Motley Fool Money - Did the Santa Rally Start Early?

Episode Date: December 1, 2023

November was a party for stocks and bonds, but is Jerome Powell about to turn the lights on? (00:21) Jason Moser and Matt Argersinger discuss: - The market’s incredible November and why we may not be out of the woods yet on rate hikes. - Why Apple and Goldman Sachs are breaking up their credit card partnership. - Thoughts on Tesla’s Cybertruck and the new details we have after this week’s showcase. (19:11) Adobe Insights Vivek Pandya talks through the trends he’s seeing so far in holiday spending and whether it makes sense to buy now or wait for some of the items on your list. You can catch Adobe’s holiday shopping tracking here. (34:10) Jason and Matt break down two stocks on their radar: Docusign and EPR Properties. Stocks discussed: AAPL, GS, TSLA, BRK.A, BRK.B, DOCU, EPR Host: Dylan Lewis Guests: Jason Moser, Matt Argersinger, Vivek Pandya Engineers: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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November was one heck of a month for the market, but we may not be out of the woods yet. Motleyful Money starts now. That's why they call it money. The best thing. Global headquarters. This is Motleyful Money Radio Show. It's the Motleyful Money Radio Show. I'm Dylan Lewis.

Joining me in the studio, Motleyful Senior Analyst, Jason Moser, and Matt Argusinger. Gentlemen, great to have you both here. Dylan! We've got a tribute to one of the greatest investors of all time, an early look at the holiday shopping trends, and of course, stocks on our radar. We're going to kick off today reflecting on November. Matt, it's a month of thanks, and I think a lot of investors very thankful for the month that was. Very thankful, Dylan. What a month it was indeed. The S&P 500 up more than 9%. NASDAQ 100, which has already been on a super tear this year. It was up another 11% in November.

Russell 2000, by the way, small caps, which have really not participated, finally had a good month, up 9%. And one of my favorite parts of the market, Real estate investment trusts, which We've had a horrible year, up 12% in November. And this is probably the kicker for me, guys. And this is according to a report from Bank of America, the classic 60-40 portfolio, 60% stocks, 40% bonds, the much-belined 60-40 portfolio, at least recently. That was up 9.6% in November. That was the best month for that strategy in more than 32 years, going back to December 1991.

The month the USSR dissolved, by the way. So that is quite a historic record right there. So how about that? It seems like everything did well in November. Nice to see stocks, not alone in the rally. Bonds in on the action as well. And Jason, we typically see a little bit of a Santa Rally in December. This one's coming a little bit earlier for us.

What do you see as you look at it in the past month? Well, I think what we saw, we saw a relatively decent earning season, right? I mean, we saw a lot of companies that while there was continued language in regard to scrutiny as spending, I heard a couple of elongated sales cycles in there. Still, companies are doing a very good job of focusing on the money that's going out, right? I mean, it's not just about growing that revenue anymore, but a lot of companies are really focused on the money that's going out, and they're really doing a good job of pairing that back,

making the businesses a little bit more efficient. We're seeing margins expanding in some cases. I mean, it's not across the board. I mean, there's some pockets of weakness there and some questions. I think it's going to be an interesting holiday season from a retail perspective But generally speaking, I think, particularly considering tech, right, because that's probably been one that's really been most under the microscope, we are seeing that these companies are taking a look at this and saying, you know what, okay, let's focus a little bit more on actually making some money. And it's amazing. What's just shifting that narrative a little bit can really do to investor sentiment.

So that was November, and we are here taping on December 1st. And as we were heading into production, Fed Chair Jerome Powell, turned the lights on at the party and said, hey, we may not be totally done here. yet, Matt. That's right. So he gave a speech on Friday morning, and it's something Powell has done a few times, I think, over the past, say, a year and a half, where he's come on and said, hey, everyone, like you said, turn on the lights of the party. Isn't that the worst?

