The Compound and Friends - Berkshire After Buffett, Disney Disappoints, Matt Belloni Live From LA
Episode Date: May 7, 2024On this TCAF Tuesday, Josh Brown and Michael Batnick are joined by Matt Belloni, Founder of Puck.News and host of The Town to discuss the entertainment and streaming industry, Paramount, YouTube vs Am...azon Prime, Disney, advertising, who will survive, and more! Then, at 47:44, hear an all-new episode of What Are Your Thoughts with Josh and Michael! Thanks to KraneShares for sponsoring this episode! Visit: https://kraneshares.com/ to learn more! Thanks to Public for sponsoring this episode! Visit https://public.com/ to learn more! KraneShares Disclosure: Consider the fund’s investment objectives, risks, charges, and expenses, which can be found in the prospectus online at kraneshares.com/kweb and kraneshares.com/kba Read the prospectus carefully before investing. Investing involves risk, including loss of principal. KraneShares are distributed by SEI Investments Distribution Co. and are not affiliated. Public Disclosure: Options are not suitable for all investors and carry significant risk. Option investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date. Certain complex options strategies carry additional risk. There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, among others, as compared with a single option trade. Prior to buying or selling an option, investors must read and understand the “Characteristics and Risks of Standardized Options”, also known as the options disclosure document (ODD) which can be found at: www.theocc.com/company-information/documents-and-archives/options-disclosure-document Supporting documentation for any claims will be furnished upon request. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC. See public.com/#disclosures-main for more information." Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices
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Ladies and gentlemen, welcome to the compound and friends.
Tonight's show is sponsored by our friends at Crane shares.
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Tonight's show is great.
Michael and I have not done what are your thoughts.
I think it's been two weeks off.
So I was in Bahamar with the family at the end of April slash beginning of May.
It turned into a little bit of a nightmare, but we don't have to go there now.
It was a great trip.
I shouldn't say nightmare, but we had a, we had a little allergic reaction issue.
Thank God everything's okay.
The week after we were in Los Angeles and we'll talk more about that in a second.
So it's been a while, but we've got an all new, what are your thoughts?
We're going to talk about all the big stuff that's happened this week
so far. Got a Berkshire Hathaway earnings over the weekend. A lot of breaking news on
the Berkshire earnings report. We'll take a look at earnings in general across the market.
And there's a lot of stuff going on right now worth getting into on the asset management
side and social
media stocks and we take a look at the yield curve and this is just a whole lot there.
But before we do, our interview with Matt Bellady that we taped while we were out in
Los Angeles.
Matt is one of the foremost authorities on the business of Hollywood. And increasingly, the largest companies in the stock market are involved in what goes
on in Hollywood.
Everyone from Apple to Amazon, Alphabet, which owns YouTube, Netflix, you name it, they are
a player in the media, in movies, in television, etc.
So Matt hosts a podcast for puck and the ringer
it's called the town and
That was cool enough to come by our live taping and be our guest and we had so much fun So you'll hear that then you'll hear what are your thoughts?
I hope you love the show and if you do make sure to leave us a rating and review really goes a long way
Okay, that's it for me. I'll send you there right now.
Welcome to The Compound and Friends.
All opinions expressed by Josh Brown, Michael Badnick, and their castmates are solely their
own opinions and do not reflect the opinion of Ritholtz Wealth Management.
This podcast is for informational purposes only and should not be relied upon for any
investment decisions.
Clients of Ritholtz Wealth Management may maintain positions in the securities discussed
in this podcast.
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Okay, guys, Matt Bellamy is the host of one of the hottest podcasts in the country right now.
It's called The Town.
It's a joint product between The Ringer and Puck.
We're in a moment where the largest publicly traded companies that all of us are investing in
are also at the forefront of massive change And Puck, we're in a moment where the largest publicly traded companies that all of us are investing in
are also at the forefront of massive change.
And they're very much involved in Hollywood and the media.
And there's just been this convergence.
So when you think of Amazon and you think of Apple and you think of Alphabet and Meta,
what all of these companies have in common is, they are increasingly becoming huge players
in televised sports, in Hollywood.
We're gonna talk about all of these topics and more.
I wanna say a word about Matt Bellinay.
Please.
Is he coming up now?
Yeah, he's coming up now.
So I grew up loving movies and had it like,
somewhat interested in the business of Hollywood,
but there was nowhere that I felt was accessible.
Obviously, the Hollywood Reporter is a big thing, but there was nobody speaking to casual
movie fans, Hollywood fans, and I discovered Matt's podcast on the bigger network, The
Town.
He's the only person, I think, who I read and listen to every week.
