1 00:00:00,000 --> 00:00:02,000 Welcome everyone, thank you for joining. 2 00:00:02,300 --> 00:00:03,900 We have a good video to get in today. 3 00:00:04,000 --> 00:00:05,300 I think you're going to like this one. 4 00:00:05,600 --> 00:00:09,200 We're going to be breaking down, big Tech, Microsoft, Apple, 5 00:00:09,200 --> 00:00:13,200 Google, Amazon and Facebook. These five companies dominate 6 00:00:13,200 --> 00:00:15,800 the market they really do. They dominate their respective 7 00:00:15,800 --> 00:00:17,800 markets. They're basically all monopolies 8 00:00:18,200 --> 00:00:20,200 in my opinion. I think every one of them all 9 00:00:20,200 --> 00:00:23,700 five are undervalued to different extents, but they all 10 00:00:23,700 --> 00:00:26,500 have very different strategies and how they're growing their 11 00:00:26,500 --> 00:00:28,600 business, how they're taking money and reinvesting it, 12 00:00:29,000 --> 00:00:31,000 they're all doing very Different strategies. 13 00:00:31,000 --> 00:00:33,100 And in this video, I want to break down their different 14 00:00:33,100 --> 00:00:35,900 strategies and how to view these different companies as 15 00:00:35,900 --> 00:00:38,200 Investments. So we're also going to be 16 00:00:38,200 --> 00:00:42,000 looking in particular at Amazon. This is a company that I've 17 00:00:42,000 --> 00:00:44,800 really liked over the past couple of years, even though 18 00:00:44,800 --> 00:00:47,300 it's traded flat. In fact, I'm in the red by 500 19 00:00:47,300 --> 00:00:48,900 bucks. So just a little bit, but I 20 00:00:48,908 --> 00:00:51,500 continue to add more and more to this holding because I think 21 00:00:51,500 --> 00:00:55,000 Amazon is undervalued. I think the company is growing 22 00:00:55,000 --> 00:00:59,200 quickly, and I think that the PE Ratio the main determinant of 23 00:00:59,500 --> 00:01:04,200 the Vision of a company Amazon's being 53, is misleading for this 24 00:01:04,200 --> 00:01:07,900 company because a P/E ratios, most helpful for a company that 25 00:01:07,900 --> 00:01:11,600 is optimized for profits. And Amazon has not optimized for 26 00:01:11,600 --> 00:01:14,500 profits like Microsoft has, or apple has. 27 00:01:14,600 --> 00:01:17,100 So we'll be going over all of big Tech and why I like all of 28 00:01:17,100 --> 00:01:19,900 these companies and contrasting their strategies but I'll also 29 00:01:19,900 --> 00:01:21,900 be spending a little bit more time on Amazon. 30 00:01:22,200 --> 00:01:25,500 Now, one quick note, before we jump in, I recently just did a 31 00:01:25,500 --> 00:01:29,800 three part 3 of our Series on Amazon for the patreon. 32 00:01:29,900 --> 00:01:33,000 Yeah, so this is an exclusive series for patreon members, but 33 00:01:33,000 --> 00:01:36,100 you can check it out and watch the three-part series for free 34 00:01:36,200 --> 00:01:38,000 by joining the free trial. There's a link in the 35 00:01:38,000 --> 00:01:40,900 description, it does not charge you up front so you can check 36 00:01:40,900 --> 00:01:42,900 that out if you're interested. I think it's worth it. 37 00:01:42,900 --> 00:01:44,800 If you're interested in this company, all right, now let's go 38 00:01:44,800 --> 00:01:47,500 ahead and Jump Right In. This is the story fund right 39 00:01:47,500 --> 00:01:50,300 now, it doesn't look pretty. We're still down six thousand 40 00:01:50,300 --> 00:01:52,600 dollars, but last week we were down 12 thousand dollars. 41 00:01:52,600 --> 00:01:55,000 So we've made up some of the losses but we still have a ways 42 00:01:55,000 --> 00:01:57,700 to go. Now I do something different 43 00:01:57,700 --> 00:02:01,000 with my portfolio in my channel. I Just showing we're making 44 00:02:01,000 --> 00:02:02,900 money. I show this good or bad with 45 00:02:02,900 --> 00:02:05,800 complete transparency, even if we're in the red, even if we're 46 00:02:05,800 --> 00:02:08,699 losing money, currently I'm still going to continue to show 47 00:02:08,699 --> 00:02:10,400 updates. So if you want to follow along 48 00:02:10,400 --> 00:02:13,500 for free and see updates on a real portfolio, every single 49 00:02:13,500 --> 00:02:16,700 week all through 2022, you can subscribe to the channel and 50 00:02:16,700 --> 00:02:19,200 follow along for free. Now, if we compare this against 51 00:02:19,200 --> 00:02:22,800 the S&P 500, this is what it looks like back in November is 52 00:02:22,800 --> 00:02:25,900 where the cloud company sold off like crazy, it's where Facebook 53 00:02:25,900 --> 00:02:28,900 and PayPal and Netflix old down like crazy, and that hurt the 54 00:02:28,900 --> 00:02:30,900 performance of the portfolio. Folio, and we're currently 55 00:02:30,900 --> 00:02:33,700 trailing the S&P 500 by around 12%. 