1 00:00:00,200 --> 00:00:02,040 Welcome back, everyone. Today on the Joseph Carlson 2 00:00:02,040 --> 00:00:04,720 Show, the tech rally showing signs of losing steam 3 00:00:05,040 --> 00:00:08,080 specifically for AI companies. We're seeing this now in the 4 00:00:08,080 --> 00:00:09,840 data. A lot of investors are getting a 5 00:00:09,840 --> 00:00:12,400 little bit nervous. In fact, they're selling out 6 00:00:12,400 --> 00:00:15,320 more than they're buying in. The market's been flat and even 7 00:00:15,320 --> 00:00:18,280 down a couple days now, even though interest rates are being 8 00:00:18,280 --> 00:00:20,080 lowered. So what do we make of this? 9 00:00:20,080 --> 00:00:22,080 Well, we're going to be looking at some of the data and the 10 00:00:22,080 --> 00:00:24,200 reason that investors are now becoming nervous. 11 00:00:24,640 --> 00:00:26,800 Now, we also have a lot of other news to get to in this episode. 12 00:00:26,840 --> 00:00:29,520 For example, the Trump administration, the US 13 00:00:29,520 --> 00:00:33,680 government is now taking an equity stake in Intel of 10%. 14 00:00:34,040 --> 00:00:36,560 Is it a good idea for the government to be buying private 15 00:00:36,560 --> 00:00:38,560 companies? And what is the purpose of doing 16 00:00:38,560 --> 00:00:40,480 this in the 1st place? We'll be discussing. 17 00:00:40,920 --> 00:00:43,720 We also have Google stock now surging to all time highs. 18 00:00:43,720 --> 00:00:47,480 This one seems to be on a winning streak and now that it's 19 00:00:47,480 --> 00:00:49,840 at all time highs, does that mean that it's expensive? 20 00:00:49,840 --> 00:00:52,400 We'll be looking at Google stock with a discounted cash flow 21 00:00:52,400 --> 00:00:54,760 analysis to try to determine whether or not this company's 22 00:00:54,760 --> 00:00:57,040 expensive. Now, we also have a lot of other 23 00:00:57,040 --> 00:00:59,040 news. There's Netflix with K Pop 24 00:00:59,040 --> 00:01:01,000 demons making it into the box office. 25 00:01:01,000 --> 00:01:02,640 This is bolstered Netflix's stock. 26 00:01:02,960 --> 00:01:06,760 We have the CEO of Uber going on an interview and talking about 27 00:01:06,760 --> 00:01:10,440 the technology between Waymo and Tesla and his take on it. 28 00:01:10,480 --> 00:01:12,800 And we have our financial TikTok review. 29 00:01:13,200 --> 00:01:15,800 We have someone that says that he has the solution to the 30 00:01:15,800 --> 00:01:18,920 United States $37 trillion debt problem. 31 00:01:19,280 --> 00:01:21,480 He has it solved. In fact, he's willing to solve 32 00:01:21,480 --> 00:01:23,800 it himself. We'll be looking at his solution 33 00:01:23,960 --> 00:01:26,000 in this episode as well. So we have a ton to get to in 34 00:01:26,000 --> 00:01:27,920 this episode. And we start things off today 35 00:01:27,920 --> 00:01:30,040 with the signs that we're seeing, the data that we're 36 00:01:30,040 --> 00:01:32,720 seeing that this tech rally is losing steam. 37 00:01:33,200 --> 00:01:36,160 Now as we look at the data here, I first just want to point out 38 00:01:36,840 --> 00:01:39,440 over the past year, not even just year to date, but in the 39 00:01:39,440 --> 00:01:43,000 past trailing year, if you haven't been making money, I 40 00:01:43,000 --> 00:01:44,560 think you've been doing something wrong. 41 00:01:45,000 --> 00:01:47,240 It's just you got to switch your strategy. 42 00:01:47,240 --> 00:01:49,920 If you're not making money, you should be making money, 43 00:01:49,920 --> 00:01:52,280 especially in bull markets. You should be making a lot of 44 00:01:52,280 --> 00:01:55,440 money in bull markets and that's what these portfolios have done. 45 00:01:55,880 --> 00:01:59,400 For example, the passive income portfolio, my main one here, has 46 00:01:59,400 --> 00:02:03,760 made around $100,000 in gains in the past trailing year. 47 00:02:03,880 --> 00:02:06,240 That's not additions, that's not me contributing money. 48 00:02:06,440 --> 00:02:08,600 That's in gains. And this year we've made around 49 00:02:08,600 --> 00:02:12,840 $50,000 in gains, so $100,000 over the trailing 12 months. 50 00:02:13,080 --> 00:02:15,000 Just year to date, it's around 50,000. 51 00:02:15,000 --> 00:02:17,040 Now, which companies are contributing so much over just 52 00:02:17,040 --> 00:02:18,760 the past year? Well, we have companies like 53 00:02:18,760 --> 00:02:21,560 Booking Holdings. This one's up huge over the past 54 00:02:21,560 --> 00:02:22,640 year. This is one of the best 55 00:02:22,640 --> 00:02:24,000 investments that I've made recently. 56 00:02:24,040 --> 00:02:27,200 Microsoft is another huge gainer, around a $40,000 gain on 57 00:02:27,200 --> 00:02:28,840 that one. S&P Global has been great. 58 00:02:28,840 --> 00:02:32,040 MasterCard has been great in the Story Fund in just the past 59 00:02:32,040 --> 00:02:33,920 year. Netflix, which was already my 60 00:02:33,920 --> 00:02:36,160 largest position, grew bigger and bigger. 61 00:02:36,440 --> 00:02:40,560 Of the $84,000 in gains, around 60,000 of that is in the 62 00:02:40,560 --> 00:02:43,120 trailing one year. And then almost all my gains in 63 00:02:43,120 --> 00:02:47,040 Amazon are in the past year as well, $45,000 of gains, like 64 00:02:47,040 --> 00:02:49,720 30,000 plus of that is in the trailing one year. 65 00:02:49,920 --> 00:02:52,440 Of course, Google, Microsoft, and S&P Global have helped out 66 00:02:52,440 --> 00:02:54,240 as well. This tech rally has been really 67 00:02:54,240 --> 00:02:56,440 great for investors that have taken advantage of it, that have 68 00:02:56,440 --> 00:02:58,200 positioned their portfolios correctly. 69 00:02:58,200 --> 00:03:00,600 But now we see news that it could be coming to an end, or at 70 00:03:00,600 --> 00:03:02,640 least slowing down. The prospect of a lower core 71 00:03:02,640 --> 00:03:05,240 interest rates is boosting many parts of the market. 72 00:03:05,440 --> 00:03:08,040 Real estate firms, banks, manufacturers. 73 00:03:08,040 --> 00:03:10,480 But the outlook for Wall Street's most popular stocks, 74 00:03:10,480 --> 00:03:13,440 the Magnificent 7 tech giants that have led major index to 75 00:03:13,440 --> 00:03:17,600 record highs is much less clear. The market leaders these mag 76 00:03:17,600 --> 00:03:20,400 seven companies have been buffeted recently by questions 77 00:03:20,400 --> 00:03:22,240 about the potential for artificial intelligence, 78 00:03:22,560 --> 00:03:24,360 concerns about their increasingly stretched 79 00:03:24,360 --> 00:03:28,080 valuations and competition from hitherto unloved parts of the 80 00:03:28,080 --> 00:03:30,360 market. So we have increasing 81 00:03:30,360 --> 00:03:33,280 competition. We have concerns in doubt about 82 00:03:33,480 --> 00:03:36,000 AI as well. In the coming days, the tech 83 00:03:36,000 --> 00:03:39,480 sector will face a key test when NVIDIA, the world's most 84 00:03:39,480 --> 00:03:41,960 valuable listed company, reports earnings. 85 00:03:41,960 --> 00:03:44,600 What investors learn there could be key to further gains. 86 00:03:44,720 --> 00:03:47,920 So this week we have the big one in question, NVIDIA, and they're 87 00:03:47,920 --> 00:03:50,240 going to be reporting their earnings and giving guidance for 88 00:03:50,240 --> 00:03:53,120 next quarter. Now when NVIDIA gives guidance, 89 00:03:53,120 --> 00:03:55,960 that's the more important part because they can either guide 90 00:03:55,960 --> 00:03:59,000 higher or substantially higher, showing that there's still 91 00:03:59,000 --> 00:04:02,840 continued momentum and increase in exponential growth or they 92 00:04:02,840 --> 00:04:05,840 can guide down and say that growth is actually decelerating 93 00:04:05,840 --> 00:04:07,720 a little bit. We're not going to be guiding up 94 00:04:07,720 --> 00:04:08,840 as much. You know, we're going to be 95 00:04:08,840 --> 00:04:11,280 cooling off for a period and that could cause the market 96 00:04:11,280 --> 00:04:14,760 great concern if that happens. We have investors getting ahead 97 00:04:14,760 --> 00:04:17,399 of this. One of them is Josh Boyer, 43. 