He is keeping me apprised on the latest.
Besides Ben.
Besides your Ben.
So Matt, excited to have you here.
Matt, come on up.
Matt, come on up.
Also, if my face looks bad,
Also, if my face looks bad,
the Knicks just blew a horrible.
We were up five with literally 15 seconds left.
So apologies for the long face, Matt.
How are you?
Thank you.
Thank you so much.
How are you doing?
Thank you so much.
How do you feel about being multitasked by a Nick fan?
Well, I just knocked over the mic,
so I'm not doing that well.
Okay.
Thank you so much for being a part of this.
We really appreciate it.
We are huge fans of yours.
Thank you.
And when we said we're going to do a show in LA and we want to talk about the business
of entertainment and the tech world encroaching, you were like the first and last person that
we said, this is the guy that we got to talk to.
So I appreciate it.
I'm happy to be here.
Now you were just in DC.
I was.
I went for the Correspondence Dinner weekend, although I did not stay the entire weekend.
I was gonna say that's not really your scene.
It is not my scene. In fact, I kind of hate it. It's just a lot of like people,
I don't know, it just feels weird to me. If I want to go to an event and see celebrities,
like there's plenty of that in LA. Yeah.
I needed that in DC and it's a lot of kind of posturing and self-importance and the kind of stuff I don't like.
Yeah, they don't have any of that in Hollywood.
No, they do.
But I can kind of keep my distance
and I know the people in DC.
It's like, it's kind of like a show.
I don't know, it's like the one time
where DC people think that they are Hollywood people
and it's weird, it just gets weird.
So I wanna ask you, you seem to be having a lot of fun
covering the moment, even though not all the stories are fun.
So when you're covering strikes and issues
that are affecting real people and real people's lives,
but you're talking to people at the highest level
of these issues, whether we're talking about
mergers and acquisitions in Hollywood, or we're talking about strikes, it seems like you're having fun and it
seems like you're kind of like the man of the moment right now on these topics.
Do you feel that way? I mean I'm definitely enthusiastic about the topics
and I feel like we started the podcast two years ago. I started the newsletter
for Puck a little bit before that and it was sort of the exact right time to start something like this
because almost immediately after we launched, all hell broke loose.
The Netflix stock tanked, which basically threw the entire business model of Hollywood
into total chaos.
Spring of 22 was like a warning shot.
Absolutely. Like three weeks after the pod launched,
Will Smith all of a sudden decided to punch someone at the Oscars.
Yeah.
And, you know, from there, there's been a strike.
There's been firings.
There's been mergers.
There's been buyouts.
It's sort of a time of complete chaos in Hollywood.
And no one really knows how it's going to play out,
which is terrifying
for everybody in town, but great for media that covers it.
Did somebody tell you that this felt like 2008
for Hollywood?
Who told you that?
Oh yeah, a friend of mine said that this is like our GFC.
And I think at the epicenter of it,
and we're gonna get into Paramount,
which the earnings call, oh my God.
The way that I think of what happened in Hollywood and the business of streaming was Netflix didn't know it, oh my God. The way that I think of what happened in Hollywood and the business
of streaming was Netflix didn't know it, but they were the road runner that was running
over the cliff and all of the other studios were a step or two behind them. Now, Netflix,
there was some sort of like a bungee cord that they were able to snap back, but all
the others, they're still in the, they're still splat on the ground.
Oh, and I think Netflix knew it. I think Netflix knew that they would be treated like a growth stock, like a tech stock, and
they would be able to capitalize on low interest rates and take on a bunch of debt to essentially
plant their flag in Hollywood and upend 100 years of the way that the business has operated.
It had a certain business model, it had a certain cadence. It had a certain volume that made financial sense.
Netflix blew that out of the water.
They started paying people insane fees.
They started making more than anyone had ever made
of film and television in the history of the business,
spending 15, 17, $20 billion a year on content.
They knew other studios and other streamers could not keep up with them.
They could not.
And they kept going anyway.
Yeah.
I mean, there was a point, I think, in the early 2010s where if the legacy businesses
had gotten together and said, guys, this is an existential moment.
This company is going to grow, grow, grow and eat our lunch and drive us all off a cliff.
They could have stopped it.
Hulu could have been that streaming service
that ran Netflix out of town.
It wasn't, it was owned by all the different studios.
They had different agendas.
They were all attached to legacy cable television businesses
that were incredibly profitable.
It's the classic inventor's dilemma.
I mean, you could not do that.
Nobody wants to cannibalize themselves.
Yeah, no one wanted to go to their board of directors
and say, you know this business that's the most
incredibly profitable business in the history of media
where we get people to pay us hundreds of dollars a month
for channels they do not watch?