The music goes out, lights go on. It's awful. We're here to hang out for a while. I know. But no, he said, you know, hold on way too early to say that we're done actually raising rates, which I think is surprising. And he says, you know, not until we have the full confidence. The Fed has the full confidence that inflation is heading back to our target of 2 percent.

he said, basically said, he didn't say, he said this without saying it, but he said the Fed is not even thinking about, thinking about lowering rates, which is very in contrast to what we're seeing, because if you look at, for example, the CME's Fed watch tool, looking at the March Fed meeting, they're looking at a 53% chance of a cut. And if Powell's coming out and said, we're not even thinking about thinking about cutting, there is a little bit of a conflict here. Now, I would say, for all the things Jason said about corporate earnings, I think corporations have done a magnificent job, kind of managing their margins, especially during this. But I think the reason, one of the reasons the market rallied so much is because there's a sense that, okay, even if

the Fed is not done, or, you know, it might not be lowering. At least they're probably done hiking. We can sort of have a little more confidence in the level of interest rates, and we can manage our balance sheets and our credit needs accordingly. That's a big thing. But now, if you're telling me that investors are actually thinking of a Fed cut is coming early in the year, that makes me a little more nervous. Matt, I'm just impressed that you got through thinking about, thinking about twice cleanly. I struggled through it just trying to get out of that once. From the big macro, we are going to check in on two big brands. Jason Apple will be exiting its credit card relationship with Goldman Sachs. The tech firm reportedly submitted a proposal that would end the relationship

in the next year. A bit of a change in strategy for both these businesses. This was kind of the culmination of two initiatives for each of them, and kind of a new brand of business or a new type of business for both them. What do you make of this partnership dissolving? Yeah, I mean, it feels like it's probably the best solution for both parties involved. I mean, this is an interesting story because it brings a lot of companies into play here, right? You've got Apple and Goldman Sachs, of course, but then you've got other companies that are interested in perhaps taking over that Apple business like American Express or even synchronies. So a lot of parties in play here, I think Apple's card aspirations,

On the one hand, it can be seen as an acquisition tool, right? It's a way for them to give consumers access to more Apple devices, right? It's an easier way for consumers to be able to finance those devices, give it to you interest free, over time, whatever it may be. And for Goldman, at the time, it seemed like a reasonable bet in their consumer aspirations. I mean, you're saddling up with Apple, one of the biggest networks out there with billions upon billions of users it feels like. But it just hasn't worked out that well.

I think it's probably something that was a little bit both parties were at fault here. I think when you saddle up with Apple, the idea is that you're settling up with one of the biggest, most important companies of the world. The other side of that coin is that Apple, because of their size, they can really command a lot out of that relationship as well, right? That typically means lower pricing. Granted, there's higher volume there. But I think also with Apple, this was a way for them to continue increasing engagement, right? Give people who want to be a part of that Apple universe, a reason to stay in that Apple universe.

You have your finances with them. That means that you're going to find more value in the devices with Apple that you're using. It all makes sense. When you look at how this relationship was born and sort of the concessions that Apple demanded from Goldman, right? I mean, they were calling for essentially all applicants to be approved, right? They want essentially 100% approval rate. And they went with sort of an atypical billing cycle that essentially was the beginning of the month, whereas all other card companies do it on a rolling basis.

and that helps smooth out those finances. And so I think Goldman maybe felt like, you know what, this is far more trouble than it's worth. Apple kind of looking at it and saying, well, if it's not going to be Goldman, I'm sure we can find another partner. And I think that's ultimately what happens. I think Apple probably continues to try to make this work just with another partner. I would say that other partner better take a look at this example here and maybe push back on some of those demands that Apple's thrown out there. We have heard for years exactly how difficult it is to be a supplier of Apple.

we're talking about small chip companies going into business with them and how those contracts are incredibly demanding, wind up straining some of the financials of those businesses, because Apple can get such favorable terms. Funny to see a company like Goldman Sachs wind up in that same spot. Yeah. And again, I think this is something that for Apple, it's not really a needle mover on the business. It's another service that they can offer. And this is clearly becoming more and more of a service as businesses. They work to diversify that revenue away. I don't think Apple card users really care what bank.

is behind all of this, right? Most of the time, they don't really worry about the issuer of the bank, as long as they are still affiliated with that Apple brand, that Apple card. So I don't think Apple's going to have trouble, have any problem finding another partner. But I think it'll be noeworthy how that new relationship is actually structured. Switching gears, it was a busy week for Elon Musk, and we're going to maybe sidestep some of the deal book comments and discussion because we did see our first look at some of the details on Tesla's cyber truck, Matt, this was something that was first unveiled as an idea back in 2019.