98 00:04:17,399 --> 00:04:19,560 He said he's trimmed his exposure to make a cap tech 99 00:04:19,560 --> 00:04:23,680 stocks like NVIDIA, Microsoft and Meta by around 25% in recent 100 00:04:23,680 --> 00:04:25,800 days. The Phoenix resident said that 101 00:04:25,800 --> 00:04:28,400 shares have grown expensive relative to the company's 102 00:04:28,400 --> 00:04:30,880 earnings and said that he is satisfied with the outside 103 00:04:30,880 --> 00:04:32,520 returns over the past several months. 104 00:04:32,920 --> 00:04:35,920 Quote, anytime I see them getting top heavy, I'm totally 105 00:04:35,920 --> 00:04:38,320 fine taking some money off the table, he said. 106 00:04:38,720 --> 00:04:41,160 So this is an investor, which I think is very reasonable. 107 00:04:41,520 --> 00:04:42,920 I don't think he's dumb for doing this. 108 00:04:43,280 --> 00:04:46,280 He's looking at these companies, Meta, Microsoft and NVIDIA. 109 00:04:46,560 --> 00:04:49,080 He's looking at the incredible erformance they've had, the 110 00:04:49,440 --> 00:04:53,840 valuation expansion overtime, and he's taking 25% off the 111 00:04:53,840 --> 00:04:56,560 table. Seems like very reasonable, I 112 00:04:56,560 --> 00:04:58,360 think even good portfolio management. 113 00:04:58,480 --> 00:04:59,840 And apparently he's not alone in this. 114 00:04:59,840 --> 00:05:01,760 There's a lot of people selling out of tech companies 115 00:05:01,760 --> 00:05:04,360 specifically, even though Jay Powell signaled that he's going 116 00:05:04,360 --> 00:05:07,240 to be lowering interest rates. So this seems counterintuitive, 117 00:05:07,520 --> 00:05:09,080 but a lot of people are choosing to do this. 118 00:05:09,400 --> 00:05:12,200 The NASDAQ Composite performed far worse than the Dow Jones 119 00:05:12,200 --> 00:05:15,640 Industrial over the past week. Now, what you hear about online 120 00:05:15,680 --> 00:05:17,760 are still the people that are hyper bullish on these 121 00:05:17,760 --> 00:05:19,560 companies. They'll never give up no matter 122 00:05:19,560 --> 00:05:22,160 the valuation, no matter what the situation is like. 123 00:05:22,520 --> 00:05:24,640 But underneath the surface, there's a lot of people that are 124 00:05:24,720 --> 00:05:26,040 growing a little bit more cautious. 125 00:05:26,520 --> 00:05:29,680 The data suggests that many individual investors, often the 126 00:05:29,680 --> 00:05:32,880 most enthusiastic fans of the tech firms, have grown more 127 00:05:32,880 --> 00:05:35,160 cautious. They were net sellers of the 128 00:05:35,160 --> 00:05:38,440 stock for the first time in two months during Tuesday's steep 129 00:05:38,440 --> 00:05:40,720 tech declines. It's according to JP Morgan 130 00:05:40,720 --> 00:05:44,880 report, Particularly for firms like Palantir, Google and 131 00:05:44,880 --> 00:05:47,640 Broadcom. Either way, the analysts now say 132 00:05:47,920 --> 00:05:50,640 that conditions are primed for a pullback. 133 00:05:51,040 --> 00:05:55,840 The NASDAQ has climbed some 41% from its April 8th low, lifting 134 00:05:55,840 --> 00:05:58,760 valuations for some of the biggest tech firms to sky high 135 00:05:58,760 --> 00:06:00,960 valuation. At the same time of these sky 136 00:06:00,960 --> 00:06:04,320 high valuations with the NASDAQ companies, there's stubbornly 137 00:06:04,320 --> 00:06:06,880 high inflation readings and deepening cracks in the labor 138 00:06:06,880 --> 00:06:09,400 market. This has left investors jittery 139 00:06:09,400 --> 00:06:12,600 and many expected PAL to sound cautious about cutting rates in 140 00:06:12,600 --> 00:06:15,040 his Friday speech. Then on top of that, we have 141 00:06:15,040 --> 00:06:19,360 these added complications, I'd say added problems, where we had 142 00:06:19,360 --> 00:06:22,040 ChatGPT being talked up to be groundbreaking. 143 00:06:22,280 --> 00:06:25,440 Sam Altman shared the Death Star and things to kind of hype this 144 00:06:25,440 --> 00:06:29,160 product and then it was released and it wasn't that 145 00:06:29,160 --> 00:06:31,520 groundbreaking. It was iteratively better. 146 00:06:31,520 --> 00:06:34,280 It was an improvement, but it was more like going from the 147 00:06:34,280 --> 00:06:38,680 iPhone 13 to the 14 instead of the iPhone 1 to the two. 148 00:06:38,840 --> 00:06:41,960 It was not that big of an iteration going to ChatGPT 5. 149 00:06:42,480 --> 00:06:45,440 So we have what seems like a slow down in the development of 150 00:06:45,600 --> 00:06:47,640 AI. While all these companies in the 151 00:06:47,640 --> 00:06:51,520 QQQ are hitting their all time highs in valuation, we have more 152 00:06:51,520 --> 00:06:55,080 and more data pouring in to show that we could be nearing a peak 153 00:06:55,080 --> 00:06:57,320 here. Open AI Chief Executive Sam 154 00:06:57,320 --> 00:07:01,440 Altman just compared the bubble in AI today to the.com bubble. 155 00:07:02,000 --> 00:07:04,360 Now, he did that while running one of the biggest AI companies 156 00:07:04,360 --> 00:07:06,320 in the world. So obviously he doesn't think 157 00:07:06,320 --> 00:07:08,840 that his company's in a bubble, but he's saying that many of 158 00:07:08,840 --> 00:07:12,360 these smaller tech companies are looking a little bit bubbly, 159 00:07:12,640 --> 00:07:15,280 they're looking a little bit overvalued, and we're getting to 160 00:07:15,280 --> 00:07:17,800 this tipping point here. We also have at the same time, 161 00:07:17,800 --> 00:07:20,480 Meta recently just freezing their AI hiring spree. 162 00:07:21,040 --> 00:07:23,440 So Mark Zuckerberg hit the gas pedal. 163 00:07:23,440 --> 00:07:25,520 He hired a bunch of people, and now he's saying no more, we 164 00:07:25,520 --> 00:07:28,080 don't want any more AI talent. We're going to put an abrupt 165 00:07:28,080 --> 00:07:30,360 pause to that as well. And then at the same time, and 166 00:07:30,360 --> 00:07:33,720 again, this is all news, just in the past week, we also have at 167 00:07:33,720 --> 00:07:38,520 the same time a new MIT study saying that 95% of generative AI 168 00:07:38,520 --> 00:07:42,120 companies are failing. They may be generating AI, but 169 00:07:42,120 --> 00:07:45,040 they're not generating revenue. They're not making any money for 170 00:07:45,040 --> 00:07:46,880 investors. That's another thing that's 171 00:07:46,880 --> 00:07:49,120 caused investors to become a little bit more cautious 172 00:07:49,120 --> 00:07:52,080 overall, as the kids say, there's been a vibe shift. 173 00:07:52,280 --> 00:07:55,080 Things have changed just over the past week, like they often 174 00:07:55,080 --> 00:07:57,600 do in the market. We have all this data of 175 00:07:57,600 --> 00:08:00,840 staggering valuations, lots of people that have made a lot of 176 00:08:00,840 --> 00:08:03,520 money in a short amount of time. There's people now looking to 177 00:08:03,520 --> 00:08:06,440 the future and concerned about Nvidia's earnings and whether or 178 00:08:06,440 --> 00:08:08,480 not they'll guide up and by how much. 179 00:08:08,880 --> 00:08:11,720 We have concerns of devaluation. We have prominent people like 180 00:08:11,720 --> 00:08:13,440 Sam Altman talking about bubbles. 