Okay, finally, there's a lot of news this week.
I wanted to wait until the end of the week to record an episode
because I know there's going to be all this news.
But here we are. The first item is at Apple
crushed their earnings expectations.
Tim. Apple did it again?
They crushed expectations. This was exciting for me in
particular because I have a huge amount of my portfolio in apple.
I've been talking about the stock.
I've been saying that I think it's undervalued even at a
market cap of one point seven trillion dollars.
I still think the company is undervalued.
So that's hard for a lot of But a grasp, how can a company worth
that much money be undervalued? I'll be talking more about Apple
later. We also have news that they're
going to be doing a four-to-one stock split.
So I'll go over that. Give my thoughts on it.
We have some less positive news, but I still think it's okay.
We have news that u.s. GDP plunge 33 percent and the
second quarter. So as an economy gross domestic
product is is the metric that we use to say.
Hey, this is how much economic activity?
The country has that went down about 33. % not the best news
but we did be expectations. It was 35% and it went down 33
percent. So this isn't great news, but it
was largely factored in already. The second quarter was going to
be bad. We should see a strong Rebound
in the third quarter. So we'll look at that.
And then we have what I'm most excited to talk about which was
this house Judiciary Committee hearing the four biggest CEOs in
the country. We got Jeff Bezos.
Tim Cook Mark, Zuckerberg and Sundar pichai going before
Congress. Answer their questions about
antitrust. Congress is trying to paint the
picture that these companies are monopolies that they don't have
competition and that they need to be scaled down.
They need to be broken up and then you have stiff regulations
on them. They're trying to say, we have a
tremendous amount of competition.
There's a whole great world out there.
There's Chinese companies that compete with us and there's lots
of companies within the u.s. It competes with us.
Now, of course, Congress did what they do, best it, the
typical thing. What Congress does is none of
them really have employed. D.
None of them have ran companies and what they're going to do is
explain to Jeff Bezos, how he should run his company and how
to create wealth. You're going to see people that
are lawyers that their best skill is arguing amongst each
other. You're going to see them.
Lecture people like Jeff Bezos and Mark Zuckerberg on creating
jobs and creating wealth and competing and that's what
Congress does. So this is a clear dichotomy
with this hearing you see the difference between the biggest
Business Leaders in the world. Politicians.
And what becomes clear is that these politicians Congress?
They have no clue of what they're even expected to
regulate. They don't know how these
companies make money, how they grow and expand, and what their
risks are. They don't know what their
competition is. And that becomes very clear.
So you're seeing a body of government, all of Congress that
has no clue on the thing that they're supposed to regulate.
And you can see that very clearly in these clips.
So we're going to take a deep dive into this.
We're also going to, of course, do a portfolio update and get to
questions and emails as well. So this should be a pretty fun
episode. So, let's first jump into this
hearing. This is the chairman over the
committee. He's the one that's going to
give an introduction to why they're meeting with the CEOs.
And basically he's laying out the case that these companies
are too big, too restrictive that they need to be regulated
by the government. Now, this is what I think is one
of the most significant risks to these big companies.
If you're an investor in Google, or Apple or Facebook, or Amazon,
one of the biggest risks to your investment is government.
Intervention is government. Elation.
So if he launches really effective attacks into these
companies, it could be devastating.
If Congress can get people on their side that these companies
need to be regulated. That could be a significant risk
to your investment. So I'll go ahead and watch and
play this clip. And keep in mind when you're
watching this or anybody from Congress, like the chairman
here. He's a lawyer which is over half
of Congress. He has worked in government
about 25 years. Basically, his entire adult
life. He's never started a company.
Never employed any Buddy, but he's going to make a breakdown
of how bad these companies are. So let's go ahead and hear this
from the chairman as Gatekeepers in the digital economy.
These platforms. Enjoy the power to pick winners
and losers to shake down small businesses and enrich
themselves. While choking off competitors,
their ability to dictate terms, call the shots up and entire
sectors, and Inspire fear represent the powers of a
private government. Our Founders would not bow
before King, nor should we bow before the emperor?
Is the online economy already? He's referring to these
companies as the emperor's and kings of our time and that we
shouldn't pal to him. So creating some visual there.
I think it's effective. But let's go ahead and
transition a Jeff Bezos. This opening statement from Jeff
Bezos is pretty epic. It is an awesome opening
statement. I don't know how he could have
done this better. This was incredible considering
this is his first time in front of Congress, but the way that he
humanizes himself reminds people that he's just a person that
started a A really big company and the way that he lays out the
Journey of Amazon was pretty incredible.
So, let's go ahead and listen to it.
I was born into great wealth, not monetary wealth, but it said
the wealth of a loving family, a family that fostered, my
curiosity and encouraged me to dream.
Big, my mom Jackie had me when she was a 17 year old high
school student in Albuquerque. Being pregnant in high school
was not popular. The school tried to kick her
out, but she was allowed to finish after my grandfather.
Negotiated terms with the principal.
She couldn't have a locker. No, extracurriculars.
And couldn't walk across the stage to get her diploma.
She graduated and was determined to continue her education.
So she enrolled in night school, bring me her infant son to class
with her throughout. My dad's name is Miguel.
He adopted me when I was four. He was 16 when he came to U.s.
From Cuba by himself shortly. After Castro took over.
My dad didn't speak English and he did not have an easy path.
What he did have was grit and determination.
He received a scholarship to college and Albuquerque, which
is where he met my mom together. With my grandparents.
He's hard-working resourceful and loving people made me who I
am. I walked away from a study job
on Wall Street, and to a shallow garage to found Amazon fully.
Standing that it might not work. It feels like just yesterday.
I was driving the packages to the post office myself dreaming
that one day. We might afford a forklift.
Customer Obsession has driven our success and I take it as an
Article of Faith. The customers, notice, when you
do the right thing, you earn trust slowly over time by doing
hard things. Well, delivering on time
offering everyday, low prices, making promises and keeping them
and making principal decisions, even when they are unpopular.