56 00:02:34,000 --> 00:02:36,200 Now, a lot of people, look at this, and they make huge 57 00:02:36,200 --> 00:02:39,000 conclusions, like the past couple of weeks we've been 58 00:02:39,000 --> 00:02:42,500 behind the S&P 500. So All Is Lost, right? 59 00:02:42,700 --> 00:02:45,000 The companies that were buying aren't doing well, that's not 60 00:02:45,000 --> 00:02:47,900 exactly what this means. I want to highlight one quote 61 00:02:48,100 --> 00:02:49,900 from Warren Buffett's, latest Berkshire. 62 00:02:49,900 --> 00:02:52,800 Hathaway shareholder letter, he says, whatever our form of 63 00:02:52,800 --> 00:02:55,000 ownership. Our goal is to have meaningful 64 00:02:55,000 --> 00:02:59,400 investments in businesses with both durable economic advantages 65 00:02:59,600 --> 00:03:02,600 and First class. Seos, please note particularly 66 00:03:02,600 --> 00:03:06,600 that we own stocks based upon our expectations about their 67 00:03:06,600 --> 00:03:10,700 long-term business performance, and not, because we view them as 68 00:03:10,700 --> 00:03:14,100 vehicles for timely Market moves, a lot of people have 69 00:03:14,100 --> 00:03:17,400 different views in the market. They say, well, we're behind 70 00:03:17,400 --> 00:03:18,800 over the past couple of months, right? 71 00:03:18,800 --> 00:03:21,800 The performance has some good, but that is Market fluctuations 72 00:03:22,000 --> 00:03:24,700 because of interest rates Rising, a lot of the market has 73 00:03:24,700 --> 00:03:28,000 shifted from growth companies to Value company's financials 74 00:03:28,000 --> 00:03:31,900 energy and consumer defensive. Chinese that's market trading 75 00:03:32,000 --> 00:03:34,500 that's not how I'm investing. I'm investing in the future. 76 00:03:34,500 --> 00:03:37,500 Prospects of these companies and Warren Buffett goes on to say 77 00:03:37,500 --> 00:03:40,100 that point is crucial. Charlie and I are not stock 78 00:03:40,100 --> 00:03:41,800 Pickers. We are business Pickers. 79 00:03:41,900 --> 00:03:44,600 So Warren Buffett makes a special effort to say, we're not 80 00:03:44,600 --> 00:03:46,700 Market timers. We're not looking for short-term 81 00:03:46,700 --> 00:03:49,000 Market plays. We're investing in quality 82 00:03:49,000 --> 00:03:51,800 businesses, that we think will hold up very well, and they have 83 00:03:51,800 --> 00:03:54,300 a lot of durability. So, I understand that right now, 84 00:03:54,300 --> 00:03:58,300 the market timer play would be to jump into Commodities and 85 00:03:58,300 --> 00:04:01,500 defense companies because there's a Interwar and energy 86 00:04:01,500 --> 00:04:05,000 companies because oil prices are going up and I could try to time 87 00:04:05,000 --> 00:04:07,300 those plays. That's not the type of investing 88 00:04:07,300 --> 00:04:09,400 I'm doing. I do fundamental analysis on 89 00:04:09,400 --> 00:04:12,100 companies that I think will have incredibly strong future 90 00:04:12,100 --> 00:04:14,900 perspective growth, and I invest heavily in those companies. 91 00:04:15,200 --> 00:04:17,700 It might not work out in the next six months, but over the 92 00:04:17,700 --> 00:04:19,700 next four or five years, I think it will work out. 93 00:04:19,800 --> 00:04:21,600 Now, having said that, let's go ahead and take a look at my 94 00:04:21,600 --> 00:04:24,800 portfolio and why I continue to have so much money invested in 95 00:04:24,800 --> 00:04:27,900 big Tech, why I like, these companies so much even at their 96 00:04:27,900 --> 00:04:31,000 current valuations in first? Place we have Amazon. 97 00:04:31,000 --> 00:04:33,900 I have 22,000 dollars of value in this company. 98 00:04:34,300 --> 00:04:37,400 Then we have igv is my third largest holding eight percent of 99 00:04:37,400 --> 00:04:40,600 this ETF is in Microsoft. So I actually have a decent 100 00:04:40,600 --> 00:04:44,000 amount of this 20,000 in Microsoft then we have Google 101 00:04:44,100 --> 00:04:46,500 seventeen thousand seven hundred dollars of value in Google. 102 00:04:46,700 --> 00:04:49,900 Then we have seven thousand dollars in Microsoft and we even 103 00:04:49,900 --> 00:04:54,000 have fifty nine hundred dollars in apple in this portfolio and 104 00:04:54,000 --> 00:04:57,700 we have another $775 in Facebook. 105 00:04:57,900 --> 00:05:00,700 I was fortunate enough to sell out a large Portion this company 106 00:05:00,700 --> 00:05:03,400 before the major draw down and I'll explain why I did that in a 107 00:05:03,400 --> 00:05:05,300 minute. But if we look at the valuations 108 00:05:05,300 --> 00:05:08,200 of these companies, they can look a little scary based off 109 00:05:08,200 --> 00:05:11,400 their PE ratio. For example, we take Amazon this 110 00:05:11,400 --> 00:05:14,600 company has a 52 forward, P/E ratio, looks a little expensive. 