Yeah, let's kill that.
You know that business?
Let's get out of that business
and let's spend billions of dollars on content to try to grow a streaming business, let's get out of that business and let's spend billions of dollars on content to try to grow a streaming business, which is, you know, not, uh,
doesn't have full penetration yet.
And it will essentially cannibalize the business we already have.
No one wanted to do that until it was too late.
Right.
So now, so now we're past the point where it's too late.
It seems obvious from a Wall Street perspective that most of these
companies are not going to stay standalone
Although it's interesting the ones that have merged or in the worst shape. So I'm not even sure consolidation is necessarily and I don't
I don't know the answer. What do you think is the answer?
Paramount will resolve itself but for everyone else what you know, I think a level of consolidation
Probably is the answer for some of these companies.
However, the government may not agree with that.
Depending on how the government defines the competitive market here, the government may
not allow Warner Brothers and NBCUniversal to merge.
Just might not say, they may say, listen, there are currently five studios in Hollywood, five legacy studios. Used to be seven or eight, now we're down to five. The Trump
administration allowed Disney to buy Fox, maybe they should, maybe they shouldn't
have, but if two of these other merge, we're down to five. If Paramount and Sony
merge, as is one of the contemplated scenarios here, we're down to five. And
will they allow that,
or will they successfully be able to argue,
listen, it's a different environment now.
We're not competing now.
Well, I was going to say, ironically,
first of all, nobody would look at the share prices
and say that these companies are dominant.
There's one, and then two,
eventually they had to let Sprint merge with T-Mobile,
because if they hadn't, both would have maybe disappeared.
But who would that be good for?
If Paramount and Warner Brothers were to make something work, Rich Greenfield was on your
show saying, I don't know if one plus one equals 0.5.
Well, they're still small in the grand scheme of things.
I mean, arguably Disney is too small.
Bob Iger made the argument when they bought most of Fox was that the streaming era is
coming in order to compete with Netflix, Amazon, Apple and these tech giants, we have to have the
most and the best IP in the world and Fox has a lot of that. Now, he probably paid too
much for the company at that time and they're now feeling the effects of that. But arguably,
Disney is still too small to keep up with Apple and Amazon.
They're less than 1% of streaming Disney is. Disney Plus is, I mean if you look at the Nielsen
numbers, they're one and I believe it's 1.7% of all viewing on connected TVs in the US.
How surprised are you that Tubi, which is a free app, it's ad-supported, owned by Fox,
has passed Disney in streaming?
People love free.
They just do.
It's too much.
People are just choking on all these subscriptions.
Yeah, and a lot of it is just Google.
They're like, I'd like to watch something now and I'm going to Google it and oh, here's
a service.
They don't try to push you into an ad tier, push you into subscription.
You know the biggest, everyone talks about Netflix and how it's the most
dominant streaming service. Okay Netflix is great. The most dominant streaming
service is YouTube. It is television for people under 30. I tell people you have a
company bigger than Netflix buried with an alphabet.
They break out ad revenue overall for YouTube,
but they don't really get into programming and stuff
because the users are worried about that.
They don't have to worry about that.
So after the world.
It's the greatest media business.
Incredible.
You talk about cable.
They recreated that audience
and they don't have to pay for the content.
They're still growing like crazy.
So AlphaBet just reported and their CFO said
YouTube advertising revenues was $8 billion
up 21% year over year.
And growing each quarter.
It's amazing.
And where does it stop?
I mean, there's still runway for YouTube.
If it's 2008, is Paramount Lehman Brothers or like...
So this is to me the most fascinating situation because a lot of the audience were investors.
If you're a shareholder in Paramount Common Stock, you don't have the holding company
shares that Shari has.
What are you to make of a situation where
the predominant shareholder is trying to parachute out with two billion and leave you with something?
No, upside. First of all, I have very little sympathy for investors who buy into a controlled company and then complain.
Warren Buffett was a shareholder of a controlled company.
Gabelli.
Yeah, Gabelli has been in that stock for years.
The stuff that Shari is doing right now, look at what her father was doing for 20 years.
He was extracting billions of dollars every year from that company.
He was paying his executives way too much. He was sitting
idle as YouTube and all these other platforms dominated the digital space. It's a controlled
company. When you buy Facebook or Metta, you know that Mark Zuckerberg could decide to spend
$5 billion on the metaverse, and you can't do anything about it. She owns 80% or 77%? She owns 77% of the voting shares.
She owns about 20% of the economic shares.
So this is great timing because Paramount had their earnings call yesterday
and I've listened to a lot of earnings calls.
