1 00:00:00,100 --> 00:00:02,500 Welcome everyone. We are back and I've came back 2 00:00:02,500 --> 00:00:05,800 to the destruction of tech companies, that's been the news 3 00:00:05,800 --> 00:00:09,000 over the past month, we have my portfolio, I'll be giving an 4 00:00:09,000 --> 00:00:10,700 update on it. This is called the story fund. 5 00:00:11,000 --> 00:00:14,700 It is a, an aggressive growth Center portfolio where I invest 6 00:00:14,800 --> 00:00:17,800 mostly in technology companies and cloud computing companies. 7 00:00:17,800 --> 00:00:20,400 So, we'll see how that's doing and what the damage is right 8 00:00:20,400 --> 00:00:23,000 now, we also have a lot of other news going on right now that I 9 00:00:23,008 --> 00:00:26,100 want to comment on. We have j-pal testifying before 10 00:00:26,100 --> 00:00:30,200 Congress saying that the economy no longer needs stimulus, so So 11 00:00:30,400 --> 00:00:32,400 he's telling us that we're going backwards. 12 00:00:32,400 --> 00:00:34,700 Now, we're not giving stimulus for kind of taking it away. 13 00:00:34,700 --> 00:00:37,800 We have Goldman Sachs David costin saying that tech 14 00:00:37,800 --> 00:00:41,200 companies, like, the ones in my portfolio are the most 15 00:00:41,200 --> 00:00:45,000 disconnected group of stocks from the rest of the market. 16 00:00:45,200 --> 00:00:47,800 Meaning, he thinks that they might still be the most 17 00:00:47,800 --> 00:00:51,100 overvalued disconnected companies in the market, I'll be 18 00:00:51,100 --> 00:00:53,000 sharing my thoughts on that, and we'll be watching that 19 00:00:53,000 --> 00:00:55,100 interview. We have the news that cloud 20 00:00:55,100 --> 00:00:57,600 companies, like the ones that I'm invested in in this 21 00:00:57,600 --> 00:01:01,100 portfolio have been getting slaughtered Over the past two 22 00:01:01,100 --> 00:01:04,200 months and I'll comment on that as well as the valuations of 23 00:01:04,208 --> 00:01:07,100 where they sit right now, we also have news that Charlie 24 00:01:07,100 --> 00:01:12,000 Munger this this guy, Charlie. Munger just not only doubled 25 00:01:12,000 --> 00:01:16,200 down he kind of tripled down on Ali, Baba buying another 300,000 26 00:01:16,200 --> 00:01:19,000 shares, and I'll share some thoughts on that and my updated 27 00:01:19,000 --> 00:01:20,100 opinion on Ali. Baba. 28 00:01:20,100 --> 00:01:23,800 And last, but not least, Taco Bell has came out with a 29 00:01:23,800 --> 00:01:27,100 subscription service and I have to go over this as well because 30 00:01:27,100 --> 00:01:29,600 when a company like Taco Bell comes out with a subscription 31 00:01:29,600 --> 00:01:31,600 service. Service, well, that catches my 32 00:01:31,600 --> 00:01:33,300 attention. So I'll be going over that as 33 00:01:33,300 --> 00:01:34,800 well. So obviously we have a ton to 34 00:01:34,800 --> 00:01:37,100 get into today. Let's go ahead and Jump Right In 35 00:01:37,100 --> 00:01:39,200 And if you're new here, make sure to subscribe, hit the 36 00:01:39,208 --> 00:01:41,800 little bell icon also. I think the thumbs up, think 37 00:01:41,800 --> 00:01:43,900 helps out that YouTube's algorithm so you can do that as 38 00:01:43,900 --> 00:01:45,900 well. All of that is completely free. 39 00:01:45,900 --> 00:01:49,200 Now, I also do things a little bit different than most other 40 00:01:49,200 --> 00:01:51,200 YouTubers. Might be a bit of a surprise, 41 00:01:51,500 --> 00:01:54,400 but we have transparency here. I don't only talk about 42 00:01:54,400 --> 00:01:57,700 investments in companies and get my opinion on them, but I put my 43 00:01:57,700 --> 00:02:01,600 money where my mouth is. So I Make investments in these 44 00:02:01,600 --> 00:02:05,500 companies, I track them week by week and I display the results 45 00:02:05,500 --> 00:02:07,700 of it on YouTube live every single week. 46 00:02:07,700 --> 00:02:11,000 So if you want to see how this plays out all throughout 2022, 47 00:02:11,200 --> 00:02:14,000 and how this portfolio does, I'm going to show it whether it 48 00:02:14,008 --> 00:02:17,300 turns out good or bad, if it turns out bad, then I'll admit 49 00:02:17,300 --> 00:02:20,100 defeat, but I'll display the results either way. 50 00:02:20,400 --> 00:02:22,300 Now let's go ahead and just do a quick overview of this 51 00:02:22,300 --> 00:02:25,500 portfolio. The story fund is centered 52 00:02:25,500 --> 00:02:29,200 around buying high quality companies that are typically 53 00:02:29,200 --> 00:02:31,400 Tech folks. Focus but not necessarily 54 00:02:31,900 --> 00:02:33,400 overall. I consider them to be 55 00:02:33,600 --> 00:02:37,100 world-class compounding companies with a very long 56 00:02:37,100 --> 00:02:39,700 Runway of growth. So I'm not looking at this and 57 00:02:39,700 --> 00:02:42,700 underwriting these companies for a three-month bump and price. 58 00:02:43,000 --> 00:02:45,100 These aren't cigarette butt companies, right? 59 00:02:45,100 --> 00:02:47,800 I'm not trying to extract immediate value out of them. 60 00:02:48,100 --> 00:02:52,000 I'm trying to establish large positions in companies that I 61 00:02:52,008 --> 00:02:55,300 think have characteristics of will compound for long durations 62 00:02:55,300 --> 00:02:57,200 of time. And when I go through that, I 63 00:02:57,208 --> 00:02:59,800 look at companies that I think are often really simple. 64 00:03:00,000 --> 00:03:01,900 Obvious buys. Those are sometimes I think the 65 00:03:01,900 --> 00:03:05,100 best companies to own Google. Being one of them, people use 66 00:03:05,100 --> 00:03:08,700 Google products every single day thousands of times a day, right? 