And our approach is working eighty percent of Americans have
a favorable. Favorable impression of Amazon
overall, who do Americans trust? More than Amazon, to do the
right thing, only, their doctors, and the military.
The retail Market we participate in is extraordinarily large and
competitive. Amazon accounts for less than 1%
of the twenty. Five trillion dollar Global
retail market and less than four percent of us retail.
There's room and retail for multiple winners.
We compete against large established players like Target
Costco. Kroger.
And of course, Walmart a company more than twice Amazon size 20
years ago. We made the decision to invite
other sellers. Selling our store to share the
scene valuable real estate. We spend billions to build
market and maintain. We believe that combining the
strengths of Amazon store with the vast selection of products
offered by Third parties would be a better experience for
customers and the growing pie of Revenue and profits would be big
enough for all. We were betting that it was not
a zero-sum game. Fortunately, we were right
there. Now, 1.7 million small and
medium-sized businesses selling on Amazon.
The trust customers put in US everyday, has allowed Amazon to
create more jobs in the United States over the past decade than
any other company. Hundreds of thousands of jobs
across 42 States. Amazon employees, make a minimum
of $15 an hour more than double, the federal minimum wage, and we
offer the best benefits benefits that include comprehensive.
Health insurance, 401, k retirement and parental leave,
which includes 20 weeks of paid maternity leave.
We're than any place on Earth entrepreneurial companies, start
grow, and Thrive here in the US. We nurture entrepreneurs and
startups with stable rule of law, the finest University
system in the world, the freedom of democracy and a deeply
accepted culture of risk. Taking of course, this, great
nation of ours is far from perfect, even as remember
Congressman, John, Lewis and honor his legacy.
We're in the middle of a much-needed, race, Reckoning.
We also face the challenges of climate change and income
inequality, and we're stumbling through the crisis of a global
pandemic. Still with all of our faults and
problems. The rest of the world would love
even the tiniest. Sip of The Elixir we have here
in the u.s. Immigrants.
Like my dad, see what a treasure this country is, they have
perspective and often can see it even more clearly, than those of
us who were lucky enough to be born.
Here. It is still A14 this country.
And even in the face of today's humbling challenges.
I have never been more optimistic about our future.
I appreciate the opportunity to appear before you today.
I'm very happy to take your questions.
I can't be the only one that listen to this live and thought
to myself, I should just buy Amazon stock.
I should throw my whole life savings into Amazon.
And as long as that guy is the CEO.
It's going to continue to do. Well as long as Jeff Bezos is
the CEO of Amazon. It's going to be a successful
company. This guy made this company not
by mistake. He didn't stumble into creating
Amazon. The reason it's so big and so
successful is because of Jeff Bezos.
That's the reason to Amazon has done so well, so it's opening
statement. I thought was very effective.
I think anybody listening to this live, is going to have a
more favorable view of Amazon. So I don't think Congress really
did themselves any favors by having this hearing next up.
We have Tim Cook. He did a little bit more of a
sales pitch in his opening statement.
He's trying to sell Apple a little He doesn't talk as much
about his background, but that makes sense when he's not the
founder of the company like Jeff Bezos, but let's go ahead and
listen to just a bit of his opening statement.
My name is Tim Cook. I've been Apple CEO since 2011
and a proud employee of this uniquely American company since
1998. At Apple.
We make ourselves a promise and our customers, the promise.
It's a promise that will only build things that make us proud.
Loud and Steve put it. We only make things that we
recommend to our family and friends.
You can try to Define this difference in a lot of ways.
You can call it the seamless integration of hardware and
software. You can call it Simplicity of
design or a great ecosystem. All of those things are true.
But if you want to put it simply products, like iPhone just for
when customers consistently give iPhone a 99 percent satisfaction
rating. That's the message, they're
sending about the user experience.
I love that all these companies mentioned their user
satisfaction rating because Congress currently has an
approval rating of 18%. So Congress is criticizing these
companies. When Apple has a 99%
satisfaction rating, Congress is currently sitting at 18%, But we
also know that customers have a lot of choices and there are
products, a fierce competition companies like Samsung LG
Huawei. Google had built successful
businesses with different approaches.
We okay with that. Our goal is the best, not the
most. In fact, we don't have a
dominant share in any Market or in any product category where we
do business. What does motivate us is that
Timeless drive to build new things that we're proud to show
our users. We focus relentlessly on those
Innovations on deepening core principles like privacy and
security. And I'm creating new features.
Now. I want to pause it here because
he's about to talk about the App Store.
This is the focus point of the criticism.
For Apple. Basically, the critics for Apple
say that the App Store is a monopoly.
The Apple has this massive App Store and for developers to make
money on the App Store. They have to give 30% of the
take to Apple. That's the commission 30%.
So that's the focus of the criticism.
Tim. Cook is trying to explain how
that's not a monopoly, and that's actually a pretty decent
feet. When you compare it to any other
type of similar store in 2008, we introduced a new feature of
the iPhone called the App Store launched with 500 apps.
Which seemed like a lot at the time, the App Store provided a
safe. And trusted way for users to get
more out of their phone. We knew the distribution options
for software developers at the time.
Didn't work. Well, brick, and mortar stores
charge, High fees, and had limited reach, physical media,
like CDs had to be shipped. We're hard to update from the
beginning. The App Store was a
revolutionary alternative app store, developers set, prices
for their abs and never pay for shelf space.
We provide every developer with cutting-edge tools, like
compilers programming languages and more than 150,000 Essential
Software, building blocks called apis.
The App Store, guidelines, ensure a high-quality reliable
and secure user experience. They are transparent and applied
equally to every developer for the vast majority of apps
developers, keep 100% of the money.
They made. The only apps that are subject
to a commission. Are those where the developer
acquires a customer on an Apple device, and where the features,
our services would be experienced and consumed on an
Apple device. In the App Stores more than 10
year history. We had never raised the
commission or added a single fee.