It is now 2023. We have a sense of what this product looks like, some of the costs, some of the specs. What did you think of the announcement? Well, first of all, I have to say, the last few days, it feels like such a perfect representation of Elon Musk's personality. I mean, it goes from, like you said, this, let's be fair, bizarre, confusing, maybe even uncomfortable at times interview at Deal Book Summit in New York, to the very next day, giving this. kind of exciting, you know, almost Steve Jobs-esque unveiling of the cyber truck in Austin, Texas, or as he put it, the biggest product launch of anything by far on Earth this year. He might be right. You know, because whatever you want to say, I think about Elon Musk, the person, and I have a

lot of things to say, but Elon Musk, the engineer, the product designer, the salesman is truly something entirely different. And I do think the demand for the cyber truck is going to be huge. we can get into the specs, but I mean, it has more than one million reservations. It's a product that I think a lot of people four years ago certainly thought there was no chance in heck that this thing was going to get roll off the production line anytime soon, yet they are really rolling it off beginning this year. And, you know, I have to say it's such a unique design. You have such a big Elon Musk fan base. And I really do believe him when he says, you know, the future kind of looks like the future with this thing.

I find myself intrigued and I do feel like it's going to be a success. As is often the case with Musk, some of the details they announced in 2019, a little bit different when they come to reality here in 2020. I believe the base model will cost around $61,000. The upscale Cyber Beast model, 100K. One of the things that I think is kind of interesting here, Jason, is we saw this announced in 2019. It is now being revealed in 2023, and we'll probably see people really drive them on the roads in 2024 and 2025. The market for EVs, and in particular, truck EVs, has changed pretty dramatically in that time. It has. It has. And I mean, EVs are going through their own little moment right now where there are some questions as to the value proposition.

And, you know, there's consumer reports data out there showing that people are having more problems with EVs than ICEs or even, you know, other types of vehicles, right? Whether that's the case or not. I mean, I think, you know, with Tesla, it's hard to, when you look at these trucks, I mean, it's very difficult to understand exactly what kind of driver wants this cyber truck. I think the cyber truck is a niche product that will probably do okay. I don't know how the company is ultimately defining success. For me, success is this a contributor to the business. And it sounds like for the immediate future, for the near future, at least, for the foreseeable future, it's going to be something that loses money until they actually figure this whole thing out, right? Because just making the truck on its own is a really difficult and arduous process.

For most people that are driving these big trucks, the trucks are a tool of their trade. It's something that matters. It needs to be reliable. They need to kind of know that it's going to work and how to fuel it up and use it and whatnot. I don't know that they're necessarily going to be the ones making the leap to a cyber truck in the near term. Now, I think that as this iterates, as it evolves, there will be more opportunities to open that market opportunity up to more of those types of truck owners. For now, I mean, I think you'd probably see a few on the road. and we'll see how this develops. All right, coming up after the break,

we've got a tribute and some of our favorite mongerisms. Stay right here. This is Motley Full Money. In a world full of noise, long-term thinking stands out. On the Capital Ideas podcast, Capital Group leaders explore the decisions that matter most in investing, leadership, and life. It's a rare look inside a firm that's been helping people pursue their financial goals for more than 90 years. Listen to the Capital Ideas podcast from Capital Group,

published by Capital Client Group, Inc. Welcome back to Motley Full Money. I'm Dylan Lewis, joined again in studio by Matt Argusinger and Jason Moser. This week, Charlie Munger, Vice Chairman of Berkshire Hathaway, and Warren Buffett's right-hand man passed away at the age of 99. He is easily on the Mount Rushmore of the greatest investors of all time. And I think it's probably worth spending a little time reflecting on just how remarkable his track record and success with Buffett and Berkshire was, Matt.

