The Compound and Friends - It Can't Really Get Worse

Episode Date: June 17, 2022

On episode 51 of The Compound and Friends, Eric Jackson joins Michael Batnick and Downtown Josh Brown to discuss growth investing, Cathie Wood, accelerating layoffs, the state of crypto, the Fed's decision, Eric's favorite stock ideas, activist investors, and much more! This episode is sponsored by Direxion. Visit https://www.direxion.com/product/breakfast-commodities-strategy-etf to learn more about Direxion's new Breakfast Commodities Strategy ETF. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/disclosures/ Inclusion of advertisements by podcast sponsors does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers: https://abnormalreturns.us5.list-manage.com/track/click?u=f8843b0fc6f0ed7d35e67dcf5&id=33b07916d1&e=4e0f612ef0. Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

So true story, hit and run yesterday. I was in a parking lot, not in my car. I was opening the back door for my daughter. She had a pie of pizza in her arms. I let her into the car. There's a woman leaving the parking lot, hits the back quarter panel, and then keeps going the open door.

She pushes the open door with her car all the way forward. And it's like a busy parking lot and there's valet guys running around. 30 people see this. And she's leaving the parking lot after that. So she breaks free from my door. Thank God the door wasn't ripped off. So she's leaving the lot, like pulling out onto the main road. And I scream, don't you dare leave this parking lot.

Because I couldn't believe it. So she pulls around. It's a really busy parking lot. So I'm thinking to myself, maybe she's just looking for a place she could pull over because she can't really stop where she is. She's like right at the mouth of the main road. She makes a right at a red light, makes another right, and is gone. I couldn't believe it. Wow.

The valet guy has her plate, thank God. Right. But like a million people witnessed. I can't believe she would leave. It seems crazy to me still. Older lady? Younger? A little bit younger than me, it turns out.

I don't want to say too much, but it turns out. So I call the police. Police come. As I'm giving him a statement, his radio starts going off. He said, hang on a second. He takes a call. She caused another accident eight blocks away. Must have been panicked or I don't know.

But so he leaves. The cop goes, you stay here. I got to go see what the hell is going on. He comes back. Another cop comes back. He's like, you're lucky. Considering the damage to your car and nobody's hurt you're lucky because the other thing that happened does not look good so uh first time for me uh i've been in car accidents before never like really bad ones but i've never seen

somebody flee this scene no this is this is wild especially with your kid in the car. The whole thing was – and my wife was – the whole thing was nuts. So we took her to the collision place today and like it's Geico is her insurer. I'm not worried about it. She should be worried. But the guy is like, look, here's the deal. I'm not taking your – your car drives. It's just your door. Don't use that door.

We're going to order the door. But I'm not taking your car until I have the door because it could be six weeks. So let me get this straight. Some asshole hits my car and I have six weeks now without it. He's like, well, that's not the bad news. The bad news is it might take us six days to fix it once we have all the parts. And so you're going to have to get a rental. And the insurance will cover the rental.

But still. But again, relatively speaking, it could always have been worse. You could be Peloton. So my friend's an insurance broker in addition to my own insurance broker. And he's just telling me what to do, what not to do. He's like, don't let your insurance company see the car in your driveway. Make them come to the shop.

Make them actually talk to the guy that's going to fix it. You know what I mean? Little things like that that you might not be aware of. So this is a whole disaster. But thank God. That sucks. Thank God everyone's okay. When was your last car accident, Eric?

Let's get deep. That's probably – I had like two when I turned 16. Two drinks? Two accidents within like six months after getting my license. Oh, 16. That's a rite of passage. Yeah. I had one at 17.

Yeah. Okay. Bad or – I took out a mailbox on my parents' road. Okay. That's a federal offense. In Canada, probably. It probably is.

But yeah, I was – but fortunately, nothing major since. But that's – I've had this – someone banged into me, not serious, but I was told like, oh, yeah, there's a China parts shortage. You can't get a new bumper for three months or something like this. It's just the day and age that we live in where mechanics like don't bring me the car. I don't want to sit with this thing. I don't want to sit with this thing in my parking lot for the next month and a half while I wait for stuff. So what was I going to ask you?

Oh, do you remember the restaurant we went to in Canada? Canoe. Canoe. That was awesome. I'm thinking about taking the kids to Toronto. Should I go back to that restaurant? Or where would you go if you were visiting for two days from out of town? Well, my favorite restaurant in the city is this Italian restaurant called Soto Soto.

Okay. Where, you know, it's usually a popular place like during the film festival. All the celebs go to it and stuff. But it's great food. Real Italian. Yeah. It's from Rome. Just always good, always high quality.

So I'll get you there. How long have you been a resident of Toronto? Is that the part of Canada you were always from, or did you move there? Well, when I took out the mailbox, it was like 45 minutes north of Toronto? Is that the part of Canada you were always from or did you move there? Well, when I took out the mailbox, it was like 45 minutes north of Toronto. My parents, I grew up on a farm just north of the city.

Are you taking notice of how I'm pronouncing Toronto? Like I'm doing it right? I'm not saying Toronto. Don't people say Toronto? Well, I think the locals, like the ones who drink a lot of Tim Horton's coffee would say Toronto. Toronto. I'm not going to go that far.

I don't want to culturally appropriate. I don't want to go that far. But I'm doing pretty good, right? We won't talk about out and about and all that stuff. That's got its own Canadian style. Yeah, yeah. Fair enough. The big thing in Toronto right now is carjackings.

So hot right now. So somebody, like usually out of people's driveways, but one of the Toronto Maple Leafs was like going to go see a film a few weeks ago because after they got booted out of the playoffs. And someone just, he pulls up in his Range Rover, white Range Rover or something, just in some shopping plaza, suburban Toronto. Someone didn't know who he was. He said, give me the keys. He knows it's a Range Rover.

That's all that matters. Yeah. Just was about to send it off to wherever. Frightening times. Maybe they were stealing that to get parts for my repairs. Who knows? We had a rash of those, Mike, in our town. I got a rash, man. mike and in our town i got a rash man nice well done all right congratulations on that hold on you know you're a little basket guy

yeah yeah i got a rash man what is that he's in the back of the limo oh i don't remember that i don't remember that line well i gotta go i gotta go back i gotta go back donkey you know i'm talking about right vaguely it's been a while whatever got to go back. I got to go back. Donkey, you know what I'm talking about, right? Vaguely. It's been a while. Whatever. Anyway, we've had some shitty Thursdays. This one takes the cake.

I saw the best performing sector is Staples. Ripping down 2%. Nowhere to hide. Oh, my God. All right. We're going to get into all that stuff. How are we doing? Ready to go?

You know what I'm looking at right now? We have a lot of content today. I know where we're going to go. all that stuff. How are we doing? Ready to go? Know what I'm looking at right now? We have a lot of content today. I know where to get into this. Three claps. I got more than three coming. Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by Direction. We're highlighting the Direction breakfast commodity strategy. So what exactly is in BRKY? It's corn, it's wheat, it's sugar, it's hogs. It's basically whatever you put on your breakfast table. So the ticker is BRKY if you are interested in learning more. Canadian edition of The Compound and Friends. My friend Eric Jackson is here. Eric, say hi to everybody. How's it going? See the high energy that I come into the show with? We need you to mimic that.

No, I'm just kidding. Alright, I'm so happy that you're here. It's actually a perfect week for you to be here. Perfect period of time for you to be here because the most volatile, wild parts of the market are the parts that you know best. I think, right? Okay. For better are the parts that you know best. Right. I think. Right? Okay.

For better or for worse. Right? Okay. Exactly. Absolutely. So thank you so much for coming. Are you staying in New York all week? No.

Okay. Just for the day. Oh, that's awesome. Just for the day. All right. You got anything else done today? A little bit. Okay.

Not much. Not much. All right. You had some rain here this morning. No doubt about it. All right. Well, I came to you. I froze my ass off. So we're even. All right. And Michael Batik is here this morning. No doubt about it. All right. Well, I came to you. I froze my ass off, so we're even.

All right. And Michael Baddick is here as usual. Michael, how are things? Not good. Not good, Bob. Okay. Fair enough. We'll hear more in a moment.

Duncan's in the house. John's here. Nicole's here. You guys feeling good? Yeah. Duncan's got the backwards hat thing again. Is that because you're looking into the lens of the camera? Looking into the viewfinder, yeah. Or is that an affectation? It's the viewfinder.

Alright, we'll roll with that. Alright, first things first, we wrote a really nice introduction for you, so I'm going to deliver that. You can just correct me or react to it. Eric Jackson, PhD, which we'll get to in a minute, is the President and portfolio manager of EMG Capital Limited. And you started that in 2017, so five years? That's right. Okay.

EMJ is a Toronto-based hedge fund focused on fundamental long-short analysis on companies where technologies, products, and or business models are undergoing change and innovation. Let's stop right there. You've been at this a long time and you've been following innovative technology companies way before 2017. What was your entree to the space and what made you fall in love with it to the point where you're, I guess you're doing this, what, 20 years or so? Well, 20 years ago, I was doing a PhD at Columbia. Right. And everybody in, you know, I didn't know it when I applied to this program, but you're supposed to go on and be an academic at a business school.

I could tell like within a year or two that that wasn't for me. Okay. But that was in the middle of the dot-com era. Yes. And that was like, that was crazy times up at Columbia. Because usually the people who go to Columbia Business School, they either wanted to be bankers or work at McKinsey. And that was the only, you know, it probably rivals whatever, 2020 or first half of 21, where people just sort of lost their minds.

And they were like, we're going to be rich. I remember Fred Wilson would come up there. We're changing the world. He's like, we're changing the world. And the audience, like the students would jump up there and change the world, change the world, you know, and, and the, and the audience, like the students would jump up and yeah, man,

that's what we're going to do. Right. And so, um, it was, it was nuts. So I got, I got,

I drank the Kool-Aid at the time. And so, uh, my father-in-law said, Hey, I got a friend up in back in, back in Toronto, who's starting a software company.

They're doing this this voice recognition stuff. Is that Learn Out and House P? It was sort of like a company in that space, but they were doing the software. So they were kind of doing like Siri or Alexa before, 20 years before it really hit the big time. But back then, everyone was saying, oh, this is going to be the next big thing.

You're just going to talk to your phone. We didn't have smartphones back then. So people were like texting on their flip phones and stuff. So if you could just talk to your phone, it was supposed to change the world. And luckily, I was lucky because it turned out to be a real company with real technology. So it stayed in business. And the first real venture capitalist that put money into us back then, a company that was called Voice Genie, was actually their headquarters are just across Bryant Park from us right now. Oh, wow.

It's this firm called Insight Venture Partners. And now they've raised like 11 funds or 14 funds, multi-billion dollars each fund and all this. But back then, there were just two guys from Goldman Sachs, young guys. The main partner is this guy named Jeff Horing. And he had this vision for investing in technology. And so just working there, meeting Jeff, meeting other people in the industry that I was, I didn't meet many Belgians

who were with LearnOut and Haspy at the time. But there was like, Tell Me was like the big, you know. I remember Nuance. Nuance, yeah. LearnOut. SpeechWorks was a company up in Boston that was doing the same thing as Nuance. This company, Tell Me, was like the bell of the ball in Silicon Valley. They'd raised all this money.

And anyway, amazing people like at all these companies. And so many of which I've stayed in touch with to this day, and they've gone on to amazing things. But that got me bitten by technology. But I'll never forget going through those. Obviously, the dot-com bubble crashed, right? Yeah. And I signed my employment agreement in March of 2000.