In fact, we've reduced it for subscriptions and Exempted
additional categories of apps. I'm here today because scrutiny
is reasonable and appropriate. We approach this process with
respect and humility, but we make no concession on the facts.
What began as 500 ABS is now more than 1.7 million only 60.
With your Apple software. If apple is a gatekeeper.
What we've done is open the gate wider.
We want to get every app we can on the store, not keep them all.
So, there's this pitch. He's trying to get ahead of this
saying that the app store has allowed more businesses to
flourish. Look how many more apps are on
it. Look how many people are making
money on the App Store. This is basically what, what all
of them said, what Sundar pichai of Google and what, Mark,
Zuckerberg said a Facebook that these companies are expanding
growth allowing businesses to grow and they Have a lot of
competition. That's what they're trying to
sell Congress. Is that they have a lot of
competition. They really don't need these
harsh regulations. So let's jump into the part
where they actually receive some real critical questions about
their previous business practices.
This first big criticism that was launched at Jeff.
Bezos was about diapers.com. If you're not aware, we've
talked about this on the channel.
Diapers.com was a website that's old diapers, Amazon wanted to
get into that space because diapers is a huge market and
online space. And they went direct competitive
head-to-head battle with each other Amazon.
The way that they dealt with diapers.com, is they undercut
them with price to the point where they're taking substantial
losses for every single diaper being sold.
They lost hundreds of millions of dollars in the process of
competing with diapers.com. But what that did was show
diapers.com, the Amazon can lose money for as long as possible.
They can lose money longer than diapers.com, can survive and so
diapers.com. Conceded defeat they sold off
to. On Amazon invested some money in
them. And eventually diapers.com was
just shut down. The project was closed.
So this is where Jeff Bezos gets asked about that event
happening. So you said that Amazon focuses
excessively on customers. So how would customers
especially Single Moms new Families?
How would they benefit when the prices were driven up by the
fact that you eliminated your main competitor?
Well, I don't agree with great respect.
I don't agree with the premise at the same time.
You should recognize him context.
Diapers is a very large product category.
Sold in many many places not just it is not aligned.
We do have evidence that doors and throw and Kroger and Walmart
is this is what happens a lot is.
They get interrupted over and over again when they're trying
to answer the question. They were just asked this is And
it's completely obnoxious with Congress.
Is they will ask a question, a very loaded question with a
loaded premise, that CEOs, or whoever's, there is starting to
answer the question. They don't like the answer,
because it actually explains the context of it.
And so, they talked right over them as they're answering it.
This drives me nuts, but this is how Congress works.
And another thing she says is that Amazon drove up the prices
of diapers. She says that without any
evidence whatsoever, Amazon can't drive up the prices of
diapers, if they charged a lot for diapers.
People would go to Costco. Amazon is in direct competition
with Costco. And because of Costco's
warehouse model that the bulk sizes.
They sell everything in, they can sell things for extremely
cheap. Diapers, is their biggest
product sold in Costco. If Amazon tried to gouge people
on the prices of diapers. They would make a trip to Costco
and buy it for much cheaper. So, Amazon has not driven up the
prices of diapers. She shows, no evidence of that,
but that's what she's saying here.
It certainly is some something that has a really hard impact
on. Going to, and I'm really
concerned that pricing might have been driven up here by this
tactic and I yield back. So to clarify.
She's really concerned about Amazon driving up, the prices of
products. When Amazon is known to be one
of the cheapest places to buy anything.
This is the dichotomy here. She has no evidence to say the
Amazon has resulted in a net increase in diaper prices.
I don't think that's true at all because, like I said, Costco
would bring the price down like crazy or Walmart or the many
other competitors. That's what Jeff Bezos.
Has tried to bring up, but she'll say she's very concerned
about that, without any evidence.
Next. Let's move on to Zuckerberg
here. This is one of the most baffling
exchanges of this entire hearing was Mark Zuckerberg being asked
by one of these congresswoman about their competition.
With other companies, she acts as though companies can't
compete with each other. Otherwise, they're doing some
type of wrongdoing. Otherwise, it's some type of
malevolent Behavior. Look at the malfeasance of
Facebook trying to compete in an open competitive.
Let's go ahead and listen to some of this questioning.
It's just incredible how detached these politicians are
from how business Works. Did you ever use this very
similar Facebook Camera product to threaten Instagrams founder?
Kevin Systrom. Congresswoman.
I'm not sure what you would mean by threatened.
I think it was public that we were building a camera app at
the time that was a well-documented thing.
He says that we're building a camera app.
This is something that Facebook was already doing and she's
going to act like he was threatening other companies by
explaining to them that they're going to be competing in the
same field that these other companies are.
So hear her explain this. It's just incredible.
Let me tell you that. Mr. In a chat.
You told Mr. Size trim that Facebook was quote.
Developing our own photos strategy.
So how we engage now will also determine how much we're
Partners versus competitors down the line Instagrams.
Founder seemed to think that was a threat.
He confided confided in an investor at the time that he
feared you would go. He would that you would go into
quote, destroy mode if he didn't sell Instagram to you.
So let's just recap, Facebook cloned, a popular product
approach the company, you identified as a competitive
threat and told them that if they didn't lie.
Let you buy them up. There would be consequences.
Yes congresswoman. That's exactly what they did.
That's how business Works. What does she think business is
you build products, you compete with other companies.
You tell them, you're either going to buy them or you're
going to compete with them. What does she think happens in
the business World mergers and Acquisitions is a huge part of
business growth. A some companies get paid as
they sell to other bigger companies.
A lot of plays of tech companies is to sell the bigger tech
companies. That's a lot of business, plans
of companies. She has no Clue how business
Works. She's acting like Facebook is
doing a great Evil by building a product and competing with other
companies that have similar products.
There's nothing malevolent about that.
There's no wrongdoing. This is how business Works.
What does she want Facebook to do?
Go do Instagram. You're building a camera app.
Well, I guess we'll just step to the side.
We won't enter that field. You already have that covered.
Is that how business works? Like she talking about here Mark
Zuckerberg does? Is fantastic here.