I've never seen anything like this.
They let the CEO go, which is another clown show of a story.
There was like three co-CEOs that kept thanking each other for the introduction.
The whole thing lasted seven minutes and they ended it by playing the Popgun music.
No, Mission Impossible, even better.
What in the world?
Yeah, a little on the nose.
Your headline was, not great Bob Backish.
No, not great Bob.
And this guy made how much last year?
He made $31 million last year, about the same as Bob Iger at Disney. He is being paid $51 million to go away now.
Not as much as the previous CEO, Philippe Doman, was paid to go away.
That was $72 million.
And he made over $500 million as the CEO of Viacom.
Because there's no real board of directors here.
Or at least it doesn't represent the shareholders
in the way that traditionally you would expect.
It's a little better now, but in the Sumner Redstone age, it was Cronies, Yesmen and Syco
fans.
So now it's on the table.
It's David Ollis and Larry Ollis' son and Sky Dance is his company.
With Apollo.
Apollo on the other side.
On the other side.
Now Apollo would be better for the shareholders, right?
Arguably. Arguably. They would see Apollo would be better for the shareholders, right? If they get Apollo.
Arguably, they would see,
they'd be taken out at a higher price.
But what does Sherry want to do?
Sherry wants the Ellison deal.
In part because she believes that Ellison
will be a better steward for the company,
will most likely keep the assets together,
which she sees as important.
For some reason,
even though her father treated her horribly,
she's very attached emotionally to the company.
She feels this is a better buyer for his legacy.
She also is going to get a $2 billion payout
from him taking over her holding company.
And the shareholders of Paramount Global
are not getting the $2 billion.
For a long time, it's felt as though,
it's not money, it's not money.
It's not just money, although money seems
to be very important.
There has to be also a vindication
that it wasn't a mistake to smash together CBS and Viacom
and for some reason have a streaming platform.
That is a good point.
It seems like it's a legacy play, but not in depth,
but like for the rest of her life.
See, this was a good company.
Yes.
She exists in a rarefied circle where she has fancied herself a mogul for the past
seven or eight years, just like her father was.
The difference is when her father built and presided over this company, it was
among the largest media companies in the world and the most powerful because he owned
cable television and cable television during the 80s and 90s was the end-all be-all of media.
I mean if you look at the power that MTV and Comedy Central and Nickelodeon had during that heyday
unprecedented slowly during the 2000s less so in the 2010s, we all saw it coming. They
sat on it and wrote it out. Now she's still pretending that Paramount Global is amongst
those rarefied companies and she's trying to make streaming work. And it's pretty clear
that losing billions of dollars on a streaming service that's trying to compete with Netflix
is not the right choice if you want to keep your company alive.
So what do you think ultimately happens and what do you think should happen?
Will and should. Now, I tend to have a more Hollywood focus in my coverage.
I think that Ellison will be the better owner and steward for the creative community.
So he would buy out her and the picture of shareholders would be, I'm going to make your
shares from whatever is 12 to 40.
Paramount would then buy him out.
No, what would happen is he would, he will take over national amusements, which is the
Redstone company.
And then he will merge Skydance with Paramount Global into a new company that he will then
run still as a public company. And what his pitch is, is yeah, we're not going to take you out like Apollo will and
pay you more.
We'll get you out of...
We'll pay you a little, we'll pay you a lot less and you're going to go on this ride with
us.
I am a better steward of this company and my father has $150 billion and he is the tenth richest man in the world
and I am 41 years old and I plan to run this company like a you know a engaged active person
with real media managers he's going to bring in the CEO of MSUniversal. Do you think he gets rid of the streaming
platform if he gets control of it? Not immediately but I think he would curtail it and they would
start selling elsewhere and his pitch is basically come along on this ride with me
and ultimately your shares will be worth more.
Well, if you're a shareholder,
you sort of want that because Apollo,
what are they gonna pay for the shares?
16 bucks, whatever it is?
I forget what it is, but it's something like that.
In fact, a new offer is coming.
Okay.
So they are now-
With Apollo buying, you'll lock in a 70% loss
or whatever, depending on where you bought it.
You just got to kill.
Oh, I mean, the losses on this company are insane.
I mean, when you look at what this company was worth
pre-merger before she put CBS and Viacom together in 2019,
if you look at what they were worth,
I mean, it's lost more than half its value.
I believe it's almost like two thirds of its value.
So where are the lawsuits?
Is it they have no recourse? Is there something to sue over? I mean, it's lost more than half its value. I believe it's almost like two thirds of its value. So where are the lawsuits? Is it they have no recourse?
There's something to sue over?
I mean, it's lost value.