I remember going home and listening to the AM radio that NASDAQ was- You might have actually caused it. Now that you're telling me this. But the wild thing was, is that, you know, everyone now is, you know, it's like, oh man, this is the worst market ever. When's it going to bounce back and all this. I'll never forget from that period. It was like, it wasn't just like, you know, the end of 2020 came and everyone's like, well, 2021, things got to turn around. It's been like nine months of this stuff.

Yeah. And then it goes all year, and then 9-11. And then you get to 2020 or 2002. Oh, this has got to turn around. And it just went on and on. Things didn't really turn around until second half of 2003. Yeah. And it was just like you're sort of like Night of the Living Dead just walking through this.

All the people who had been attracted to the industry left and stuff. So anyway, that's a long way of saying – They went back to law school. They went back to banking. Back to banking, back to consulting. The thing that I remember about 2000 to 2002 that really reminds me so much of this period is not just NASDAQ stocks crashing 90%, blah, blah, blah. But to your point,

so you have the dot-com bust and people forget it was not just dot-com. It was also on a parallel track. It was wireless and it was telecom in general. Yeah, WorldCom. So then you had WorldCom and then Enron. Yes, Enron. And then 9-11 is like the 1,000-pound fat lady dropping on the stage.

Right. And you almost can't believe it. And then the malaise goes on a while longer. So let's talk about the malaise because I was saying that things are really – people are really bearish right now where you can see max pessimism before the market bottoms because eventually there will be this malaise and this apathy where people are like, yep, stocks are red again. And they sort of hit the acceptance phase of that cycle. I don't think we're there yet. Yeah. I mean that's the million-dollar question.

Call the bottom anyway. Go ahead. I'm just talking about like a sentiment. Forget about the bottom or whatever. But, yeah, it can't really get worse is what I feel. I start, like I'll never forget the May the 12th. Duncan, I think we have our episode title. May 12th was a day, I don't know if you guys remember,

where the market opened like way down. I can't even remember what set it off overnight and the futures, but like everything was down, huge down. That was the low for Cathie it off overnight in the futures, but everything was down, huge down. That was the low for Cathie Wood's ARK Innovation. No, she's still above it, if you can believe it, from a month ago. And then that was the day that I think Coinbase opened at 40 and closed at 80 or something like that. It was just a crazy day. Simpler times, Eric. But when I started seeing those prices,

like I thought, okay, well, this is it. Now we're here. And then of course, So like Robinhood bounced from 10 to 15, now it's seven. Right.

I know. Because there's always, because there's always a door in the floor. Right. Right. And that's, that's the thing that,

what do you got? John, throw this straw up. I mean, all right, here's what we're looking at. We're looking at, we're looking at square, square DocuSign, Zillow, Coinbase, Robinhood, Teladoc, Peloton. These are the declines.

Again, square down 80, DocuSign down 82, Zillow down 86, Coinbase down 86, Robinhood down 90, Teladoc down 90, Peloton down 94. Holy shit. For the companies that were public prior to the pandemic, these prices are now all not just below pre-pandemic, but significantly as though all of the new customers and stuff they sold over the last two years just doesn't matter. We might crash through their last private round of financing. What did Robinhood raise in 2020

when they had the public shitstorm? They raised money. I don't know what valuation was, but there's 6 billion right now. It can't be that much lower. Yeah, I think they have more cash than market cap is what I read. They're worth more debt than life. I tweeted that out yesterday, and my old friend who's a great investor said, yeah, that's true, but it doesn't mean they're a buy. It's not an unencumbered cash. Right, exactly.

It's cash that's spoken fored cash. Right, exactly. It's cash that's spoken for. Right. Yeah, it's a very big difference. So I wanted to start with this. Now what's going to happen next is you're going to start hearing people say growth investing is dead if they're not already saying it. And this is now my third or fourth go-round, yours too, in this kind of cycle. Right.

This is now my third or fourth go-round, yours too, in this kind of cycle. But you're going to start hearing people say there's no reason to ever give these companies money based on their prospects five years from now. Like why would anyone ever do that again? Why would anybody ever look at anything other than cash flow? Total addressable market as a metric for valuing stocks is a joke. Price to sales is dead. Right. So we'll go through that.

And maybe that lasts a year or six years or whatever, however long that has to happen. But that train's never late. That's right on time. So I think, I don't know, are you hearing people start to talk that way or not quite yet? Oh, for sure. I mean, you turn on CNBC now and everybody wants to talk about energy stocks. Yeah. I wonder why, you know, when was the last time, you know, uh, maybe 10 years ago that people were talking about energy stocks. Super exciting. Yeah. So, um, yeah, growth is out, um, energy's in, you know, everybody wants to kind of recency bias, just keep, you know, just plow into whatever's worked for the last six months.

But a lot of that is career, a lot of that is survival. Yeah. If you work in the markets, to some extent, I know you're supposed to not do this, but let's talk about people as they really are, not how we wish them to be.

To some extent, part of your job is not just beating the market, but staying employed. Right. And you have to go where the money is being made. Like everybody, to some extent, people that have been around for 30 years, maybe don't have to.

People who've been around for three years, they have to talk about what's working because otherwise you don't keep your job. People have fiduciaries to their shareholders and their families. Yeah, right. Exactly. So you have to expect,

I feel like you have to expect some of that rubbernecking, like, oh, well, what is going up? Can we sell that? So, OK. So I think there's going to be some element of that. How long do you think the pessimism has to run its course before people are willing to look at innovation again as something that they get excited by as opposed to being afraid of? afraid of well i mean this pullback is unlike any other that i can remember in tech specifically since dot com and but it's not as it's not the malaise isn't as deep as it was back then because i think you still have people that are saying well you know it'll come back it's only been

it's only been six months we just started We just started. We just started. Right. But compared to every other pullback, like you remember the Q4 2018 pullback when people were like slitting their wrists and begging. That was kind of bad. That was 40. But this is like 90. That was also market wide. This seems, I mean, this is market wide now, Tro. But this seems very specific to tech. Well, and you only see charts like that in the market amongst like the hot, not just tech, because it's not the fangs that are doing that. It's super discretionary.

It's the smaller growth. It's biotech. It's smaller growth, whatever, profitless tech. People like to call it now. To that point, Microsoft, Apple, and Google are each down 30. Amazon's down 45, but I don't know if you would bucket it necessarily with those names, but Netflix is down like 75. Yeah.

Netflix has fallen out of the acronym over the course of the last year. They're no longer a fan. Tesla's finally taken it on the chin. That had held up relatively well. That was fast. Now it's down 50. I saw on a chart yesterday, they're still positive for the year. Maybe not after today, but. Right. But then if

you look at GM, GM has gone from 70 to 29. So it's not like you did yourself any favor being like, well, I'm a value investor. So I'm in GM and Ford. You're, you're as beaten up for doing that. you're as beaten up for doing that as Tesla. They're down, well GM's down 53. Right. And so when will they come back? I think they always come back to growth because The investors. Yeah. Because

more than any other sector I think, and this is the reason why I'm attracted to it and why I invest in it is that these are the best returns over time of any other corner of the market. And this is what you have to live through.

And you have to live through it. Yeah. Did you know Apple had three separate 80% plus drawdowns over the course of its life? Really? Apple. And obviously, that's going way back. When Jobs left that period. That's going back to when Jobs went on his walk in the desert and all that.

Probably 08. Don't you think that a lot of these names just won't come back to where their 21 high was? No, that's true. I mean, I think both are true. So Netflix had major drawdowns. Salesforce had major drawdowns. All the winners. Amazon.

All the winners get killed. All these winners have gotten killed. But then they come back and then everyone can point to them and say, hey, but if we had just picked these ones. But you're right. There are hundreds of others that we've never heard of from again. But from this point, new money can make a ton of money even if they don't take out the 21 highs, right? There's maybe opportunities. They almost don't need to anymore to have big returns.

I think any – like right now, Cathie Wood's ARK investments from the peak is down 77%. 77%, okay? That's like a year and a half. Let's throw this up while Eric's talking. And most of the smaller stocks, like the ones you put up before, are in the same boat. But

how does that compare? Well, the total drawdown for NASDAQ during dot-com was, I believe, 74%. The Nikkei, when that bubble burst in Japan in 89, it took 20 years, but that was like a 79% drawdown. And so one thing I'd say is, or makes me bullish about the sector, is that ARK is not an index like NASDAQ was. But obviously, it's a group of companies that we're talking about here. And any time you see a grouping like that drop 77 percent – You got to start shopping.

Counterpoint. You're not going to press your shorts on this. So I agree with that conceptually. The reason why I think that may not work in the case – so we have a chart up. This is three years of ARK Innovation ETF, the flagship. There was a point in January of – February of 21 where it was up 240 percent from the summer of 19. It is now negative 13 in the three-year period versus the overall S&P, which is up 36. in the three-year period versus the overall S&P, which is up 36.

So now anybody that was building this product into their asset allocation, that's the back test now, that 36-month period of minus 14 versus plus 36 on the S&P. And we know that financial intermediaries, consultants to pensions, whatever, nobody wants to put something like that into a back test that blows up the historic returns because you're not going to win the business. You're not going to bring on the wealth management client. You're certainly not going to improve, right? So that's what makes it so tough

for something like that to come back because who's coming in now? It makes sense like who would have come in in January of 21. Anybody would come in. It was going up every day. So that's one issue. And then the second, of course – so that takes time to heal. The second issue is not the same portfolio.

She's active. So it's not like an index where it's static components. So even fangs have a better case to be made, right, because it's the same fangs we're talking about. I don't think that her top 10 looks much like her top 10 from the peak. So that's what makes an actively managed ETF more difficult to say anything down 70-something percent you have to take a look. Maybe in this case not just because it's a different mix of stuff. What do you think about that? Also at this point, she is a slave to – not she.

All of these companies are slaves to their shareholder base who is a slave to inflation. That's the only thing that matters right now. And as long as people are seeing these headline numbers, even if it comes down to seven, people aren't – have no appetite for long-duration assets, which can be an opportunity for people like you who are able to go in and see the business and say, you know what? This is overdone. I don't think most people can do that, but. Yeah. You know, when, when I went back and looked at some companies that made it through the.com and made it through the great financial business. And there's a list. There's a list. What was interesting to me was that several companies, you can't say the class of growth stocks did this,

but there were many examples where these growth companies, they had their moments of capitulation well before the NASDAQ or the S&P bottomed, right? So eBay, Microsoft, back then 20 years ago, and.com, it was more of a growthy stock. But both of those bottomed in December of 2000, which turned out to be two years before the NASDAQ. So they stopped going down before the overall market.

Amazon bottomed the month after 9-11, which was a year before the rest of the market bottomed. So my point – and you had – like in 2008, Google, Netflix bottomed in October, November of 2008 versus the rest of the market in March. So my point is that I think you want to look for moments of panic on individual names that you like. We're there. We're there. And then look to add to those opportunistically. Some of the companies that have had the biggest rebounds out of those crashes also used it as an opportunity to slaughter a lot of sacred cows, get out of a lot of underperforming businesses, do it under the guise of, look, we're doing what we have to do to survive, and even making big business model pivots. Obviously, the Microsoft of 2010 was nothing like the Microsoft of 2000. Of course, Office and Outlook were still part of the mix, but they had already been reinventing for a decade by the time that stock started to approach old highs. I think part of the problem is that some of these names just got so outrageously expensive.