It's remarkable. I mean, it is, yeah, it is Mount Rushmore for sure. Yeah, I mean, if you're talking about, as the young people say, goat, the greatest of all time, right? I mean, Warren Buffett is the goat when it comes to investing. But I'm not sure he's quite the goat without Charlie Munger. And if you look at Berkshire Hathaway's market value per share, 57 years ago when he took over the textile mill in Massachusetts and turned this into, you know, one of the most successful businesses and companies of all time, he and Munger compounded. He and Munger compounded. market value per share for Berkshire, just under 20% a year for 57 years, almost six decades, more than double the annual compound return of the S&P 500, just to put that in dollar terms, if you invested $100 in Berkshire Hathaway, you know, the moment after Buffett took over, that $100 would have turned into $2.96 million today. Matt, to your point about the duo, I kind of think of Buffett and Munger as Brady and Belichick. Both individually great, but what they've done together just absolutely incredible, and I don't know that we're going to see it again. No, I don't think so. And if I could tell a quick story at Jamo was involved in this too, is early 2015,

Jason and I took over a million-dollar portfolio, which was the service we had here at the Motley Fool. And as we were thinking about how to run this service, the first thing that came to mind was a quote by Charlie Munger. And it goes something like this. If you buy something because it's undervalued, then you have to think about selling. it when it approaches your calculation of its intrinsic value. That's hard. But if you buy just a few great companies, then you can sit on your butt. That's a good thing. Now, Charlie used a little bit more colorful language as I just did. But that to me was such a, that more than any quote from Charlie Munger told me, you know, it really isn't about trying to always constantly massage your portfolio, deciding what to buy, when to buy, what to sell, when to sell. Find great companies,

buy them, hold them. And I think that was the lesson he also gave to Buffett six decades ago as well. I was going to say, you're right, because Buffett was the cigar butt guy. He was the Graham cigar butt guy, right? Deep value. Munker was the guy that came in today. What about just buying good businesses at fair prices, right? You know, buying good businesses at reasonable prices.

And then what's, Matt, he says, sit on our butts and just kind of go about this. And I think one interesting thing, and the returns numbers you quoted there are phenomenal. It's fascinating to think. And Munger's on record. It's saying this, right. He said, you know what, we could have doubled the size of Berkshire. Had we done just one thing? Use leverage.

Right? And it's something, we talk about leverage a lot here because leverage can be a very dangerous tool. It can be a helpful tool for certain investors if you know what you're doing. But it adds a level of, right? It raises the degree of difficulty when it comes to investing. He said, we could have used leverage. And Berkshire would have been worth twice as much. He said, the reason why they didn't do it was because they didn't want to disappoint the people

that had been with them for so long, right? They generated a lot of wealth. He's like, if we lose three quarters of our money, we're still rich. But a lot of these people that have kind of made all this money along the way with us, they're just individual investors. We would have let them down in a big way in understanding the nature of leverage in the fickle nature of markets. I mean, using leverage kind of boils down to market timing in some senses.

So they made that conscious decision. Nope, we're not going to do that. We've got our process in place. And I think that's a great lesson for investors. Know what you don't know. Get your process in place and entrust the process, right? kind of, what, Belichick, right? As a testament to the process and really just by keeping it simple,

how easy they were able to make things for themselves, one of the top 10 largest companies in the United States, even without the benefit of using leverage. So even doing things the right way, doing things simply, and not exposing themselves to too, too much risk, I think they did just okay. I think they did more than okay. And I would say, and beyond also just buying wonderful businesses,

one of the hardest things we do as investors is holding. I mean, holding great businesses. I mean, it's one thing to identify a wonderful business, buy a wonderful business at a fair or reasonable price, right? Most of us just don't hold those businesses long enough. If you look at their holdings in, you know, Coca-Cola, American Express, I mean, even Apple, which is a more recent purchase, they've held that for almost a decade now. A lot of us just have a hard time doing that as an individual investors. We see a stock, we own go up 50%. We're like, hey, should I think about selling? You know, is the market at a top? but what if I don't sell in the dry, stocks drops 20%.

And that is also part of the genius. It's part of the goading, which was not just buying wonderful businesses, but holding them, which is such a hard thing to do if you're an individual investor. And I think, Matt, modeling that behavior, talking about that, and being very open about it as such great investors, probably helped investor outcomes on the retail side, almost more than anybody else. I think it was probably Jack Bogle, Warren Buffett, and Charlie Munger, in terms of good investing behavior and lessons.