67 00:03:08,700 --> 00:03:11,600 We're on them all the time. Whether it's Gmail or Google 68 00:03:11,600 --> 00:03:15,000 search or Google Maps or YouTube, you know, Google Cloud 69 00:03:15,000 --> 00:03:17,700 all their business stuff. That's one of my top Holdings. 70 00:03:17,700 --> 00:03:21,000 It's in fact right now my top performing individual holding 71 00:03:21,400 --> 00:03:24,200 Netflix is another one. This is more of a contrarian 72 00:03:24,200 --> 00:03:25,300 bet. A lot of people think that 73 00:03:25,300 --> 00:03:29,300 Netflix is widely overvalued. It's highly volatile, it's a 74 00:03:29,300 --> 00:03:30,900 highly. Disputed stock. 75 00:03:30,900 --> 00:03:33,600 I don't get as many people agreeing with me on Netflix is 76 00:03:33,600 --> 00:03:35,000 Google. But I'm investing heavily in 77 00:03:35,000 --> 00:03:37,900 this company as well. And I have many videos on 78 00:03:37,900 --> 00:03:40,200 Netflix if you want to see my thesis on that overall. 79 00:03:40,600 --> 00:03:45,500 But overall every company in this portfolio has a long 80 00:03:45,500 --> 00:03:48,300 duration and I think they'll compound for a long duration of 81 00:03:48,300 --> 00:03:50,700 time. So having said that, let's go 82 00:03:50,700 --> 00:03:54,400 ahead and look at the return. So far of this Tech, kind of 83 00:03:54,400 --> 00:03:57,500 cloud computing. Technology Center portfolio with 84 00:03:57,500 --> 00:04:01,700 the S&P 500. This is what it Like the S&P 500 85 00:04:01,700 --> 00:04:05,300 is in red and the story fund my portfolios in blue. 86 00:04:05,400 --> 00:04:06,900 And this is what it looks like overall. 87 00:04:07,700 --> 00:04:10,600 Now you can see that we were doing okay, in fact we're kind 88 00:04:10,600 --> 00:04:15,100 of outperforming the S&P 500 about two or three months back 89 00:04:15,400 --> 00:04:18,600 and then my portfolio fell a little bit off a cliff here, 90 00:04:18,899 --> 00:04:23,200 just started to trade down incredibly quickly and it even 91 00:04:23,300 --> 00:04:24,800 started to trade down lower and lower. 92 00:04:25,100 --> 00:04:27,200 Right here is where it hit the low point. 93 00:04:27,400 --> 00:04:29,500 This is at the end of the year, in fact, right at the beginning 94 00:04:29,500 --> 00:04:31,500 of the year. Ear and then right now it's 95 00:04:31,500 --> 00:04:33,700 traded up a little bit. So at nine point three, six 96 00:04:33,700 --> 00:04:38,900 percent returns overall since Inception and the S&P 500 is at 97 00:04:38,900 --> 00:04:42,600 22 percent returns. So given the past two months, 98 00:04:42,600 --> 00:04:45,500 I've given up a lot of the gains that I've made and traded down. 99 00:04:45,800 --> 00:04:50,400 And this correlates really heavily with the overall cloud 100 00:04:50,400 --> 00:04:52,700 computing and technology companies. 101 00:04:52,700 --> 00:04:55,700 So this isn't something where it's very specific to. 102 00:04:55,700 --> 00:04:57,900 The companies that I picked, this is something where it's 103 00:04:57,900 --> 00:05:01,400 been kind of, in line with this in, Higher indices overall. 104 00:05:01,700 --> 00:05:04,800 Now, to give this all context, I want to look at this chart here. 105 00:05:05,000 --> 00:05:08,600 This is a graph of the Enterprise Value to next. 12 106 00:05:08,600 --> 00:05:12,000 months Revenue, multiples of cloud computing, companies in 107 00:05:12,000 --> 00:05:15,000 particular. So this show is sense, around 108 00:05:15,000 --> 00:05:18,800 2015, is the beginning of this chart to current day. 109 00:05:19,100 --> 00:05:22,300 This shows, the actual Revenue, multiple of these type of 110 00:05:22,308 --> 00:05:25,000 companies of cloud computing companies, which are kind of the 111 00:05:25,000 --> 00:05:26,900 companies that I have in my portfolio. 112 00:05:27,000 --> 00:05:29,700 They're mostly cloud computing companies in this chart, 113 00:05:29,900 --> 00:05:32,400 correlates heavily with my performance. 114 00:05:32,400 --> 00:05:36,700 So let's go ahead and take a look at this before. 2020, the 115 00:05:36,700 --> 00:05:39,400 Enterprise Value to next, 12 months Revenue, multiple of 116 00:05:39,400 --> 00:05:43,400 these type of companies averaged around 11, it was right around 117 00:05:43,400 --> 00:05:45,300 10 or 11. That's what they were trading 118 00:05:45,300 --> 00:05:47,400 at. That was kind of the normalized 119 00:05:47,400 --> 00:05:49,900 basis that they traded around an eleven times. 120 00:05:49,900 --> 00:05:52,800 Next 12 months Revenue, multiple, look what happened? 121 00:05:52,900 --> 00:05:55,600 After the pandemic, like many of the technology stocks, they 122 00:05:55,600 --> 00:05:58,700 traded up incredibly high at one point. 123 00:05:58,700 --> 00:06:03,400 The median was At 20, 20 times next 12 months Revenue, so they 124 00:06:03,400 --> 00:06:06,600 went up around 100 percent of where they were on a multiple 125 00:06:06,600 --> 00:06:08,300 basis. Then right after that, they 126 00:06:08,300 --> 00:06:11,800 traded down to around a 16 times, multiple still elevated 127 00:06:11,800 --> 00:06:14,100 from where they historically. Our, but look what happened. 128 00:06:14,100 --> 00:06:16,300 Just recently right here. This is over. 129 00:06:16,300 --> 00:06:21,200 Just the past couple of months, the median multiple was at a 16 130 00:06:21,200 --> 00:06:26,500 times revenue and it traded from a 16 x down to an 11 times in an 131 00:06:26,500 --> 00:06:29,400 order of two months. From a 16 times, multiple to an 132 00:06:29,400 --> 00:06:30,600 11. Times multiple. 133 00:06:30,800 --> 00:06:32,400 Now where does where does that leave us now? 134 00:06:32,800 --> 00:06:34,900 Right? Now, the eleven times multiple 135 00:06:35,400 --> 00:06:38,700 is around the median of where it was pre-pandemic. 