Like you could sue her for bad judgment,
but you know, she's lost money too.
She's lost a lot.
The way the shareholder suits will come
is when these shareholders feel like
she's enriching herself at their expense.
How much longer do they have?
They have the Super Bowl.
They had it this year. Okay, and is that a a year-by-year thing? How does that work?
It rotates among the four broadcast partners so they won't have it for four
years. You've talked about it. But their earnings this quarter were juiced by the
Super Bowl which was, I mean if you remember, it was not be repeated a year
from now. It will not be repeated a year from now and it was the first overtime
Super Bowl. So those ads that were running in the overtime, that all showed up
on the earnings this year. You've talked about Sony as being perhaps a better model for Paramount,
ditch the streaming, focus on making great content, and then just be an arms dealer,
sell it to all the other platforms who are constantly in need of movies and shows.
We're probably past the point where that's going to happen here.
But Sony looks really smart in hindsight, not having attempted to build its own
app, its own streamer.
You think that's the case?
It does in the short term.
Yeah. Now, Sony in not going into the streaming wars
has essentially admitted that it will not be one of the three, four,
maybe even five companies that dominate the next
generation of media.
It will be a smaller, more nimble, but Sony didn't have US television networks either
because it's a foreign company and you can't own broadcast networks as a foreign company.
That will be a problem potentially if they team up with Apollo to go after Paramount
is that they will have to divest CBS because CBS can't be owned by
a foreign company.
I wanted to ask you what your biggest takeaway was from the Disney versus Nelson Peltz saga.
This is a Dow component fighting off an activist, which is a fairly rare occurrence.
It was closer than I thought it would be.
Oh really?
Yeah.
Yeah, I guess he got about 30% of the vote.
He got, was it ISS or Glass Lewis, one of the proxy services.
ISS, I believe the bigger one.
So, you know, more than me, the bigger one sided with him.
So if you're Bob Iger or if you're the board of Disney, do you say, wait a minute,
why was that so close?
Or do you say, all right, that's over with.
Let's focus on the mood is at Disney.
I think Disney is feeling triumphant.
They they manage this pretty well. Given the mood is at Disney now? I think Disney is feeling triumphant. They manage this pretty well given the problem.
I mean, since when Peltz announced he was going after Disney,
the things they did to systematically boost that share price
and the price going up is why he lost.
I mean, if it was going down, down, down,
it would have been a much more urgent situation.
What was he putting forth other than he wants court seats?
Nothing.
He presented no new ideas.
And all of the ideas he had were things
that Disney was either already doing,
or they had floated them and decided not to do them
for very specific reasons.
But Iger announced a whole bunch of things,
from the Taylor Swift movie to a Moana sequel.
He did a lot of the things that got the,
he got the Disney family to endorse him. He got George
Lucas, all these people. I mean Disney is such a unique company in that people
have an emotional attachment to the stock and they buy it for all different
reasons and they have shareholders all over. I mean so many of them are retail
and personal shareholders that they did a very good job managing that.
The one thing and the reason I think that the proxy firm sided with Peltz is the succession
issue.
Eiger has absolutely failed on that very important issue, so much so that it arguably tanked
the company when Bob Chapek took over.
James Gorman, who is the former CEO of Morgan Stanley,
has managed his succession really well,
especially by Wall Street standards.
There were three heirs apparent,
two of them got big bags of cash,
and the third guy got the job.
He's on the board at Disney.
And didn't they stay at the company?
Yes.
That's a key fact.
This does not happen.
This does, look at Goldman Sachs.
Look at this.
This never happens.
So James Gorman is someone that you could point to and say, okay, this guy understands
succession.
That's probably one of the positives on the Disney boards in their camp they could point
to and say, look, we have succession experts here at the company.
True.
Although the four people that are being evaluated
as potential successors internally, all great executives,
none of them is perfect.
So they're going to have to make some very difficult choices
over the next six to eight months in positioning one
or more of them.
That's got to be one of the hardest companies on Earth
to find a perfect CEO candidate.
There's no such thing. And Eiger seems now to be one of the hardest companies on earth to find a perfect CEO candidate. There's no such thing.
And Eiger seems now to be sort of molded in the CEO factory.
But even when he took over, there were a lot of questions about him and whether he had
the chops for Wall Street.
He was a former weatherman.
He grew up in the TV business.
There were a lot of questions about Eiger at the beginning.
And by the end, he was considered the greatest CEO the company's ever had.
So let's talk about sports, specifically the NBA. I'm not over this next loss, please nobody
talk about it after the show. So the rights is over after next season. Disney pays the
NBA 1.6 billion, Warner Brothers and inside the NBA on TNT pay $1.2 billion. Of course, YouTube and Amazon are going to be sniffing around heavily.