He's actually really good in front of Congress for the people
that make fun of them that he's a nerdy programmer, or whatever.
He's actually great in front of Congress files.
In front of them. I would want to blow up at every
question. I'd want to freak out at every
single question here because they don't even know what
they're talking about. But here he goes and he tries to
explain that. This isn't really the context
and that this is how normal business Works.
Congresswoman. I want over respectfully
disagree with the characterization.
I think it was, it was clear that this was a space that we
were going to Compete in one way or another?
I don't do those conversations as a threatened.
Anyway, I just I'm just using the documents and the testimony
that the committee has collected from others.
Now, of course, Zuckerberg tries to explain the context.
He tries to say that really isn't how it happened.
But as per usual, he's interrupted talked over by
Congress. That's what they do.
Best is they don't want to actually listen to anything.
These people want to say they don't want to listen to anybody.
They're talking to they just want to hear themselves talk.
So she talks, right? Over him.
And then, this is how she goes on to characterize Facebook.
Listen to how she talks about this company.
Facebook is a case study in my opinion, in Monopoly power
because your company harvests and monetizes our data and then
your company uses that data to spy on competitors and to copy
acquire and kill Rivals. They use their advantage to copy
a choir and kill Rivals, copy acquire and kill Instagram was
purchased for a billion dollars. That's killing someone if that's
killing Rivals. I want to be killed because if
they pay me a billion dollars to buy my app and then they grow
into something much bigger and I have the legacy of starting that
plus I'm a billionaire that sounds like a pretty good
situation to be in. It's not like Instagram was this
little project that Facebook just crushed.
They purchased it. They purchased it.
And then they invested a lot of time and resources in it.
They had the smarts and the people to make it successful.
So now, Instagram is 100 times bigger butt.
They didn't kill Instagram. They made it much bigger and
they paid the original founders of it a billion dollars.
Now, this theme continues on with Mark Zuckerberg.
He gets asked more questions. They're trying to paint
Facebook. Is this big Unstoppable
Monopoly. So, here's their attempt at
doing this mr. Zuckerberg, in 2004, when you
had launched Facebook, it's fair to say, I think you'd agree with
me that you had quite a few competitors.
You agree with that. Congressman yes, my space
Friendster Google's or cut. Mixi.
Cyworld Yahoo! 360, aol's Bebo.
They were all competitors Congressman.
Those are some of the competitors, the time.
And it's only gotten a lot more competitive sense.
Well, let's talk about that because I 2012 mr.
Zuckerberg. None of those companies that I
just identified existed and boom.
He's got your Zuckerberg, all those companies.
When you started Facebook, none of them exist anymore.
You destroyed all of them. You're a monopoly, of course,
the congressman fails to mention that Tick-Tock was the second
most downloaded app in the US. And 2019.
It is one of the biggest social media apps.
Now, it's a Chinese firm that came in here with a direct
competitor to Facebook and their saturating, the US market with
their app that is direct competition.
That's happening right now. Today.
Tick-Tock is one of the hottest apps.
He doesn't mention that when instead he mentions companies
like AOL that are gone. There are no Anger here, and
he's trying to say that Facebook is a monopoly because they don't
exist anymore. He asked Zuckerberg if he agrees
that Facebook is a monopoly Facebook, in my view, I think
was in a monopoly by then. I wonder whether you would agree
with that. I take it.
You don't cover some that's correct.
I don't we Face a lot of competitors and every part of
what we do from connecting with friends privately to connecting
with people and communities to connect him with all your
friends at once to connecting with All kinds of user generated
content. And I would bet that that you
were most people here have multiple apps for each of those.
On your phones here. Mr. Zuckerberg looks.
Now here it is. Again.
Zuckerberg gets asked about normal business practices
basically just competing as a business and it's talked about
as if it's evil. Would you agree with me that
Facebook its strategy since that time to essentially protect what
I described as a monopoly, but I obviously what you would
describe as Market power. Our that Facebook has been
engaged in purchasing competition in some cases,
replicating competition. And in some cases, eliminating
the competition. Would you agree?
Mark Zuckerberg that you use any of these tactics that you buy
other companies, something called, mergers and
Acquisitions. Would you agree that you compete
with other companies by making similar products that you expand
your product line. He's acting like this is somehow
bad that Mark Zuckerberg is making concessions by admitting
that as a business leader, he competes with Their businesses.
I know it's hard for Congress to grasp this because they don't
have to compete. They just have money pouring in
from taxpayers. So they're not competing with
anybody. They just get a paycheck
regardless of what happens in the world, but other businesses
actually do have to compete to survive.
If Facebook did not buy Instagram, if Facebook didn't do
mergers and Acquisitions, if they didn't create new products
that were similar to other Trends and things that we're
going on, they would go out of business, but somehow he talks
about this like, it's some how bad Dad.
Now this next Parts, a little bit revealing because he takes
what's clearly a joke in an email and tries to insist that
Mark, Zuckerberg was being serious.
Facebook also tried to buy other competitive startups.
In fact, as chairman a blur noted, you did tell one of
Facebook, senior engineers in 2012 that you can quote, likely
by just by any competitive start up, but, it'll be a while before
we can by Google. Do you recall writing that
email? Congressman, I don't
specifically but it sounds like a joke.
Clearly. This was a joke in 2012.
When Facebook purchased Instagram, Google is about four
times, the size of Facebook. It was more likely that Google
could have purchased Facebook during that time.
So obviously he was just making a tongue-in-cheek joke here, but
the congressman insists that this was serious.
He says it wasn't a joke. I don't think he's a joke that,
you know, as I review the email, it was in regards to having just
closed the Instagrams. And the response from this
individual is engineer to, you was quote.
Well played your response was. Thanks one reason.
People underestimate. The importance of watching
Google is that we can likely always just buy any competitive
startups, but it'll be a while before we can buy Google.
He insists saying that the Instagram sale is kind of
evidence that he's not joking. Instagram was purchased for a
billion dollars at that time. Google was worth about 210
billion dollars. A little bit of difference in
size there. R next day, attack Facebook, and
Google based off the fact that the market changes with news and
that there's less local journalism.