136 00:06:38,900 --> 00:06:41,100 This is around the same. Multiple, in fact, it's almost 137 00:06:41,100 --> 00:06:43,600 the exact same of where these companies traded at 138 00:06:43,900 --> 00:06:46,700 pre-pandemic. So you have to ask yourself this 139 00:06:46,700 --> 00:06:50,500 question, were these companies? A goodbye pre-pandemic right at 140 00:06:50,500 --> 00:06:53,700 that multiple before, they had the huge run-up, and positive 141 00:06:53,700 --> 00:06:56,800 investor sentiment where they an excellent by then or were they 142 00:06:56,800 --> 00:06:59,500 just okay. That's up to you to decide. 143 00:06:59,900 --> 00:07:03,400 But either way, the valuation of cloud computing companies has 144 00:07:03,400 --> 00:07:05,900 improved dramatically as the prices have fallen. 145 00:07:06,200 --> 00:07:08,500 Now, they are at a normalized pre-pandemic. 146 00:07:08,500 --> 00:07:11,400 Multiple that stayed for three years before that. 147 00:07:11,800 --> 00:07:15,400 And so I feel better buying these companies at this 11 times 148 00:07:15,400 --> 00:07:19,100 multiple than paying way up at a 16 times or 20 times multiple. 149 00:07:19,400 --> 00:07:22,000 I've tried to buy them at as best prices as I could 150 00:07:22,100 --> 00:07:24,500 throughout this last year but it's honestly been pretty 151 00:07:24,500 --> 00:07:26,100 difficult. Most of them have been at pretty 152 00:07:26,100 --> 00:07:29,200 stretched multiples and now they've traded down dramatically 153 00:07:29,300 --> 00:07:31,600 this drop in in multiple with the overall industry. 154 00:07:31,700 --> 00:07:34,600 Also correlates with the drop in price in my portfolio. 155 00:07:34,700 --> 00:07:36,500 You can see that correlation right here. 156 00:07:36,700 --> 00:07:38,500 It started at the exact same time. 157 00:07:38,500 --> 00:07:41,500 So I'm not saying these companies are all undervalued 158 00:07:41,500 --> 00:07:43,500 right now and I wouldn't make that conclusion. 159 00:07:43,800 --> 00:07:46,800 I am saying though that they are trading at a more normalized 160 00:07:46,800 --> 00:07:50,100 valuation than where they were, can it continue to drop further 161 00:07:50,100 --> 00:07:53,500 to a, you know, a seven times multiple or a six times? 162 00:07:53,500 --> 00:07:56,200 Multiple sure. They could drop further but that 163 00:07:56,200 --> 00:07:58,700 would just mean that they're trading undervalued compared to 164 00:07:58,700 --> 00:08:02,300 their historic. So I think at this point, I feel 165 00:08:02,300 --> 00:08:05,600 better buying these companies. Then I did over the past year 166 00:08:05,800 --> 00:08:08,500 in, this is where things get really challenging as an 167 00:08:08,500 --> 00:08:10,300 investor. This is where the real test 168 00:08:10,300 --> 00:08:12,600 comes in. Do you have the right stomach? 169 00:08:12,600 --> 00:08:15,800 The right temperament the right emotional control to be able to 170 00:08:15,800 --> 00:08:17,600 do this. Type of investing is very 171 00:08:17,600 --> 00:08:20,700 specific to one type of company or one type of sector. 172 00:08:21,100 --> 00:08:24,500 If you wait for your sector to trade down and valuation. 173 00:08:24,800 --> 00:08:27,500 Like tech companies are doing right now and then as they're 174 00:08:27,500 --> 00:08:29,700 trading down, you think, man. I'm getting discouraged. 175 00:08:29,800 --> 00:08:31,900 Judge and emotionally. I want to exit out of this 176 00:08:31,900 --> 00:08:35,299 sector and I want to go into financials or energy or whatever 177 00:08:35,299 --> 00:08:37,900 is doing well right now and trading up, you probably don't 178 00:08:37,900 --> 00:08:40,799 have the right stomach or the right emotional control to be 179 00:08:40,799 --> 00:08:44,000 doing this type of investing. That makes it very difficult to 180 00:08:44,008 --> 00:08:47,100 make any type of gains. If you try to trade out a 181 00:08:47,108 --> 00:08:50,300 sectors that are doing poorly, in to ones that have already had 182 00:08:50,300 --> 00:08:52,900 a great run up, that's not the way to be doing this. 183 00:08:53,300 --> 00:08:56,800 What you should be doing is as a sector, you like trades down and 184 00:08:56,800 --> 00:08:58,700 value. That's when you want to buy more 185 00:08:58,700 --> 00:09:00,900 of that sector. So it's Cloud companies are 186 00:09:00,900 --> 00:09:03,100 trading down and tech companies are selling off. 187 00:09:03,400 --> 00:09:06,400 That's actually a better time to be buying in to those type of 188 00:09:06,400 --> 00:09:09,700 companies. For example, in 2020, one of the 189 00:09:09,700 --> 00:09:12,700 last groups of stocks to actually recover where 190 00:09:12,700 --> 00:09:16,200 financials everyone at the time hated financials. 191 00:09:16,400 --> 00:09:19,300 They thought it was going to be a repeat of 2009, where 192 00:09:19,300 --> 00:09:21,700 financials had to be bailed out and they're in a lot of trouble. 193 00:09:22,000 --> 00:09:24,100 I looked through the financial statements, that JP Morgan and 194 00:09:24,100 --> 00:09:26,700 different banks and I realized they were all fine. 195 00:09:26,900 --> 00:09:30,000 So, as sentiment was terrible with these type of stocks With 196 00:09:30,000 --> 00:09:32,200 financials, I bought in heavily to j.p. 197 00:09:32,200 --> 00:09:34,900 Morgan and it's since been, one of my best trades. 