For example, Shopify is obviously a great company, but the price to sales ratio ran up to over 60 times. That's the Amazon of Canada, so be respectful. No, I am being respectful. So Shopify- Is it? No. The stock price, what?

Well, I think six months ago, it was the biggest Canadian company by market cap. It surpassed the Royal Bank of Canada. So one of the biggest e-commerce companies in the world was trading at over 60 times sales. Now it's down to eight times. So maybe investors are overdoing it on the downside. But this stock is now at the same level it was prior to the pandemic. And I'm guessing that the business is three, four, five times larger than it was pre-pandemic. Oh, for sure.

And the stock's at the same price. Yeah, for sure. Like, full disclosure, I added some yesterday. And because I was just – Yes, finally, somebody's buying something. I was looking and saying, you know, this stock went public. First, it went public in Canada. I think it was in 2015.

Nobody had heard of it down here. Nobody in Canada had heard of it. Yeah. And it traded only up there for the first couple of years and before it listed down here. up there for the first couple of years than before it listed down here. And right now, it's sort of as cheap or cheaper than it was just in the early days when nobody had ever heard of it back in 15 or 16. I don't know if you remember this. Hold on.

You told me, I think it was you who said the worst thing you could be is the largest market cap in Canada. Is that you? Might have been me. That's definitely gone around. RIM, Research in Motion, Blackberry. Nortel. Valiant. Valiant, yeah've been me. That's definitely gone around. RIM, you know, Research in Motion, the Blackberry, Nortel, Valiant, yeah. Oof. Like you never want to be the biggest tech stock in Canada. The kiss of death. Very bad things happen right after. So this had a market cap of over $200

billion when it peaked in November. It's now down to 38. Yeah. I mean, could it go to 30? Sure. But sure. Yeah. But yeah. And so that's why I bought some. And there are other names like that where I say, yeah, I don't know when it's going to bottom. It could be six more months. It could be eight more months. What's interesting about Shopify post-pandemic, there's still a lot of business to be done. The comps obviously are harder because the growth numbers from 20 and 21 are crazy. So you had that. But now if you also have a rapidly decelerating consumer appetite to just buy things, like in general, forget about the comps.

I feel like they're getting hit from both sides. Because they also – if you're in e-commerce, you need like a decent economy. And if the US consumer is about to fold, that's not going to be great no matter how good Shopify is or Amazon or anybody else in the space, right? Yeah, and they also had this thing where the founder CEO, Toby, basically did a Zuckerberg where he recently created a new class of shares to give him total control and all this kind of stuff. Yeah, just a few weeks ago. So you got that hanging over all the people. Can you do that in Canada, the way they let them do that in California?

Oh, yeah. You can. Okay. Canada has a proud history of families controlling cable companies up there. Do you think maybe a way for investors to sift through where the opportunities lie versus what's just not coming back? So, for example, investor attitudes have shifted dramatically. People are no longer subsidizing money-losing companies. You had 10 years to get profitable or at least positive free cashflow. Come on.

So maybe is that a metric to look for companies that are still burning cash versus those that are cashflow positive? Yeah, for sure. And I, you know, I think when you go back and you look at who have been the major winners in tech in the last 30 years, the common thread amongst all of them is they were cashflow gushers. So I don't know, I don't care. Apple, Google, Netflix, before it got into streaming, when it was just sending out DVDs by mail. Salesforce. Salesforce. People criticize Salesforce. Like the old value guys used to say, Aaron, they're not gap profitable. Meanwhile, they were adding cash flow every month like crazy.

So that's the common thread. So for sure, if you want to find companies today that ideally that are producing lots of cash as a signal of their future. But I would say that probably the better opportunities right now where the people who will clean up the most at the, at this moment, putting new money to work is, can you put your finger on the company that is burning cash, but everybody's getting it wrong. And a year from now or two years from now,

it's going to make, start making tons and tons of cash. It will look wise in the mirror. They were losing lots of cash and then they flip the switch tesla this is what happened to tesla remember everybody thought you know 2018 they're going out of business yeah and all this and they have a debt payment due was like a recurring motif and suddenly 2019 they did a billion in free cash that that year and all the bears didn't see it coming all that money they So all that money they were burning in 18 that the bears were like taking delight in,

that ended up being productive investment they were making? Yeah. And everybody loves to dance on the grave of Cathie Wood, right? And kind of take shots at her when she's down. But do you know anyone else who in size had a trade on Tesla before that happened? A Scottish guy, Bailey Gifford. Ron Barron. Ron Barron.

But it's a short list. Ron Barron. But so – Yeah, it's like three or four. So, Kathy, I was looking even at today's levels with Tesla. I think versus pre-pandemic, she's up like 18.5x on that Tesla investment. So, how many other investments? She should have just stuck with that.

So Amazon was like that too. Remember when Barron's did the Amazon.bomb cover in the dot-com era? John, we have that, right? I don't know if you've ever seen this. So this was 1999. This was one of these Saturday cover stories from Barron's. So they were right if this is 99. They were right.

On stock price, not on the business. They were right because they were burning free cash in 99 and all up until 99. And they didn't start going free cash flow positive until 02. When coincidentally, the stock bottomed and started to take off a year before the rest of the market did. So what are some names that you think are in that category? So for me right now, I think there are two stocks right now that are hated. If you go on FinTwit,

the majority of people tweeting about them are saying they're going out of business. That's your first mistake is going there. No, dude, every stock is hated. So let's have it. Yeah, everyone hates everything right now. I'd say it's Carvana and Opendoor, right? Spice it.

Those are the two. All right, give me the case for Carvana. So Carvana is one of the biggest stock debacles of 2022. And that's saying something. That's got to be a 90. Last summer, last August, I think they were- What is that, a father-son founded that? Yeah, exactly.

And they like personally lost like- Billions. Like tens of billions or something? I don't know. It's down 94. I don't know. That means- 94%?

Yeah. Give it to me in points. 358 last August to 20 bucks today. Holy shit. Oh my God. And there was a story- Now this is, wait, hold on. This is leasing used cars or buying used car,

which is it? Buying used cars. Buying a used car online. Basically they've, they've built these coin operated dealerships. Oh yeah. Are they building one on the Meadowbrook? Do you see that thing going up?

No, I hope that's not it. I think that's what it is. Do you know what I'm talking about? No. It looks like a giant Legos. They're like big vending machines. It looks likeos matchbox car set on the Meadowbrook. All right, but you don't actually put a coin in.

You do. You buy a coin and you go online. You buy the car online. It's sort of an online experience. And if you're out in the sticks, they bring it to you on a flatbed. But they do send you a coin, don't they? For real. But yeah, if you're close, and part of the reason

why they've been burning cash is they've been building all these coin-off machines. Yeah, stop with the f***ing coins, maybe. No, it's because the coins are made of palladium. The coins are made of palladium.

Oh, look, Josh, no, they are building that. So this is for marketing purposes? Well, you go there, you buy it, you stick your coin in, and cars start moving, floors start coming,

you know, the car comes down, and you drive it away. So that's a 30-second experience. It's probably very exciting. But is that worth structurally? I don't know. Part of me feels like maybe that's good.

So the bears would say they've never made money. They're spending all their money on these stupid machines. What's their competitive advantage? But the fact is this was a darling amongst all the top growth tech hedge funds. So what happened? They started taking Bitcoin instead of the regular coin. Inflation happened. I want to get out of long-duration assets happened.

Cars. No cars happened. Cars. Can't get cars. Perfect storm. They went from like this used cars are worth more than new cars to like the world is ending. CEO came out as a Trump gut. No, I'm just saying that.

All right. So they had a perfect storm. It's like a terrible environment for them. But they continue to invest? They're continuing to invest. They're cutting costs. They're cutting headcount. They have to rely on the debt market stuff because when people lease from them, they've got to take that.

They've got to provide the cars. Yeah, it's a car leasing business. So it doesn't rise in rates. The cost of capital goes up. Rise in rates kill them, right? Well, it makes it a more difficult business for sure. But so are they going to die? They've never made money.

Yes, they have a great brand. People love the experience of buying the cars through them despite the hokeyness of it. Have they been around long enough to be able to definitively say that? Do they have repeat car buyers? If you do a cohort analysis of people who just bought with them and what they've experienced through different years. The engagement has been great and people have been very satisfied from a net promoter score and all this kind of stuff.

And they've got a lot of adjacent areas that they could expand into. They do service. Swimming pools. They built this footprint across the country of all these coin-op machines. They can get into new cars. They haven't been in new cars to this point.

They can get into fleet management. They haven't been in new cars to this point. They can get into fleet management. It's kind of an easy expansion. What's the other stock you said people should short? Opendoor. Oh, another one. Okay, let's talk about this. Opendoor is sort of buying your house from you instead of you putting it on the market.

Go online. Which Zillow threw in the towel. I bought it. They said basically we can't do it. They said that, yeah. So they basically left the market to Opendoor. That's wild to me. One company gets completely out,

but that wasn't their core business. This is Opendoor's core business. They better be good at it. They started doing this in, I think, 2015 is when they got founded. And the last couple of quarters, surprise, surprise, they've been free cash flow positive. Now, it hasn't been a huge positive because-

How much is it stocked at? It's on 87. So this is interesting. Redfin, Zillow, Opendoor, all crushed, hottest housing market of all time. Not of all time, but very, very scorching hot. Is real estate like undisruptable? Is that what we've learned?

Or you think they have a real opportunity? Because I think the broker, the whole process sucks. You would think that there's an opportunity, but maybe it's harder than it looks. I think it all comes down to math and algorithms and how much risk they take. Because basically they're buying homes and then those homes are sitting on their balance sheet

for a couple of months before they unload them to somebody else. So if you're not good at, you know, setting the right price that, and knowing that you can get that, you know, two or 3%. So Zillow lost 50 grand on every house on average. I forget what the number was, but one of the stories was like things that they can't pick up in the algorithm is we've got a dog that won't show up in the backyard, right? That sort of stuff can't be picked up with a machine because they don't know what it's... That made the house harder to resell and the

local brokers would say, the local realtors would say, we could have told them that. It's a classic John Henry man against machine story. But if you get to scale, maybe it'll work. That's been the criticism against Opendoor all along. Was he a Chamath SPAC?

Is he still there? Is he still involved? No. He cashed out completely? Mm-hmm. Okay. No, he's moved on. Is that one of the things

that was hanging over this stock, though? I don't think it was that. I'm sure it helped in the beginning. No, I don't think it was. It was a hot SPAC. I think people just, I think people soured on SPACs, so that hurt it.

I think then people soured on housing, and that hurt it. And so these last- Now people have soured on everything. Now since the Fed made their announcement, like all the home builders are like way down in the toilet. Home builders are down 7% today. Oh, does this trade with,

should it trade with home builders at all though? I don't think it should, but it is right now. So it's like, that's the way it's trading right now. So even if we go into this nuclear winter period for the next five years, let's say, in some ways, Opendoor's value proposition is even stronger because what they're saying to people is – Get out now. We'll give you cash now. We'll get you out right now.

Three days, you can have cash. Not six weeks, not six months. And we'll tell you this is what you're going to get does wall street value this in part based on the values of the homes on their books or they're not meant to keep these homes that long they've done a good job of you know churning through them because i say don't don't forget yeah they'll give you cash now but then they also have something to sell into a down market like they have to sell the house yeah i don't think they could hold it i think that's i think i think that's probably why the stocks – They should just call BlackRock.

