Welcome everyone, to Joseph, Carlson after hours.
This is just bad. There's no other way to say it.
There's no sugarcoating. It, the markets terrible today,
my portfolio and basically every company that I own is performing
terrible today. Let's go ahead and take a look.
This is the story fund as of right now.
This is one of my two portfolios that I track every single week
week by week with complete transparency come good or bad.
Now right now as you can see, we're down big on the portfolio
and every day it seems to go down.
Down even further. Just today.
For example, we are down, five thousand dollars, five point
three, three percent. And is this, some specific
company causing all this pain? Not really, some of them are
down a little bit more than others.
But overall, all of them are down to a huge extent.
So, this is just every company that I own in this portfolio,
heavily in the red. And this is how the market is.
Right now. It's not, it's not doing well.
We look at this overall again. We're down about 40,000.
One thousand dollars. What I do with this portfolio is
since the beginning. I've tracked it against the S&P
500 as The Benchmark. We have that view right here.
This is what it looks like. The story fund my portfolios in
blue. The S&P 500 is in red ever since
the tech route back in November of last year.
My portfolio has sold off along with these tech companies to a
greater extent and you have the S&P 500, even over the past
couple of weeks. Just you know, it was up 16% now
it's actually in the red fine. Ali fell into the - my portfolio
is down 30% 29% right now. So overall is just ugly.
This Mark is completely ugly. If we look at the broader
indices year-to-date the S&P 500 is down, 17 percent
year-to-date, that QQQ the tech companies are down 27%.
Now this wouldn't be a big issue.
How do you invest in all these companies?
And these indices five years ago, then you would, you know,
you'd have some gains you would have lost a little bit of Gaines
but you'd still be largely in the green.
The issue is if you started investing in the last year or so
just the last year or two that is precisely.
When I started this portfolio was last year.
I put the majority of the money, the huge majority in the market
in 2021 right around here which turned out to be very poor
timing to buy because now we have this huge sell-off and
these companies are just getting crushed.
So this is an already difficult Market, very difficult and most
of us have seen Huge losses over the past three months, but this
next Domino that's been knocked over causing this chain
reaction. And this huge sell-off.
Today seems to have started with a ball murdered.
Yes, Walmart's earnings report was yesterday.
I made a video on it. The title of the video was the
death of retail, right? And some people thought that
this was clickbait. They thought Joseph is being
dramatic here, right? The death of retail.
That's a little bit of drama. Now what I did in that video as
I actually critiqued Walmart's earnings or poor, I dove into
Actually looked at it and it was terrible.
They miss their earnings by huge extent, caused by things that
are outside of their control gas.
Prices are are incredibly high and retailers have to ship
things to. And from stores with big diesel
trucks, that is a huge cost outside of their control.
Sluggish sales, supply chain, disruptions on, and on, and on
Wal Mart. CEO said that more people now
are choosing to buy half gallon of milk than before.
So before they're buying a full gallon of milk.
Now, they're choosing. The by the half gallon of milk.
That was something that I thought was sad to hair on an
earnings report. Now after Walmart reported their
earnings, the very next Domino was Target and this is where
things got really bad Target. Reported their earnings and they
cited an even worse report missing their earnings by huge
extent saying that consumer shift in spending, the things
that they're buying is dramatic. They're not buying the hard
Goods anymore. The type of things that you go
into a Target, which is one of the higher margin.
Or so, this is one of the more pricey ones, consumers are not
favoring. These type of things anymore
where you go in and see the interior design stuff, where you
go in and see the expensive home improvement stuff inside of the
target. That's not doing well right now,
all of the hards good section is not doing well.
So when investors looked at Targets earnings report and saw
that consumers were moving away from these, these type of goods,
right? Moving more to services and just
the bare bones, the groceries this caused a chain reaction in.
In the market Costco, even the mighty Costco, which
self-admittedly is one of my favorite companies.
Everett's I love Costco. I literally think it's one of
the best companies in the world. I own it.