181 00:08:13,920 --> 00:08:16,240 We have different people now starting to take gains and take 182 00:08:16,240 --> 00:08:19,200 money off the table, all happening at the very same time 183 00:08:19,800 --> 00:08:22,320 now. I've been somewhat outspoken 184 00:08:22,360 --> 00:08:24,880 whenever the market gets a little bit feeling like it's 185 00:08:24,880 --> 00:08:27,320 expensive and when it gets feeling like it's cheap. 186 00:08:27,840 --> 00:08:31,480 I made a lot of videos about the Trump tariffs and the panic that 187 00:08:31,480 --> 00:08:33,600 happened in April. I made many. 188 00:08:33,600 --> 00:08:36,360 You can go look at all of them. And in each one of them, I said 189 00:08:36,360 --> 00:08:39,440 I was buying the tariff dip. I was buying it aggressively, 190 00:08:39,799 --> 00:08:41,840 and I did. And even during that time 191 00:08:41,840 --> 00:08:45,560 period, I also posted constantly on X talking about how this is 192 00:08:45,560 --> 00:08:47,840 an opportunity. It looks like the walls are 193 00:08:47,840 --> 00:08:49,360 caving in. It looks like the world's caving 194 00:08:49,360 --> 00:08:51,240 in. No one's bullish at all. 195 00:08:51,320 --> 00:08:53,920 It seemed like the US was retreating from trading with 196 00:08:53,920 --> 00:08:56,040 anyone. We're becoming turtles. 197 00:08:56,120 --> 00:08:58,520 We were offending all of our partners. 198 00:08:58,720 --> 00:09:02,200 It looked very grim for about a month, and then after a month 199 00:09:02,440 --> 00:09:05,720 everything changed. The vibe changed, the sentiment 200 00:09:05,720 --> 00:09:08,880 of investors changed, the market surged, and investors that 201 00:09:08,880 --> 00:09:11,720 bought that dip made a lot of money in a short amount of time. 202 00:09:12,320 --> 00:09:15,160 But now we find ourselves back on the other end of the spectrum 203 00:09:15,160 --> 00:09:18,080 here with the stocks going up so much in just a short amount of 204 00:09:18,080 --> 00:09:22,680 time, going up thirty, 4050% in many cases, it seems like it's 205 00:09:22,680 --> 00:09:24,800 now time to become a little bit more cautious. 206 00:09:24,960 --> 00:09:27,360 So here's my advice with anybody that's getting a little bit 207 00:09:27,360 --> 00:09:30,000 nervous about the valuations of the market or the fact that 208 00:09:30,000 --> 00:09:33,040 there may be a sell off now that we've gone up so much recently. 209 00:09:33,480 --> 00:09:35,600 My advice is that if you're going to look over your 210 00:09:35,600 --> 00:09:38,920 portfolio and look over your holdings and do analysis on them 211 00:09:38,920 --> 00:09:41,920 of what you really want to stay owning and what you're not so 212 00:09:41,920 --> 00:09:44,560 sure about, do that analysis now. 213 00:09:45,120 --> 00:09:47,200 Don't wait. Don't wait till the market's 214 00:09:47,200 --> 00:09:50,040 down 10% and then you're concerned and then you look at 215 00:09:50,040 --> 00:09:52,080 your holdings and decide what you really want to own. 216 00:09:52,600 --> 00:09:56,240 The saying goes, if you're going to panic, panic early, sell your 217 00:09:56,240 --> 00:09:59,200 stocks early while you're getting great bids, while the 218 00:09:59,200 --> 00:10:01,800 valuations are high, while you've made a lot of money. 219 00:10:02,360 --> 00:10:04,800 Don't wait till the offers go down where somebody knocks on 220 00:10:04,800 --> 00:10:08,400 your door and says, hey, I'm going to offer you $50 less than 221 00:10:08,400 --> 00:10:10,840 I was just a a week ago for the same stock. 222 00:10:11,200 --> 00:10:14,240 Don't wait until that happens. Look at your portfolios today 223 00:10:14,280 --> 00:10:17,480 and look at what you want to own today, what you're really going 224 00:10:17,480 --> 00:10:21,680 to stay invested in even if the market falls 1020 or 30%. 225 00:10:22,040 --> 00:10:25,720 When I do that, I do continual analysis on My Portfolio and I 226 00:10:25,720 --> 00:10:28,360 make sure that the companies that I own are ones that I would 227 00:10:28,360 --> 00:10:31,040 still want to own even if they went down in price. 228 00:10:31,520 --> 00:10:34,560 Companies that I wouldn't become discouraged and sad and sell 229 00:10:34,560 --> 00:10:38,080 when they're 20 or 30% lower. O The type of companies that I 230 00:10:38,080 --> 00:10:39,960 like to own are incredibly high quality. 231 00:10:40,200 --> 00:10:42,520 They're ones that I know will eventually recover. 232 00:10:42,960 --> 00:10:45,400 If you don't have that type of conviction in the holdings that 233 00:10:45,400 --> 00:10:48,720 you have, it's time to make adjustments and the time again 234 00:10:48,720 --> 00:10:50,760 to do that is before they drop in price. 235 00:10:50,760 --> 00:10:52,360 Now, I don't want to be mistaken here. 236 00:10:52,360 --> 00:10:54,800 I'm not saying to sell out of your high quality companies. 237 00:10:55,080 --> 00:10:56,800 I'm not selling most of my positions. 238 00:10:56,800 --> 00:10:59,040 The only one that I've really trimmed is Texas Roadhouse. 239 00:10:59,040 --> 00:11:01,240 That's the only company that I've really taken some gains in 240 00:11:01,680 --> 00:11:04,520 and I put that money right back into other compounding machines 241 00:11:04,520 --> 00:11:07,280 that I own. So I did a small, small, but 242 00:11:07,280 --> 00:11:08,760 meaningful trade in My Portfolio. 243 00:11:09,160 --> 00:11:11,880 But overall, I'm keeping My Portfolio relatively the same. 244 00:11:12,240 --> 00:11:14,400 I'm invested in companies for the very long term. 245 00:11:15,080 --> 00:11:17,960 But at the same time, if we rewind to April when the market 246 00:11:17,960 --> 00:11:20,320 was down, when valuations were being crushed, when good 247 00:11:20,320 --> 00:11:23,080 companies were being sold off and investors were scared, that 248 00:11:23,080 --> 00:11:25,960 was a time to be different from the pack and be bold and 249 00:11:25,960 --> 00:11:29,000 assertive and buy companies. And on the flip side of that, 250 00:11:29,000 --> 00:11:31,840 right now, I believe it's time to become a little bit more 251 00:11:31,840 --> 00:11:34,960 cautious, not quite as bold or assertive, but a little bit more 252 00:11:34,960 --> 00:11:37,160 conservative. Still hold great companies, 253 00:11:37,160 --> 00:11:39,600 watch them compound, but I think it's a great time to look at our 254 00:11:39,600 --> 00:11:42,360 portfolios and make sure we have what we really want to be 255 00:11:42,360 --> 00:11:44,120 owning. Now let's go to move on to some 256 00:11:44,120 --> 00:11:45,600 news. Now, the first story we jump 257 00:11:45,600 --> 00:11:48,200 into is one that was a little bit shocking when I first heard 258 00:11:48,200 --> 00:11:50,680 it. the United States government, the actual 259 00:11:50,680 --> 00:11:54,520 government of the United States bought a 10% equity stake in 260 00:11:54,520 --> 00:11:56,720 Intel. Now they didn't necessarily buy 261 00:11:56,720 --> 00:11:59,280 it because they didn't have to pay anything upfront, but there 262 00:11:59,280 --> 00:12:01,000 was a deal, there was an agreement. 263 00:12:01,360 --> 00:12:04,280 And this agreement has led to the government taking a large 264 00:12:04,280 --> 00:12:07,000 stake in a very big company, something that we haven't really 265 00:12:07,000 --> 00:12:10,000 seen in the United States. And even though other countries 266 00:12:10,000 --> 00:12:13,640 have sovereign wealth funds, those in and of themselves, they 267 00:12:13,840 --> 00:12:16,600 operate a little bit differently than how this deal happened. 