Now, Facebook and Google have Gravely.
Threatened journalism in the United States reporters.
Have been fired, local newspapers have been shut down.
And now we hear the Google and Facebook.
I'm making money over what news the America, they let the
American people see. It actually seems like he's just
upset that Facebook and Google have changed the way.
People consume media that people don't read their local
newspaper, quite as much because they can get a lot of news
locally on apps like Facebook and Google.
This is just a general complaint with changes in the market
space, is he also going to complain that the the automobile
got rid of the horse. And buggy as a mode of
transportation that it's destroying jobs that the horse
and buggy. And the people that operate that
are gone. Is he going to complain that
Tesla? CEO.
Elon Musk is getting rid of jobs at Ford and other competitors
that have moved along to electric vehicles as fast.
You look at Ford stock Tesla's bad for the economy.
It's getting rid of job. In other lagging companies.
A lot of this is just accusations and complaints about
normal business. Now.
This next question was a little bit more controversial.
One of the congressman asked to all four of them.
Do. They believe that China Stills
intellectual property from the US, does a Chinese government
still intellectual property from American firms?
I don't know of specific cases where we have been stolen from
by the So, you don't believe that the Chinese government
stealing technology from us companies.
Are you just saying that not from yours?
I'm saying I know of no case hours where it occurred, which
is I can only speak to first-hand knowledge.
Mr. Petri, you believe that the Chinese government steals
technology from United States companies.
Congressman, I have no first-hand knowledge of any
information, stolen from Google, both of them, kind of sidestep
that question. They do a little Dodge there.
They don't really answer it. They say, we don't know of it
happening with our company that really wasn't the question
asked, what they asked was? Do you believe that China is
stealing data from American companies?
It's obvious why Tim Cook isn't answering this because they do
all their Manufacturing in China.
They have close relationships are.
It's a really Port market for Apple.
So, Tim Cook does kind of sidestep the question and Sundar
pichai does the same thing, but listen to the answer that Mark
Zuckerberg gives Congressman. I think it's well, documented
that the Chinese government steals technology from American
companies. Thank you.
Sure. They do.
It's well documented and Mark Zuckerberg.
He really doesn't have, I think close ties with China.
There's no reason why he has to tiptoe around.
This question. Facebook is blocked in China.
They block pretty much every aspect of their company from
even being Operational there so he has no reason to tiptoe
around the question. Don't another question.
Jeff Bezos gets asked about counterfeit products on Amazon.
This is a huge problem that Amazon faces.
They try to make it out like Jeff Bezos likes counterfeits
because he profits off of it. So here's this dialogue between
the two of them, but I can tell you is that the we have a
counterfeit crimes unit. We attempt to prosecute
counterfeiters. I would encourage this body to
pass. After penalties for
counterfeiters and to increase law enforcement resources to go
after counterfeiters joke comes the artists make money off of
counterfeit, Goods being sold on your platform.
Isn't that correct? If it does in my view sir, it
would only be in the short term we met.
We don't may, I would much rather lose a sale to lose a
customer. Counterfeiters.
Do not help Amazon, not on their long-term growth.
And this is a problem that Amazon is having to deal with
themselves because of the lack of support.
The government is giving so Congress saying, NG you're
benefiting from counterfeiters is not correct and when Jeff
Bezos brings up. Hey, we need some help with
this. Could you actually give us more
resources to deal with the problems of these crimes?
These counterfeits? They just glossed right over
that they don't have to do anything on their end.
Actually passing legislation that would help protect against
counterfeiters, but they're fine blaming Jeff Bezos for profiting
off of these counterfeit sales. As this hearing went on the
lines of questioning just got worse and lazier.
Here's the last one that I'll share.
I think it's summarizes the quality of the questions.
So Basil's are are stolen goods sold on Amazon.
Congresswoman not to my knowledge, although you know
this bird more, they're more than a million Sellers and so
I'm sure that there have been stolen goods.
Really? No really mr.
Big. Sorry.
There's not you don't believe that there is a surprise as me.
No, I said with over a million sellers.
I'm sure that it has happened. But certainly, I don't think
it's a large part of what we're selling.
Okay, so, mr. Basil's basically, then you're
saying, yes. I guess so.
Okay, congresswoman. You got me?
Good question. I can see that maybe out of the
million sellers on our platform. Some of them might have sold
stolen goods. Like that's some big gotcha
answer. What kind of questions are
these? You have the four biggest
Business Leaders in the world sitting in front of you.
Tim Cook, Jeff Bezos, Mark Zuckerberg Sundar pichai, you
can ask them anything in. This is your line of questioning
cheap, gotcha questions, that don't reveal anything
insightful. Unfortunately, that's what most
of this hearing was were questions like this.
Just got your moments trying to get their their attacks out on
these big companies. All of it.
Has to do with politics, going against these big dominating
companies so that they can say to their constituents that they
stood up to Jeff Bezos, but I think it's sad to waste
opportunities like this to wrap. This up.
Of course, the chairman gives his concluding remarks that this
hearing made it all clear. That these four companies are
monopolies is hearing has made one fact.
Clear to me. These companies as they exist
today have Monopoly power. He says this meeting that their
hat made clear to him that these companies are monopolies, but
he's reading this closing statement from a stack of
papers. Did he actually prepare that
during the meeting? Did he go and type that out
during this meeting? I think he probably type this
concluding remark out last night.
He probably did it before the meeting even started.
But Harry is reading from a stack of papers saying that this
this meeting makes clear to him. That these companies are
monopolies, so There you have it from the very open-minded
Congress. Now the big question from all of
this is is Congress really going to come forward with some huge
antitrust action and do something like break up
Instagram and Facebook or put in really punitive measures against
these companies. I don't believe so and I don't
think it's because these companies are lobbying and
paying off the politicians. I think it's because Congress
really doesn't understand what they're dealing with and they
know that if they screw anything up, they could cause a
tremendous amount of damage to the These are four of the
biggest companies in the US competing with the rest of the
world. And if they mess with them too
much, they mess with their business models.