198 00:09:35,000 --> 00:09:38,600 I bought into this company. One sentiment was at Peak fair 199 00:09:38,600 --> 00:09:41,500 and concern over this company. And now it's one that everyone 200 00:09:41,500 --> 00:09:43,800 wants to own. So you actually want to be 201 00:09:43,800 --> 00:09:47,200 buying into companies trading down not selling out of them and 202 00:09:47,200 --> 00:09:49,700 buying into companies that are already traded way up. 203 00:09:49,700 --> 00:09:51,900 And over the past month I can see sentiment turning so 204 00:09:51,900 --> 00:09:54,800 negative towards tech companies. We have articles like this 205 00:09:54,800 --> 00:09:59,100 saying, Cloud stocks are off to a brutal start to 2022 as 206 00:09:59,100 --> 00:10:02,000 investors Sour on pandemics top performers. 207 00:10:02,300 --> 00:10:05,500 But most of these Cloud companies are not pandemic 208 00:10:05,500 --> 00:10:07,900 stocks so they're putting them in a basket. 209 00:10:07,900 --> 00:10:10,500 Like these are just pandemic companies and they'll go away 210 00:10:10,500 --> 00:10:12,700 when the pandemic is over. That's nonsense. 211 00:10:13,000 --> 00:10:15,800 Look at Netflix. People watch Netflix before the 212 00:10:15,800 --> 00:10:17,700 pandemic, it's not a pandemic stock. 213 00:10:18,000 --> 00:10:20,800 Look at Adobe. Did people only start using that 214 00:10:20,800 --> 00:10:23,300 during the pandemic. Look at Salesforce. 215 00:10:23,500 --> 00:10:26,200 That is a company that will flourish after the pandemic. 216 00:10:26,200 --> 00:10:29,600 We also have news out today that Goldman's David cost and says 217 00:10:29,900 --> 00:10:33,500 The tech disconnect is the single greatest mispricing in US 218 00:10:33,500 --> 00:10:35,300 Stocks. So he says that these companies 219 00:10:35,300 --> 00:10:38,200 are still widely disconnected and now I want to go in and 220 00:10:38,200 --> 00:10:40,600 listen to him explain this. All right, so here's a clip from 221 00:10:40,600 --> 00:10:42,400 this interview with David costin. 222 00:10:42,400 --> 00:10:45,200 Who is the chief us Equity strategist at Goldman Sachs you 223 00:10:45,200 --> 00:10:48,600 plays a huge role and he explains he explains why these 224 00:10:48,600 --> 00:10:50,900 companies were re-rated. And why he thinks that tech 225 00:10:50,900 --> 00:10:54,100 companies are still widely disconnected from the rest of 226 00:10:54,100 --> 00:10:56,000 the markets. So let's go ahead and listen to 227 00:10:56,000 --> 00:10:59,200 this. Now very specifically the single 228 00:10:59,200 --> 00:11:04,200 greatest Mispricing in the US Equity Market is between 229 00:11:04,300 --> 00:11:09,700 companies that have high expected Revenue growth but low 230 00:11:09,700 --> 00:11:13,400 or negative margins. On the other hand, high-growth 231 00:11:14,100 --> 00:11:17,800 companies with positive or very significantly positive profit. 232 00:11:17,800 --> 00:11:24,100 Margins, that Gap is adjusted dramatically in the last year. 233 00:11:24,600 --> 00:11:28,900 Put some numbers numbers around that high growth Low-margin 234 00:11:28,900 --> 00:11:32,900 stocks traded at 16 times Enterprise value of sales, 235 00:11:33,000 --> 00:11:36,800 February of 2021, you know, 11 months later, they're trading at 236 00:11:36,800 --> 00:11:39,500 seven times. So a huge derating that took 237 00:11:39,500 --> 00:11:44,600 place much of that took place in the last month or so we just 238 00:11:44,600 --> 00:11:47,700 looked at that chart illustrating the median, the 239 00:11:47,700 --> 00:11:50,000 median valuation and that's basically what he's saying here 240 00:11:50,700 --> 00:11:54,800 and largely that because as rates, increase the valuation 241 00:11:54,800 --> 00:11:58,800 where the value of that future, cash flows are Somewhat Less in 242 00:11:58,800 --> 00:12:01,600 a higher rate environment and that's a big issue. 243 00:12:01,600 --> 00:12:04,900 And so that the gap between those two and say is the single 244 00:12:04,900 --> 00:12:08,600 biggest topic of conversation with clients, you've had a huge 245 00:12:08,600 --> 00:12:13,600 derating of the fast expected Revenue, growth companies that 246 00:12:13,600 --> 00:12:18,000 have low margins and argument is probably that there's more to go 247 00:12:18,100 --> 00:12:20,900 in that Readjustment. The relationship between these 248 00:12:20,900 --> 00:12:23,200 two categories. These two, buckets of stocks are 249 00:12:23,200 --> 00:12:27,800 quite still pretty close to one another and probably should be 250 00:12:28,200 --> 00:12:30,400 Wider neck. So he says that there, still 251 00:12:30,400 --> 00:12:33,800 might be room to go with this re-rating but they still might 252 00:12:33,800 --> 00:12:36,000 trade a little bit lower. So I realized there's people, 253 00:12:36,000 --> 00:12:38,100 like David costin of Goldman Sachs. 254 00:12:38,100 --> 00:12:41,300 And, you know, people like Ray dalio, that are kind of looking 255 00:12:41,300 --> 00:12:43,000 at them. Macroeconomics, they're looking 256 00:12:43,000 --> 00:12:46,200 at interest rates and they're doing these overall median 257 00:12:46,200 --> 00:12:48,500 valuations of different Industries and sectors. 258 00:12:48,800 --> 00:12:51,600 And they're giving projections based on that and that's a fine 259 00:12:51,600 --> 00:12:54,000 way to invest. I don't, I don't think that's a 260 00:12:54,000 --> 00:12:55,600 problem. If you want to invest that way 261 00:12:55,600 --> 00:12:58,400 and base it off of macroeconomics, that's The way 262 00:12:58,400 --> 00:13:00,900 that I'm looking at this portfolio, whether the FED does 263 00:13:00,900 --> 00:13:02,400 three. Interest rates are for interest 264 00:13:02,400 --> 00:13:06,100 rates, has zero effect on my investments, in terms of which 265 00:13:06,100 --> 00:13:09,200 one's I'm making in, which companies that I plan on buying, 266 00:13:09,400 --> 00:13:12,600 when I look at my portfolio, my investment in Google is not 267 00:13:12,600 --> 00:13:14,800 based off of interest rates as nothing to do with the 268 00:13:14,800 --> 00:13:17,300 macroeconomics. It's based off of the future 269 00:13:17,300 --> 00:13:19,700 growth. I think YouTube will have and 270 00:13:19,700 --> 00:13:23,400 Google cloud, and their Suite of products, right Android as well. 271 00:13:23,700 --> 00:13:26,400 So I'm what's called a bottom-up investor. 