268 00:12:17,120 --> 00:12:20,160 Now, this deal, again, has lots of mechanics behind it, and 269 00:12:20,160 --> 00:12:22,040 we'll be looking at those mechanics in a bit in the 270 00:12:22,040 --> 00:12:23,880 details. But I first want to go into the 271 00:12:23,880 --> 00:12:26,000 back story of how this deal even happened. 272 00:12:26,160 --> 00:12:28,840 What is the story leading up to the United States government, to 273 00:12:28,840 --> 00:12:31,760 the Trump administration brokering this deal where they 274 00:12:31,760 --> 00:12:35,040 now have a 10% equity stake in Intel stock? 275 00:12:36,120 --> 00:12:40,360 Libu Tan, this is the CEO of Intel was anxiously preparing 276 00:12:40,360 --> 00:12:41,760 for the biggest meeting of his life. 277 00:12:42,080 --> 00:12:45,880 Just five months into his tenure as chief executive of Intel, Tan 278 00:12:45,880 --> 00:12:47,720 was already fighting for his job. 279 00:12:48,040 --> 00:12:51,720 A few days earlier, Donald Trump had demanded that he stepped 280 00:12:51,720 --> 00:12:54,640 down and his past ties of the Chinese military. 281 00:12:55,120 --> 00:12:57,920 So Trump is saying you need to get out of this big U.S. company 282 00:12:58,240 --> 00:13:01,160 because you have passed ties to the Chinese military. 283 00:13:02,120 --> 00:13:05,040 That in and of itself is very threatening from the president. 284 00:13:05,040 --> 00:13:08,920 So when the president's tweeting out that an an individual CEO of 285 00:13:08,920 --> 00:13:12,840 a company needs to step down, like that company's going to be 286 00:13:12,840 --> 00:13:15,240 in a flurry, that's going to cause a massive panic, 287 00:13:15,480 --> 00:13:18,840 especially for one like Intel that is in desperate need of 288 00:13:18,840 --> 00:13:21,120 good leadership. They've already swapped out CEOs 289 00:13:21,120 --> 00:13:23,920 a couple times. The past CEOs have not done a 290 00:13:23,920 --> 00:13:27,840 great job with this company. Now, of course, this tweet or 291 00:13:27,840 --> 00:13:31,160 truth or whatever you want to call it, the demand sent Intel's 292 00:13:31,160 --> 00:13:34,360 leadership into a panic. They immediately contacted the 293 00:13:34,360 --> 00:13:37,720 White House for a meeting, and Tom flew to Washington, huddling 294 00:13:37,720 --> 00:13:40,600 with his advisors for hours on Sunday, August 10th. 295 00:13:40,960 --> 00:13:43,720 His team reassured him that the president would hear him out 296 00:13:43,720 --> 00:13:47,000 because, quote, Trump loves meetings with CE OS, even those 297 00:13:47,000 --> 00:13:49,640 who he has publicly attacked, according to people with 298 00:13:49,640 --> 00:13:52,400 knowledge of the conversations. The next day, Tom met with 299 00:13:52,400 --> 00:13:55,640 Trump, the Commerce Secretary Howard Lutnick and the Treasury 300 00:13:55,640 --> 00:13:58,040 Secretary Scott Besant in the Oval Office. 301 00:13:58,480 --> 00:14:00,480 He sought to convince the president that he wasn't a 302 00:14:00,480 --> 00:14:03,840 Chinese spy and that the US government has a long standing 303 00:14:04,040 --> 00:14:07,280 or long term interest in bolstering Intel, one of the 304 00:14:07,280 --> 00:14:10,720 only homegrown manufacturers of computer chips that power the 305 00:14:10,720 --> 00:14:13,680 modern economy. The CE OS arguments proved 306 00:14:13,760 --> 00:14:16,480 persuasive. The president also took a liking 307 00:14:16,480 --> 00:14:20,680 to Tan, the Malaysian born, Singapore raised U.S. citizen 308 00:14:20,880 --> 00:14:23,480 who once considered a career as a professional baseball player 309 00:14:23,840 --> 00:14:26,840 and backed off in his demands for the CEO to be ousted. 310 00:14:27,360 --> 00:14:31,560 So basically the CEO here, he did the right thing, which is 311 00:14:31,560 --> 00:14:34,640 instead of having an online battle, this tit for tat back 312 00:14:34,640 --> 00:14:37,640 and forth between President Trump and the CEO, That's the 313 00:14:37,640 --> 00:14:40,440 route that you don't want to go. What you want to do with Trump, 314 00:14:40,480 --> 00:14:43,600 I, I just think with his personality is get on a plane 315 00:14:43,600 --> 00:14:47,440 and go meet him in person, give him a, a really solid handshake, 316 00:14:47,760 --> 00:14:50,200 talk about, you know, that you like what he's doing, you want 317 00:14:50,200 --> 00:14:52,320 to invest in the US, you know, that type of thing. 318 00:14:52,680 --> 00:14:55,760 And that's exactly what he did. He talked about how they're one 319 00:14:55,760 --> 00:14:58,360 of the big U.S. companies. They have huge incentive to 320 00:14:58,360 --> 00:15:01,920 invest more into the US. And he got on Trump's good side. 321 00:15:02,080 --> 00:15:04,560 So now Trump is no longer wanting to oust him. 322 00:15:04,840 --> 00:15:07,720 He made friends with Trump by making a visit in person. 323 00:15:07,840 --> 00:15:10,400 Now, that's the story so far. But there's more to this. 324 00:15:10,800 --> 00:15:13,960 The truce came with a cost. In return for Trump's support, 325 00:15:14,280 --> 00:15:17,040 the administration proposed taking an equity stake in the 326 00:15:17,040 --> 00:15:19,400 company. It decided to convert nearly $9 327 00:15:19,400 --> 00:15:23,840 billion in grants promised to Intel as part of the 2022 CHIPS 328 00:15:23,840 --> 00:15:28,280 Act into a 10% equity stake in the company, an unusual 329 00:15:28,280 --> 00:15:30,680 arrangement that makes the government Intel's biggest 330 00:15:30,680 --> 00:15:32,800 shareholder. So they're saying this is under 331 00:15:32,800 --> 00:15:36,600 the CHIPS Act that we now have $9 billion to put into Intel to 332 00:15:36,600 --> 00:15:38,920 become the largest shareholder. Now, that's a bit of background 333 00:15:38,920 --> 00:15:41,920 of how this deal transpired, and you can see that this may raise 334 00:15:41,920 --> 00:15:44,920 some concerns. Why did the US government decide 335 00:15:44,920 --> 00:15:47,760 to take equity out of Intel? What was the specific reasoning 336 00:15:47,760 --> 00:15:50,280 behind it? Was it just for the CEO to 337 00:15:50,280 --> 00:15:53,760 protect his job? Did he exchange job protection 338 00:15:54,080 --> 00:15:56,640 for selling part of Intel or letting this deal transpire? 339 00:15:56,800 --> 00:15:59,680 A lot of these questions remain, but we have a bit more detail on 340 00:15:59,680 --> 00:16:01,920 this from people like Kevin Hassett, who's part of the 341 00:16:01,920 --> 00:16:04,240 administration. He was part of this deal as 342 00:16:04,240 --> 00:16:05,800 well. Let's go ahead and listen to him 343 00:16:05,800 --> 00:16:08,840 being questioned by Andrew Ross Sorkin and some of the responses 344 00:16:08,840 --> 00:16:10,840 he gives. In the past, the federal 345 00:16:10,840 --> 00:16:14,080 government has been giving money away lickety split to companies 346 00:16:14,520 --> 00:16:17,240 and the taxpayers have received nothing in return. 347 00:16:17,440 --> 00:16:20,440 And so now what's happening with with the Intel deal is the CHIPS 348 00:16:20,440 --> 00:16:23,560 act of money is come going out as planned. 349 00:16:23,800 --> 00:16:26,360 But instead of it just going out and disappearing into the ether, 350 00:16:26,440 --> 00:16:28,480 the US taxpayers are getting a little bit of equity. 