What do you think happens there with the future of sports?
NBC's Comcast and NBC Sports.
And these new streams.
We actually just taped a pod that's going to run tomorrow on this subject.
I'm listening.
So, you know, it's seeming, how it's playing out is that the NBA is likely going to increase its package from two to three
It could do four but what's likely going to happen is there will be three distinct packages. One of them we know is going to disney
One of them which is the abc espn combo and the finals will likely remain on abc
Okay, still important enough. Oh, absolutely and there will be a streaming component whatever the over-the-top
Oh absolutely and there will be a streaming component whatever the over-the-top ESPN service not ESPN plus whatever replaces it and becomes the
over-the-top ESPN those games will then air there because all of the outlets
will have a streaming component there will not be anything in my
understanding that will be only linear so what the difference will be is that
Amazon will have a package and Amazon will have a number of games that are Amazon Prime video only just like they do with NFL Thursday night and that there is now a
third package that is either going to go to
NBC and Comcast via Peacock and NBC or it's gonna go to its current rights holder
Nobody cares about the regular season games. Is there be a playoff packages packages as well? They're going to divvy up the playoffs as well. So let me ask you about
Inside the NBA, which is the crown jewel of NBA coverage. Is it possible that that gets streamed
on either Netflix or Amazon? Could there possibly be a deal that would happen there? You mean on
one of the non-rights holders? No, what will likely happen, it already does stream on Max inside the NBA,
but if, let's say there's a scenario
where TNT doesn't get a package of rights,
that leaves that show in limbo.
They will have to move it to another outlet
or reconstitute it at another outlet.
Warner Brothers doesn't own that show?
They do, but when they re-sign the talent,
it's all contingent on them having the rights to show.
So they can, I don't know what their deals are,
but in every other instance,
when the network that has the show loses the rights,
the talent will go to wherever the broadcast comes from.
A lot of high profile sports commentators have lost their jobs in the last year or so.
Like very surprising names.
Just one night they're calling the game and the next night they're gone.
So it seems like people are willing, the media companies are willing to sacrifice a lot of
salary to rightsize and maybe even send them.
Well, they have to
I mean the rights, the sports rights fees are becoming so expensive that that is really
all they can care about. I mean, if you look at ESPN right now, ESPN has been forced to
pay so much money for these rights that they rent, by the way, this is why Netflix has
not gotten into this. They rent these rights, they don't own the rights. And if you watch
ESPN now, it's a very bare bones sports center. They're not doing original programming.
Nobody watches it.
They turned over like half the day to Tanktop Dune, what's his name, McAfee. And they're
just not, they're not as ambitious as they once were because the entire priority of ESPN
is keep those sports
rights.
That's what the viewers want.
That's where the carriage fees come from, and that's what's going to transition them
to the streaming future.
But at some point, Warner Brothers can't afford to keep going higher and higher.
Hasn't Zaslov been aggressively paying down debt?
Oh, I mean, it's an awful situation for David Zaslov.
What do they do?
Because there was a journal story yesterday that explained that
Peacock and NBC Universal, they're prepared to pay $2.5
billion for the B package.
That's double what Zaslav is currently paying.
Can Warner Brothers Discovery afford to match that?
They have a matching right because they're an existing older.
They can match that, but not looking great.
I mean, if I had to bet, I'd probably bet on Comcast taking those rights because Comcast balance sheet is much better.
I want to ask you about Warner Brothers. It's 98 million subs. It's not tiny.
There are some weird branding things with Discovery Plus and taking away the HBO name, which seems like madness to most people.
I was a defender of that, but I'll explain why.
Okay. They formed the company through and there was some provision called the Reverse
Morris Trusts, which kept them out of the merger and acquisition situations. But that's over now.
They could do something. Somebody could make a play for them. Something.
How do you think that situation resolves?
And why did they get rid of the HBO name?
Why did you defend that decision?
Okay, so two issues there.
They can merge with other companies.
They can sell off assets. They can do anything they want.
For the reason I mentioned before, the regulatory stuff,
I don't see them merging with another media company or a tech company, at least until the election at the end of this year,
because of the government.
The government is just super aggressive going after these kinds of mergers right now.
Doesn't mean that they won't sell off assets.
They have an earnings call coming up. And if they are not recovering
in the ad market, they are the most exposed company to the downturn in linear television
because they don't have a lot of other stuff.
The cord cutters.
The cord cutters, exactly. And the shift in dollars from linear to digital. I mean, these cable networks like TNT and TBS,
they depend on that.