Exactly. Exactly. Lessons that any investor could follow, right? These were the lessons. And what's amazing to me is, I think it was Jeff Bezos who asked Buffett once, you know, why aren't there more investors like you? Why don't they just copy you and do what you do? And the whole frame was, well, because people don't want to, they want to be rich fast. They don't want to get rich slowly. And that's what we did, and they did it better than anyone else. J-Moh, Matt mentioned a mongerism that he particularly enjoys. Anything jump out to you? Yeah, I mean, the one that I noted earlier this week and the Indian impact, I think I've had,

that Munger's had on my life from reading and then listening to him and speaking is just, overall, it's just patience, right? And it goes back to what you were saying. And one of my favorite quotes, the big money is not in the buying and selling, but in the waiting. And that really is what it boils down to. A lot of people don't want to hear that because, like Maddie said, they want to get rich quick. That's not the way it works. You determine your process.

You do what works best for you. But I think over time, what we found is that Munger Buffett came up with something pretty special there. So it's not a bad idea to try to mirror that. Patience, it's not easy all the time, but it matters. Gentlemen, we're going to see you a little bit later in the show. Up next, we've got to check in on holiday spend and places we're seeing deflation in pricing. Stay right here. You're listening to Motleful Money. We'll meet again. Don't know where. Don't know when. Don't know when, but I know with some sunny day. Always do sky drive the dark cloud.

Welcome back to Motley Fool Money. I'm Dylan Lewis. The holiday season is in full swing, and we've got an early read on results from Cyber Monday and Black Friday, thanks to Adobe. The firm is the source for online holiday spend data, so we caught up with Vivek Pandya, their lead insights analyst, to get a sense of the trends he's seeing in the numbers this winter,

and whether it makes sense to buy now or wait for some of the items on your list. Let's dive right in. Your firm reported a record $9.8 billion in Black Friday online sales and over 12 billion in Cyber Monday sales. How do you think online retailers and shoppers are looking so far this holiday season? It's been, I think, something that they've been anticipating in terms of where they would land for these major days. Biopropensity is the strongest on Thanksgiving to Cyber Monday. So I think they're probably feeling pretty good. about the momentum that they've experienced through these five days. I think what we're going to have to keep a closer eye on is how the demand continues to persist from where we are post-Cyber Monday through the rest of the season. And I also think they'll have to think a little bit more about how they approach early

seasonal discounts, which they did in late October all the way into early November. And in the past, that has done well for them. This season with the consumer's priority around price and discount magnitudes, they really kind of return back to Black Friday and Cyber Monday for their shopping. And so that's something the retailers are going to have to continue to think about in 2024. If I'm not mistaken, I think Black Friday spend was up somewhere around 7% year over year. We saw, I think, Cyber Monday results up nearly 10% over 2022.

There are a lot of different reasons why those numbers could be going up. I think inflation is probably top of mind for a lot of people. Do you feel like we're seeing a mix of inflation and increases in demand and volume, a little bit more, one or the other? It's a great question because with online retail prices, those have actually been coming down year-on-year for the past couple of years, because we did see prior to the pandemic, we would continue to see online deflation. And the reason for that is you'd have more online retail merchants kind of enter the space. that gives the consumer much more choice and there's more competition, and that puts a downward pressure on prices. And we also saw with categories like electronics, you have the newer products

coming out, and that pushes prices down on the older versions. So that deflation was, you know, pretty apparent pre-pandemic. Then we had these supply chain issues that really, you know, put consumers in a position where they were seeing much higher prices across the board, even for online goods, the demand was so high. But then as we, as we're in a position, you know, put consumers in a position where they were seeing much higher prices across the board, even for online goods, the demand was so high. But then as we got to 2022, the summer, where gas prices started going up and durable and goods demand started coming down, that put online prices back on this deflationary trajectory. So a lot of the growth that we're seeing is purely because people are buying more goods and buying more items. So I think online retailers can, you know, really take a lot

away from that. And I will say that, you know, especially in certain categories like electronics, apparel, prices, and discounts are in the range of 20 to 30 percent. That puts a lot of impact in terms of good demand because of just people buying more goods. Let's talk a little bit about what people are buying. You mentioned a couple different categories there. Where are you seeing a lot of interest? And are there any particular products that you're seeing really spike this holiday season? Well, the good news is we've seen strong boosts in categories across the board. So even categories like apparel that had kind of softer flat to negative growth in the off season and the rest of the time in 2023 had a bit of a boost through