272 00:13:26,500 --> 00:13:30,100 I'm investing with the Accompany the leadership and the overall 273 00:13:30,100 --> 00:13:32,800 growth projection. I have for that company and then 274 00:13:32,800 --> 00:13:36,500 I think over time that will defeat or beat out all the 275 00:13:36,508 --> 00:13:39,500 macroeconomic stuff. I think that stuff can play a 276 00:13:39,500 --> 00:13:42,200 short term role but over time, if these companies grow 277 00:13:42,200 --> 00:13:44,000 substantially they grow their revenue. 278 00:13:44,000 --> 00:13:47,100 They grow their profit margin, they grow their client base and 279 00:13:47,100 --> 00:13:49,500 they grow their moat and overall, they're just bigger 280 00:13:49,500 --> 00:13:51,300 more profitable companies in the future. 281 00:13:51,300 --> 00:13:55,200 I think that regardless of whether interest rates are 3% or 282 00:13:55,200 --> 00:13:57,900 2% or 5%, they'll come out on top. 283 00:13:58,000 --> 00:13:59,400 In the end. So that's the way that I'm 284 00:13:59,400 --> 00:14:02,200 looking at this. Despite all the macro news that 285 00:14:02,200 --> 00:14:04,600 you're hearing right now, that's constantly in the news. 286 00:14:04,800 --> 00:14:07,300 Now, moving on, I have to mention the news about, of 287 00:14:07,300 --> 00:14:11,600 course, Charlie Munger and his recent, by until Ali Baba. 288 00:14:11,600 --> 00:14:15,800 He doubled down on the stock and buy doubled down the math. 289 00:14:15,800 --> 00:14:20,200 Checks out, the he increased his position by 99.3 2%. 290 00:14:20,300 --> 00:14:22,600 Now, if I was Charlie, I would have update just a bit to get 291 00:14:22,600 --> 00:14:24,800 that. Nice round 100 percent increase 292 00:14:25,100 --> 00:14:26,800 but regardless he increased it by roughly. 293 00:14:26,800 --> 00:14:28,100 Let's say 100. Scent. 294 00:14:28,100 --> 00:14:30,000 So he literally doubled down on the stock. 295 00:14:30,200 --> 00:14:32,600 This is another, you know, somewhat, shocking, thing to 296 00:14:32,600 --> 00:14:33,900 some people. Why would he buy this stock? 297 00:14:33,900 --> 00:14:35,800 When there's so much negative sentiment and news? 298 00:14:35,800 --> 00:14:37,500 And, you know, there's all these concerns about it. 299 00:14:37,800 --> 00:14:40,200 But anybody that's actually followed Charlie, Munger and 300 00:14:40,200 --> 00:14:42,800 studied about him, his personality and his life would 301 00:14:42,800 --> 00:14:44,600 know that this is nothing out of the ordinary. 302 00:14:44,800 --> 00:14:49,000 When a fantastic world-class, fast-growing company that has a 303 00:14:49,000 --> 00:14:53,500 wide moat like Ali, Baba continues to grow and flourish 304 00:14:53,500 --> 00:14:56,900 overall and the price plummets 60%. 305 00:14:57,000 --> 00:15:00,200 And he's already Wash on this company, he's not going to let 306 00:15:00,200 --> 00:15:02,700 some news articles, scare him out of this holding. 307 00:15:03,100 --> 00:15:05,300 So in my opinion, this isn't surprising. 308 00:15:05,600 --> 00:15:08,000 It's in line with Charlie, Munger his entire history, his 309 00:15:08,000 --> 00:15:10,400 character. What would have been surprising 310 00:15:10,400 --> 00:15:11,700 to me? What would have actually? 311 00:15:11,700 --> 00:15:14,200 Shocked me is not him doubling down. 312 00:15:14,200 --> 00:15:16,700 It would be him selling out. That would be concerning then, 313 00:15:16,700 --> 00:15:18,800 I'd think. Wow, he's really lost his mind. 314 00:15:18,900 --> 00:15:21,800 He waited till a stock went down. 60% that he loved. 315 00:15:21,800 --> 00:15:25,100 He got scared out of it and then he sold at a low, you know, 316 00:15:25,200 --> 00:15:26,800 probably foreseeably. Hello. 317 00:15:27,200 --> 00:15:29,300 So That would have been the shocking thing. 318 00:15:29,600 --> 00:15:33,000 This buying more shares of a great company as it goes down. 319 00:15:33,000 --> 00:15:36,400 In value is not shocking. Another thing I'd like to say 320 00:15:36,400 --> 00:15:39,900 about Ali Baba and the concerns about the Chinese government and 321 00:15:39,900 --> 00:15:43,300 investing with or in or alongside the Chinese 322 00:15:43,300 --> 00:15:45,800 government. A lot of people have wax poetic 323 00:15:45,800 --> 00:15:48,900 about how much disdain they have for the Chinese government. 324 00:15:49,100 --> 00:15:51,800 And like I've said, many times, I love the u.s. 325 00:15:51,800 --> 00:15:53,000 I think it's the best country in the world. 326 00:15:53,000 --> 00:15:54,300 I have an American flag right there. 327 00:15:54,500 --> 00:15:57,800 I'm as patriotic as it gets, but you have to be completely. 328 00:15:58,200 --> 00:16:00,200 Blind. If you think that the u.s. is 329 00:16:00,200 --> 00:16:04,400 economy is completely separate and not invested in an alongside 330 00:16:04,400 --> 00:16:07,300 China, both of our countries need each other. 