111 00:05:14,600 --> 00:05:18,900 Apple looks a lot better, it's out of 27, which still seems 112 00:05:18,900 --> 00:05:21,900 kind of expensive, but, you know, it's Apple, it's a great 113 00:05:21,900 --> 00:05:23,400 company. So maybe investors are just 114 00:05:23,400 --> 00:05:25,700 paying up for this one. We have Microsoft to me. 115 00:05:25,700 --> 00:05:27,700 This is one of the most wide moat businesses in the world, 116 00:05:27,700 --> 00:05:30,100 but it still has a 30 to Forward. 117 00:05:30,100 --> 00:05:32,400 P/E ratio. I still continue to believe that 118 00:05:32,400 --> 00:05:36,700 Microsoft is undervalued. We have meta or Facebook trading 119 00:05:36,700 --> 00:05:40,200 at a 16 forward, P/E ratio. Now, Facebook is not my favorite 120 00:05:40,200 --> 00:05:42,000 company. I don't really love any of their 121 00:05:42,000 --> 00:05:44,400 products that much. I don't care for Instagram that 122 00:05:44,400 --> 00:05:48,500 much or Facebook, but I will say their Core Business is 123 00:05:48,500 --> 00:05:51,300 incredibly cheap at a 16 forward, P/E ratio. 124 00:05:51,500 --> 00:05:53,300 There's not a lot baked into the price here. 125 00:05:53,400 --> 00:05:55,700 Then of course, we have Google, this is a company that I really 126 00:05:55,700 --> 00:05:58,500 do like their products. Obviously, I love YouTube, they 127 00:05:58,500 --> 00:06:00,300 have YouTube music youtube,best, Premium. 128 00:06:00,300 --> 00:06:02,900 They have Google search. They have Android and they're 129 00:06:02,900 --> 00:06:05,900 trying to get into cloud and this business trades at a 23 130 00:06:05,900 --> 00:06:09,200 Ford P/E ratio. So when we just briefly, look 131 00:06:09,200 --> 00:06:12,200 over these companies and their PE ratios, they look like 132 00:06:12,200 --> 00:06:15,300 they're all kind of expensive but I think this all over 133 00:06:15,300 --> 00:06:17,000 States. How expensive these companies 134 00:06:17,000 --> 00:06:18,800 are. I think every one of them is 135 00:06:18,800 --> 00:06:20,900 cheaper than the PE Ratio would imply. 136 00:06:21,200 --> 00:06:23,800 And one of the big reasons that I think that the PE Ratio 137 00:06:23,800 --> 00:06:27,500 actually overstates the expense of these companies making them 138 00:06:27,500 --> 00:06:29,700 look like they're more expensive than they actually are. 139 00:06:29,900 --> 00:06:33,000 Is because of how aggressively all of them reinvest and I want 140 00:06:33,000 --> 00:06:35,300 to go over there. Reinvestment and growth strategy 141 00:06:35,800 --> 00:06:37,200 with Microsoft. It's simple. 142 00:06:37,600 --> 00:06:40,400 First of all, they copy other companies so they see Zoom 143 00:06:40,400 --> 00:06:42,300 building out conference software. 144 00:06:42,400 --> 00:06:45,700 They cieslak, building out chat software and Conference software 145 00:06:46,000 --> 00:06:48,400 and Microsoft builds out teams. Did they think of that 146 00:06:48,400 --> 00:06:49,900 themselves? Know they just copy those 147 00:06:49,900 --> 00:06:52,500 companies and since they already have such a huge network of 148 00:06:52,500 --> 00:06:54,200 companies, they work with their customer. 149 00:06:54,200 --> 00:06:57,400 Acquisition cost is a fraction of these other companies so 150 00:06:57,400 --> 00:06:59,500 Microsoft can copy other companies. 151 00:07:00,000 --> 00:07:03,100 All the time and build out their same software and they can sell 152 00:07:03,100 --> 00:07:06,000 it easier than those companies. That's a big way that they grow, 153 00:07:06,200 --> 00:07:09,900 but Microsoft also reinvest heavily through Acquisitions. 154 00:07:09,900 --> 00:07:13,000 They're constantly buying other companies, they bought 155 00:07:13,000 --> 00:07:15,900 Minecraft, which was a very attractive by it's a cash cow. 156 00:07:15,900 --> 00:07:19,300 Now, they bought LinkedIn. Possibly their best acquisition 157 00:07:19,300 --> 00:07:21,100 ever. It's the only social network 158 00:07:21,100 --> 00:07:24,400 that doesn't have the problems like Russia misinformation and 159 00:07:24,400 --> 00:07:27,300 moderation problems with people being upset because it's a 160 00:07:27,308 --> 00:07:30,200 business social network. But they're growing The ad 161 00:07:30,200 --> 00:07:31,600 Revenue. They're like crazy. 