351 00:16:28,480 --> 00:16:31,200 I can really not see how anyone would think that's a bad thing, 352 00:16:31,400 --> 00:16:33,640 unless you thought that the government was then going to go 353 00:16:33,640 --> 00:16:36,120 in and run the company. But but these are going to be 354 00:16:36,120 --> 00:16:38,880 shares that don't have voting rights the government's going to 355 00:16:38,880 --> 00:16:40,280 stay out of. It So the argument from the 356 00:16:40,280 --> 00:16:42,920 administration and people like Kevin Hassett is that the US 357 00:16:42,920 --> 00:16:45,320 government is done being the Piggy Bank for all these big 358 00:16:45,320 --> 00:16:48,640 companies and instead of just handing out money with asking 359 00:16:48,640 --> 00:16:51,760 for nothing in return, they're now going to take equity stakes 360 00:16:52,040 --> 00:16:54,000 in these companies that want this money. 361 00:16:54,120 --> 00:16:56,880 That's what their argument is. But I think it's a rather weak 362 00:16:56,880 --> 00:16:59,360 argument. First of all, the history of the 363 00:16:59,440 --> 00:17:02,960 US government, when it hands out money to large corporations is 364 00:17:02,960 --> 00:17:05,599 almost always to get that money back through loans. 365 00:17:05,640 --> 00:17:06,880 That's what happened with the banks. 366 00:17:07,319 --> 00:17:09,760 Remember when the banks got bailed out by the US government, 367 00:17:10,079 --> 00:17:12,359 it looked really bad because the US government was giving them, 368 00:17:12,480 --> 00:17:15,240 it was giving them a get out of jail free card, which a lot of 369 00:17:15,240 --> 00:17:17,280 people didn't like. But if you look at the details 370 00:17:17,280 --> 00:17:19,960 of those deals that the US government made with their 371 00:17:19,960 --> 00:17:22,839 infusement of money in those banks, all of them have paid 372 00:17:22,839 --> 00:17:24,680 back the government with interest. 373 00:17:25,079 --> 00:17:27,760 In fact, in terms of loans, those were great loans being 374 00:17:27,760 --> 00:17:31,000 paid back to the taxpayer. So there's many cases where the 375 00:17:31,000 --> 00:17:34,280 US government has lent out money to private companies or 376 00:17:34,280 --> 00:17:36,480 different companies that are really important, but they've 377 00:17:36,480 --> 00:17:38,840 gotten paid back and the taxpayer has been made whole. 378 00:17:39,360 --> 00:17:41,480 And there's no reason why they couldn't do that in this 379 00:17:41,480 --> 00:17:44,080 situation as well. The problems with taking an 380 00:17:44,080 --> 00:17:47,360 equity stake in a company, the problems with the US government 381 00:17:47,360 --> 00:17:51,320 or the Trump administration making this investment is that 382 00:17:51,320 --> 00:17:56,880 now Trump is aligned with Intel. He has personal vested interest 383 00:17:56,880 --> 00:17:59,280 in Intel succeeding. Think about this. 384 00:17:59,320 --> 00:18:03,120 If Trump buys a $9 billion stake with the taxpayer dollar in 385 00:18:03,120 --> 00:18:07,000 Intel, and then the stock price starts to trend downward and it 386 00:18:07,000 --> 00:18:10,240 goes down and down and down, and then there's news articles 387 00:18:10,240 --> 00:18:12,320 saying that Trump made a bad investment. 388 00:18:12,720 --> 00:18:14,960 He's losing taxpayer money in Intel stock. 389 00:18:15,480 --> 00:18:18,120 What can Trump do to try to bolster that investment? 390 00:18:18,120 --> 00:18:21,120 He could do executive orders or different laws to benefit them. 391 00:18:21,440 --> 00:18:23,560 He can make it so that they have more favorable treatment with 392 00:18:23,560 --> 00:18:26,560 tariffs than other competitors. He could do a lot of things to 393 00:18:26,560 --> 00:18:30,200 bolster Intel stock to make his investment in the company look 394 00:18:30,200 --> 00:18:34,000 better because now he has his reputation attached specifically 395 00:18:34,280 --> 00:18:37,240 to that company. And it also extends further from 396 00:18:37,240 --> 00:18:39,520 there. Now that the US government is 397 00:18:39,520 --> 00:18:43,600 invested directly into Intel by owning a huge portion of the 398 00:18:43,600 --> 00:18:45,120 stock, being the biggest shareholder. 399 00:18:45,560 --> 00:18:49,000 It also shows competitors to Intel that the US government is 400 00:18:49,000 --> 00:18:51,600 vested in this company. There could be the case where 401 00:18:51,680 --> 00:18:54,240 other competitors that wanted to do business in the United 402 00:18:54,240 --> 00:18:58,000 States, that wanted to build manufacturing plants here now 403 00:18:58,000 --> 00:19:00,440 view it as more unfavorable because they have a bigger 404 00:19:00,440 --> 00:19:03,720 competitor, which is a government backed Intel. 405 00:19:04,280 --> 00:19:07,360 So there's lots of 2nd and 3rd order effects to this. 406 00:19:07,360 --> 00:19:09,400 I think there's a lot of things that could be unexpected 407 00:19:09,400 --> 00:19:12,200 consequences, as well as the fact that I believe that this is 408 00:19:12,200 --> 00:19:15,040 a massive slippery slope. Some people refer to the 409 00:19:15,040 --> 00:19:17,360 slippery slope argument as a logical fallacy. 410 00:19:17,640 --> 00:19:20,160 It is not. The slippery slope argument is 411 00:19:20,160 --> 00:19:22,880 real when the government steps its foot into one part of 1 412 00:19:22,880 --> 00:19:25,800 industry, like it is taking a direct equity stake in a company 413 00:19:25,800 --> 00:19:28,280 like this. If it becomes acceptable and 414 00:19:28,280 --> 00:19:31,680 normal, we could see a lot more of this going on, different 415 00:19:31,680 --> 00:19:34,800 excuses, different reasons for the government to be buying more 416 00:19:34,800 --> 00:19:37,840 and more private companies, which could transition this from 417 00:19:37,840 --> 00:19:41,400 less of a free market capitalist system where the government has 418 00:19:41,400 --> 00:19:44,440 vested interest in certain companies succeeding over their 419 00:19:44,440 --> 00:19:46,680 competitors. And overall, my reaction to this 420 00:19:46,680 --> 00:19:49,720 deal is I'm very concerned that this will be a slippery slope 421 00:19:49,720 --> 00:19:52,920 situation that we're going to see more and more deal making, 422 00:19:52,920 --> 00:19:55,880 more and more of the government taking equity stakes and less of 423 00:19:55,880 --> 00:19:58,760 free market capitalism. I hope that's not the case. 424 00:19:58,760 --> 00:20:02,160 I hope that this is a complete one off situation that it's not 425 00:20:02,160 --> 00:20:05,160 repeated on a broader scale, but we'll have to wait and see. 426 00:20:05,280 --> 00:20:08,080 Now moving on, we get to an AI company that continues to win. 427 00:20:08,080 --> 00:20:10,600 In fact, this is one that I talk about frequently, but it 428 00:20:10,600 --> 00:20:13,080 continues to surge up into all time highs. 429 00:20:13,640 --> 00:20:16,320 And this is a situation where even with Google, some investors 430 00:20:16,320 --> 00:20:18,760 could become potentially concerned that this stock is 431 00:20:18,760 --> 00:20:22,200 getting a little expensive because it's now at $210.00 per 432 00:20:22,200 --> 00:20:24,000 share. And again, if we zoom out here, 433 00:20:24,000 --> 00:20:26,480 if we look at the chart over time, let's take a look at the 434 00:20:26,480 --> 00:20:29,640 price chart, we can go back five years or 10 years. 435 00:20:29,920 --> 00:20:31,960 This is an all time high for Google. 436 00:20:32,440 --> 00:20:35,240 So we did it. This one is a real winner. 437 00:20:35,280 --> 00:20:36,880 We are winning with Google stock. 