No, I'm kidding. If you're going to argue the bear case, you'd say like, well, how much do they have on their books? And the market's changing. So whatever they bought in Q1 or Q4 or whatever, they're not going to be able to unload it or something. But I think obviously time will tell. I think that they've got a great team. But I think, you know, obviously time will tell. I think that they've got a great team.

And this is all that they've done is build these models to give themselves wiggle room, to protect themselves on the downside. And we'll see. They haven't gone through a downturn yet. Do they need to raise money? No. They've got plenty of capital. So it's really just if they're right and, you know, so of these two, Carvana and Opendoor, I have more confidence in Opendoor. If they're right, that could be an Amazon.bomb in the future. And if they really kill it, I mean they could go from – I don't know what it would say, $4, $5 to over $70.

What's the consumer acceptance of iBuying like? Because I think most homeowners – it's like not the first thing they think of. The first thing they think of is my sister-in-law is a realtor. So what is the penetration rate? It's got to be tiny. It's like well into the housing market. That's the upside. If you think it's going to take off. That's the upside.

And they're expanding like crazy. They're in New York City now. Maybe they should stop. Just saying. So we'll see. And they've got the market to themselves. They have no competition. Like Redfin, I think, was doing this, but now they've done job cuts.

Zillow's out of it. I think Offerpad is out there, but it's basically that. Okay. So you're saying that, I mean, at the prices these stocks sell at, they're almost call options. Right. On the business. It's amazing. Relative to what their share prices were. So, okay, I love this idea.

I like that people are starting to think that way. Like what does everyone hate because they misunderstand it? And there must be a lot of other examples. I was thinking about biotechs this way. I know that's not really your area. It's not mine either. Don't worry. But these are companies that raised a ton of money.

We had a ton of new biotechs come public. There's just – there's a lot of capital there, right? There's not going to be a lot of drugs. There will be a few drugs, but there's a lot of capital there. But theoretically, none of that should be economically sensitive or cyclical at all. We're talking about lifesaving therapies and innovation in chemistry and protein-based stuff, like what does Jay Powell have to do with any of that other than valuations? Those are not businesses that should be affected by the economy. Therefore, if you are looking for growth companies that are down 80%, 90%, maybe that's a good place to start looking. And again, think about 03.

I think biotech beat the shit out of every sector coming out of that malaise. Biotech in 03, they had a new guy at the FDA. He started approving everything in sight. And I remember being in – what was the one with the C that everybody owned? Stock went up 10x or something? Carvana. Not Carvana. Close.

It's the one Martha got in trouble with Celgene oh yeah no Mclone yeah Mclone was part of that era but there were stocks that 10x'd oh Biogen

and they were a lot of them were biotechs it wasn't in other words you lost the dot com names forever right there was no more excited home like those were gone

but biotechs that had raised a lot of money in the bubble and just kept doing their science for a year sat quietly. All of a sudden those were like the hottest growth names. So I was thinking about that.

Do you play in that space at all? I've tried to. I don't think I'm smart enough, frankly. Unless you play the ETFs or something like that. What I found is that, how am I supposed to judge whether this thing gets phase one approval?

You got to take the drug yourself. That's really the only, in my experience. All right, did you listen to Aswath Damodaran with Patrick O'Shaughnessy a couple of weeks ago? No. So I want to get your take on this. They were talking about what's discretionary, like how does discretionary spending get affected by inflation? He said, the money we spent, this is DeMutterin, he said,

the money we spend now is on things we didn't have 40 or 50 years ago. We don't know how discretionary or non-discretionary your Netflix subscription is. We're going to find out very quickly. So, so much of our market cap comes from companies that provide products and services that weren't around 30, 40 years ago. So we're going to find out how inflation plays out. Are you less likely to upgrade your iPhone if prices are going up 15 to 20% a year? Blah, blah, blah, blah, blah. Your thoughts. I think he's right.

SAS alone, in the GFC, there was no SAS software that anybody was even talking about. I know it existed, but like now we have 500 SaaS companies with 10 billion plus market caps that are making the case that everyone's going to keep paying these subscriptions. And we don't know. Maybe they will. I feel better about those kinds of companies keeping their customers because they're enterprise customers.

They're stickier. Yeah, and web security, Palo Alto, CrowdStrike, some of that stuff you actually can't stop paying for. Yeah. No, yeah. There's a big difference between that and Uber Eats or Netflix, my subscription. Okay, so enterprise is less discretionary, let's say.

Well, if you've made that investment, you've like invested a ton into Salesforce or whatever. Like you've trained people internally. You'd have to- The switching costs are, okay. It's the workday would fall into that category or- Yeah. I mean, but there's a lot of variation, obviously in SaaS.

And so you really got to drill into the details. But there's a lot of SaaS companies that came to market because they could and raised capital. But we're going to find that the smaller ones don't have the goods. I mean DoorDash is the first thing to go in a recession. I mean it's so expensive. Do you think there's going to be M&A activity in that space?

I'm going to ask you about activism later. In DoorDash? No, no, no, no, no, no, no. In SaaS, in software, in – I just feel like there's too many. I mean I don't know anything, but it seems to me that we had 1,500 IPOs in the last two years. There are so many publicly traded companies that maybe don't need to be standalone and work better as a piece of a larger entity. We saw like Slack get bought up by Salesforce. Do you think we'll see more of that? Oh, for sure.

I mean, I think Microsoft, Adobe, Salesforce, I mean, those are going to be the obvious buyers. Are the valuations, like, because none of these deals still, even at current valuations, would be accretive to earnings or anything like that. Like they're still expensive, even though they're down a lot or maybe not.

Yeah, well, I have a friend of mine and lives out in Silicon Valley. He's just a venture capitalist. So he never looks at a screen. Like he's out there meeting his, it's always funny. Like when I, you go from the stress of like, you know, watching your daily portfolio value

to kind of meeting these VCs that just like are just focused on like- Michael Dozier. I invest in companies. Yeah, we know, we know those guys too. 12 years from now, you know, my client- Little beach volleyball. Anyway, he's a super know those guys, too. 12 years from now, my client may help me. Anyway, he's a super-

They don't have to mark to market, so every day is Saturday. He's a super sweet guy. And he actually told me, he said, I said, what public stocks do you like these days, Mike? And he said, Eric, I don't invest in public stocks. I don't get my hands dirty. And I said, why? Because he said, because in my line of business and being a VC, and he mostly does enterprise kind of software deals. You know, the companies come to me, they're private, and they show me the full books, right?

And I can see, like, how's the new cohort doing? What's the lifetime value of this customer? Are we seeing improving statistics in terms of over time people really like this product and going back and using it or not? And then that's what we make our investment decision on. In public markets, the public companies – The Fed. They do their best to kind of shield all the proprietary information away from – And then you have all these other factors.

What sector is in favor now? Like, right. So it's like Michael basically jokes. We don't really mean this, but like the stock market is college and private markets are kindergarten. So I know it's not really like that, but that's how it felt the last six months worth of companies that came public and were cut in half a week later. The first time they reported earnings, they were cut in half. It's like welcome to the real world. So speaking of M&A, sometime this week,

Cathie Wood was asked, what risks to your strategy most? Where are you? And this rubs some people the wrong way. I understand. She said, the biggest risk is that our companies that are taking a beating will be taken over at current very low valuations, in which case we'd incur permanent losses.

So we will fight tooth and nail against larger companies if they try and pluck these companies up for their superior assets at bargain basement prices. So in other words, she bought something at 50, it dropped to 20, somebody acquires it at 30, locking in a permanent loss for her. I guess that is a real risk, kind of like a bond being called early or something. I mean, I don't get this quote from her. I mean, I'll defend her on a bunch of issues. I don't always see. I think most of the stuff that she's a very good marketer,

and most of the stuff she says, there's a marketing reason why she's saying it. I think she's talking up like the risk right now is not inflation, it's deflation. I think that partly because that benefits the kinds of companies that she goes after. So I got to think that this quote is something – it sort of shows her investors or potential investors that she's – I don't know. There's like so much value here that somebody else is about to come steal it from us. I mean if Zoom, one of her companies, got taken out tomorrow for $150, she'd mark it up, and then she'd use the cash, and she'd invest it in some other stuff.

Zoom actually recently became a bigger holder than Tesla. Zoom's a cash flow company. It's one I'd put in the quality tech cash flow company, for sure. It's one I own. What's the problem with that? There's no differentiation? Google Meet is just as good? Well, everyone's said that. I feel like that's true I own. What's the problem with that? There's no differentiation. Google Meet is just as good.

Everyone said that. I feel like that's true, though. I feel like they're still the dominant player. People love the product. And they have other adjacencies they can get into. They're getting into kind of call centers and phone, more office software kind of stuff. So they're the, you know. What's the market cap on?

What's the market cap? 30, I think. Is that it? Yeah. I mean, it got smushed. It went from 580 to 85. Now it's about, I don't know, 104 or something like that. Could Microsoft like potentially just say,

let's just make Zoom part of Teams and just do this? Zoom's 30 billion. Why couldn't they get bought? Slack, what was Slack when it of Teams and just do this? Zoom's $30 billion. Why couldn't they get bought? Slack? What was Slack when it got bought? Slack was, I'm guessing, $20 billion. Sorry. Zoom has hundreds of millions of customers.

Is that right? Yeah. It's like a very, very big number. I don't know how much they're getting paid by all those customers. Yeah. A lot of those are small, one-person enterprises. So what? Their last report was a disaster.

Their growth slowed pretty dramatically. Stock went up, though. I think because it went – because they – I think they beat on revenue. They had big cash flow. It wasn't as bad as people feared. Oh, I wanted to ask you about this one. What about DocuSign? That has been – we're DocuSign customers.

Everyone I know is a Docu – I know Adobe competes. But if you say to somebody the same way, let's do a Zoom tomorrow, it's the same thing. DocuSign is a docu i know adobe competes but like if you say to somebody the same way let's do a zoom tomorrow it's the same thing docu signs a verb i'm gonna docu sign you something i need you to sign it like 60 billion to 11 oh this is an 11 it's 11 billion on market cap let's buy it right now they should first of all the ceo should be gone and and somebody should just like step in here and fix and like stop the bleeding. There's no reason for the carnage in that stock that I can think of. Are we going to talk about the activist investors? Where are they?

We're going to do that later. We'll do that later. What do you think about this thing? DocuSign, yeah, that's a good case study. Zoom versus DocuSign. Like one, Zoom is- Same chart. Both verbs.

Zoom's always been a cash flow positive. You think of what I'm thinking? DocuZoom? What's up, motherfuckers. You think of what I'm thinking? DocuZoom? What's up, motherfuckers? You guys, what do you think? What if? I'd buy it. What if?

It could probably go right to zero. Okay. All right. So she did know the Tesla call. You're right. She is a great storyteller. The team that's unusual in their backgrounds. So what does that mean?

She found really talented researchers, many of them from Twitter. Is that what makes them unique? I'm trying to figure out, like, what's the unique part? I don't know. I don't know. I don't know all the team. I hired half my people from Twitter either, also. So I'm not saying that as a diss, but is that what's unusual about it?

Well, she's always been unusual. Like, you know, before the Tesla call, like before she made all the money and had all the success, people hated her on Twitter. Again, that might be fin twit, but, you know, every time she'd go on CNBC and talk up Tesla and she'd throw a big price targets for Tesla. That's what pissed people off. That's what made people. Her base case for her bear case, I believe on Tesla was a $2 billion market cap. Her bear case. That's not made people mad. Her base case for – her bear case I believe on Tesla was a $2 billion market cap.