162 00:07:31,800 --> 00:07:34,300 Then they bought GitHub. This is a knowledge base that 163 00:07:34,300 --> 00:07:37,400 they have and it gives them a further insight into the coding 164 00:07:37,400 --> 00:07:39,500 industry. Then they have Activision 165 00:07:39,500 --> 00:07:43,300 Blizzard as their current biggest acquisition, a 70 166 00:07:43,300 --> 00:07:46,400 billion dollar acquisition of a massive gaming company. 167 00:07:46,400 --> 00:07:50,000 That's a cash cow so Microsoft can take this enormous amount of 168 00:07:50,008 --> 00:07:52,200 cash flow. They have continually by 169 00:07:52,200 --> 00:07:55,400 companies left and right, Congress isn't stopping them and 170 00:07:55,400 --> 00:07:58,200 they can copy any other companies in anything that 171 00:07:58,200 --> 00:07:59,700 they're doing and implement it in. 172 00:07:59,900 --> 00:08:03,700 Our core office suite, the growth potential of Microsoft is 173 00:08:03,700 --> 00:08:06,600 still completely untapped, they can continue to grow like crazy 174 00:08:06,600 --> 00:08:08,700 through copying and through buying now. 175 00:08:08,700 --> 00:08:12,000 Next up we have apple Apple's. Reinvestment strategy is much 176 00:08:12,000 --> 00:08:14,800 different than Microsoft's. They do copy features from other 177 00:08:14,800 --> 00:08:16,700 things and implement it into their service. 178 00:08:16,700 --> 00:08:19,600 So that's a similarity. But apple does not do 179 00:08:19,600 --> 00:08:21,300 Acquisitions. They're not going out and buying 180 00:08:21,300 --> 00:08:24,200 Minecraft or Netflix or Tesla or other companies. 181 00:08:24,200 --> 00:08:26,100 That's just not the way that they run their business and they 182 00:08:26,100 --> 00:08:29,200 reinvest rather they do Secret projects. 183 00:08:29,800 --> 00:08:33,700 I do projects in secret for multiple years, not talking 184 00:08:33,700 --> 00:08:36,900 about them, not advertising them, but they pour a ton of 185 00:08:36,900 --> 00:08:38,700 money into these secret projects. 186 00:08:39,000 --> 00:08:41,799 And if those projects are good enough to see the light of day, 187 00:08:42,000 --> 00:08:44,900 to be able to actually go to a customer, they'll finally reveal 188 00:08:44,900 --> 00:08:48,100 it, but they will only do that when they're confident, that it 189 00:08:48,108 --> 00:08:50,900 will be a success. That's the only time Apple 190 00:08:51,000 --> 00:08:54,100 actually reveals a project. And that's the reason that so 191 00:08:54,100 --> 00:08:57,200 many things Apple does are successful, is because they work 192 00:08:57,200 --> 00:08:59,700 on a lot of stuff and they'll only reveal it if they have a 193 00:08:59,900 --> 00:09:01,800 Amount of confidence that it will be successful. 194 00:09:02,300 --> 00:09:04,600 And we know a couple big directives are working on right 195 00:09:04,600 --> 00:09:07,800 now in secret they're working on AR and VR, they're working on 196 00:09:07,800 --> 00:09:10,000 the Apple car and they're working on Healthcare. 197 00:09:10,200 --> 00:09:12,100 These are some of the things we know that they're working on. 198 00:09:12,200 --> 00:09:16,300 Now, one of the rumored updates we have from Apple and their VR 199 00:09:16,300 --> 00:09:19,800 headset, is the device has reportedly completed. 200 00:09:19,800 --> 00:09:23,200 Second phase, engineering, validation test to ensure that 201 00:09:23,200 --> 00:09:25,600 the Prototype units, meet apples design goals, and 202 00:09:25,600 --> 00:09:28,600 specifications. Did you times added that the 203 00:09:28,600 --> 00:09:31,700 headset is? Added to Depew by the end of 204 00:09:31,700 --> 00:09:35,800 2020 to. So we could see an AR VR headset 205 00:09:35,800 --> 00:09:38,200 from Apple debut by the end of this year. 206 00:09:38,200 --> 00:09:42,500 So even though apples trading at, like a 27 PE ratio part of 207 00:09:42,508 --> 00:09:44,800 the reason why is because they're putting so much money 208 00:09:44,800 --> 00:09:47,000 into these projects. They're working on cars and 209 00:09:47,000 --> 00:09:50,200 Healthcare AR and VR. They're pouring a lot of money 210 00:09:50,200 --> 00:09:53,200 into this stuff that they could, otherwise be giving back to 211 00:09:53,200 --> 00:09:55,200 shareholders through dividends or share BuyBacks. 212 00:09:55,400 --> 00:09:58,000 So they would actually become more profitable if they weren't 213 00:09:58,000 --> 00:10:00,300 pouring so much more money into these Aspen's. 214 00:10:00,600 --> 00:10:03,200 But Apple thinks they'll create more value down the road with 215 00:10:03,200 --> 00:10:05,500 these Investments. The next up, we have Google 216 00:10:05,700 --> 00:10:09,400 Google, does long shot bets, but I'm not investing in Google 217 00:10:09,400 --> 00:10:11,700 because of their long shot bed. So I actually think that there 218 00:10:11,700 --> 00:10:14,800 are the weakest in terms of their reinvestment into these 219 00:10:14,800 --> 00:10:16,800 long shot bets, most of their long shot. 220 00:10:16,800 --> 00:10:18,900 Bets get scrapped most don't work out. 221 00:10:18,900 --> 00:10:20,500 It's kind of like throwing spaghetti against the wall and 222 00:10:20,500 --> 00:10:21,600 seeing what sticks? Right. 