They might inhibit their ability to compete and also destroy a
lot of jobs in the US and not really help competition that
much as well. So, basically, they're messing
with something that they don't fully understand that if they
get it wrong, could have extremely adverse consequences.
So, I think that they will tread very lightly with antitrust
measures. Okay.
Now, moving on, from that. Let's get to the big news.
Apple stock head. As for all-time highs after
crushing wall Street's expectations.
This was a really big beat. If we look at the numbers on
Revenue, they beat on earnings per share on iPhone Revenue,
Service, revenue and accessories.
I think, out of all of these, the service revenue is the most
important. The fact that they're on track
with service Revenue, I think is really important but let's go
through the numbers real quick. Apple said that they earn fifty
nine point, seven billion versus 50 2.3 billion.
That is their overall Revenue earnings per share 2.58.
Versus 2.07. IPhone Revenue was twenty six
point four two billion service Revenue. 13.2 billion versus
thirteen, Point 1, billion and accessories 6.5 billion versus
6.1. They crushed it in every single
category. I was excited about this for a
couple different reasons. One of them was that I recently
purchased about 50 shares of Apple sigh made significant
purchases in this company. Many people criticize me for
these purchases for a variety of different reasons.
Basically, saying that I'm buying the company at all-time
highs. Sighs that, it's fomo, all these
different things, but I looked at the company I compared it to
other companies. For instance.
Apple has about a 30 PE ratio right now.
It's trading at a 30 times multiple.
It might be a little bit higher right now.
But at the time that I purchased it, it was trading at around a
27, multiple Costco. For instance, has above 30,
multiple. Nike has above 30, multiple,
Facebook, and Microsoft and all these companies have a higher
multiple than Apple and I don't think that that's really
Justified. I think apple is growing really.
Deadly as a business and has a very significant boat.
So that's part of the reason that I purchased it is I think
in general terms, the company's undervalued.
And I think that it has really high quality products that
brings a lot of brand loyalty. So, I was excited that they had
a strong earnings report. I can't control what direction
the market goes. But the market has gone crazy
with this stock. It's up 8.3%, and one day, if I
go to my holding of Apple, that market is generally down right
now. In fact, if I go to the one day
view here, you can see my portfolio every single sector.
Is in the red except for Tech and that is mostly because of
one company. Apple.
I'm up, fifteen hundred dollars. Just today on this holding a
point to three percent as it stands right now.
So this has been a pretty good company to hold.
They do pay a dividend. They grow it over time.
They do, share BuyBacks. They do everything, Apple's, a
Growth Company. It's a value company.
If it's into a lot of different categories, but I don't think
apple is a company. You should be excluding from
your portfolio along with other. Good companies, MasterCard,
Microsoft, and Visa. Overall, my portfolio has a
significantly higher yield than the market overall.
I continue to grow a stream of cash flow.
So I'm focusing on those companies.
But if there's really good growth potential and other
companies like apple. I still think that it's worth
purchasing now, there's other news as well.
Apple is announcing a four-to-one stock split.
This is something that they've done frequently over time.
And I think that this is for a good reason, if we look at
Apple's share price. It is $417 a share, it continues
to go up every hour. It.
Like, but it's $417 a share right now.
When they do a, four-to-one stock split, that means that
every share based on today's price would be around, you know,
a little over $100 like $104. So if we look at share splits a
lot of people are confused of what this means.
Does this mean you get 4 times a dividends know, the dividend
stays the same, the dividend will be split just like the
sheer. So instead of Ash are paying x
amount that will be x amount divided by 4 in the end.
The company will have the exact same yield so Sure, splits is
mostly a cosmetic thing. The biggest functional
difference is the ability for people to purchase small amount
of quantities of Apple. If they don't have fractional
shares on M1 and many other Brokers.
We are benefiting from having fractional shares.
I put in the dollar amount. I want to buy apple and M1 just
buys that amount. So I don't have an exact share
count, my sure counts like forty nine and a half or something
like that. So I can buy fractional shares,
but some people are limited to buying the whole share and I
think that that's what they're trying to address here.
They're making it more available for retail investors.
Esther small-time investors that don't have fractional shares to
pick up a little bit of Apple. They want to buy two shares.
They can buy it. I also think there's another
pretty big benefit to stock splits.
And that is that it makes it a little bit psychologically
easier to purchase shares in these companies.
If you look at this and you're just a retail investor and
you're looking at Apple and you see the prices $419.
Now, for one chair, you think that's a lot of money.
Then you look at Amazon and a share of Amazon is three
thousand one hundred and seventy dollars for one.
Share. So as a retail investor, you
think, is it really worth buying Amazon?
One. Share of it for over three
grand. Is that really worth it?
It's really a tough pill to swallow for investors.
So I think it makes it a little bit easier for investors to
purchase the shares when they're at smaller prices, even though
right now apple is a bigger company than Amazon.
It's a more expensive company to buy than Amazon, but the share
price being smaller has a psychological effect of making
it easier to dollar cost average into this company.
I think that's The Reason by investors do well on ETFs is
because it's a level of obfuscation you by the ETF like
the S&P 500 for 200 bucks. And really, what it's doing is
buying shares of Amazon for three thousand dollars, but you
don't have to see your money being used directly that way.
So, when I look at this, I think the stock split will also help
investors retail investors. Pick up a few shares of Apple
when they might have otherwise not now, I know another question
I'm going to get asked is Joseph.
Should I buy Apple now? Should I buy it now?
After this? Recent Spike?
Or did I miss the window of opportunity?
I didn't buy it a month ago. I didn't buy it two months ago.
And now it's spiked up like crazy.
It's up almost 10% just today. Should I buy into this company?
This is a tough question, but I think it's actually pretty
simple Apple's trading at a 33 PE ratio.
It has a market cap of over 1.8 trillion dollars.