331 00:16:07,500 --> 00:16:09,800 Both of us are heavily invested in each other's. 332 00:16:09,900 --> 00:16:15,000 Economies we can look at someone who's here, this is widely known 333 00:16:15,100 --> 00:16:17,100 that Tesla. One of the most, you know, 334 00:16:17,100 --> 00:16:21,100 exciting Investments of our of our generation is heavily 335 00:16:21,100 --> 00:16:23,900 invested in China. They spent two billion dollars 336 00:16:23,900 --> 00:16:27,200 on a giga Factory in China. Elon Musk went there met with 337 00:16:27,200 --> 00:16:30,200 their Oil and invested two billion dollars in building up 338 00:16:30,200 --> 00:16:33,300 factories in China. That's a huge investment in 339 00:16:33,300 --> 00:16:35,300 China. There's no other way around it. 340 00:16:35,300 --> 00:16:38,100 That's a bigger investment than the one that Charlie munger's 341 00:16:38,100 --> 00:16:41,500 making and total nominal terms. It's a much more substantial 342 00:16:41,500 --> 00:16:44,500 investment, its multiple speaker and they also have rumors that 343 00:16:44,500 --> 00:16:47,500 Tesla is working on a second Factory in China. 344 00:16:47,900 --> 00:16:50,500 This is a huge growth path for Tesla. 345 00:16:50,800 --> 00:16:55,200 Look at the overall Revenue that comes from China for Tesla, they 346 00:16:55,200 --> 00:17:00,600 say now that Tesla's Sales have grown to nearly half the size of 347 00:17:00,600 --> 00:17:03,400 the company's Us sales. So take the entire sales at 348 00:17:03,400 --> 00:17:06,300 Tesla has in the u.s. their biggest Market chop that in 349 00:17:06,308 --> 00:17:07,700 half. And that's how much they now 350 00:17:07,700 --> 00:17:10,800 make from China. This is critical to Teslas 351 00:17:10,800 --> 00:17:12,500 growth. They would not be hitting any of 352 00:17:12,500 --> 00:17:15,300 their analyst, expectations, their revenue growth numbers, 353 00:17:15,300 --> 00:17:17,700 their margin numbers. If they didn't have China, 354 00:17:18,000 --> 00:17:21,200 they're invested in. They are heavily reliant on at 355 00:17:21,200 --> 00:17:23,800 China at this point and I'm not picking on Tesla, they're not 356 00:17:23,800 --> 00:17:26,900 the only one. We have Disney Disney is trying 357 00:17:26,900 --> 00:17:29,800 to grow in China as As much as they can, they have a park there 358 00:17:29,800 --> 00:17:32,000 that was their most ambitious park, ever. 359 00:17:32,100 --> 00:17:34,800 One of the biggest ones I've ever built, they've tried to get 360 00:17:34,800 --> 00:17:37,000 Disney plus there with little success, they're trying to 361 00:17:37,008 --> 00:17:39,100 Market their movies, their, and their merch there. 362 00:17:39,500 --> 00:17:42,400 This is a big potential growth path for Disney that they're 363 00:17:42,400 --> 00:17:45,600 still seeing resistance. To we have Starbucks. 364 00:17:46,000 --> 00:17:50,500 Look at the growth of Starbucks locations in China over the past 365 00:17:50,600 --> 00:17:52,500 15 years. Since 2005. 366 00:17:52,800 --> 00:17:59,200 It's now reached 4700 locations Starbucks is Is a partial 367 00:17:59,200 --> 00:18:01,000 Chinese investment. If you're investing in 368 00:18:01,000 --> 00:18:04,100 Starbucks, you're investing partially in China. 369 00:18:04,100 --> 00:18:06,900 Then we can even look at Costco. Costco, of course, only has like 370 00:18:06,900 --> 00:18:10,500 one location out of their 800 or so that's in China right now. 371 00:18:10,700 --> 00:18:14,000 So they're not really reliant on China at this point but they're 372 00:18:14,000 --> 00:18:17,600 looking at it as a potential growth path that US market for 373 00:18:17,600 --> 00:18:19,800 Costco's is getting somewhat saturated. 374 00:18:19,800 --> 00:18:22,600 They're looking for different areas to expand and China. 375 00:18:22,600 --> 00:18:24,200 For sure is going to be one of them. 376 00:18:24,400 --> 00:18:27,600 They're looking at opening up another four locations total. 377 00:18:27,800 --> 00:18:30,700 In China rapidly multiplying the amount of stores they have in 378 00:18:30,700 --> 00:18:32,500 China. So Costco's also going to be 379 00:18:32,500 --> 00:18:35,300 heavily invested in China. And this isn't cherry-picking, I 380 00:18:35,300 --> 00:18:38,600 could go through so many companies in the S&P. 500 US 381 00:18:38,600 --> 00:18:41,800 based companies that have big investments in China and are at 382 00:18:41,800 --> 00:18:45,700 least partially reliant on their cooperation, their government 383 00:18:45,700 --> 00:18:47,500 and their revenues right there market. 384 00:18:47,500 --> 00:18:51,200 So when I look at Charlie Munger and him being bullish on a 385 00:18:51,208 --> 00:18:54,200 Chinese company. People act like this is so 386 00:18:54,200 --> 00:18:57,300 different than what Tesla's doing and I don't see the huge 387 00:18:57,300 --> 00:18:59,200 distinction. Here, I think it's different to 388 00:18:59,200 --> 00:19:02,000 some extent because you're not reliant on the vi e structure if 389 00:19:02,008 --> 00:19:05,200 that's your major concern, but if your overall concern is being 390 00:19:05,200 --> 00:19:09,300 any W somewhat reliant on the Chinese economy or having to 391 00:19:09,300 --> 00:19:11,000 deal with their government at all. 392 00:19:11,400 --> 00:19:13,600 Well, if you're invested in any of these companies, you're doing 393 00:19:13,600 --> 00:19:16,200 the same thing. The distinction is very small 394 00:19:16,200 --> 00:19:19,600 between giving your money to a company where the executive is, 395 00:19:19,600 --> 00:19:22,700 then investing in China and you directly investing in China, 396 00:19:22,900 --> 00:19:25,600 either way, your money is being invested in China. 397 00:19:25,600 --> 00:19:28,300 So overall, I think a lot of the Comments. 398 00:19:28,400 --> 00:19:31,800 They act like it's so crazy that Charlie Munger would put money 399 00:19:31,800 --> 00:19:32,800 into Ali. Baba. 400 00:19:33,300 --> 00:19:35,700 I think they're unwarranted unless you're really avoiding 401 00:19:35,700 --> 00:19:38,300 any type of company that has any exposure to Ali Baba. 402 00:19:38,300 --> 00:19:41,300 Because overall many of them do and what he's doing. 