223 00:10:21,600 --> 00:10:23,200 That's kind of the approach Google takes. 224 00:10:23,800 --> 00:10:26,300 It's okay. Maybe something will work out in 225 00:10:26,300 --> 00:10:28,400 the future. But the reason that I invest in 226 00:10:28,400 --> 00:10:29,700 Google is because of their Core Business. 227 00:10:29,800 --> 00:10:31,500 Business. They have a very strong core 228 00:10:31,500 --> 00:10:34,000 business with YouTube. You're seeing massive YouTube, 229 00:10:34,000 --> 00:10:36,000 premium subscription growth YouTube. 230 00:10:36,000 --> 00:10:39,400 Music is now being competitive with apple music and Spotify. 231 00:10:39,700 --> 00:10:42,600 They have YouTube TV. They're also of course, the 232 00:10:42,600 --> 00:10:45,400 owner of Android and they have Google cloud, which they're 233 00:10:45,400 --> 00:10:47,500 trying to grow trying to compete with Amazon. 234 00:10:47,700 --> 00:10:50,400 So Google has an incredibly strong core business but their 235 00:10:50,400 --> 00:10:52,400 whole advertising Network and all the different things are 236 00:10:52,400 --> 00:10:54,900 growing. But they're long shot bets from 237 00:10:54,900 --> 00:10:58,000 what I've seen, they go on for years and they're usually not 238 00:10:58,000 --> 00:11:00,000 that fruitful. So I'm not investing in Google. 239 00:11:00,000 --> 00:11:03,700 Because of their long shot beds and the company trades at a low 240 00:11:03,700 --> 00:11:06,600 20 s PE ratio. So even if none of their lung 241 00:11:06,600 --> 00:11:10,500 shot bets turnout, I still think the company's undervalued just 242 00:11:10,500 --> 00:11:11,800 based off of their Core Business. 243 00:11:12,200 --> 00:11:16,000 Then we have Facebook Facebook. I actually think has the 244 00:11:16,000 --> 00:11:20,400 riskiest reinvestment strategy. It's led by Mark Zuckerberg and 245 00:11:20,400 --> 00:11:23,300 it's basically one directive. The big thing that they're doing 246 00:11:23,300 --> 00:11:26,700 to grow the company and the future of it is the metaverse. 247 00:11:27,100 --> 00:11:30,700 So they have a more concentrated bet than Any of the other big 248 00:11:30,700 --> 00:11:34,500 tech companies on one directive which is a meta verse the other 249 00:11:34,500 --> 00:11:35,300 ways that they're trying to grow. 250 00:11:35,300 --> 00:11:38,400 Their Core Business is by basically engagement having 251 00:11:38,400 --> 00:11:39,600 people. Stay on their platform for 252 00:11:39,600 --> 00:11:41,300 longer, monetizing them for longer. 253 00:11:41,500 --> 00:11:43,300 That's a big competitive industry. 254 00:11:43,700 --> 00:11:46,300 They're competing with Tick-Tock and Netflix and YouTube and 255 00:11:46,400 --> 00:11:49,300 anything else that takes your time away, Facebook's competing 256 00:11:49,300 --> 00:11:51,600 with them. But in terms of the reinvestment 257 00:11:51,600 --> 00:11:54,900 strategy, it is the most concentrated. 258 00:11:55,000 --> 00:11:57,700 Everything is based off of One Thing, Mark Zuckerberg is 259 00:11:57,700 --> 00:11:59,600 working on which is the metaverse. 260 00:11:59,900 --> 00:12:03,400 So in my opinion, I think that this is actually a more risky 261 00:12:03,400 --> 00:12:05,500 bet. Either it will work out big and 262 00:12:05,500 --> 00:12:08,200 the company will go up multiples because they loan a huge part of 263 00:12:08,200 --> 00:12:11,200 the future metaverse or it will just be a flop. 264 00:12:11,200 --> 00:12:14,600 It'll be something like the Amazon Fire Phone, right? 265 00:12:14,600 --> 00:12:19,200 It'll be something like the Microsoft phone or Apple's multi 266 00:12:19,200 --> 00:12:21,000 charging pad. You know, some of these things 267 00:12:21,000 --> 00:12:24,300 don't work out like expected. So Facebook can't make the 268 00:12:24,300 --> 00:12:28,200 metaverse latch onto Society in the way that he envisions that 269 00:12:28,200 --> 00:12:29,600 will be a big problem for Facebook. 