Her bear case. That's not serious. There's nothing wrong with being bullish. But to have a bear case at $2 trillion? Eric, you said that there's a little bit of sexism and ageism maybe even if it's unintentional in the mix here. You noted that Morningstar criticized her this April for being 66 and not having a succession plan. They don't do that with 66-year-old men that I'm aware of. That's true.

I never hear about a 66-year-old hedge fund manager, for example, that how dare he not have a successor. So I think there's something to that. But I also think that there's a contingent of people who when they hear that claim being made, they just have this like really violent reaction like, oh, now it's the woman card. Now it's – so it's really, really hard I think for – and she, to her credit, never does that. No, she never plays that. Never. She was asked point blank by that – by Bob Pisani. I give her credit because not that I think other people would do that, but it's like it's in the arsenal if you want to use it.

It's always there. Yeah, to her credit. You do really – at least I've never really seen her address the haters of which there are – there's an army of them. Because you can't. No. Go ahead. But I'm interested in growth tech stocks probably for the same reason that she is, which is know, I remember when I started my fund, I said I was going to invest in technology. People said, oh, yeah, you're going to invest in Fang?

Is that what you're going to invest in? And I never had an interest in investing in Fang, not because they weren't great companies, but because it's an acronym. So, you know, the money's been made. And the law of large numbers is kicking in. Can I? Go ahead. I'm sorry. Last year, I mean, they had a great year

and everyone was saying, well, Fang's where it's at and stuff. But now, you know, we're seeing that. The acronym is so, that's such a good insight. I remember the BRICS. Right. Like you had to be in the BRICS. Right.

Literally by the time everybody was talking about the BRICS, nobody's made money in 15 years since. Yeah. It's incredible. So I want to find the next acronym. Let's make one. Who amongst the DocuSigns and the Zooms are going to be the next? Let's just make one.

Next acronym. Let's take those cash-burning companies that have all been thrown out with the bathwater, and let's come up with an acronym. And they may not work, but at least we could market the acronym. When did Kramer come up with FANG? Was it 2016? It was 2015, I think. It was a while ago.

So we should do that today and then we should, you know, plow the money in and then ride it for the next five years. And then we get an ETF to license it and we're off to the races almost no matter what happens. I have a little bit of good news.

Finally, finally, interest rates are coming down. On what? On interest rates. Oh, bond yields are coming down, you mean? Yeah. Okay. But with Kathy,

I respect her. And one thing that amazes me, though, is that she's had positive inflows this year. And she's still up. She's at, I think, $7 billion now in the core ARC fund. And it was like $1.8 billion at the lows of the 2020 pandemic. It was $30 billion a year ago. Yeah. Well, no, obviously.

of the 2020 pandemic. It was $30 billion a year ago. Yeah. Well, no, obviously. But my point, what amazes me, though, is that minus 77%, and people are still putting money to work. And it's mostly younger people. And so say what you want about her, but she's put her finger on a corner of the market,

and she's articulated it, and she's put it out there, and there are a lot of people that are interested in it. She also is of the internet age. So she has global fans right out of the gates even in places where they can't access her funds. People know her in Korea. They know her around the world. I think what's different – so she might have a really big comeback. Like if interest rates stabilize and some of these companies that she's in start to like really crush it and show that the money burning they were doing actually had a payoff, that it's possible.

But there are other comebacks on Wall Street where people aren't coming back from negative 80 percent. Like Buffett has had really rough – he doesn't care. But like he's had Barron write the shitty article about about him, how he's done and has had the comeback. But he wasn't down 80 percent. This is like – this is a lot, a lot to come back from. It is. Yeah. But if you're going to – Just buy the fund today.

You don't care about that. But if you hire it, it matters. For sure it matters. And for sure no investor likes to lose that kind of money. But – Michael does. Most investors don't. But this is the most volatile subsector, probably, of the entire

investing universe. If there's anybody who's going to have a comeback, it probably will be from this. I like happy endings for people, so I would root for that. The destruction is so severe, ARK could double and still be down 50% from its highs. And it probably will get a double.

It'll probably go up 100% at some point. Well, she's in the types of stocks that could double. If inflation slows down at some point, these stocks will double in four months. Yeah. I was on a webinar with Mike Wilson from Morgan Stanley, who's kind of like the bear right now on Wall Street from a macro perspective.

Shout out to Mike. We like Mike. And by the way, he keeps saying like 3,400, 3,500. I'm not buying until then. If we have a couple more days like today, we'll be there. But I remember I asked him about when things do bottom, what rallies first? And he said it'll be the growthiest part of tech and the small caps. Well, first in, first out.

Or first out, first in. First out, first in. Yeah, they've been getting killed since February 2021. February 21, sorry. Speaking of the bears, layoffs in tech. This is another natural part of the cycle

that you've seen multiple times. It seems like it's just starting. It's coming in hot. But these companies are not wasting any time. These are 10% workforce reductions as the appetizer. They're not taking their time and seeing what happens. They're acting decisively.

How do you see it? And unfortunately, they're probably a leading indicator for other companies down the road six months from now. So Armstrong at Coinbase is a very big layoff. Is it 18% of workforce? Fortunately, they're probably a leading indicator for other companies down the road six months from now. So Armstrong at Coinbase is a very big layoff. Is it 18% of workforce? So Coinbase, Netflix. Sorry, let me just jump in. So Balchunis just sent this to me because I asked.

This is ARK, Flows. So it's pretty noisy. But year to date, 1.5 billion in inflows. That is very impressive. For sure. I've never seen that before. I would love to see a breakdown of the demo of who's investing this year. But I would think it's skewing younger.

She's sort of capturing. She's got a brand. She's built it. And she's communicating. And people believe. I think it's probably a lot of people who were originally in the fund when it was going up. And they remember that this is possible. I don't think it's new people. I just don't. I'd love to know. Six days ago, there was on Hacker News, Coinbase employees petitioned to remove execs. And there was people piled on. The thread goes on for six miles. And Brian Armstrong

did a whole tweet thread. This is really dumb on multiple levels. And he goes on and on and on. And then five days later, big, big, big Coinbase layoff announcements. We were speaking about that when they reported earnings last week. Wait, he was refuting that there were going to be big layoffs? No, it was just people, employees calling for executive change.

Like him? They want him out? I'm sure. That was June 10th. Who do they want in there? Doquan? Who do you go to? I think they were complaining like, oh, these guys cashed out after the IPO. They took a lot of money out of the company. He bought some big expensive house.

But I think over the last year, they went from 1,000 to 3,500 employees. And the stock-based comp we spoke about after they reported earnings was absolutely out of control. Yeah, it was like $300 million. It was like some insane number. It was a joke.

Yeah, I think it was 250 for the quarter. Maybe they were projecting 900 for the year. I don't know. It was outrageous. Right. And that's something that we all lost sight of over the last couple of years. And those are real costs, the stock-based issues.

And that's probably going to be a rolling problem for a lot of tech companies. Yeah, it's not just an accounting figure. It's an actual cost to the company while the company's not making money. And shareholders, especially. Right. But now employees this year,

when there comes bonus time. The options reprice. Hey, are you going to take your bonus this year in cash or stock? Oh, I'll be taking it in cash this year. Well, then that's going to have a direct impact on the company's financials. These are the laughs that we've got so far.

Oh, that's interesting. So now you have people that are like, I'm not going to ever make that stupid mistake again. Give me the cash. The companies actually have to give you the cash. They can't just issue stock. Well, every company is different. I mean, but there are a lot that give that kind of a choice.

Oh, I did this. When was this? Oh, Q1. Look how fast this guy is. Good job, John. John, very impressive. $350 million. Oh, my God.

This is the first quarter of 2022. This is Coinbase stock-based compensation. $350 million for the quarter. I mean, come on. So this is why it matters. We spoke about this a while ago, that the market is the economy for some of these companies if their shares are their currency for hiring employees. It matters a lot.

Right. So some of the layoffs that we've seen so far, Peloton, Wells Fargo, Robito, Netflix, GoPuff, Facebook, OnDeck, Carvana, Twitter. I mean it's everywhere. It's becoming like pretty pervasive. Yeah. I mean you could say, hey, good for him to do it, take decisive action. But then you could also say, why did you have all those people in the first place? Why did you hire them?

Why did you need whatever it was? And they weren't hired five years ago. They were hired like six months ago. Right. And I saw something when the layoffs were announced that as late as January of this year, they were offering senior engineers new packages, hiring them for 900 grand.

Yeah, why not? The investors are paying for it. But doesn't that speak to, we mentioned the Redfin layoffs. What's WBDA? So Warner Brothers, Warner Brothers Discovery. By the way, all of these media stocks hammered. Paramount's down like 75 or 80%.

They all look like Peloton. Imagine Maverick didn't make a billion dollars. So- Disney. Yeah, exactly, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, Disney. Yeah, exactly. Disney. Warner Brothers Discovery, they are laying off 30% of their ad sales team. Mm.

Yeah. Does this speak to the, the speed at which the, the switch was flipped? If Coinbase was doing what you said in as recently as late January, that feels like yesterday to me. Right. So it's amazing how quickly all of this is taking – which was my point. Like they're not waiting and seeing.

So how quickly does the tight labor market untighten? I think we're going to see it pretty quickly. I mean I think – and the Fed is doing all this stuff to slow things down. And it's hard to say, you know, you know, are they, I tend to think like there's a lot of stuff that's going to, would happen anyway in response to like all the stuff that's gone on this year, uh, aside from the Fed that's slowing things down. And so I think a lot of CEOs are just looking at how much cash do I have on

hand? What kind of, you know, what's my stock price? What kinds of calls am I taking from my investors? And they know that if they don't act, you know, that they're going to be in some serious problems. When did Uber CEO come out and say, all right, game changed, cashflow, cashflow. That was the first quarter. That was, that was like 90 days ago. Not even maybe. Yeah, no, I think it was more recent. It happened so quickly. A month, a month ago. So six months ago, I mean, everything is happening so quickly. Six months ago, housing was unaffordable. Now it's really unaffordable. You couldn't afford the down payment.

Now you can't afford the mortgage. That's the weirdest part about this thing, especially when I compare it to dot com, is that things seem to be going much faster. Yeah. These days than that. Like back in 2000. I wonder if there's empirical data on the pace of layoffs from back then that we could, I'd be really curious if it feels that way.

And back then, tech was not this behemoth in society, right? No. Because like people had, people were kind of mad at Y2K back then. Like, ah, that was a fraud. And, oh, the internet. Oh yeah, people got all excited about that.

But, you know, a lot of people weren't using the internet. They weren't going home to their AOL dial-ups. And also think about employment. How many people work for Apple and Alphabet and Facebook? These are enormous. Amazon's as big as Walmart. These are the biggest employers

and probably the fastest hiring employers in the Fortune 500. So actually what happens with stock price becomes more impactful in people's lives now than back then. Right. So that's why I wonder. How many people worked for Yahoo in 2000?

A lot, but not that many compared to now. No. So if we're a year and a half into this correction for a lot of those tech stocks that you had up before. February 21 being the top. 80, 90%. Are things moving faster? this correction for a lot of those tech stocks that you had up before february 21 80 90 percent like it's are things moving faster meaning like we don't have to go through a four-year you know waiting period like we did after the dot-com like are are are we going to move through this even faster and as as like as amazed as we are now talking about these layoffs versus six months ago, six months from now, are things going to turn again?