438 00:20:37,000 --> 00:20:39,480 I'm really glad to see that Google stock is doing so well, 439 00:20:39,560 --> 00:20:42,000 not only because it's a big holding of mine, it's in both of 440 00:20:42,000 --> 00:20:45,000 my portfolios, but also because it's a company that many 441 00:20:45,000 --> 00:20:47,440 investors own. I can see the analytics on 442 00:20:47,440 --> 00:20:49,360 Qualtrim. I can see which stocks are the 443 00:20:49,360 --> 00:20:51,880 most searched, which ones do people have in the most watch 444 00:20:51,880 --> 00:20:54,320 list, Which ones do people have in their portfolios. 445 00:20:54,680 --> 00:20:57,360 And Google is one of the most heavily owned and tracked stocks 446 00:20:57,360 --> 00:20:59,520 in the market by retail investors. 447 00:20:59,800 --> 00:21:01,200 And I love that it's doing so well. 448 00:21:01,320 --> 00:21:03,480 And I have reason to believe that Google's just going to keep 449 00:21:03,480 --> 00:21:05,120 doing better and better and better. 450 00:21:05,680 --> 00:21:08,880 We have here that Google's AI mode is expanding globally, and 451 00:21:08,880 --> 00:21:12,960 it adds a new agentic feature. Users can now use the AI mode to 452 00:21:12,960 --> 00:21:16,000 find restaurant reservations, and in the future they'll be 453 00:21:16,000 --> 00:21:18,960 able to find local service appointments and event tickets. 454 00:21:19,320 --> 00:21:22,680 Users can request dinner reservations based on multiple 455 00:21:22,680 --> 00:21:26,920 preferences such as party size, date, time, location and 456 00:21:26,920 --> 00:21:30,160 preferred cuisine. AI Mode will then research or 457 00:21:30,160 --> 00:21:32,880 will search across different reservation platforms to find 458 00:21:32,920 --> 00:21:35,560 real time availability for restaurants that match the 459 00:21:35,560 --> 00:21:38,520 inquiry. It then surfaces A curated list 460 00:21:38,560 --> 00:21:41,280 of options to choose from. This new capabilities rolling 461 00:21:41,280 --> 00:21:44,080 out to the premium users already and they have a little bit of a 462 00:21:44,080 --> 00:21:46,600 mock up of the user interface. So basically if you want to find 463 00:21:46,600 --> 00:21:49,040 a reservation at a restaurant, you're now able to do it 464 00:21:49,040 --> 00:21:51,760 directly through AI Mode and it will have a different interface 465 00:21:51,760 --> 00:21:53,280 that shows you it Just like this. 466 00:21:53,280 --> 00:21:56,160 They say that the AI Mode will now see search results as 467 00:21:56,160 --> 00:21:58,520 tailored to their individual preferences and interest. 468 00:21:58,600 --> 00:22:01,440 For example, if someone searches I only have an hour, need a 469 00:22:01,440 --> 00:22:03,400 quick lunch spot. Any suggestions? 470 00:22:03,760 --> 00:22:07,080 AI mode will use their past conversations, along with places 471 00:22:07,080 --> 00:22:10,280 they've researched or clicked in the search of maps to offer more 472 00:22:10,280 --> 00:22:13,720 relevant suggestions. So if the AI mode infers that 473 00:22:13,720 --> 00:22:17,080 you like Italian food and places without outdoor seating, you'll 474 00:22:17,080 --> 00:22:20,200 get results suggesting options with those preferences. 475 00:22:20,840 --> 00:22:23,640 So here's Google leveraging all the data that they already have, 476 00:22:23,960 --> 00:22:26,200 the maps, you know, they'll leverage your Gmail, they'll 477 00:22:26,200 --> 00:22:27,840 they'll probably leverage everything that they use in 478 00:22:27,840 --> 00:22:31,600 their ecosystem to better inform and better help out with 479 00:22:31,600 --> 00:22:34,600 suggestions with your searches. Now with Google, it seems like 480 00:22:34,600 --> 00:22:37,160 there's nothing that can stop this company at this point. 481 00:22:37,200 --> 00:22:40,160 It will continue to just compound, take more market share 482 00:22:40,440 --> 00:22:43,320 and dominate with its continual incredibly strong earnings 483 00:22:43,320 --> 00:22:45,960 reports. Mark Mahaney also remains 484 00:22:45,960 --> 00:22:48,760 bullish on this company. It's still his top pick in large 485 00:22:48,760 --> 00:22:51,760 tech, and he says that Google is now in the lead in multiple 486 00:22:51,760 --> 00:22:54,520 categories. Google is running the race. 487 00:22:54,520 --> 00:22:57,480 It's in the leadership position or one of the leaders in AI. 488 00:22:57,480 --> 00:23:01,200 And I think a couple of months ago at 160 when the stock was 489 00:23:01,200 --> 00:23:03,280 down there, I think they were real fears that it was going to 490 00:23:03,280 --> 00:23:05,440 be left behind. But no, look, with Gemini, I 491 00:23:05,440 --> 00:23:08,320 think they've got one of the best large language models out 492 00:23:08,320 --> 00:23:09,120 there. They've obviously got a 493 00:23:09,160 --> 00:23:12,400 wonderful distribution platform in Google, the most widely used 494 00:23:12,560 --> 00:23:16,120 Internet asset out there. And then we've also got coming 495 00:23:16,120 --> 00:23:19,080 up this week, almost certainly judge's decision in the 496 00:23:19,920 --> 00:23:22,920 antitrust monopoly case. We hope that it's going to be a 497 00:23:22,920 --> 00:23:25,000 clearing event. It's very hard to handicap the 498 00:23:25,000 --> 00:23:27,240 the outcome of the event. But at the end, if you look at 499 00:23:27,240 --> 00:23:30,120 all of the AI companies that are out there, this is the cheapest 500 00:23:30,120 --> 00:23:32,120 1. I mean, it's AIDS at the direct 501 00:23:32,320 --> 00:23:34,440 AI companies. This trades at 19 times earnings 502 00:23:34,800 --> 00:23:37,000 and I think there's still material upside. 503 00:23:37,000 --> 00:23:39,960 That's why we like the stock. He mentions that there's still a 504 00:23:39,960 --> 00:23:42,760 clearing event with the judge's ruling that's going to happen 505 00:23:42,760 --> 00:23:45,360 sometime this week. So that is imminent. 506 00:23:45,360 --> 00:23:48,000 And we'll see whether or not the judge takes the extreme stance 507 00:23:48,360 --> 00:23:51,200 of forcing Google to sell off Chrome, which will lead to more 508 00:23:51,200 --> 00:23:54,640 uncertainty, more appeals, years long of Google having that way 509 00:23:54,640 --> 00:23:57,000 over their head or whether or not they come up with a better, 510 00:23:57,000 --> 00:23:59,360 less extreme remedy for the situation. 511 00:23:59,440 --> 00:24:02,040 But either way, Mark Mahaney still believes that Google stock 512 00:24:02,040 --> 00:24:04,400 is undervalued and so do I. Now, when we get into a 513 00:24:04,400 --> 00:24:06,480 discussion question about valuation, it's important to 514 00:24:06,480 --> 00:24:09,000 note that even though a company has gone through really good 515 00:24:09,000 --> 00:24:12,280 performance, even though it's reaching all time highs, that 516 00:24:12,280 --> 00:24:14,760 does not mean that it's getting expensive or that it's 517 00:24:14,760 --> 00:24:17,080 overvalued. When we look at Google, we can 518 00:24:17,080 --> 00:24:19,280 just take a look at the DCF calculator. 519 00:24:19,760 --> 00:24:22,840 Now this is a tool in Qualtrim where you can make some simple 520 00:24:22,840 --> 00:24:25,800 assumptions about a company, both their multiple and their 521 00:24:25,800 --> 00:24:27,640 growth rate. And from those two metrics 522 00:24:27,640 --> 00:24:30,080 alone, you can determine what your rate of return is going to 523 00:24:30,080 --> 00:24:32,640 be owning this company. If we look at Google, for 524 00:24:32,640 --> 00:24:35,560 example, the current PE ratio is 22. 525 00:24:35,880 --> 00:24:39,280 We have earnings per share growth of 19.4%. 526 00:24:39,800 --> 00:24:41,520 So fast earnings per share growth. 