403 00:19:41,300 --> 00:19:43,800 I don't think is all that crazy. Now, having said all of that, 404 00:19:43,800 --> 00:19:46,000 just because Charlie munger's investing in Ali Baba. 405 00:19:46,200 --> 00:19:48,500 Does that mean it's a sure bet there's no chance of losing 406 00:19:48,500 --> 00:19:50,000 money. Everyone should sell everything 407 00:19:50,000 --> 00:19:51,700 they own and invest all of their money and Ali. 408 00:19:51,700 --> 00:19:55,500 Baba, no, not even. Charlie Munger is doing that. 409 00:19:55,500 --> 00:19:58,800 He doesn't have anywhere close to the majority of his In Ali, 410 00:19:58,800 --> 00:20:02,100 Baba, I would never be comfortable selling all of my 411 00:20:02,100 --> 00:20:04,200 assets and putting it in this one company. 412 00:20:04,400 --> 00:20:07,300 I've said that many times I have very low exposure to it. 413 00:20:07,400 --> 00:20:10,400 It's a smaller bet in my portfolio, I put ten thousand 414 00:20:10,400 --> 00:20:13,500 dollars in it and that's where I'm keeping it and so far. 415 00:20:13,500 --> 00:20:15,900 I'm in the red but it's starting to trade up a little bit over 416 00:20:15,900 --> 00:20:17,700 the past month. And that's kind of where I'm 417 00:20:17,700 --> 00:20:20,800 keeping this holding. I would never recommend putting 418 00:20:20,800 --> 00:20:24,100 a huge amount of money in one single company, especially one, 419 00:20:24,100 --> 00:20:27,600 that's more, volatile like Ali, Baba and Charlie Munger doesn't 420 00:20:27,800 --> 00:20:31,800 No either he could be wrong. This could be a losing bet and 421 00:20:31,800 --> 00:20:34,300 he understands that he probably looks at. 422 00:20:34,300 --> 00:20:37,600 This is just a good bet on a company where the reward is 423 00:20:37,600 --> 00:20:40,600 asymmetric, there's more chance of upside than downside, but 424 00:20:40,600 --> 00:20:42,600 that doesn't mean there's no chance of down sights. 425 00:20:42,600 --> 00:20:45,300 So overall, when I look at this company, I still am very 426 00:20:45,300 --> 00:20:47,400 positive on it. I think has a higher likelihood 427 00:20:47,400 --> 00:20:50,100 of making money than losing it, but there's always the chance of 428 00:20:50,100 --> 00:20:52,100 this trade, still going south overall. 429 00:20:52,100 --> 00:20:55,400 So keep that in mind when you're following bigwigs like Charlie 430 00:20:55,400 --> 00:20:57,700 Munger look at his overall exposure. 431 00:20:58,000 --> 00:20:59,900 And don't just buy into a company like this because 432 00:20:59,900 --> 00:21:02,200 someone like, Charlie Munger is now moving on from that. 433 00:21:02,200 --> 00:21:06,200 Last but not least, I have to comment on the news that Taco 434 00:21:06,200 --> 00:21:11,200 Bell has launched its first ever Taco Subscription Service 435 00:21:11,300 --> 00:21:15,900 Nationwide tacos as a service as they call it in the industry, 436 00:21:16,600 --> 00:21:19,300 they say hello to the Taco lovers pass. 437 00:21:19,900 --> 00:21:21,200 So let's go ahead and read into this. 438 00:21:21,200 --> 00:21:24,400 This is from The Newsroom of Taco Bell itself, right from the 439 00:21:24,400 --> 00:21:26,200 source. Let's go ahead and Jump Right In 440 00:21:26,600 --> 00:21:28,500 now. Taco Bell is doing doing the 441 00:21:28,500 --> 00:21:32,000 most to kick-off, 2022, then virtually any company. 442 00:21:32,000 --> 00:21:36,600 I would add with the Nationwide debut of the taco lovers pass a 443 00:21:36,600 --> 00:21:39,700 digital Taco subscription service that takes value to the 444 00:21:39,700 --> 00:21:43,800 next level and is sure to satisfy any Taco craving. 445 00:21:43,900 --> 00:21:47,400 Now that is some bold claims they want to satisfy any Taco, 446 00:21:47,400 --> 00:21:51,000 craving with this subscription service available starting 447 00:21:51,000 --> 00:21:52,900 today. Exclusively on the Taco Bell, 448 00:21:52,900 --> 00:21:58,400 tap the taco lovers pass allows fans to redeem one of Iconic 449 00:21:58,400 --> 00:22:03,300 tacos a day for 30 consecutive days at participating, u.s. 450 00:22:03,300 --> 00:22:06,400 locations all for the price of $10. 451 00:22:06,900 --> 00:22:09,400 And I'm sure that a strict says that it's subject to change, 452 00:22:09,400 --> 00:22:11,300 right? But right now, it's ten dollars. 453 00:22:11,300 --> 00:22:14,700 So let's go ahead and break this down what this means for the 454 00:22:14,700 --> 00:22:18,200 future of Taco Bell. First of all, is this a 455 00:22:18,200 --> 00:22:20,800 surprise? No, this isn't a surprise and I 456 00:22:20,800 --> 00:22:23,300 hate to say I told you so, but I've been telling you. 457 00:22:23,300 --> 00:22:27,600 So for a while, every single company, possible imaginable. 458 00:22:27,700 --> 00:22:31,300 L will eventually try to initiate or include some type of 459 00:22:31,300 --> 00:22:33,900 subscription service because like I've mentioned, Many Times 460 00:22:33,900 --> 00:22:37,900 subscription services are the Holy Grail of business models. 461 00:22:38,000 --> 00:22:40,400 Nothing beats them. I've never came across a 462 00:22:40,400 --> 00:22:44,200 business model that is overall, just better economically than 463 00:22:44,200 --> 00:22:46,600 subscription services. So there's some companies that 464 00:22:46,600 --> 00:22:50,800 are are Naturally Fit for subscription services and those 465 00:22:50,800 --> 00:22:52,700 are SAS companies software as a service. 