Currently. I have said repeatedly that I
think Apple will easily surpass a two trillion dollar market
cap. I just think it will get there
eventually. It's just a matter of time.
So I think that you still can buy it right now.
It's historically more expensive than it's ever been.
But this is a company that continues to grow and innovate
and make really good products and they're expanding into
different services. So I think they have a lot of
growth potential ahead of them. But the bigger point is the
reason that I originally purchased.
This company was, the PE Ratio was about 27.
And basically every other company around Apple had a much
higher PE ratio, and I thought, why is this company have such a
low P/E ratio? Paired to the rest of them.
And the reason why that I looked up was that people said, well,
apples a hardware company. They're just one bad phone away
from having some huge dip and I didn't really agree with that.
I thought the Apple is, is a whole ecosystem of products.
It has incredible brand loyalty. I think that the people that are
fans of Apple, they're going to buy their products.
Their can expect them to be good, but they're going to buy
their products every time they come out.
So I think the apple is being treated like some clunky
hardware company. When in reality, they are a very
polished. List ecosystem of products, to
iterate through improvements over time.
The iPhone really doesn't have to change that much.
It just gets better and better every single version with small
improvements and that's enough to keep people buying that
product over and over again. So I think that they have an
extremely loyal customer base as long as Apple makes good
products that loyal customer base, will buy those products.
I'm one of them. I'm going to continue buying
Apple products until I don't like him anymore.
And as soon as I don't like the product, I'm going to sell the
company. So that's where my conviction
with this company comes in. It's partly because I really
just like the products that they make if that changes I'm going
to be selling out of the stock because if I don't like the
products that they're making I'm assuming other people like me
aren't going to like them as well.
So that's part of the reason that I purchased it.
If you don't have that level of conviction with the company, I
don't think you should buy it at this price because if it does
have some ten or twenty percent dip, you might end up selling
out instead of buying more of it, if this would have went the
other direction and apple would have had some poor earnings.
Port, they missed a couple metrics and all the analysts had
really bearish views on them. All of a sudden, I wouldn't have
been concerned. I would not be concerned about
this company until I don't like their products.
That's how I'm treating most of this investment.
So if you're considering making apple, a big part of your
portfolio, you should look at whether or not you think that
they're going to continue to make market-leading devices.
What are the best devices with the best software if you think
the company can continue doing that into the future, I think
the Answer is yes, you should make this part of your portfolio
just realize that there's going to be dips in between.
If you're going to sell out when the stock comes down 10 or 20%,
Then don't buy it today, because there's going to be times when
big hedge, funds, shift things around, or they take profits, or
do whatever an apple come back down for a while.
But as far as I'm concerned, if they keep making an improving
their products like they have been, I'm really not concerned
about this company. This is one of the least
stressful companies in my portfolio.
I have next to no stress. Buying Apple just II.
I don't worry about it, their earnings reports great.
It's good news, but I wouldn't have sold this company.
If they had a bad earnings. Now as far as a general
portfolio update, we've almost reached four thousand dollars in
earn dividends. That's a good amount of earn
dividends. The market gains are at two
thousand dollars. Now finally, we're getting both
sides of it. We're having a market gains and
we're having dividends or enjoying valuations going up.
And we're enjoying a constant stream of income.
This has been an evolving process coronavirus is
highlighted that some companies are more susceptible.
Oh, that this type of event than others.
The cloud companies and tech companies have not been affected
as much by the coronavirus so you can see this Illustrated
through out my profile. In fact, if I go to the one day
view hair, you see it Illustrated right here.
Tech is in the green by quite a bit.
Every single other sector real estate, consumer health care,
Finance, utilities. All of them are in the red, and
this is what most of this year has been value.
Companies have been getting crushed tech companies have been
doing well. Now, I don't think this is going
to be the case forever. That real estate will recover.
I think these consumer companies will do.
Well. Healthcare is obviously growing
industry finances as well. So I think there's going to be
eventual growth with these other sectors.
But right now, I would be careful how much money you put
into real estate and how much money you put into Industrials.
These sectors are being damaged, pretty heavily.
The sectors that I've tried to focus on is growing Tech,
growing consumer, health care and finance.
These are the ones that I've been focusing on the most.
I've been growing Finance because I think there's going to
be a lot of innovation there in the fintech space.
I've been buying MasterCard and Visa as well as a lot of JP
Morgan. I've been buying different
healthcare companies and there's some consumer companies that
have been buying so that's most of the purchases.
I've been doing. I'm going to continue to make
purchases of Bank of America, of JPMorgan a Visa and MasterCard
because I think that those companies are going to do really
well over the next year. Now, if I go on I filter by the
one month you here, I've earned 300 dollars in dividends and
thirty five hundred dollars in market gains.
It's about 30. Eight hundred dollars in the
past 30 days. It's been a good month that has
been a really good month. So this shows you how quickly
things can change just a short time ago.
This portfolio is in the red by quite a bit but repositioning it
and moving into some companies moving out of some companies and
continuing with the strategy I think has put this in a good
position for the future. So I have an updated link of
this portfolio in the description if you want to.
Look at all the Holdings, I have what companies I've dropped and
which ones I've added new, they're all in the description
in that. Link that says My main
portfolio. Okay.
Let's move on to some emails. Joseph at Joseph Carlson
show.com is the email address. You can write in any of your
questions, criticisms, anything you want to talk about and we'll
discuss it here on the show. The first one's from Jason.
He says, Joseph, I seen all of your videos and think you're
doing a great job, following your information.
I have a sizable investment in various individual dividend
growth stocks in one of your newest videos, you decided to
move towards your growth stocks such as Apple Microsoft and less
towards other sectors. I know you have a few van.
Our DTS in your auth are a what do you think of the Vanguard
ETFs V ug + V? GT to capture the apples.
Microsoft's excetera? Yeah.
That's a good question. Jason.
If you look at the bottom of my portfolio, if you look at the
link in the bottom, it said one line that I've had there since
day, one of creating my portfolio that it's a defensive
portfolio focused around creating a stream of passive
income. Its defensive.