I'm not selling it. I'm not treating it at all.
So I still have my steak. It could go down to $200 a
share. It could go up to 700.
I'm not going to sell it for the next ten years, but regardless
this company's down 12%, today didn't report any news didn't
have anything happen. People just looked at Targets
earnings report and they thought.
Wow, this Really bad Costco, should sell off as well to some
extent. Now.
I'm going to explain some key differences between Target and
Costco. And the reason that I don't
think, you know, I don't know, we have Costco's earnings report
coming up. But the reason that I don't
think Costco will have as bad of an earnings report, but we have
Amazon Amazon is down 7% today after already being down a lot.
The stocks not doing really well.
It's down like 30, 40 percent over the past few months.
So, it's down another 7%. Today approaching the Oh 2000s.
These are retailers. Investors looked at Walmart.
They said that's not good. Then they saw Target and they
saw that looks terrible. I want out the rest of these
companies. I'd only want to think about
Costco's earnings report, taking any gains that I have.
I'm exiting out of it. Amazon already has enough
issues. I'm going to exit out of this
one as well. Then we also have Walmart again
today. Right?
There were down 11% yesterday. They're down an additional 7%
today. So not a good week to own
Walmart. It's down 17 percent overall.
Has really been The Perfect Storm against these retailers.
Think about this, for just a minute, you had the perfect
environment for retail companies.
Consumers were locked in their houses.
They couldn't go to work. Many of them were buying new
homes to get into larger spaces and they were well capitalized,
the government gave endless stimulus to every American
individual. So you're locked in your home.
You can't go out and do much. The only thing you can really do
is go shopping at places like Target at places like Walmart
place. His like Amazon places like
Costco. And if you're thinking about
redoing your desk and improving your your situation right at
home, you're going to go to Target.
They have a lot of interior design stuff.
They have a lot of different furniture and different things
that you can buy. That situation is gone.
Consumers are running out of their stimulus money and they're
not being recapitalize the new jobs that they have or the
higher wages is not enough to make up for these stimulus.
Checks in the meantime, inflation's out of control
consumers, filling the squeeze of inflation are now Choosing to
buy less of these objects and focus on just the things that
they need in the meantime. The retailers have gas prices of
five to six dollars. Six dollar diesel charge for a
company that has to ship everything.
Across the Earth. We have companies like Amazon
that literally ship everything everywhere.
They're going to probably get hit very hard with these diesel
prices. So everything from employment
from transportation is getting more expensive while the
consumers getting weaker. Are the perfect storm is now
happening for the Retailer's. Now just to illustrate how
unique the circumstances were for a company like Target and
the growth that they had during 2021.
There's really no graph that illustrates it better than the
earnings per share. Take a look at this graph over
time. You might notice a trend since
1997 Target did grow their earnings over time, faster than
the economy, is a great company that expanded and grew and it
was a good investment, but you might notice the trend change
here in Eighteen to twenty Twenty-One a massive Trend
change Target, didn't just grow their earnings.
They doubled it in one year, after running the business for
20 years. 20 plus years one year.
They suddenly doubled their earnings.
Now to me that raises some red flags.
I think what happened and is it sustainable?
The question? What happened is, like I
mentioned everybody got free money.
There was stuck at home. They're redesigning their house
and buying pictures and furniture and different things
for their desk and different things that target cells.
And the question of Is that sustainable is obviously no.
Now the earnings per share went from a dollar. 69 a dollar
thirty six to two dollars and 79 cents.
Three dollars and 64 cents almost $4 per share in one year.
Just a year later. We're getting earnings reports
showing three dollars plus per share per quarter.
And in this most recent report, just today analysts were
expecting three dollars and seven cents of earnings per
share and they reported almost an entire dollar less back to
Sense, so the analysts were expecting another quarter, just
like the past six. Just for this to continue on
with no big reversion to the mean, another quarter of three
dollars, three dollars, and ninety nine cents.
