starts to sell off like don't think this is the end of tech um this is just the beginning and um i would say stay close to this industry if you want real gains i mean i know that seems like i'm biased but i can promise you that i'm actually just trying to encourage people to not be afraid of tech to not be scared about high valuations. Again, I think we're trading top heavy right now. I think that anytime you find

really strong tech companies between around 20 price to sales, that's a good time to enter, 25 price to sales, 30 for the best. Those are bargains. So I think that if you come back to me in five years, you're going to see that that became more of a trend than these super low price to sales and everyone thinking like tech is going to trade super cheap or that there's going to be a huge crash, et cetera. So my advice would be pick good tech stocks. That's good advice. Yeah. Yeah. I'm sure coming from me. Thank you, Beth. Had a lot of fun. Yeah. Thank you. I really appreciate it. Yeah. Take care. Thanks. Welcome back in. Thanks again to Beth Kindig for joining us i had a fun conversation but now we have hot water um i have two i do too okay my first one

is vaccines uh oh and this is a this is a bit of like one of those headline grabs but there's a point to the end but two days after trump touted regeneron which i'm sure everyone kind of knows about um an executive and a director sold a million dollars worth of shares we've seen this play out probably 10 different times throughout coronavirus um now these share sales do have to be predetermined but what is it called a 501b plan or whatever it's called whatever you have to like plan your sales yes but you can you can plan more and you can know sort of what's coming also yeah because it's a long-term pipeline i think what six months is the deal you have to set out it's like six months in advance which is spring i think i think it's yeah six months anyway the

the note was this year 248 million dollars in stock has been sold versus the previous two years where the average was 142 million the average that's not a great sign no it's not a it's not great and it's not it's not like they sold 10 times as much but it's not good and it's not you know if people are like oh that could be coincidence whatever but and they're like why wouldn't you sell your stock if you knew that your vaccine or your therapeutic was going to be helpful wouldn't you keep your shares no that is uh that is a good point ryan yeah but so it's like i mean isn't it like they're just the biggest red flag when that that much is being sold versus prior years yeah i mean there's no way anyone um if you want to invest in quality companies and

you're trying to not invest in index funds i just and if you have a long-term focus just stay away from these stay away from the vaccine stay away from the vaccine companies just don't even touch him i know it's enticing to get that get rich quick scheme but it's just not it's a good way to lose all your money as well you gotta think of the downside yeah i just thought that was it's been a problem for like a few you know it's happened multiple times i think it had the same thing yeah it irks me um and they pump it on cnbc it's it's annoying okay larry ellison is also in hot water this week findings showed that he donated 250 000 to a super pack supporting lindsey graham's re-election which is whatever i think most people knew that he was friends with

trump and yeah he's got one of the generally conservative um and i don't have any problem with donations but this was literally hours after they won the bid for the tiktok acquisition and lindsey graham was the one who was saying to trump you know let an american company buy them out and he was literally quoted saying if tiktok is saved you can thank me that's what lindsey Graham said and then he got the donation hours after the TikTok thing technically that isn't illegal I mean it's like legal bribery it's yeah it's suspicious doesn't it just like frustrate you like don't you want a CEO that has nothing to do with politics yeah I yeah I agree a lot I agree 100% with that I can like I could never be I could never be an investor in a Larry Ellison

company no i mean i guess the bigger you get as a ceo you're just warped into politics no matter what kind of but i don't know it's tough it's tough uh it's a tough look um and as we know you know if you're if you're one of the big dogs you kind of get to do what you want he is also a board member of tesla so and yeah he well he also backs theranos if i'm not mistaken yeah and as people may know if you're a new listener you might not know we are not fans of tesla so we land on that side of the fence um and so far you know larry ellison's turned a billion dollars into six billion investing in tesla but it might be a rude awakening for people that didn't know we were sort of tesla bears yeah if you're new i'm sorry uh dislike politics don't uh don't just hate us

because we don't like tesla we're really like we're kind of we actually are really big growth investors typically but uh all right uh what do you have hot water okay soft bank update gotta have this one headline here uh this is actually just from an hour ago soft bank stock trading strategy is said to focus on q3 earnings that's the whole headline okay so they're gonna be if they do straddles if they start straddling facebook or whatever this could end and have you ever seen a positive softbank headline not for the last few years not for the last few years like i feel like masa sun might he's either there's no in between he's either a genius or an absolute idiot that just got insanely lucky i think he's just a big risk taker just a huge