the Cyber 5. And with apparel, you really have products that have gone viral on TikTok, things like that. So, you know, the Birkenstocks, the Ugg Tasman slippers. And then we have cosmetic products that have done well because the gift sets and all that are really, popular this season. Electronics are massive this time of the year. And with the supply chain issues easing, it's a lot easier for people to get a hold of PS5s and Xbox Series X and things like that this season than previous seasons. So that's helping. We've also had the iPhone 15 release, which, you know, that had an initial launch and that picked up some demand. But usually the consumer continues to want some of these goods into Christmas. So it has the momentum

and through the gift-giving season. And then obviously, toys are pretty massive this time of the year. And you end up seeing the sort of perennial favorites like the Lego and the Barbie products, but you end up seeing kind of variations. And so I think about Tamagoshis, which have been around for decades. But now you have the Tamagotchi Nano, Harry Potter version, which is a much more advanced version than probably we grew up as kids. So these types of items continue to be popular.

and we see an uptick, especially this time of year. Everything old is new again, right? Exactly, exactly. You mentioned the Cyber 5 earlier, and I think Black Friday and Cyber Monday continue to be the main events, and they get a lot of the headlines, but it does seem like, at least anecdotally,

the individual days are being blurred a little bit more. Those big days are still important, but is that what you guys are seeing in the data where it's more of a season of shopping rather than these big tent pole days? Well, in previous years, it definitely became the early season blurring into Thanksgiving, but this season, it's been very much the discount magnitude strengthened from, you know, within the 5 to 10% range to the 20 to 35% range as we got into Thanksgiving week.

So you had Thanksgiving all the way up to Cyber Monday have really strong discounts, and those ones were blurring into each other. So the Black Friday deals were transforming into early Cyber Monday deals. and you saw that kind of, you know, transition. But what was interesting was something like Thanksgiving, where consumers are used to going out to the shops, you know, five, ten years ago, they'd go out to the shops after a Thanksgiving meal and get another deal on a TV or something like that. But then with the pandemic, those stores closed on Thanksgiving and they remain closed.

But that buyer propensity and that buy mode that they're in continues to persist. So that's when they just turn to their smartphones after eating or, while they're talking to family and then start doing their shopping. And that's where we saw a lot of spending velocity kick up. And that's where we saw $5.5 billion. And that really set the tone for what we would see from Black Friday to Cyber Monday. Earlier you mentioned people looking at their phones and doing some shopping. By my count, I think for e-commerce, desktop is still king.

But it seems like it's barely still king. What are we seeing in terms of mobile and desktop shopping this year? It's exactly right because we're crossing this threshold where mobile devices will make up about 51% share for the season and become technically the maturity way that people buy online goods. However, when we think about certain days like Thanksgiving and Cyber Monday, it's already surging beyond that 51%. We almost hit 60% on Thanksgiving because, as I said, there's just so much of a shift to smartphones. while, you know, when you're around with family, you don't want to pull out your laptop and then start shopping, but you might pull out your smartphone and be comfortable doing some shopping there. And so it's been really important for retailers to ensure that their mobile experiences are

state of the art and, you know, are seamless and frictionless so that when the consumer does that impulse buying, they can support that demand. Because what we still see is online conversion rates and buyer rates being stronger on online desktop. And we really need to see that level of strength in mobile device conversion because that's where all the momentum is going. Are there any retailers that are doing anything particularly interesting or novel with mobile to try to boost those conversion rates? Well, I think, you know, we think about a lot of these online retailers across the board

leveraging these initiatives to get consumers to download the mobile apps, provide additional value and discounts if they download the mobile app because that strengthens the relationship. It becomes less cost prohibitive to engage them once they've downloaded the mobile app and the conversion is stronger. So we see constant encouragement to download mobile apps to leverage certain types of deals, to scan QR codes, all these types of things are designed to have consumers, you know, who are very mobile first, continue to think about eco-R. commerce from a mobile first lens to. And you see it also with social media apps and, you know,