527 00:24:41,800 --> 00:24:43,440 And we can make a couple assumptions here. 528 00:24:43,880 --> 00:24:46,480 For example, if we assume that the earnings per share growth is 529 00:24:46,480 --> 00:24:50,200 going to moderate over time over the next five years, it's going 530 00:24:50,200 --> 00:24:53,160 to grow at 15% that the appropriate earnings per share 531 00:24:53,160 --> 00:24:56,400 multiple is a 25. That would make it so that we 532 00:24:56,400 --> 00:25:01,360 have a 16 percent, 16 1/2 percent return per year every 533 00:25:01,360 --> 00:25:04,080 year for the next 5 years. Now we also have our desired 534 00:25:04,080 --> 00:25:07,920 return based on these assumptions, the 25 multiple, 535 00:25:07,920 --> 00:25:11,360 the 15% earnings per share growth rate and a desired return 536 00:25:11,360 --> 00:25:14,960 of 15% per year, which I believe is a good benchmark that will 537 00:25:14,960 --> 00:25:17,520 likely beat out the S&P 500 in the QQQ. 538 00:25:18,080 --> 00:25:22,800 We could still buy Google up until $224 per share and get 539 00:25:22,800 --> 00:25:26,160 that 15% return. So right now we're getting a 16 540 00:25:26,160 --> 00:25:27,920 1/2. We can continue to buy the stock 541 00:25:27,920 --> 00:25:30,320 until it's 224. And with these assumptions, 542 00:25:30,320 --> 00:25:31,720 we'll still outperform the market. 543 00:25:31,760 --> 00:25:34,120 Now, even if we moderate these assumptions, let's say that 544 00:25:34,120 --> 00:25:36,720 Google doesn't grow quite as fast, that the earnings per 545 00:25:36,720 --> 00:25:40,680 share growth rate goes to 13% and the multiple moderates at 546 00:25:40,680 --> 00:25:44,440 around 22. That still gives us a 12% 547 00:25:44,440 --> 00:25:48,200 annualized return. That's a really strong return 548 00:25:48,640 --> 00:25:51,240 that's still likely to outperform the S&P 500, but 549 00:25:51,400 --> 00:25:54,560 it'll probably come in in line or a little bit above the QQQ. 550 00:25:55,200 --> 00:25:58,720 So even with more moderate, more conservative assumptions, we're 551 00:25:58,720 --> 00:26:00,520 still outperforming at this point. 552 00:26:00,520 --> 00:26:03,400 But I have no good argument, no reason to believe that Google 553 00:26:03,400 --> 00:26:06,440 deserves a 22 PE ratio. And that's why Google stock 554 00:26:06,440 --> 00:26:08,960 today remains undervalued. Now Speaking of stocks that are 555 00:26:08,960 --> 00:26:11,720 doing well, we have Netflix. This company is up a little bit 556 00:26:11,720 --> 00:26:13,400 today. It's outperforming market on the 557 00:26:13,400 --> 00:26:15,240 day. And we look at it this year, 558 00:26:15,440 --> 00:26:17,720 it's up big this year, 38% gains. 559 00:26:18,120 --> 00:26:21,720 It's leveled out around the 12112 fifty mark. 560 00:26:22,000 --> 00:26:24,560 So it's not at all time highs, but it's but it's been trading 561 00:26:24,560 --> 00:26:26,360 around this range. It's found a little bit of 562 00:26:26,360 --> 00:26:28,680 support around this range. But I believe there's a good 563 00:26:28,680 --> 00:26:31,640 chance for Netflix to gain the remainder of this year. 564 00:26:31,920 --> 00:26:33,680 And it remains one of my biggest positions. 565 00:26:34,080 --> 00:26:37,400 When we look at the reason why one of the concerns of Netflix, 566 00:26:37,400 --> 00:26:40,080 in fact, I would say it's one of the only concerns about this 567 00:26:40,080 --> 00:26:44,000 company is total market share. The market share for Netflix is 568 00:26:44,000 --> 00:26:48,240 held roughly steady with slight gains year over year, but 569 00:26:48,240 --> 00:26:51,600 YouTube is far outpacing it and watch time and market share gain 570 00:26:51,880 --> 00:26:54,760 even though Netflix is growing. But Netflix is showing signs 571 00:26:54,760 --> 00:26:57,640 that it's getting a lot more engagement recently, especially 572 00:26:57,640 --> 00:27:00,080 with this new hit called K Pop Demon Hunters. 573 00:27:00,480 --> 00:27:03,920 It's a very interesting movie. It's it's all singing, it's 574 00:27:03,920 --> 00:27:05,720 animated. It's mostly targeted towards 575 00:27:05,720 --> 00:27:07,040 kids. If you have kids, they're 576 00:27:07,040 --> 00:27:08,720 probably playing this one on repeat. 577 00:27:09,040 --> 00:27:12,040 The numbers of how much this movie has been seen is 578 00:27:12,040 --> 00:27:13,880 staggering. If we want to compare this to 579 00:27:13,880 --> 00:27:17,160 other huge movies on Netflix, we can take a look at the chart 580 00:27:17,160 --> 00:27:18,400 here. We have the dark line there. 581 00:27:18,400 --> 00:27:21,560 That's K Pop Demon Hunters, which had a very slow starting 582 00:27:21,560 --> 00:27:22,760 week. You can see that it barely 583 00:27:22,760 --> 00:27:24,320 bumped up. It was beat by all these other 584 00:27:24,320 --> 00:27:27,520 premieres, but then it just seems like it it caught hold. 585 00:27:28,240 --> 00:27:30,840 All all the kids, all these people started watching it over 586 00:27:30,840 --> 00:27:34,680 and over again and it's just steadily surpassing every other 587 00:27:34,680 --> 00:27:38,120 movie with no end insight. Look at the growth of this. 588 00:27:38,120 --> 00:27:39,760 We have Carry On. We have Red Notice. 589 00:27:39,760 --> 00:27:41,920 We have Don't Look Up. These are huge movies. 590 00:27:41,920 --> 00:27:44,080 One of them has Leonardo DiCaprio, right? 591 00:27:44,080 --> 00:27:47,640 These are big Netflix originals and all of them went up fast, 592 00:27:47,640 --> 00:27:49,000 but then they started to plateau. 593 00:27:49,280 --> 00:27:52,520 The one that continued up for the longest was Red Notice, big 594 00:27:52,520 --> 00:27:54,800 general action movie with a lot of big stars in it. 595 00:27:55,000 --> 00:27:57,600 In fact, I think it's almost a certainty at this point that K 596 00:27:57,600 --> 00:28:00,160 Pop Demon Hunters is going to crush all of these. 597 00:28:00,280 --> 00:28:03,520 Now, Netflix being the savvy company that they are, they 598 00:28:03,520 --> 00:28:05,680 actually bought this property from Sony. 599 00:28:05,880 --> 00:28:08,760 So Sony produced it. Netflix said, well, we'll take 600 00:28:08,760 --> 00:28:10,880 that, we'll buy it from you. They used their massive 601 00:28:10,880 --> 00:28:13,960 distribution like they've done before, many times repeatedly to 602 00:28:13,960 --> 00:28:16,400 make it a massive hit, the number one hit. 603 00:28:16,800 --> 00:28:19,240 And now that they have it as a massive hit on their streaming 604 00:28:19,240 --> 00:28:23,200 service, they also just showed it in a very limited way in the 605 00:28:23,200 --> 00:28:26,280 box office over a weekend. K Pop Demon Hunters LED all 606 00:28:26,280 --> 00:28:29,520 films over the weekend with 16 to $18 million in ticket sales. 607 00:28:29,640 --> 00:28:32,880 Now, keep in mind, they made this much money, $18 million in 608 00:28:32,880 --> 00:28:35,680 box office sales without even going into AMC. 609 00:28:35,720 --> 00:28:38,240 So AMC did not do this limited screening. 610 00:28:38,280 --> 00:28:41,200 I think this just shows the ability for Netflix to pull a 611 00:28:41,200 --> 00:28:44,040 rabbit out of their hat. Every single year, every 612 00:28:44,040 --> 00:28:46,440 quarter, there's some big phenomenon that comes completely 613 00:28:46,440 --> 00:28:50,280 out of left field with this one. It's literally a movie about 614 00:28:50,280 --> 00:28:55,040 this K pop superstar trio who doubled as demon hunters. 615 00:28:55,520 --> 00:28:59,320 Now the members of this trio, they're like the good guys in it 616 00:28:59,360 --> 00:29:02,800 and they must protect their fans and faced their biggest enemy 617 00:29:02,840 --> 00:29:05,960 yet, a rival boy band made-up of demons in disguise. 