270 00:12:29,700 --> 00:12:32,400 So again, I think that this concentrated bets a bit more 271 00:12:32,400 --> 00:12:34,100 risky than the other big Tech bets. 272 00:12:34,400 --> 00:12:36,200 And that's the reason that I took a lot of the gains and 273 00:12:36,200 --> 00:12:39,800 Facebook a couple months ago. Now, having said that Facebook 274 00:12:39,800 --> 00:12:43,300 has traded down to such a ridiculously low, P/E ratio, the 275 00:12:43,300 --> 00:12:45,700 even if the metaverse doesn't work out, I think they'll 276 00:12:45,700 --> 00:12:47,900 continue to offer good value, just based on their Core 277 00:12:47,900 --> 00:12:50,200 Business. Now, next up, we have Amazon 278 00:12:50,500 --> 00:12:53,800 Amazon's reinvestment strategy is dramatically different than 279 00:12:53,800 --> 00:12:57,100 Facebook's while Facebook has these concentrated bets where 280 00:12:57,100 --> 00:13:00,000 they're putting everything into the metaverse and that's Mark 281 00:13:00,000 --> 00:13:03,700 Zuckerberg is focused on Amazon. Never bet the farm on any one 282 00:13:03,700 --> 00:13:06,600 thing they build out. Lots of small investments in 283 00:13:06,608 --> 00:13:10,800 projects and then as they start to grow, they put more and more 284 00:13:11,000 --> 00:13:12,700 focus on it and more effort on it. 285 00:13:12,700 --> 00:13:14,900 That's how they grew AWS. That's how they grew their 286 00:13:14,900 --> 00:13:16,500 Logistics. That's how they grew. 287 00:13:16,500 --> 00:13:19,400 Alexa and all the smart home devices and that's what they did 288 00:13:19,400 --> 00:13:22,000 with Amazon Prime video. They didn't start any of these 289 00:13:22,000 --> 00:13:24,000 with twenty billion dollar initial Investments. 290 00:13:24,000 --> 00:13:27,300 They just grew them from a small, starting point to now a 291 00:13:27,300 --> 00:13:30,200 major business and they're doing the same thing with music and 292 00:13:30,200 --> 00:13:33,400 physical retail, they continue to just look at different 293 00:13:33,400 --> 00:13:36,200 potential projects, fund them with some growth, and the 294 00:13:36,200 --> 00:13:38,900 continue to invest in them as they continue to show success. 295 00:13:39,400 --> 00:13:42,000 So when I look at Amazon's reinvestment strategy, the way 296 00:13:42,008 --> 00:13:44,300 that they run their business and try to grow it and try to 297 00:13:44,300 --> 00:13:47,800 reinvest, I find it much more preferable to Facebook's because 298 00:13:47,800 --> 00:13:49,500 again I think it's far less risky. 299 00:13:49,500 --> 00:13:53,600 I think Amazon has a much higher chance of having a lot of these 300 00:13:53,600 --> 00:13:56,600 projects work out and be fruitful than Facebook's. 301 00:13:56,600 --> 00:13:58,700 So, that's the comparison I'd make. 302 00:13:58,700 --> 00:14:01,600 Now, having said that Again, I think all these companies are 303 00:14:01,600 --> 00:14:03,700 undervalued. I like the reinvestment strategy 304 00:14:03,700 --> 00:14:07,100 from Microsoft app on Amazon, the most and Facebook's trading 305 00:14:07,100 --> 00:14:09,400 at a very cheap price, even its Core Business. 306 00:14:09,400 --> 00:14:12,100 Compared to its earnings is incredibly cheap. 307 00:14:12,100 --> 00:14:14,800 So I think all these companies are undervalued but I think 308 00:14:14,800 --> 00:14:17,900 Amazon has the most potential currently to surprise to the 309 00:14:17,900 --> 00:14:19,800 upside. Now while we look at the P/E 310 00:14:19,800 --> 00:14:22,600 ratios of big Tech and it can seem a little expensive because 311 00:14:22,600 --> 00:14:25,600 they're in the mid-20s. I want to compare that basket of 312 00:14:25,600 --> 00:14:27,700 companies. We just talked about to another 313 00:14:27,700 --> 00:14:31,100 basket of companies. This is consumer defensives 314 00:14:31,200 --> 00:14:34,600 companies that investors right now are piling money into. 315 00:14:35,000 --> 00:14:38,800 We have McDonald's Corporation, the real estate and food company 316 00:14:39,100 --> 00:14:43,600 that's trading at a twenty four point five for PE ratio keep in 317 00:14:43,600 --> 00:14:45,300 mind. That's right there in line with 318 00:14:45,300 --> 00:14:47,900 Apple. So McDonald's is as expensive as 319 00:14:47,900 --> 00:14:51,800 apple with its current price to earnings ratio and it's actually 320 00:14:52,100 --> 00:14:54,800 it's a little bit cheaper than Microsoft, but it's actually 321 00:14:54,800 --> 00:14:57,900 more expensive than Facebook and more expensive than Google. 