TikTok has been quite the social media story these past couple of years. And there's been a lot of investment into the social media advertising platforms so that they can extract the value and have the consumer who's maybe going to these apps just to, you know, browse videos and things like that to, you know, quickly be, you know, shifted into the buy mode too. I think one thing, a lot of consumers have gotten used to over the last couple years is seeing the option to buy now pay later as they are checking out. And I look at the consumer, and we've talked about this a lot on our show, it feels like we have stretched consumers. Between inflation, interest rates rising, student loan payments going up, it seems like there is probably going to be a decent number of people who are

looking for either holiday spend and go on credit card spend or buy now pay later options. What are you seeing over there? The buy now pay later. for growth has been quite something in terms, even prior to getting into the holiday season. And we're expecting about 17% growth for the season in terms of buy now, pay later utilization. And that will mean out of the $22 billion spent this holiday season, about $17 billion will be processed specifically through buy now, pay later. And so we're already hitting that growth momentum right now when we've seen over $8 billion spent. So it's definitely something consumers are leaning it on. And I would say multiple consumers and different audiences are leveraging it for different

reasons. Some of them are, you know, maybe social savvy younger consumers and they're going through the payment checkout process and they see, oh, I thought I was going to spend $200. They're saying, oh, I can just do $50 and just break it up into payments. It entices them to just jump on that bandwagon very quickly. Other consumers are more of a financially strained position and they're having to kind of lean on Buy Now Pay Later in order to support their gift-giving budget. And really, that's one of the things where we're going to have to just continue

to see how that moves in the context of larger online growth. And what I will say is you have that utilization. You've seen growth in integrations with Buy Now Pay Later, and it's been a growth factor. But I think we'll have to see in the off-season, so coming into 2024, how those growth rates continue to persist. One of the other consumer stories we've been seeing kind of as a result of some of those pressures

is this idea of consumers trading down a little bit and looking for lower priced items or maybe moving from one retailer to more of a discount retailer. Do you see any of that in the data that you're looking at? Well, it's something that we've kept a close eye on since what I mentioned earlier, since we started to see online inflation turned to online deflation. And that really started kicking off as we look at how the prices shifted from 2021 into early to mid-20203. And what we were finding is, yes, people have absolutely downshifted to cheaper goods. We've seen people, you know, go from, you know, organic products to non-organic to save money there.

We've seen people go from, you know, the higher-end luxury version of, a cosmetic item or apparel to the cheaper version. And the exception a little bit is you see consumers being a little less price sensitive to that during the holiday season because A, discounts are helping bring down prices overall. And B, they're usually giving gifts to other people. So they're very conscientious of how, you know, the gifts will appear that they got the person of the premium gift they were looking for versus a cheaper substitute. So that's where we see a little bit more of a return to the premium luxury.

But in the off season and when we're not in the holiday season, Bonanza, that's when we see people downshifting a lot to the cheaper versions and cheaper. Sometimes they go for a completely different alternative altogether to make the most of their budget within these categories. You mentioned the discounting there. And my last question for you, Vivek, is really, you know, in service of our listeners, We saw the huge discounting happen, as we would expect, during the Cyber Five and ahead of the Cyber Five. Based on what you're seeing, is this where we're going to see discounts kind of bottom out, or should people wait a little bit on some of these purchases for the holidays?

I would say for the most part, they have kind of bottomed out, especially in the key categories, like apparel electronics. We do expect to see a bit more stronger discounting on December 4th for sporting goods. That's just how that particular category has, we've seen the pricing trends over the years. So a bit in early December, maybe a bit more of a deal on sporting goods. But outside of that, we're starting to see the discounts kind of weaken and dissipate across a lot of the products. And that's, again, almost seasonally how it's worked in previous years. And, you know, credit to retailers, they've had to kind of train consumers that this is the moment.

and then that's why we also see a lot of spend velocity in the 6 to 11 p.m. p.st. Time on Cyber Monday. We see about over $4 billion spent that way because everyone's trying to get the discounts and get their shopping out of the way. Listeners, we'll put a link to Adobe's Holiday Shopping Tracker in our show notes. Coming up after the break, Jason Moser and Matt Argersinger return with a couple stocks on their radar. Stay right here. You're listening to Motley Fool Money.