Just like last quarter. Then Target came out, reported
$2.99 about two-thirds of the way there, which is a huge
reversion back to their long-term mean their long-term
Trend. So what we're seeing here with
Target, is a massive reversion to the mean.
Now Target still a great company and this is no fault of the
management. This is just a situation where
in higher fuel prices higher employee costs.
Right? Higher wages to pay higher
expensive, goods and services due to inflation and a consumer
that's running out of money. That's the situation right now.
Now Costco is also selling off along with targets down.
Twelve point. Seven, five percent now, Costco,
is a unique company, even a unique retailer.
The first thing that I would say about this company, is it trades
at a massive premium, even after today's sell-off?
I think the company still inexpensive company and I say
this being a big Holder of the company.
I have a big stake in it. I've owned it for a long time.
I don't plan on trading it at all.
So if it trades up or down, or in between, I'm not going to be
selling it. It's one of the companies.
One of the very few that I've just decided I want to own for
10 years. I don't want to trade in and out
of it. I just want to own it for 10
years and see what happens at the end.
Because I have a feeling it's going to be worth a lot more at
the end of 10 years. So that's kind of how I'm
looking at Costco, but people that are more active with your
Investments. I've been telling to not buy
Costco. Recently, it's been trading at a
huge premium, the company even after a twelve percent drop in
price. Today is still pretty expensive.
It's above 400 dollars a share. That's not really a cheap
Company. Still trades at a very high, P/E
ratio. Now, there's a couple things
unique about Costco, when comparing it to Target.
The first thing is, is that Costco is a membership model.
It's not a company. You can just walk into and buy
anything and leave. So it is purely a membership
model. You cannot get into the Costco
warehouse. Without being a Costco member.
The member has a high retention rate.
Most people keep their membership year after year, and
that's how they make the majority of their profits.
So, one thing that I observe here is that Costco's earnings
per share growth is much more gradual than targets.
It's not this massive doubling and earnings per share from one
year to the next. And so I think even though
Costco is definitely a beneficiary of the pandemic.
I think it's less of an anomaly for Costco.
And I think there's a chance. I think it's likely that Costco.
I'll have an easier time dealing with all these issues and Target
because Costco earns around two-thirds of their profit,
their net income from their memberships.
Not from selling stuff. Target is purely a seller.
They make money by selling products and they charge a
margin and that margin is their profit.
Margin. Costco, considers himself a
buyer. They try to buy things on behalf
of their members. They try to charge them, the
lowest margin possible, the greatest savings and then they
make the money through the memberships.
So it's a very different business model.
Very Even though they're both just in the basket of consumer
discretionary retail. Now, next up, we have Amazon,
which is, of course, a massive retailer.
Biggest online retailer for sure, but it's also more than a
retailer. Everyone knows that Amazon has
the elephant in the room, which is AWS as well.
But regardless investors are becoming very concerned about
the retail portion of this company.
As I think is warranted because it's down seven point four eight
percent now Amazon to put it lightly has a lot of headwinds
facing it, and I say this This as an investor, this company.
So I'm still heavily invested in it.
But I have to admit this company has a lot of problems.
It's facing at least over the next six months.
First of all, you have gas prices, just like Target and
Walmart are saying gas is affecting them because they have
to ship everything around the world.
No company. I think does more shipping and
has to deal with more gas prices than Amazon.
Every single thing that they send to anyone has to go into a
van has to be filled up with gas, and that's getting more and
more expensive. And Can only raise their prices
for Amazon Prime so much. So you're enjoying that free
shipping from Amazon Prime and they're having to pay the higher
gas prices every week as gas continues to go up.
So Amazon is eating the cost of that.
They're wanting to keep prices low.
They want to keep their customers using Amazon.
So they're just they're just taken the hit there for a huge
extent. They're taking the hit, so
Amazon has the issue of gas prices and that's not the only
issue. We also have interest rates, of
course Rising which make it so that smaller tech companies and
smaller startups, can't get as much funding.