It's always hard to see that in the moment. But the people that are going to make the most money right now are thinking a year from now. I'll tell you this much. Six months from now, you're going to hear a lot less people fighting over whether or not they could work at home. You'll be like, I will take the job, sir. I will see you. Wait, do I have to relocate? Okay.

Okay, where do you want me? San Antonio, sure. Let's do crypto. What do you have in here, Beth? Sam? Well, this goes to the layoff thing. Yeah. Sam Banker and Freed.

He was interviewed on the Sohn Conference, which they did remote again this year. What are they doing? Just do it already. If you haven't seen it, you should go to YouTube and watch this interview because it was Patrick Collison, one of the co-founders of Stripe, who's interviewing Sam Bankman-Fried. And I first thought he was lying on a bed with his MacBook like on his chest in a t-shirt. Was he on his beanbag? I think he was leaning against his headboard

or something like this. Doing this like, you know, 45 minute discussion to sewn in his t-shirt. Okay. But anyway, super smart guy. I really like listening to him. But one of the most interesting there. This guy's the best.

He's so, he's so, like so unintentionally funny. Maybe this is intended. I don't know, but he's very entertaining. But the most interesting part of this interview was that the guy, Patrick, asked him, how many engineers do you have at FTX? It's a big company, right? And he said, 24. It's not a lot. No, it's nothing.

And he said, why so few? And he said, well, we believe, I believe, that just adding headcount for the sake of headcount does not make the company more productive. In a lot of ways, we think it makes us less productive. So we'd rather have a much smaller team. And he thought that all the companies like Google and Facebook and Coinbase, I'm sure he didn't name Coinbase, are overhiring basically. Loaded. And it's also a status thing, right? You know, I work at, you know,

you know, I work at Facebook. I'm part of this, you know, huge community or town or something that works here. So he said if he ran Facebook, he'd probably employ 10% of the number of engineers. That's crazy. Yeah. And the job market will say, oh, thank God.

We'll take them. We'll take a Facebook engineer right now. But part of that is also when you build a large company, you don't want to hear about things taking two weeks. So you're a senior VP of whatever bullshit, but you're like, I need this like next week. You want a team of 30 engineers swarming that project. You don't want to be told. We have some people working on things and you're going to have to wait for that.

And you think like, hey, I'm Facebook. Why shouldn't I have this team? How do we not get this? Get more people then. Let's solve this problem. It's not easy. But then you got to train them. He did a tweet thread on this the other day.

I thought it was spot on. Just hiring is a distraction because training and oftentimes people think, oh, I have so many other colleagues. It's somebody else's responsibility. The leaner it is, the more focused the team is. But what do you do? But what do you do?

Listen, we struggle with this. Like we've been hiring like crazy. What do you do? Do you slow down the rate at which you're handling things for clients and employees from an engineering person? Like what is the drawback to saying I would run this leaner? Do you make your people work more hours and pay them more rather than having another body? Like what, because I'm trying to figure out how I can get more out of Duncan, uh, candidly. Well, I mean, they, he was talking specifically about engineers and so, um, he's our audio video engineer, sir. And, uh, you know, I remember one of the questions was,

do you just hire for IQ? Is that all you hire for to have the best team? And he said, well, it's an important factor, but it's probably like 20% most important. The most important thing is we have to hire people and we interview for people that can basically just deal with a lot of

ambiguity because there's never a clear-cut answer in our business. And a lot of times these engineers are writing code, and some of them will get really fixated on it. It's got to be just right. It's got, oh, it's messy code, and I have to clean it up. I have to take a little bit more time. And he was saying, like, we can't.

Well, you hope that's the case, for example, with nuclear missiles. Like, you hope, right? At FT for example, with like nuclear missiles. Like you hope – right? At FTX, it's not such a big deal. But basically hire for those kinds of people rather than just – Would you bet on Sam Bankman Freed coming out of this in better shape than Brian Armstrong, for example? Like not personally, but like the way that they're – His company? The way they're leading their organizations, like which one would you prefer to bet on?

You can't bet on FTX. Is this a joke? You could bet on Coinbase. Which would you bet on? The guy that has 24 engineers or the person that just laid off? There's more to it than how many engineers somebody has. There's competitive position.

There's what stadium do you own the rights to? Are you going to bet on a bald man or a man with a beautiful head of Afro? That's true. That's true. I don't know. What do you think about that? Too soon to tell?

No, I for sure would bet on Sam. Don't you think either of these two guys, though, if they weren't in crypto, they would be successful in no matter what? They just seem to have that thing about them where they both can see the future and then also execute faster than anybody else. That seems to be what they have in common.

Yeah, and I wouldn't bet, you know, you talk about one of those cash-burning ideas that might turn out to be a great idea. I mean, I think something good will come out of crypto, out of all this, despite, like, everyone wanting to say this thing was just a hoax. If you don't think crypto's a zero, and I am definitely in that camp of not zero,

Coinbase could be very cheap right here or not. Not zero is a super bullish posture. Are you sure you want to get that carried away? I'm being very adventurous by saying that. I looked it up, and on a multiple basis, they're as cheap as Schwab. But the problem is they're charging enormous fees right now. That are going to compress. No one's going to trade at those. And those fees are going to compress. No one's going to

trade at those spreads and those fees. Everyone knows that. And one day Schwab will be their competitor. As will Fidel. If this was really going to be a thing, they're not going to compete with FTX. You know what was a thing like six weeks ago? Well, how much is Coinbase's venture arm

worth? Not much. All right. Much less today. Michael Saylor's margin call. Do you see this as like one of the most exciting will they or won't they situations in the market right now? So let me set this up. This is – what is this? Quartz? All right.

Bitcoin needs to cut in half for around $21,000 per Bitcoin before we'd have a margin call. That's at $21,000. Pause. That's the CFO of – what's his company called? MicroStrategy. MicroStrategy in May at Bitcoin $40,000. So now we're there. Where are we?

Bitcoin is at $20,999. Okay. So now we're there. But he said that. The CFO said that publicly. All right. In the two months since MicroStrategy's latest Bitcoin purchase, it lost more than half its value. As of June 14th, MicroStrategy has lost $1.1 billion on its Bitcoin debt.

Who's our counterparty in this? Silvergate. Okay. So best of luck. party in this uh silvergate okay so um best of luck uh according to the terms of micro strategies loan agreement with silvergate a margin call would be triggered if bitcoin falls below 21 000 per coin um we here throw this up john uh the first chart is so this is just like a quick history of when they bought it they started buying it it. Pretty good. Fall of 2020. Timing was impeccable.

It goes crazy. They buy another billion at $60,000. Bitcoin falls to $30,000. Then it goes back to $70,000 and they buy another... They're up to $3 billion in purchases and a lot of which is now borrowed money. And then they just did another purchase

somewhere in the mid 40,000s in 2022. I'm guessing they're done, right? They have no more money. Nobody's going to lend them any more money. Okay, so you would guess that. And what's their market cap of MicroStrategy? It's tiny. I think it's way below.

Okay, so now, next chart. They have now lost more money in crypto than they've made. Wow. So I thought this was unbelievable, actually. So they had bought more than a billion by the end of 2020. Then the price went crazy. They bought another billion. So wait, their unrealized gains was almost $5 billion.

At one point. All right, listen, you win some, you lose some. They have spent more than $4 billion on Bitcoin, which is more than twice as much as the company's $1.7 billion market cap. So there's a lot of money that maybe – I mean we're talking all this shit. Bitcoin could be $50,000 tomorrow for all I know. I don't even know what it trades based on. But this is a pretty remarkable situation, right? It's crazy.

I mean he – and he's become a bit of a punching bag now in the media. Well, that's how we're – the bigger of a personality you are on the way up, the more that will turn against you on the way down. So the market cap is $1.8 billion. The enterprise value is $4.2. Their value of their crypto is what now? I don't know, but they've spent more than $4 billion on it, and it's not that much. They've spent more than $4 billion.

Their enterprise value is 4.2. And they have losses. Well, their average cost is in the 40s or 50s, I think, based on courts. He put up a new LaserEye profile pic on Monday, I think. Well, now I'm bullish. He's still bullish. He's still tweeting what BTC is

when BTC. Do you think that do you think that any of this stuff matters to the overall economy or it just never got big enough?

Crypto is now slightly sub one trillion in total. I think it could go to zero and it wouldn't impact anything. There's not enough

margin outside of crypto for it to matter. Yeah, I don't know. Like, it's a lot bigger now, obviously, than it was. Tesla has $60 billion in Bitcoin, right? Is that the— No. Not $60 billion.

I think they sold some, but, yeah, I think they still have some. But out of all the publicly traded companies—I don't know why 60 is not the number. Out of all the publicly traded companies, they had the second largest amount after MicroStrategy. So it does matter to some. I think it could. I mean, it does worry me that, you know, I saw just on the way in here that some crypto hedge fund, you know, didn't meet a margin call today or something like that. Three-hour capital. That was the talk the last 14 hours.

Didn't meet a margin. But who is the margin loan provider for a crypto hedge fund? It's nobody's systemic. Yeah. No, I know. But I guess – It's not Goldman Sachs. I just – I worry that there will be some follow-on effects.

If nothing else, even at just the consumer level. Remember how everybody was like, ha, ha, ha, subprime. It's this bizarre little corner of the market. Nobody cares. It's contained. It's contained. It's ring- little corner of the market. Nobody cares. It's contained. It's ring-fenced. Right. Grease.

Nobody gives a shit. But subprime and crypto are very different. All right. Anything worth saying about the Fed's announcement yesterday, the market reaction today? Any thoughts that maybe people should consider? I wish I had some great insights. I mean, the whole- It's not your game.

The whole last few months just feels like schizophrenic where it's like one day, hey, it's great. And the next day, it's like the walls are falling in. And even after the last Fed meeting, like we got the, you know, 90 minutes or whatever. Yeah. 90 minutes of like a rally and then five or six days of relentless selling. And so I hope we're not in for five or six days. I think the entire game going forward, the only thing that matters is inflation. I think that even bad economic, so we have yet to really see the bad economic data show itself. I think bad economic data will be cheered by the market because it'll be a sign that inflation is coming down. Yeah, I think so. What if he's doing what Armstrong is doing? Here's the thing I'm hearing a lot of people say,

oh, the Fed is front end loading now. Okay, first of all, they're not. They're a year and a half late, but fine. The bigger cuts are going to be earlier this year, which will allow for more flexibility later with – bigger hikes are earlier in the year. And then the smaller hikes can come later because they already got the big ones out of the way. That's what people are saying now. Maybe that's wishful thinking, but maybe that's the same kind of approach. Like if you're going to eat shit, don't nibble. Like if we're going to do this, let's just get it done. Maybe this will be the biggest hike that we've seen

and then they'll take some time to watch as this stuff takes effect. I don't know. Is there any doubt that rates are going to come back down? They're going to come back down. Eventually, yeah. When they crush the stock market to Dow 10,000, I'm pretty sure that'll be cutting rates.

And if there are more waves of Coinbase layoffs and all this kind of stuff, obviously, for sure. There is going to be an impact from all of that. Can you tell me about, what is the deal with mortgage rates and with interest rates in Canada? Is it like they had rates at half a percent?

Like they had rates like super low and mortgage rates reset every like five years or something? Why was there so much speculation in the Toronto housing market versus there was a lot of, there was a lot of a home price appreciation here, but where you live, there was it's apples and oranges.