466 00:22:52,700 --> 00:22:56,000 That's been proven to be a fantastic model for those type 467 00:22:56,000 --> 00:22:57,700 of companies. But now we're starting to see 468 00:22:57,800 --> 00:23:00,100 Subscription Services Venture into all different type of 469 00:23:00,100 --> 00:23:02,900 companies that normally you wouldn't see fit with a 470 00:23:02,908 --> 00:23:06,100 subscription service, but they will try nonetheless, whether 471 00:23:06,100 --> 00:23:11,100 it's Taco Bell Netflix or adobe. We're going to see every company 472 00:23:11,200 --> 00:23:14,200 left, right, and Center try to become a subscription company. 473 00:23:14,500 --> 00:23:17,400 We seen the transition with apple over the past five years. 474 00:23:17,800 --> 00:23:20,900 It's gone from a hardware seller of selling these devices. 475 00:23:21,200 --> 00:23:24,600 Can now selling Apple TV plus selling Apple Fitness selling 476 00:23:24,600 --> 00:23:27,300 its Apple music subscription selling iCloud. 477 00:23:27,400 --> 00:23:29,300 They're Um everything they can to sell you as many 478 00:23:29,300 --> 00:23:32,100 subscriptions as possible, because inscriptions are King, 479 00:23:32,300 --> 00:23:34,100 Microsoft is way ahead of the game on this. 480 00:23:34,100 --> 00:23:37,700 Since around 2014. They've been moving primarily to 481 00:23:37,700 --> 00:23:40,500 subscription-based and now that's the entire basis of their 482 00:23:40,500 --> 00:23:42,300 company. Netflix is the other one. 483 00:23:42,300 --> 00:23:45,300 Doing this, of course, spotify's the other one, doing this, we 484 00:23:45,300 --> 00:23:48,400 have companies like Amazon with Amazon Prime doing this. 485 00:23:48,700 --> 00:23:51,000 We have Google with YouTube premium. 486 00:23:51,200 --> 00:23:54,600 Having this be a big push into subscriptions, not just adds. 487 00:23:54,900 --> 00:23:59,300 So every company is trying to become a Company and it comes at 488 00:23:59,300 --> 00:24:01,600 no surprise that even food companies are doing this as 489 00:24:01,600 --> 00:24:03,900 well. The taco subscription is just 490 00:24:04,200 --> 00:24:06,900 one of the first ones and if I have to be honest I think the 491 00:24:06,908 --> 00:24:09,500 Taco Bell is probably doing the smart thing here, they're 492 00:24:09,500 --> 00:24:12,400 experimenting, they're trying different things and this just 493 00:24:12,400 --> 00:24:16,300 might be a big push to wear lots of companies start doing this. 494 00:24:16,500 --> 00:24:21,100 If Taco Bell's able to make this work as a profitable model that 495 00:24:21,100 --> 00:24:23,800 actually Spurs more business and more repeat customers. 496 00:24:24,100 --> 00:24:27,300 You'll see every other food chain, try the same thing in 497 00:24:27,300 --> 00:24:30,200 various Us Fashions and forms until they get the model down. 498 00:24:30,600 --> 00:24:32,400 Let's go ahead and look at the actual value here. 499 00:24:32,400 --> 00:24:35,700 When we break down this particular subscription, they 500 00:24:35,700 --> 00:24:41,300 say that it's ten dollars for 30 consecutive days of any Taco. 501 00:24:41,700 --> 00:24:45,200 I don't actually think this is necessarily that great eval you. 502 00:24:45,200 --> 00:24:47,700 And I can see how this works out in Taco Bell's benefit. 503 00:24:48,100 --> 00:24:51,600 First of all, just on a, an overall case, I think, if you 504 00:24:51,608 --> 00:24:56,400 look at it from a basis of $10 to buy 30 tacos, that's okay 505 00:24:56,400 --> 00:24:58,400 value. But it's still not that Seen 506 00:24:58,500 --> 00:25:00,700 right? That's nothing like crazy. 507 00:25:00,800 --> 00:25:04,100 You're spending $10 to buy 30 tacos, that might be a better 508 00:25:04,100 --> 00:25:06,300 value than what they cost on an individual basis. 509 00:25:06,600 --> 00:25:09,500 But in a bulk order, I don't think that's too crazy but then 510 00:25:09,500 --> 00:25:12,200 when you break it down even further you can't get more than 511 00:25:12,200 --> 00:25:14,400 one a day. Well college, students want to 512 00:25:14,400 --> 00:25:16,800 eat more than one taco if they go to lunch. 513 00:25:17,000 --> 00:25:20,200 So every time you visit, Taco Bell your ten dollars for the 514 00:25:20,200 --> 00:25:22,900 month is only going to buy you one taco and then you're going 515 00:25:22,900 --> 00:25:25,700 to be spending more money on drinks and more tacos. 516 00:25:25,700 --> 00:25:28,000 On top of that. So they're going to get It more 517 00:25:28,000 --> 00:25:30,300 business out of you because of the subscription. 518 00:25:30,500 --> 00:25:34,300 This is kind of like a buy-in to go to Taco Bell for lunch every 519 00:25:34,300 --> 00:25:37,300 single day, so they're going to get way more Taco sold out of 520 00:25:37,308 --> 00:25:40,500 this than the 30 a month and likely students aren't going to 521 00:25:40,500 --> 00:25:42,700 be going or whoever's buying. This is not going to be going 522 00:25:43,000 --> 00:25:45,800 every single day without fail. They're gonna have some days 523 00:25:45,800 --> 00:25:48,400 that they miss. So overall, I don't think this 524 00:25:48,400 --> 00:25:50,800 is the best value. I actually think that it works 525 00:25:50,800 --> 00:25:53,400 out in the benefit of Taco Bell a lot, but I think it's an 526 00:25:53,400 --> 00:25:56,000 interesting play from Taco Bell and it doesn't surprise me at 527 00:25:56,000 --> 00:25:57,300 all. We're going to see more of this 528 00:25:57,300 --> 00:25:58,300 stuff. The future. 529 00:25:58,300 --> 00:25:59,800 Now that is all for this episode. 530 00:25:59,800 --> 00:26:01,900 I hope you enjoyed. Make sure to subscribe to the 531 00:26:01,900 --> 00:26:04,400 channel, hit the Bell icon, and I'll catch you in the next one.