322 00:14:58,300 --> 00:15:02,400 So McDonald's is At a higher price to earnings ratio than 323 00:15:02,400 --> 00:15:07,300 Apple, Facebook, and Google. Now, what is McDonald's doing in 324 00:15:07,300 --> 00:15:09,800 terms of their long shot, bets, in terms of building out 325 00:15:09,800 --> 00:15:13,200 infrastructure for the future is McDonald's, releasing an AR and 326 00:15:13,200 --> 00:15:16,000 VR headset later this year. That might revolutionize the 327 00:15:16,000 --> 00:15:17,800 world right? Like some Apple devices really 328 00:15:17,800 --> 00:15:19,500 end up doing. I don't think so. 329 00:15:19,500 --> 00:15:21,400 I don't think McDonald's is doing a whole lot of 330 00:15:21,400 --> 00:15:24,700 reinvestment McDonald's is probably incrementally building 331 00:15:24,700 --> 00:15:27,900 out their business closing stores and underperform, opening 332 00:15:27,900 --> 00:15:30,100 more stores that might perform. I'm better. 333 00:15:30,300 --> 00:15:31,600 That's basically what they're doing. 334 00:15:31,900 --> 00:15:35,200 They might adjust prices a little bit and raise prices, but 335 00:15:35,200 --> 00:15:38,200 is this company, reinvesting anywhere close to the level that 336 00:15:38,200 --> 00:15:41,700 big Tech is the answer is, no, we can look at the Clorox 337 00:15:41,700 --> 00:15:44,800 company trading at a PE ratio of 33. 338 00:15:45,100 --> 00:15:47,600 Again, investors are fleeing big Tech. 339 00:15:47,600 --> 00:15:50,400 They're fleeing Cloud companies and they're rushing to companies 340 00:15:50,400 --> 00:15:53,100 like Clorox. We can again look at big Tech 341 00:15:53,100 --> 00:15:56,300 Amazon's out of 52. So Amazon is more expensive than 342 00:15:56,300 --> 00:15:59,500 the Clorox, company apples cheaper, Microsoft. 343 00:15:59,700 --> 00:16:03,400 Even cheaper, Facebook is cheaper and Google's cheaper 344 00:16:03,700 --> 00:16:06,100 four out of five. Big tech companies are 345 00:16:06,100 --> 00:16:09,100 substantially cheaper on a price to earnings ratio then the 346 00:16:09,100 --> 00:16:12,500 Clorox company. Now maybe I'm missing something 347 00:16:12,500 --> 00:16:14,900 here but it doesn't appear as though. 348 00:16:14,900 --> 00:16:18,300 Clorox is growing like crazy. We can compare the revenue 349 00:16:18,300 --> 00:16:21,900 growth of Clorox to the revenue growth of, let's say Microsoft 350 00:16:22,300 --> 00:16:25,900 one of them sees incremental consistent growth, has a 351 00:16:26,100 --> 00:16:28,800 extremely wide moat and then we have the Clorox company. 352 00:16:29,300 --> 00:16:31,000 It's D flat. It might be going a little bit 353 00:16:31,000 --> 00:16:33,800 over time but what am I missing with this company? 354 00:16:34,100 --> 00:16:36,100 Are they doing any massive reinvestments? 355 00:16:36,100 --> 00:16:39,500 Are they buying Activision Blizzard are they building out a 356 00:16:39,500 --> 00:16:42,100 premium subscription model? You know what is this company 357 00:16:42,100 --> 00:16:44,100 doing? In terms of reinvestment I would 358 00:16:44,100 --> 00:16:47,400 stack up the reinvestment plan of Clorox against any big tech 359 00:16:47,400 --> 00:16:50,200 company and I don't even think it comes close but yet investors 360 00:16:50,200 --> 00:16:52,000 are paying a higher price for this company. 361 00:16:52,300 --> 00:16:56,600 Then almost every single big tech company aside for Amazon. 362 00:16:56,600 --> 00:16:58,100 That's the only one more expensive. 363 00:16:58,100 --> 00:17:00,900 Now, we can cite more examples. We can Look at Kimberly-Clark. 364 00:17:00,900 --> 00:17:03,000 This company trades, at a 22 forward. 365 00:17:03,000 --> 00:17:07,700 P/E ratio, 22 forward. P/E investors are racing into 366 00:17:07,700 --> 00:17:09,800 these companies, they're paying up for these companies. 367 00:17:10,099 --> 00:17:12,900 It had three percent Revenue growth year over year last 368 00:17:12,900 --> 00:17:15,700 quarter three percent. That's what the revenue growth 369 00:17:15,700 --> 00:17:17,099 looks like over the past five years. 370 00:17:17,400 --> 00:17:19,099 Again, we compare that to Facebook. 371 00:17:19,599 --> 00:17:23,099 It's trading at a 16 for PE and had twenty percent Revenue 372 00:17:23,099 --> 00:17:26,900 growth last year. So for 20 percent Revenue growth 373 00:17:27,000 --> 00:17:31,400 with very high margins. You're paying a And for PE, and 374 00:17:31,500 --> 00:17:35,800 with Google you're paying a 23 for PE for 32 percent Revenue 375 00:17:35,800 --> 00:17:37,500 growth and extremely high margins. 376 00:17:37,800 --> 00:17:41,500 But investors for whatever reason prefer this company they 377 00:17:41,500 --> 00:17:44,200 think this is what's going to create future prosperity and 378 00:17:44,200 --> 00:17:46,600 future wealth investing in Kimberly-Clark. 379 00:17:46,700 --> 00:17:49,600 We can also take a look at Coca-Cola a company that's 380 00:17:49,600 --> 00:17:52,900 almost completely stagnant. Not growing at all, and 381 00:17:52,900 --> 00:17:56,600 investors are paying a 25.4 for PE ratio. 