So if they premise this entire
Warner Brothers discovery transaction
on $14 billion a year in EBITDA,
they're probably gonna be down to about 10.
That changes the entire calculus of this company.
And I would not be surprised if they had to sell CNN
or sell some of these other assets.
Who on earth do you sell CNN to?
TBS.
It seems really, like it seems very difficult right now.
Maybe Comcast would buy it.
Okay.
Wait, why did you think it was a good idea
to kill the HBO name?
Well, they didn't kill the name.
They put-
It's Max now.
It's now Max.
The app was HBO Go. The app was HBO, it was HBO Max the name. It's Max, no? It's now Max. The app was HBO Go.
It was HBO Max, and it is now just Max.
Yes.
I think the calculus there was as great as the HBO brand is,
there is a roof on the growth potential of a product
with HBO in the name.
Because as much as you and I might love that content,
as many people as HBO is for,
it is not for many, many people.
And it has a very established brand
of being something in the television marketplace.
What it is not is 90 Day Fiancé and HGTV.
It's too high brow to be a universal app. Exactly. It's not a, you know,
when you look at Disney+, Disney plus houses all of these different brands.
Disney is lucky in that Disney itself is a worldwide brand, Max obviously is not,
but the thinking there was if they ever wanted to grow this thing and turn it
into a global streaming service that could generate 100, 200, 300 million subscribers at some point,
they had to drop the HBO name from it and just have HBO be a tile and part of the overall content offering, not the entire service name.
Do you think that any of these companies would follow either Free Free or 2B and do that sort of strategy?
The fast channel strategy? Yes, I do. First of all, they're all either launching or
have already launched advertising tiers that are cheaper and they are putting a
lot of resources into growing those and I think the goal for a lot of them, maybe
not want a discovery because the max service is sort of considered higher brow but the goal is to have different tiers you know you have a free
tier you have a ad tier that's cheaper and then you have the premium tier for
people who want the best and don't want to pay that seems like what we will
likely end up with there there are all sorts of challenges in having a free
tier it could cannibalize some of your other businesses we haven't I don't know end up with. There are all sorts of challenges in having a free tier. It
could cannibalize some of your other businesses. We haven't, I don't know the
data on that, but like Pluto TV is owned by Paramount. Pluto TV is a fast channel.
They have Paramount Plus which has a ad tier and has a subscription tier. So
they're doing it and you see now Fox has Tubi, where Fox does not have a streaming
service for subscribers.
They have this free one.
Well, they have Fox Nation, but that's for Fox super fans, Fox News super fans.
But you see some of these that, you know, Amazon is a perfect example.
Amazon just did a super interesting thing and we saw it in their earnings because they
supercharged advertising.
They moved every single prime video subscriber
to an ad tier unless you want to pay $3 extra to not have ads.
They don't want you to pay the $3 extra, right?
No, they make more money off of the ad tier.
That's what Netflix is doing right now.
That's why Netflix is getting into all these live events and sports related content and
why they got the WWE, because Netflix knows that in the future,
they're gonna make more money on the ad tier
than they would on the subscription,
the full subscription without ads tier.
Here's the question that's on everyone's mind here.
What the hell is Apple doing?
Good question.
Let me set this up.
They have unlimited money.
They have so much money that the money they have
is making more money than most of the
companies that we're talking about.
Literally.
And why are they burning it on $300 million shows?
It's $150 billion earning 5%.
They do docudramas.
Arguably they don't have to do anything, but they kind of are doing weird things.
So just I picked out a few examples.
They'll spend $300 million on a four hour Martin
Scorsese film. But then when you finish watching it, there's nothing else to watch if you've
already seen Ted Lasso. It's the strangest strategy.
They do have a lot of shows. I want to, they are launching a lot of shows and many of them
are good.
Where's Suburban? Is it ever coming back?
It is. They say it's coming back.
Yeah, listen, there was a six month strike.
So a lot of that stuff got delayed.
So do I have the wrong impression that...
So it seems, it doesn't seem uncommitted.
It seems lackadaisical.
Am I wrong about that?
It seems to me unfocused and half-assed.
It does, okay.
And that's, but that's by design.
They have clearly decided they want to be-
I am half-assed by design as well, so I do respect that.
They want to be in the space, clearly, and they see value in the overall services ecosystem.
And Apple defines their success in this arena as services revenue, which has gone way up in recent years.
Now, that also includes things like cloud computing
and things that, and cloud storage
and things that have nothing to do with content,
but music and Apple TV Plus,
and that is in the services division.
They just, they want to dabble.
They could be Netflix if they wanted to.
They're, you know, the old Oprah line.