618 00:29:06,120 --> 00:29:08,160 And that right there, of course, is the biggest movie of the 619 00:29:08,160 --> 00:29:11,000 year, one that's going to have the most watch time almost by 620 00:29:11,000 --> 00:29:12,960 far. And it's one that nobody could 621 00:29:12,960 --> 00:29:14,560 have predicted. Now moving on, we get to an 622 00:29:14,560 --> 00:29:16,600 interview with Dara, the CEO of Uber. 623 00:29:16,640 --> 00:29:19,920 He goes ahead and he shares his thoughts on the safety concerns 624 00:29:19,920 --> 00:29:23,080 and the technology currently. I think in the near term is 625 00:29:23,080 --> 00:29:27,000 going to be very difficult and Elon would tell me I'm wrong and 626 00:29:27,160 --> 00:29:29,680 never bet against him. But it's my instinct that in the 627 00:29:29,680 --> 00:29:33,240 near term it's going to be very difficult to build a camera only 628 00:29:33,240 --> 00:29:36,760 product that has superhuman levels of safety. 629 00:29:36,960 --> 00:29:40,040 And again, now at some point will it be possible? 630 00:29:41,080 --> 00:29:45,480 Quite possibly, yes. But if you can have 631 00:29:46,560 --> 00:29:50,840 instrumentation that includes cameras and Lidar and the cost 632 00:29:50,840 --> 00:29:56,720 of LIDAR, you know, solid-state Lidar now is 405 hundred bucks, 633 00:29:57,160 --> 00:30:02,240 why not include LIDAR as well in order to achieve superhuman 634 00:30:02,240 --> 00:30:05,480 safety? So possible, yeah, it will be 635 00:30:05,480 --> 00:30:09,200 possible. I don't know when, but is the 636 00:30:09,200 --> 00:30:12,880 possible the better product? I'm not sure I would. 637 00:30:12,920 --> 00:30:17,440 I All of our partners that we're working with now are using a 638 00:30:17,440 --> 00:30:22,520 combination of camera, radar and LIDAR and you know, I personally 639 00:30:22,520 --> 00:30:24,200 think that's, that's the right solution. 640 00:30:24,440 --> 00:30:27,440 Dara clearly believes that the better route to go here is with 641 00:30:27,440 --> 00:30:29,720 Lidar. He even addresses the argument 642 00:30:29,720 --> 00:30:32,600 that it's not scalable or it's too expensive by saying that 643 00:30:32,600 --> 00:30:36,240 solid-state LIDAR is now about 500 bucks, so why not add it 644 00:30:36,240 --> 00:30:39,520 when it is proven to show superhuman levels of safety. 645 00:30:40,160 --> 00:30:42,520 And in fact, you have more data to work with. 646 00:30:42,520 --> 00:30:47,360 You have multi model data, you have Lidar, radar and camera, 647 00:30:47,560 --> 00:30:50,040 which if you synthesize that data together, it creates a more 648 00:30:50,040 --> 00:30:52,360 clear data set. Even the people that have worked 649 00:30:52,360 --> 00:30:55,920 on the robotaxi at Tesla said that there is a margin between 650 00:30:55,920 --> 00:30:58,480 the data set that you get. In fact, when Tesla decided to 651 00:30:58,480 --> 00:31:01,160 remove the sensors out of their vehicles, that's when they 652 00:31:01,160 --> 00:31:03,920 started to have the phantom breaking issue where the car 653 00:31:03,920 --> 00:31:06,880 will randomly break if it sees a shadow wrong and interprets it 654 00:31:06,880 --> 00:31:09,160 as an object. That's a problem that still 655 00:31:09,160 --> 00:31:11,120 happens to this day. So I think it's going to be more 656 00:31:11,120 --> 00:31:13,160 challenging for Tesla. We'll see if they do it over 657 00:31:13,160 --> 00:31:15,680 time, but Uber is probably OK either way. 658 00:31:15,800 --> 00:31:18,200 Now finally, we get to the most important segment of the day, 659 00:31:18,200 --> 00:31:21,280 which is the financial TikTok reaction. 660 00:31:21,600 --> 00:31:24,680 This individual here has a plan of solving America's debt. 661 00:31:25,000 --> 00:31:29,160 We have $37 trillion in debt. We're gaining like another 662 00:31:29,160 --> 00:31:31,280 trillion dollars every every year. 663 00:31:31,280 --> 00:31:32,760 It's just an incredible amount of debt. 664 00:31:33,320 --> 00:31:36,520 So I'm happy to see that this this individual is is he's going 665 00:31:36,520 --> 00:31:38,200 to solve it. He has a plan to solve it. 666 00:31:38,400 --> 00:31:39,760 Let's go ahead and listen to his plan. 667 00:31:39,920 --> 00:31:43,840 No, America is $1 trillion in debt, but I know how we could 668 00:31:43,840 --> 00:31:46,880 solve this. Let me take the debt, bro. 669 00:31:47,560 --> 00:31:50,640 Someone has to do it. Someone has to step up and be a 670 00:31:50,640 --> 00:31:52,280 freaking trillion dollars in debt. 671 00:31:52,640 --> 00:31:55,440 And I'm not afraid to be that guy, All right? 672 00:31:55,760 --> 00:31:58,320 I'll be the one that's freaking in a trillion dollars of debt 673 00:31:58,320 --> 00:32:00,440 because you know what I'm saying? 674 00:32:00,440 --> 00:32:04,000 Who's that he? He, this is his plan. 675 00:32:04,000 --> 00:32:06,160 He's going to, he's going to take the debt for us. 676 00:32:06,440 --> 00:32:10,320 That's really kind. I think he's really, you know, 677 00:32:10,320 --> 00:32:11,960 that's a lot of debt. Some people complain about 678 00:32:11,960 --> 00:32:13,920 having like twenty, $30,000 of debt. 679 00:32:14,280 --> 00:32:16,160 They might have a mortgage payment or a car loan. 680 00:32:16,560 --> 00:32:19,400 Imagine having $37 trillion of debt. 681 00:32:19,400 --> 00:32:21,960 That'd be so tough. Like imagine those interest 682 00:32:21,960 --> 00:32:24,000 payments. You have to pay $700 billion in 683 00:32:24,000 --> 00:32:26,200 interest per year. That's a lot. 684 00:32:26,920 --> 00:32:29,040 I think that would that would weigh down on me. 685 00:32:29,120 --> 00:32:32,520 Like I even with a higher income than average, I still think I'd 686 00:32:32,520 --> 00:32:35,360 have trouble paying off $37 trillion of debt. 687 00:32:35,360 --> 00:32:38,280 So that's really kind of him to to take this on. 688 00:32:38,400 --> 00:32:41,520 I think he continues on here explaining how he's willing to 689 00:32:41,520 --> 00:32:44,120 be this sacrificial lamb. Then in debt too. 690 00:32:44,920 --> 00:32:46,760 Who's the one that's going to pay this debt? 691 00:32:47,440 --> 00:32:49,480 This debt doesn't even really exist. 692 00:32:50,200 --> 00:32:53,160 Let me be the one to have this debt bro 'cause then I could say 693 00:32:53,320 --> 00:32:56,480 I'm a trillion dollars in debt. I'm a trillionaire, you know 694 00:32:56,480 --> 00:32:57,960 what I'm saying? That would make me a real 695 00:32:57,960 --> 00:33:02,080 trillionaire. He may have a a misunderstanding 696 00:33:02,080 --> 00:33:03,760 of what it means to be a trillionaire. 697 00:33:03,880 --> 00:33:06,600 He also mentions that he doesn't believe the debt is even real. 698 00:33:07,080 --> 00:33:09,520 That's the point that we've gotten into in society. 699 00:33:09,520 --> 00:33:11,640 The debt's so much. It's not even a real number. 700 00:33:11,680 --> 00:33:13,880 Like we're you know, who even owns this debt? 701 00:33:13,880 --> 00:33:15,160 Who do we have to pay back with it? 702 00:33:15,720 --> 00:33:18,480 Is it even real? But either way, in TikTok, we 703 00:33:18,480 --> 00:33:20,880 only get the finest and this is another example. 704 00:33:21,280 --> 00:33:23,560 He's willing to take on all the step for us and solve this 705 00:33:23,560 --> 00:33:26,560 problem once and for all. And for that, I commend him. 706 00:33:26,560 --> 00:33:28,040 Now that's going to be it for this episode. 707 00:33:28,320 --> 00:33:29,960 Hope you enjoyed seeing the next one.