risk taker okay what's your second one uh the i don't need to use his real name but you remember the bubble bubble person the person that said i would uh take a thousand dollars for calls during the middle of march total scumbag right um he's back on twitter october 17th he came back said and i quote here i need to step away and gather my thoughts after an extreme build-up on frustration with the futility of trying to cut through the incredible amounts of propaganda disinformation and misinformation in today's media so i think this guy dude he has lost so much money for so many people it's just it's bad if it's the guy i'm thinking of he had a rough go of it yeah and you know what it was all fine you can be as bearish as you want but then don't take people

i'm taking a thousand dollars for a one hour call to tell you why everything's a bubble i mean you gotta know you're gonna get eaten alive on twitter at that point yeah it's just like it's just disconcerting that's my yeah that's the last one okay fuck marry kill the week the theme this week is brick and mortar category leaders so it's kind of playing off gavin baker's article okay costco home depot walmart i don't know what they're trading at because i think that is important for these companies i'm gonna marry i'm gonna okay i know who i'm killing that's walmart just because i like costco and home depot a ton uh i probably problem with walmart but i'd marry both costco and home depot but time being i think i will marry home depot and fuck

costco i don't know why i might flip i might flip there is yeah it's a fine line i think either one yeah i like both a lot um they're probably not making it into my portfolio just because they're big names that i don't think there's really much of an advantage in uh but they've been some of the best performing stocks and they have quite the competitive advantage over over others um all right anecdotal evidence then do you want to go first yeah i can go all right um this is a scenario for you it's a real scenario um it's currently happening amc the theater company their 2025 bonds are trading at 66 cents on the dollar if you were a bond trader and this is anecdotally before looking at all the numbers and thinking about how theaters

are going to look like would that entice you now remember bondholders are the first ones that get paid so yeah i i like the theater experience like i always have i've been like a big advocate for it and my thoughts is i would like to go back to a theater so yeah i think a lot of people do yeah the only problem is is like they aren't showing high quality movies right now right yeah no that's the thing action's a problem and if the production is basically their supply chain they've their supply chain is dry they can't show i mean i love the experience but yeah they're in a pretty shitty spot yeah i think if i was a bond trader that's something that'd be very interesting me interesting to me though it's not something i'm gonna invest in because i don't know anything

about bonds really uh but i think another point to make is that someone will buy them out netflix could disney could they could try to vertically integrate with that it might be more like a charity act yeah it like wasn't that sort of what bezos did with the washington post yeah and then but in that situation i think the bondholders might get made whole unless they file for bankruptcy or but i don't know i feel like like america doesn't want to let the theaters die yeah it's true they're also selling right now you can get a whole theater um if you're i guess a wealthy family for 99 bucks and you can rent out a whole theater right now i don't think you have to be that wealthy of a family i guess 99 bucks well i mean you gotta be you know you

gotta have some disposable income for one night spend 100 bucks that's just for the ticket together with like five people 20 bucks but it's only for one family yeah oh right so it has to be right yeah one family interesting okay my anecdotal evidence i had starbucks this morning oh great wow what a what an anecdotal evidence here i think mcdonald's black coffee is better than starbucks and i might have mentioned that before but just generally after going to starbucks i've gone probably twice in the last like two weeks i think it's gonna have a tough go of it for the next decade five years yeah that's okay i mean we were doing a scenario comparing all three of the starbucks where like altria's revenues or well revenues might be declining by like one percent

two percent and the operating income is flat and cash flows are flat um and starbucks is growing at like what four percent with the same sort of debt structure and they might not they're probably not going to be growing at four percent indefinitely for the next three or four years i mean people aren't going into the store as much yeah i don't know well they have that loyalty program which is nice that's a big plus for the app um but yeah i think i mean starbucks is something that's not enticing me especially when it trades at 30 times earnings and someone like all trade trades at eight yeah i mean there there's less people going to work less people you know staying in the restaurant or not restaurant but the store itself and working it just they're gonna be in a tough

spot like oh yeah not to mention mcdonald's black coffee is better yeah so go sit in the mcdonald's into your studies whatever it is yeah starbucks still has that uh what do they call the atmosphere a lot of people like the atmosphere but yeah it's tough no way i'm investing in starbucks unless it gets really really cheap yeah which i believe is possible because it happened like two years ago yeah when they had a tough i mean yeah we both invested in it not to brag we both did pretty well with that one um that's it yeah that's it for me yeah yeah uh that's going to do it thank you guys for listening we have our youtube channel so check it out we've been getting maybe some more positive comments that's sort of not death threats but some hate

comments thank you to beth again yeah thanks again beth for coming on the show uh feel free to follow us on twitter you can email us it's chitchat money podcast at gmail.com for any show recommendations we are not financial advisors anything we say or discuss here on chitchat money is not formal advice or recommendation. Thank you guys for listening. We'll see you next week. Thanks for watching!