They can't get easy cheap, Capital to fund their business.
Lots of tech startups and new companies.
Use AWS has their go to service. So Amazon relies on all these
smaller tech companies hosting all their stuff on AWS and that
growth will probably be declined at least over the next year, if
interest rates go up a lot. If companies get less funding,
if they're spending Less on on different, you know, different
Cloud Endeavors that's going to affect Amazon as well.
So over. All right now, I think Amazon
has a ton of issues. It's facing.
I think investors have reason to be concerned at least over the
next year. I do not expect their earnings
reports to be Stellar. If anything, I expected to be
underwhelming, investors are pricing that in there, getting
ahead of it and I think appropriately.
So so I say this as a big long term Amazon Bowl, I'm very
bullish on the company and a long-term time Horizon over the
next couple of earnings reports. I do not expect it be good.
I expect them to say that that oil prices caused their ship.
Being and Logistics to have tons more expense than normal.
I expect them to say that they had invest in employees with
Rising wages. I expect them to say, aw s
growth is slowing down a bit as companies are trying to cut cut
expenses, you know, a lot of things that I think will be
difficult over the next couple of quarters.
Now, I'm going to continue holding the company.
My time Horizon is by the end of 2025 and hopefully gas prices
won't be five and six dollars a gallon by that time.
If that is a case that's going to be a little bit unfortunate.
Now site of Amazon and Specifically, we also have a
bunch of other companies in my portfolio that I have unique
concerns about all of them. Google is a great company trades
at a low P/E ratio, but I think we might see some of the same
stuff we saw with kind of Home Depot, and Lowe's and target
with Google. I think the company had a pretty
unique circumstance in 2020 and in 2021, people spending lots of
time at home watching YouTube lots of their their, their ad
business and their service and their their advertisement
business doing really well. Well, because lots of companies
have a lot of capital, they're paying a lot for the ads.
I could see a reversion to the mean.
That's why I haven't been piling money into Google right now.
Microsoft, and probably, you know, one of the most bullish
on. This is a company.
I really am not concerned about it trades at a premium.
I think deservedly. So I think that the earnings of
Microsoft are going to be much more reliable than the earnings
of Google Amazon or even Apple. I think that Microsoft will
likely have the most reliable earnings.
And I think the company is undervalued right now because my
Soft is one of the rare companies that I don't think
over earned over the past two years.
It didn't have a uniquely amazing year.
I think the company just has an incredibly powerful business
model powerful moat and will continue to grow.
Its earnings on Pace for the future.
Netflix is definitely one of the companies in my portfolio.
In fact, this one, I would consider probably the most risky
stock in my portfolio. As of right now, even more risky
than Ali Baba. When I look at Netflix, the the
risk in this company and this holding Has incredibly high.
I would not go into this one. Unless you're okay with an
extreme amount of volatility. I haven't bought any of it.
I haven't sold any of it, since the last earnings report.
I'm just holding on to my shares, will see how this does
over the long term. So, so far.
I have not sold a single share of Netflix.
Not sold one, and I plan on, keeping it that way for, at
least the next year. Or so, I'll assess after their
next earnings report will see how bad of retention.
They had how many subscribers they had.
And the type of efforts that they're doing.
There's lots of news on Netflix right now.
Like they're firing employees. They're cutting budget.
They're doing lots of things in, my opinion.
Are kind of goodness right there being more cautious about their
cost structure and their spending seems like they're
trying to really hone in their content.
Hopefully, they can come out with some better content in the
future. But overall, they still have a
massive lead over other streaming services and their
price with very low expectations right now.
So this is one that I'm going to hang on to Ali.
Baba's the next one. I likewise haven't sold any of
this company. I continue to just hang on to
it. I think there's a chance that if
any news is positive from China, if the government opens back up,
if they stopped doing the covid, lockdowns, if if the economy
starts to grow in China, if we have any good news at all and
China or Russia, or just internationally altogether.
I think that Baba could pop as a stock.