382 00:17:57,000 --> 00:17:59,300 It, grew ten percent quarter over quarter last year. 383 00:17:59,700 --> 00:18:01,900 But that's only because of the reopening because restaurants 384 00:18:01,900 --> 00:18:05,800 reopened overall, the company's not growing Coca Cola is mostly 385 00:18:05,800 --> 00:18:08,200 a stagnant company. And if you look at the earnings 386 00:18:08,200 --> 00:18:12,800 per share, it's been this way for the past, almost 10 years, 387 00:18:12,900 --> 00:18:16,100 the earnings per share have gone up almost none over the past 10 388 00:18:16,100 --> 00:18:19,300 years but yet Coca-Cola is a company that investors are 389 00:18:19,300 --> 00:18:23,400 paying a 25.5 forward. P/E ratio for this company 390 00:18:23,400 --> 00:18:24,800 that's not building up the metaverse. 391 00:18:25,100 --> 00:18:26,800 They're not building out YouTube premium. 392 00:18:26,900 --> 00:18:29,500 They're not building out AR and VR headsets in the Apple car. 393 00:18:29,600 --> 00:18:32,600 So they're not buying Activision Blizzard, in fact, they do very 394 00:18:32,600 --> 00:18:34,400 little in the way of reinvestment. 395 00:18:34,600 --> 00:18:38,300 It's trading at a higher price to earnings ratio than alphabet, 396 00:18:38,400 --> 00:18:41,900 then Facebook and around the same PE ratio as Apple. 397 00:18:42,100 --> 00:18:43,800 That's what investors are pricing this at. 398 00:18:43,800 --> 00:18:46,300 So, when I compare these two groups of companies, on the one 399 00:18:46,300 --> 00:18:49,800 hand, we have big Tech, we have Microsoft and Apple, Amazon, 400 00:18:49,800 --> 00:18:53,200 Google and Facebook, and then in the other basket, we have these 401 00:18:53,200 --> 00:18:56,100 type of companies. We have McDonald's the Clorox 402 00:18:56,100 --> 00:18:58,400 company Kimberly-Clark and Coca-Cola. 403 00:18:58,800 --> 00:19:01,100 If you compare the E ratio is to each other. 404 00:19:01,400 --> 00:19:03,900 They're trading for around the same big Tech is selling for 405 00:19:03,900 --> 00:19:06,000 around the same price as these companies. 406 00:19:06,500 --> 00:19:08,800 And in my opinion, when I look at them over the next five years 407 00:19:08,800 --> 00:19:10,700 and which ones are going to have bigger earnings and create more 408 00:19:10,700 --> 00:19:13,600 value for shareholders. I think without question big 409 00:19:13,600 --> 00:19:16,700 Tech will outperform this group of companies without question. 410 00:19:16,800 --> 00:19:19,800 I don't even have any doubt in my mind that that will happen. 411 00:19:19,900 --> 00:19:23,400 Big Tex earnings right now are artificially lowered based on 412 00:19:23,400 --> 00:19:25,600 their heavy reinvestment, they're doing unlike 413 00:19:25,600 --> 00:19:29,500 Kimberly-Clark and Coca-Cola, every big tech company is doing 414 00:19:29,600 --> 00:19:32,100 Well, amounts of investments into future projects that will 415 00:19:32,100 --> 00:19:34,400 probably create a lot more value for shareholders. 416 00:19:34,700 --> 00:19:37,900 So I do comparative analysis of big Tech and their earnings 417 00:19:37,900 --> 00:19:39,800 potential, the projects, they're working on. 418 00:19:40,100 --> 00:19:42,700 And the moats are the business, how stable they are in durable? 419 00:19:42,700 --> 00:19:44,600 They are. I continually think they're 420 00:19:44,600 --> 00:19:47,300 undervalued compared to the Alternatives companies that 421 00:19:47,300 --> 00:19:50,500 investors are rushing into oil companies commodity companies 422 00:19:50,500 --> 00:19:52,700 and consumer defenses. I don't think that's where 423 00:19:52,700 --> 00:19:54,200 you're going to get long-term wealth. 424 00:19:54,200 --> 00:19:56,800 It might be a good trade, that might be a good trade over the 425 00:19:56,800 --> 00:19:58,900 next couple of months, but that's not the way that I'm 426 00:19:58,908 --> 00:20:01,200 investing. Investing for the long term for 427 00:20:01,200 --> 00:20:04,800 the future and I see more value in these big tech companies that 428 00:20:04,800 --> 00:20:06,200 I do in many of the Alternatives. 429 00:20:06,200 --> 00:20:09,100 So I hope that gives some insight of why continually by 430 00:20:09,100 --> 00:20:10,500 Amazon and these other companies. 431 00:20:11,000 --> 00:20:13,400 Again if you want to see the three-part Series on Amazon, 432 00:20:13,600 --> 00:20:15,000 there's a link in the description of joined the 433 00:20:15,000 --> 00:20:16,800 patreon. I think if you try it out, you 434 00:20:16,800 --> 00:20:18,500 really like it. But that's all for now. 435 00:20:18,500 --> 00:20:19,300 I'll see you in the next one.