As always, people on the program may have interests in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or anything based solely on what you hear. I'm Dillin Lewis, joined again by Jason Moser and Matt Argusinger. We tend to focus on stocks here at the Motley Fool, but this week we are profiling a different kind of investment. NBA owner and Shark Mark Cuban is selling his majority stake in the Dallas Mavericks to Miriam Adelson, the largest shareholder in Las Vegas Sands.

Matt, Cuban will remain in charge of basketball operations, and he'll keep a small stake in the business, but this seems like a... interesting choice and kind of an interesting moment. Yes, it was a surprise to me, and that's because, you know, I think of Mark Cuban as a pretty successful businessman and investor. Well, highly successful businessman and investor. But at the same time, he's this highly passionate sports fan and team owner. So him selling his majority stake in what I thought was his passion makes me think he's calling a little bit of a medium-term top in the market in terms of professional sports team valuations, especially for non-NFL franchises. I think if you look at the, Jason and I were

talking about this earlier in the week, NBA, Major League Baseball, anything not in the NFL, I feel like we might be a little bit of a top. And I think Mark Cuban actually might be calling that a little bit. Cuban timed it pretty well when it came to the dot-com boom. I think he may be able to time this one. We'll see. I think so. All right, let's get over to stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Jason, you're up first. What are you looking at this week? Yeah, keeping an eye on Docu sign, ticker is DOCU. Earnings come out Wednesday after the market closes. They've got new-ish CEO, Alan Teakas and he's been there about a year now, a little over a year.

You know, we should continue to hear more and more about CLM, right? Contract lifecycle management. That's really the key to the long-term strategy here is taking that core specialty and e-signature in just expanding it out to that full lifecycle management. They're adding features and capabilities that are working out. Last quarter reported a total customer base of $1.44 million. That was up 12% from a year-over-year. Also saw 6% year-over-year increase in customers with annualized contract value,

exceeding $300,000, a total of 1,047 customers there. So those are metrics to keep an eye on. They tell us that not only are they landing new customers, but they're expanding the relationships with those customers, even in a time of scrutinized spending and elongated sales cycles, right? But listen, I mean, this is a company. They're going through a tough time, but they've grown revenue at a compound annual rate of 35% over the last five years.

Good balance sheet. You want to see that stock-based compensation continue to come down, but I think they're doing a good job of keeping the hyperbole to a minimum, kind of getting out of this pandemic sort of stay-at-home stock mentality, and just getting back down to brass tax. I'll be interested to see what Wednesday brings. Dan, a question about DocuSign. So DocuSine's stock price is flat, like if you don't count the pandemic.

It's like the pandemic never happened. It's back to pre-pandemic levels. Does this company have enough of a moat? Moat, man, I tell you, I think moat is a very, very overused term. I don't know that they necessarily have a moat. There's competition out there primarily in the form of Adobe. But again, I think this boils down to contract lifecycle management. The more they can build out capabilities beyond these signature,

the more of a competitive advantage they can build through time, Dan. All right, Matt, what is on your radar this week? EPR properties, Dylan, ticker EPR. This is a real estate investment trust. You know I love my REITs. For all intents and purposes, this company was dead manwalking after the pandemic. Their biggest real estate holding? Movie theaters.

Oh, tough business, right? Well, and especially after one of their largest tenants, Regal Entertainment, filed for bankruptcy last year. Business is far from dead, though. Thriving this year, revenue in the third quarter is up 17%. Most of the theaters that were closed as part of the Regal bankruptcy have reopened with new operators. Portfolio was 99% leased at the end of the quarter. Great balance sheet. eight times earnings and a 7% dividend yield, I can't turn away from this one.

Dylan, Dylan, I'm looking to actually add to my position. Dan, a question about EPR properties. Matt, you go into movie theaters? Because I haven't been to one since 2019. I have it, but that's mainly because I have a four-year-old son at home, but I plan to get back there pretty soon. All right, Dan, which one are you putting on your watch list? I got to tell you, I feel like DocuSine is becoming a verb like Xerox and Kleenex out there. Or, you know, like someone's going to send me a doci sign.

So I'm going to go DocuSign. That's usually a sign of brand strength. I'm right there with you, Dan. I like it. Dan, thanks for weighing in on this week's radar stocks. Matt and Jason. Thank you guys for bringing them to us. Thank you.

That's going to do it for this week's Motley Full Money radio show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll see you next time.