That's something that I've been trying to focus on what I found
is that Coronavirus Has highlighted the Achilles heel to
this type of strategy. The, the type of companies that
have been really punished. During this specific
environment, have not been the high-flying tech stocks.
They haven't been punished, the companies that have been
punished have been, the more conservative value stocks like
the ones that most dividend growth investors invest in.
So with the goal of making my portfolio defensive.
I don't want to have an Achilles heel.
I don't want to have anything that can do substantial damage
to my portfolio. And so, all I'm trying to do.
Is make it a more well-rounded more defensive portfolio.
So that has been the main goal in this transition is to try to
balance that the different type of value stocks as well as
having stocks that are more growth-oriented.
But more importantly, their stocks that are less affected by
the coronavirus. They're less affected by this
term. This type of environment that
happens to be tech stocks. And the reason that tech stocks
are less affected is because they don't have a lot of capital
expenditures. They don't have to have millions
of employees and lots of retail locations there in the Cloud.
And so they continue to operate. Even if things are close down,
the government closed down States, all the tech stocks
continue to do. Well, in fact, more of the focus
moves towards them. The longer things are closed
down, and I'm going to continue doing episodes.
One of them I have planned, is basically to show that I think
that things are going to stay shut down for a little bit
longer than I originally anticipated.
So, when I'm looking at the current environment right now,
I'm seeing the coronavirus, not really seem like it's going
anywhere too fast. It continues to go up in the US.
Everybody seems to be wearing masks right now and it's still
around. So this has been a bit of a
dynamic shift that viewing this historically, the growth stocks
seemed like the more risky stocks.
That's what growth stocks are there more risky than more
volatile. Their risk, your Holdings, but
coronavirus has kind of swap things to now value stocks seem
more risky buying and companies like Delta Airlines is the risky
bet buying an AMC, Theaters. That's a risky bet buying in
real estate right now. That's a Risk, right there.
Buying growth stocks, like apple and Amazon.
That's kind of the safe bet right now.
So I don't feel like I'm increasing risk in my portfolio.
What I think I'm doing is actually decreasing risk.
I think I'm trying to balance the portfolio out.
I think it will actually reduce risk in the portfolio.
So that's the primary goal behind it.
Now you bring up these Vanguard ETFs, I think vug is really good
side like that ETF a lot. If you look through the Holdings
of it, it has a really solid Holdings.
I don't know vgt as well. But I do like vug a lot.
I also like just as a general growth ETF one that's mentioned
a lot on our Discord as s py g. That's SP.
YG. You can check out that ATF as
well. If you're looking at extremely
high quality growth companies. So I would check that one out as
well. Emile says, my name is Emil.
I'm coming all the way from Belgian with a question.
I'm a second year Bachelor student in business engineering
economics, at the University of Ghent.
What books did you read on finance?
Testing, what are your sources to get new interesting titles?
There's a lot of good books on investing.
I think the best one is from Peter Lynch.
I've read the intelligent investor.
I've read books from Warren Buffett.
I've read books from Howard marks.
I think the best book on investing is from Peter Lynch
beating. The street is a fantastic book.
His advice I think is second to none.
He has such good advice for everyday investors.
He basically says to invest in things that, you know, and
understand, don't invest in companies that you Don't know
how they're making money and you really don't understand them.
Don't put your money with them. Put your money in companies that
you really understand, you really like, how they make
money, the products that they sell.
And they have a really good story.
He's all about story of the investment.
If the company has a great story, if it's growing and
expanding is going to be a lot bigger in five years than it is.
Today. That's probably a good
investment. So that's been his primary
advice and that's really how he ran his fund.
The Magellan fund did really well.
He was one of the Arzo Fidelity. He's the one that made Fidelity
what it is today. So, Peter Lynch was this
Rockstar investor. He was one of the best investors
of history, and his strategy was basically to look for companies
that have a great story that he really likes the products.
They sell one of his best investments was Dunkin Donuts.
He went to a Dunkin Donut. He thought this is a long line
for a donut place. What type of donuts are these?
And he got one, and he thought, this is a great doughnut and it
came off an assembly line Dunkin Donuts.
How many of these locations are there?
R. So we started to do research.
He saw that they were expanding rapidly and then he went to new
locations and saw that the new locations were packed.
And after that, he decided I love the doughnuts.
Everybody loves he sings, they're expanding like crazy.
I need to buy this company, so he bought that company.
That had a 10 times return on it.
He made 10 times as original investment on it, with Dunkin
Donuts. That's why he believes and
buying what, you know, what you think, has a good story.
So I think that's really good advice, of course.
Is other good books on investing from Warren Buffett, the
intelligent investor, I think is good.
It's a little bit more of a dry read and then I think on the
subject of investing there's lots of good books.
You can read about the ride of a lifetime.
If you want to read about Bob Iger, lots of books that I read
outside of investing specifically, but just in
general business, like bad blood from John Kerry, you it's about
Elizabeth Holmes and theranos and the big scam that happened
with that. So I like reading about all this
stuff, but I think Peter Lynch really has The most applicable
and easy-to-implement advice for retail investors.
And then the question. What are your sources to get new
interesting titles, I think of the titles myself.
So I don't have any sources to get the titles for videos.
If that's what you're talking about.
Most of what I talk about is, just whatever is going on.
Whatever is on my mind. So that will continue to be the
episodes are basically what my thoughts are on current events
and what I'm doing with my investments and all of that.
Okay. Well, I think I covered some of
the news, there's a lot more to go over.
I An episode plan where I'm going to give a little bit of an
economic update. Now that we have some economic
news, so not as uplifting of an episode, but we need to talk
about the economy. So I'm going to be doing that in
the next episode. So I appreciate everybody for
listening. Thank you for all the support.
If you haven't like, half of you, listening are not
subscribed. So it does help me out.
When you hit the Subscribe button, it's free to do.
I appreciate everybody that does that and shares the channel and
I'll talk to you guys next time.