Yeah. It's, it's. Who controls the Canadian? Is that Wayne Gretzky still? Who is the, who's in charge of all this? He's the most popular guy.

I don't know. Probably, probably Kevin O'Leary. Kevin O't know. Probably Kevin O'Leary. I think he caused all these housing issues up there. No, they don't have 30-year fixed up there. Most people just do short-term, five-year mortgages that they renew, always sort of tied to the interest rates at the time. And so most people are on adjustable rates because they're cheaper. And so that all factors into then why movements of the interest rates definitely drive the housing market up there. And so there has been a frenzy up there. I don't know if it's been that different than pockets of the US that have been hot as well.

But it's been a hot market for a while. The last time Toronto had a downturn in housing was probably the early 90s. It lasted for 18 months or two years or something like that. Because it's still a very international city. It's an innovation center. People want to be there. They get a lot of foreign buyers that come in. But, uh, I think the biggest thing that's been supportive of the market has been, uh, immigration. There's like all the while that Trump was, you know,

keeping the immigrants out, uh, the doors were, Howard Linsen said that a lot of smart people were going there. And when the people come, they have this point system where, you know, they don't just take anybody. They have this ranking system to try to take them, the brightest people. And when they come, they mostly want to come to Toronto or Vancouver. And so you basically have all these people coming into the city, pushing up kind of demand for housing. That pushes the prices up. Let's have some fun.

Let's do some of your favorite stock ideas for the second half and for 2023, I asked you. But you could just go. Whatever stocks you want to talk about, I always find that your takes on growth companies are fascinating, and I learn a lot from listening to you. So we did Zoom already. We did Open. We could skip those two. Farfetch? China's interesting because it's the only place in the world right now that's easing. It's not hiking. And so that's why a lot of people are very bullish on Chinese internet

stocks, some of which have been killed 75% or something like that. So they've had more of a beating. I like Farfetch because it's a London-based luxury e-commerce platform, but it's obviously got a lot of exposure to China. And it's been killed. It's down like 90%. They're selling into China. They sell into China. They sell globally. Yeah, I see their shit.

Because it's luxury. What is it? Luxury what? Whatever you want. Handbags, shoes, dresses. Is it pre-owned or just better prices? It's new. Is it real shit? Yeah, it's real. They just did a big partnership with Neiman Marcus

to basically e-commerize. That's what the department stores should do. They're doing a pretty good job with e-commerce, but they should really- That's what the department stores should do. Because they're not, they're doing a pretty good job with e-commerce, but they should really go to experts to do this stuff. So because they have so many buyers in China, because people there like love luxury, they have the exposure to China. And they've sort of were, you know,

penalized for that on the way down when China was, you know, taking all their, you know, DD to the woodshed and all that kind of stuff. But now I think they can come back on the other side. What percentage of your portfolio right now is in China-related stuff? I know you know a lot about that market. Well, it's very low still because right now I have Farfetch.

I have got one other name that I have sort of starter position in. What would get you more bullish on going back to the names that you knew about? You knew Alibaba five years before it came public. Nobody knew about it when you knew about it. Yeah. To be honest, I've followed it, but I've never trafficked in the public stocks just because I've always – there's always been this regulatory risk that one day they could wake up tomorrow and totally change. Yeah, we've seen that with a few companies. Not just their regulations.

They could get rid of this VIE structure, which is how they become a Caymans entity and list as a stock through that. But you don't actually have any control of the business and all this sort of stuff. What's Friar Battery? Tell us about this. This sounds interesting. It's a SPAC. That doesn't make any – Just kidding.

It's pre-revenue. So why wouldn't you love it in this environment? Pre-revenue SPAC. Tell me all about it. But they make EV batteries and other – Wait, it's a SPAC that already closed its deal? Yeah. So where is it now?

$4? $8? $7. $7. Okay. All right. That's close. Better performing SPAC.

Yes. So basically, it's a Norwegian company that's building a bunch of huge gigafactories to build batteries in Norway, and then they just did a JV with Koch Industries to build gigafactories here in the U.S. And the reason why I think that's important is that despite the pullback and— We're still going to need that stuff. We're going to need electric cars. We're still going to need that stuff. We're going to need electric cars. And right now, if those car companies, whether it's GM, Tesla, Lucid, if they want to buy batteries, chances are they're going to be buying it from a Chinese-based battery maker.

They seem very intent, though, on also wanting to develop their own at some point. Is that not realistic? Tesla? No. No. GM. They're making noises about doing their own battery technology. Well, they'd be smart, but it's probably a long road.

So Friar is interesting because they've done a licensing deal with an MIT company that has sort of established technology. And they're domiciled in Norway and the U.S., so I think a lot of companies are going to be interested in doing business with them. Non-China outsourced batteries, yeah, if you think that we're going to have to, you know, buy batteries from Western supplier, you know, there aren't many to choose from. And so that's why I like them. You call that a wild card. When you get something like when you get involved with something like that, what's your return expectation? You need you need like a 10x on something like that to justify the amount of risk you're taking or not really. Yeah. Well, no, I have to see that in the blue sky scenario.

No, not that it's going to happen, but it has to be a possibility. A 10x has to be a possibility, yes, for sure. Because you're bearing a lot of risk, so there has to be that potential upside. Yeah, for sure. Okay. Bombardier. What is this ticker symbol? It's on the OTC down here.

Okay, B-D-R-B-D. Yeah, Bombardier. So there's basically – What did I say? Bombardier? Bombardier. They're up in Quebec. Bombardier. Up in Quebec.

So they're one of like basically three private jet makers in the world. So there's Gulfstream. there's Dassault from France, and then there's Bombardier. And so right now they've got the jet that goes the farthest. So you could fly from Toronto to Phuket, Thailand nonstop. Which I'm doing very often. If you're going to drop $75 million on a new plane like Chamath just did a few months ago on one of these planes, that means a lot to you.

So they've got a huge two-year backlog. I'm happy for Chamath. So I think it's interesting because if you compare it, it's more of a value play for me. If you look at them versus Gulfstream or versus the one in France. It's the two-year waiting list for this jet? Yeah. Okay. And so it should be 3 or 4X where it's trading now. versus the one in France. It's the two-year waiting list for this jet? Yeah. Okay.

And so it should be 3 or 4X where it's trading now. But it's got high debt. Look at that thing. Yeah. It's beautiful. Down 50%. The stock's down 50% this year. Just hit a 52-week low list. Okay.

So this is the kind of stock that if there's going to be a bounce in these types of names, this will participate. Well, it's a little bit different because it's sort of under the radar. Like in my opinion, like it should have been – it should have doubled. Like if you'd asked me six months ago, it should have doubled or tripled by now. But nobody knows about it. They need to keep churning out EBITDA every quarter. But they also need a stock market bubble to sell a lot of jets because that's what sells

jets. Yeah. Well, yeah. I didn't even say a SPAC bubble. I'm just saying like they just need a healthy market. But I guess one of the things that has been helpful for them is that one of the impacts of the pandemic is there's the ultra Chamath rich, and then there's the next level below Chamath.

And some of those people haven't had private jets up until now. Yeah. But during the pandemic, they had to dip their toe in the water, right? Yeah. And then they probably liked it and they don't want to go back to flying business class. Are you a member of any of those private jet sharing things? No. The economics of those are just not good still.

Yeah. They've been popular. Yeah. I don't understand who's paying for that. I would never pay for that. I have a private Jeep Grand Cherokee. Yeah. No, I looked at all of them.

Not that I'm traveling that much. I used to. I guess I looked at them in like 19. The economics were terrible for the user. Right. Unless you're really, really traveling every week. The ones that are stocks have done terribly. Awful stocks too.

I wanted to finish with two things we could do this really quickly where are all the activists who's who's gonna who's gonna step in here

on tech not even crypto but like regular software stock down 60% I understand it's macro forces that are doing this

to a lot of the companies but yeah what's Ackman doing but where are these guys? Isn't this prime time? Well, two things. One is that when the economy goes bad, the activists typically pull in their horns,

like after 2008. You know, I don't think- Isn't that backwards? Yeah, but I don't know, it's risk aversion or whatever, but I don't think you really saw activists jumping in until 2012. Icahn's been pretty counter-cyclical, though. He just closed out a position in Chenier Energy, where he's in the process of closing it out,

taking his guys off the board. He got in that in 15. It was almost like bankrupt. He got in there. They put in somebody new in charge. That stock has gone up so much, it's incredible. LNG. And now he is removing himself from it with oil where it

is and with transmission assets worth what they're worth. So he's been pretty I think a droit. I think he's a A-D-R-O-I-T. A droit? We say a droit in Toronto. What was I f***ing saying? I've never even heard that word.

Don't make fun of me. I learned it by reading. That's why I don't know how to say it. So you think – I think Icon's been the best activist of the bunch. I love him. I really do too. But I think tech has been a terrible place for activists to play their trick.

I don't know. So take that back. Icon alone. Apple, Netflix, eBay, PayPal. I think he's making some money there. I think if you asked anybody who worked at the company, they'd say, what did he really do? It was more of a distraction. Well, he forced PayPal spinoff.

He did do that. Made Apple pay a dividend. Made Apple do a buyback and dividend. Tim Cook was not doing that. Wouldn't, you know, should. Some people would say eBay would be a lot more attractive stock if they kept it. Well, sure.

Sure. But PayPal became a $300 billion market cap company at its peak. Netflix, I feel like they were somewhat helpful there. I don't know. Huge. Maybe not. Well, actually, maybe they just came at the right time. Maybe they just got lucky.

Yeah. He had an amazing return. He wasn't there for very long. He had a great return. Yeah. He had a great return. But I think that was just more. He had a great return. Yeah, he had a great return, but I think that was just more like- It was his song. They showed it in the documentary.

It was really Brett. It was his kid. Could have been in the right place at the right time. Yeah, yeah. But Yahoo was an unmitigated disaster for the- Oh, I forgot about that. Why are tech stocks tough for activists in general? Because innovation is so important

and that's not their language? Yeah, it's activism is a financial playbook. but tough for activists in general because innovation is so important and that's not their language? Yeah. Activism is a financial playbook. I think Chenier Energy, you buy a dump truck company and they own a media business and you can go on and yell at them and say, sell the media business. Spit it out. Raise your dividend. So obvious shit that's- Spit it out. You know, raise your dividend, you know. So obvious shit that's not- Yeah, and they're not product managers. So they're not getting into the weeds

of some tech business and giving advice on what should be done. To your point, like if you think about some of the really successful, and I mean over decades, not once or twice, some of the really successful activists, like you think about like Nelson Peltz, he operates these businesses when he takes board seats. And these are companies that are on paper.

They're not – it's not innovation. It's Wendy's. Right. It's Snapple. It's more private equity in a public company. It's almost like a private equity. I was going to say almost like a public equity with private, with a private equity with public shareholders. Right.

And long, long, long term in many cases. Yeah. Right. I think that works, but I think tech,

it doesn't work. And you know, and then you could say typically the activists are Wall Street guys versus, or gals. The other thing is

some of the best tech companies have these anti-shareholder share class structures where even when you get a company that should be disrupted meta by an activist, it's not going to happen. And Zuckerberg is untouchable almost no matter what goes wrong there. That's for sure. And I think a lot of – like if we tried to name what are the tech companies that should be a target for an activist, probably the ones that have been most beat up are crappy businesses. Twitter. Twitter is a perfect example.