I think it could go back up. It's priced with very low
expectations. I recently looked at the
valuation of Ali. Baba right now.
The company is down. All time from its IPO.
It's literally in the red since when I peeled back in 2014, the
revenue is up like, multiples and multiples and multiples of
our that time, the free cash flow is the margins are.
Every aspect of the company has improved since then and the
price to sales of Ali Baba. When it I poed was 28.
So IP o dat, a 28 price to sales right now at trades that a 1.8.
So the amount of multiple contraction in the price to
sales of this company. He has been astronomical again.
It's being price with very low expectations right now.
I think if you have good news out of China, I can see this one
go up. So I'm just hanging on to it.
Adobe in Salesforce to companies that are relatively expensive,
right? Their premium company's overall.
I'm not selling these ones. I'm not training them and I
haven't really done anything with these two companies
recently other than by little bits of them dollar cost.
Averaging these two companies grow their free cash flow per
share routinely, consistently every single A quarter every
single year. They grow their free cash flow
per share. Now next up we have apple which
is a smaller holding in this portfolio, but a much larger one
in my dividend portfolio. I have around 40 thousand
dollars worth of Apple in my dividend portfolio and I bought
the company at ninety dollars, a share.
That was my major by price. I bought 20,000 dollars worth at
90 share, and then, I did an additional by about 120 apples
currently trading at 140. So, I'm not really wanting to
average up on this company too much.
In fact, right? Right now, I think the company
is a little bit expensive at 24 PE based on the rest of the
market. So it makes sense that the
company's trading down a bit but I'm not selling the company.
I'm not really buying it right now.
Apple to me is just to hold Facebook.
On the other hand is a company that for me right now is a by
Facebook trades. A day, 16 forward, P/E ratio.
Facebook has a lot of cash and not a lot of debt.
The company is highly profitable.
They generate consistent and growing free cash flow and it's
just a cheap company trades at a very cheap multiple.
So in Market, there's no guarantees Facebook could trade
down more. But as of right now based on all
the numbers you could run. It's one of the cheaper
companies in the market. So that's my portfolio on an
individual holding basis, but overall, I think on a more macro
level the challenges we face as investors, I think are enormous
right now. We have a Fed that is hawkish.
And you've heard the phrase. Don't fight the FED.
Don't fight the FED when the FED is on your side.
Like they had been for the past 10 years, investing was easy.
Look at the graph. Over the past 10 years, you
bought basically anything half-decent and the prices went
up. That was the environment that
we're in, that is come to an end.
The FED is no longer our friend. He has risen interest rates will
continue to and he's now also going to be offloading.
The balance sheet. These are things that are
incredibly difficult to invest against.
So I have very low expectations over the next year.
I think that this could get worse.
I think that your discounted cash flow and your fair value.
Analysis could mean, basically nothing when you're trying to
fight the FED companies can trade Far Below.
They're intrinsic value for a very long period of time and the
period of time that we're in right now, is a very difficult
one. Jerome Powell has said openly
that he will continue to raise interest rates until inflation
is under control. That's what he said.
He will raise interest rates and tell inflation is under control.
So if inflation does not get under control, interest rates
are going to go up as interest rates.
Go up. This portfolio will go down.
That is the basic analysis. There's not much more to it.
There's not anything I can do to control that.
Since I can't predict interest rates, since I can't predict
inflation or oil prices. I am going to continue to stick
with my plan, which is good or bad continue to dollar cost
average in hold the companies and by the best deals that I
can, as I continually DC a n. So, that's the situation.
We're in. It's not a good one right now.
The market looks incredibly. Ugly.
Look at this chart here today. It's just awful.
TJX is like the only thing in the green today and most stuff,
even apples down 5.76 percent today.
Just incredibly bad Market, but hang in there.
We'll get through this together. Thanks for watching, and I'll
see you in the next one. Just incredibly bad Market, but
hang in there. We'll get through this together.
Thanks for watching, and I'll see you in the next one.