So you got activism there. What's somebody from New York going to go onto the Twitter board and tell them to do? Nothing. Like the people that will kind of run circles around them and they'll get to kind of like doddle along. So I think Twitter's best hope is probably someone like Musk coming in and doing something there. And just closing. Because he'll know the BS that the engineers try to feed them and probably cut people and change out people and stuff like that. This is a late addition to what we're going to talk about today.

We'll do this and then we'll go into favorites. And then we'll let you get out of here. This kid, Jack Rains. do this and then we'll go into favorites and then we'll we'll let you get out of here um this kid uh jack rains so he writes for finlet which is like social media blogs instagram whatever he's in the liquidity mafia he's in the liquidity mafia and i i thought this was the best thing i've read this year about online content and have you seen this yet? Yeah. Okay, what did you think? I thought it was spot on. I mean, I don't write as much as I used to, but if I go on TV and I make the case for something,

invariably I'll get some kind of mean tweet or something or email like two months from now if it ends up being a terrible pick. You told me to buy this. No, I didn't. What did you do? Why did you tell me to do that? And all this kind of stuff. Let me set this up.

So this is a kid. But Jack is like 24, I think. He's a phenomenal writer. So this is a kid that figured out something really important about himself and about other investors at a really young age. And it's going to benefit him yeah i didn't know he's 24 so he's so basically like everybody else he was trading meme stocks and spacks and all this shit during the pandemic and it was working and a lot of

people thought they were really smart um and myself this all happened to this day if i buy a stock that goes up immediately it's because of how I was. So he built his account up to like $400,000 and he put $150,000 into this thing called Catapult and wrote about why he was buying it on Seeking Alpha. All above board, like full disclosure, I own this, I'm buying it. This is why I bought it. That's what everything on Seeking Alpha should be.

I have no problem. I think that's great. And then of course it blew up because it's a SPAC and it's interest rates and blah, blah, sure. and I told dozens of friends and acquaintances about the stock, I knew there was a pretty good chance that at least a few of them had invested money because of me, which means that they lost because of me. One silver lining is that I lost more on this trade than anyone else.

I certainly suffered the consequences of my conviction, but the fact remained that other people still lost money on my recommendation. This was a defining moment in my writing career as I came to two realizations. One, I'm not a market genius. I'm just a guy who played a hot trend well for a while. Two, I'm a convincing writer who could explain my arguments well. That second point really hit home for me as somebody who can be very persuasive when I write. There's like a responsibility that

comes along with that. And I don't even think most people in their 50s and 60s who are writing about markets, stocks, feel that responsibility to the extent that this kid does. So I know you've been somebody that's been writing about stocks for a long time and you've done seeking out, you've done blogging, everything that I've done also. How do you feel about like what he's saying here?

And is part of this responsibility ultimately on the reader who takes action based on something they read? Yeah. I mean first it's tremendously insightful. I wish I had been that insightful at 24. I think about it – I definitely think about it a lot because part of what you do when you write about something is, you know, you're making your case. You know, if you're a debater in high school, you want to do the best job at making your points on the debate team. Right. Here's why I'm convinced on this stock. I'm going to make the case for it.

Yeah. And so you want to put that out there. But then if, you know, there are, you know, unintended consequences of that, if it's too convincing or something like that. So should people learn for themselves? Well, yeah, of course. I mean, I mean, that's part of growing up. So he's like, I'm done writing about individual stocks now. Yeah. Well, I would say this.

I wouldn't do that. I wouldn't go that far. I don't think. I think you should come back. There's a huge difference between being intellectually open and honest and giving your opinion and possibly being wrong versus doing what Micah Saylor did, which is saying take out margin on Bitcoin, sell your house. Those are two very different universes. Right. Right? So you do the best you can. Right.

And you're going to be right. You're going to be wrong. And to be honest, like one of the things I like Cathie Wood for, and I think I do a bit of this myself, and one of the things I dislike about most of the folks that I see going on business TV and talking is that most people, they never want to stick their necks out. They never want to make a bold prediction. They never want to – you know, it's a sell-side analyst for career preservation. I really like this stock, but I think it's going to go up 10% between now and 18 months from now. But Eric, his job is not sticking his neck out. He's not getting paid to stick his neck out.

He's getting paid to be there. But I appreciate people that are willing to give an opinion. Put it on the table. That's why me and you like each other, for sure. So neither one of us are afraid to do that. For better or for worse.

Yeah, for better or worse. Not me either. There's a 50-50 chance. Jack's blog is youngmoney.co. Young, talented, up-and-coming writer. I hope he goes back to writing about stocks. And I think there's a way to do that right. Like, there's a way to say, look, by the way, our friend Paki McCormick starts his newsletter off with,

I'm an idiot, don't listen to me. Now here's what I'm going to tell you. And I like that approach. I like this idea of like, by the way, don't even read another paragraph if you're incapable of saying to yourself, oh, maybe I should do some research by myself rather than just blindly act. The other thing is people writing about stocks are not saying you should do this too. Now, in his case, he was, right?

The reality is people don't want to do the work. They want other people. They want to outsource their brainpower to somebody else. Anyway, go read that. And congrats to young Jack for having that realization. Okay, we're going to do favorites. Eric, you're going to go first. What's something that everybody should watch,

listen to, read in your world? Ira Stone conference on YouTube. One guy that didn't wear a t-shirt on his bed to do that was Stan Druckenmiller. He should have, though. He should have. That would have been great. Stan was interviewed by the other co-founder of Stripe, John Collison. And it's about an hour.

And it's just extremely interesting. I really respect Stan as an investor because he's made a lot from growth investing. And I think he had a line where I probably made 90% of my money on growth investing. But he understands macro. He understands bonds. He understands himself. He understands himself. He's, you know, he knows his own biases. And talks about it all the time.

Yeah. And it's just tremendously eyeopening if you haven't heard it. He's one of the guys, right? Like, like maybe trading, trading Mount Rushmore. Yeah. He's one of those guys in terms of influence, what he's done, what he's built. He's definitely Mount Rushmore. I don't think – I can't think of anyone I admire more as an investor.

The thing is, do you have space for both him and Soros? You probably don't, so you have to pick one of those two. That's a whole other – we could do an hour on this. I appreciate – as somebody who says I'm a tech investor, I just find it tremendously impressive that he has this broader perspective and he's able to kind of move from these different domains. Okay. So search YouTube for Stan Druckenmiller at the new – he's been at Sona Bunch, so the new one.

Okay. All right. Michael, what do you got for favorites this week? Hit us. The season finale of Barry was – do all of you guys watch that? I'm not up to it yet. I haven't seen it yet. Are you watching it?

Yeah, I'm watching it. I'm not up to the season finale. No spoilers. Duncan. John, you watch? I'm watching it. I haven't seen the finale. I haven't seen the finale.

Is Bill Hader like incredible or what? Yeah, he's amazing. This show is – it's so – there's nothing else like it. It started as pretty much a straight dark comedy, and now it's just dark. You've been telling me for three years to watch it. I started watching it. You're dead right.

I really love it. How great is Noho Hank? Oh, one of the best characters on TV. Mr. Kusina, where are you? Winkler's still on the show. I'm in season two. He's a prominent character. It's so good.

Yeah. We have people in the comments thinking that you're playing Noho Hank. Oh, my God. Oh, that's so good. Yeah. We have people in the comments thinking that you're playing Noah Hank. Oh, my God. Oh, that's really funny. Halloween idea? Coming up. Halloween show.

I want to give you guys a podcast episode and let me just give you props for Hustle. Wasn't that great? Great movie. So Adam Sandler. Did Justin love it? The best thing he's ever done for Netflix. Did Justin love it? Not a high bar.

Justin loved it. No, Sandler goes Justin love it the best thing he's ever done for Netflix did Justin love it which is not a high bar Justin loved it no Sandler goes like back and forth he's like alright this time I feel like being goofy where's Chris Rock right and then every once in a while

he'll do something where he's like seriously acting and it's still Adam Sandler like he can't really be an actor and not be Adam Sandler but this is one of those serious ones

but I've never seen so many NBA stars present and former, in one anything. It was so cool. How good was Anthony Edwards as a villain? Everybody was great. Try what? I mean, they're all good.

Anthony Edwards, if he hurts his ankle and can't play anymore, he could legitimately act. God forbid. I really enjoyed that movie. Did you see it? I haven't seen it. My kids have told me. Watch it on the plane home. And I've heard it, yeah, if you're an NBA fan, it's amazing.

So my son is an NBA nut, and I showed it to him. He's like, no, I don't want to watch this. I'm not in the mood. He's like, there's no finals on this night, right? So he watches it, and then the next morning he's like, Dad, I watched it three times already. So he never ended up going to bed. Love, loved it.

So great call, Michael. Cardiff Garcia's podcast is f***ing great. So he is not doing what did the Fed do this week? Like he's an economy guy. Used to be at NPR. He was at Financial Times. You know Cardiff, right? Yeah, yeah.

He's got a long career. Have you heard of the podcast yet? No. Okay. I didn't know he had one. He's great because he's very understated. He's not a promoter like I am. More people should be listening to it.

He's really going out of his way to try to find guests who are off the beaten path and have knowledge on something that most people don't have. He speaks a lot about immigration myths and he brings on somebody who – an academic. She used a database from Ancestry.com to bust every myth that you hear people spout about immigrants to America and what happens and why is this generation of immigrants not assimilating as fast as the Ellis Island generation or why don't they name their kids American names or why aren't the second generation becoming wealthy at the same way? And most of those suppositions turn out to be false when you look at the data. So I thought that was a really great episode. And if you've never heard Cardiff's show, it's called The New Bazaar. And that episode is a really great introduction to what he does. So shout out Cardiff. And we'll definitely have Cardiff back on the show, right?

We're overdue. All right. It's been Cardiff and we'll definitely have Cardiff back on the show, right? Yeah, yeah. We're overdue. Yes. All right. It's been an amazing episode. Did you have fun? It was great, guys. Thank you.

Do you want to try to do this one more time just to make sure we get everything right or you feel good about this version? Yeah. He's good?

No, we can do it one more time. All right. Eric Jackson, ladies and gentlemen. And where can we follow you? Where can we find your stuff? Tell everybody where to go. Twitter. Eric Jackson on Twitter. You add Eric Jackson? ladies and gentlemen. And where can we follow you? Where can we find your stuff? Tell everybody where to go. Twitter. Eric Jackson on Twitter.

You add Eric Jackson? Yeah. Okay. What else? TikTok. What is it? EMJcapital.ltd. Okay.

Are you writing anything publicly or no? Not. I've got a newsletter on Twitter you can sign up for, but I haven't been doing as much. Another 10% down in the NASDAQ. You can start writing some shit. I got a feeling. I'm just kidding. Eric, you're the man. Thank but I haven't been doing as much. Another 10% down in the NASDAQ. You can start writing some shit. I got a feeling. I'm just kidding. Eric,

you're the man. Thank you so much for hanging out with us. It's a pleasure to see you as always. Hope to see you again soon. Safe travels. Thank you. You're an amazing guest. Everybody check out Eric Jackson's Twitter and make sure if you are not

already watching these episodes on YouTube, we love that you're listening, but you could also watch an Eric's handsome. So it's youtube.com slash the compound R W M. All set guys. Yes. All right. We'll see you next week.

Thanks everybody. Oh my god, Babbel was like the last Bastion of the season Alright, that was great Thank you guys, that was awesome