They're in a billion pockets.
Who is in charge of their entertainment efforts?
It's Eddie Q.
Still?
Yeah. I mean, there are two guys who came from Sony
television who now run the content unit.
But Eddie Q is the guy who runs services and he's the ultimate boss there.
They could also dominate sports.
Could you, I was going to ask you about that.
So they don't, they don't strike me as wanting to share the NBA with three other
platforms.
That is why ultimately I think they didn't go in on it.
Well, they bought all of major league soccer.
They seem to want to own it.
They seem to want to own a whole thing, but that doesn't really exist.
Or I guess Netflix now has the WWE.
They're not sharing it.
What could Apple do in sports?
No, they do share it,
because there are other WWE packages.
They're getting the Monday Night Raw package,
but there are other WWE events.
Peacock has some, yeah.
Netflix, I mean, Apple in the sports world is fascinating
because they could be the biggest player in sports
if they wanted to, but they haven't,
and they have selectively dived in. They do, they have a, a major league baseball package that they are not renewing.
They have had, um, you know, they, they, they have been in the mix for a number of
these rights negotiations and ultimately only pulled the trigger on soccer.
Matt before we can't let you go without talking about movies.
I, so I, I love going to the movies.
I'm still, I'm the one that actually tries
to support the industry.
I was at Civil War opening night
and there was five other people in the audience.
Oh, and that movie actually opened.
Five.
So, how screwed are theaters and does Max,
which is a stock that I bought recently, Max,
does IMAX, excuse me, have a chance to fill the void
and be like the premier movie going destination for fans?
Yeah, I mean, increasingly the numbers are showing
that for a certain generation and certain type of movie goer,
going to an IMAX is now going to the movies.
You are either going to go all in for the kind of moviegoer, going to an IMAX is now going to the movies. You are either going to go all in for the kind of movie that you feel should be seen
on that kind of a screen, or you're going to wait and watch it at home.
There's none of this like, I'm a serial, very less, a lot fewer of the, I'm a serial moviegoer
and we'll just see whatever in a regular theater on a Thursday night.
That doesn't exist anymore.
I mean, it does, but...
Horror maybe a little bit.
Yeah, there are certain genres that still can open,
but for the most part, there are categories of movies
that have now been relegated to streaming.
And there are holdouts.
We've seen some weakness in horror this year,
so we're wondering if that's next to go.
Animated films that are not part of franchises
have also struggled over, you know, post-COVID. Awards-oriented movies, the kind of prestige
movies that go for the Oscars. That used to be a category. I saw a billboard yesterday in Hollywood
for Zendaya's new movie, which I could have told them. It says only in theaters. I said, Oh really?
Do you know her fan base? They don't know where the movies are.
Listen, it opened to 15 million. Not terrible. Not terrible. Um, will many more of those
of those fans see the movie on Amazon Prime video when it debuts there? Yes. In a few
months? Yes, of course. That's where I'll see it. Yeah. And but that movie was made
by Amazon. They could have just put it direct to the service.
They chose to release it in theaters.
And they're doing that with some of their movies,
but not all.
Is the Academy gonna get rid of the requirement
of having to be in a theater for a certain amount of time?
Oh no, they just beefed it up.
Oh.
Yeah, it was sort of considered a jab at Netflix
because the rule has always been to qualify for Oscars.
You have to play in one theater or a couple theaters in New York, LA, Miami, a couple cities for you.
Just a qualifying run.
But now they have a rule that in order to qualify for Best Picture, you also have to run for,
I believe it's either seven or ten days in a smattering of
the top 50 markets around the country. So it's requiring an additional theatrical
release in order to qualify for Best Picture, only for Best Picture, and that
has been perceived as a bone that they threw the theater owners and a jab at
Netflix for not doing that. Michael mentioned IMAX. You had Richard Gelfand, the long-time CEO,
on your show recently.
For me, it feels like that's the only interesting reason
to go to a theater these days,
is to go see something like Oppenheimer in that format.
Well, we saw Dune II, and I said to Josh,
I said, why are we going three weeks after it opens?
He goes, I can't get tickets, asshole.
Yeah, and something like 40 or 45% of the gross revenue or dune to was from those premium
large format screens.
But you also seem to be entertained or amused by Adam Aaron.
You like that?
I am.
Endlessly entertained by him.
Why are IMAX and AMC two standalone companies, why don't they just grab onto each other and
like really go for it and upgrade all the theaters.
Why would IMAX want that?
Because it's a $16 stock
with an $800 million market cap.
I mean, first of all, IMAX is not a theater company.
IMAX is a technology company that powers these theaters
that are largely built by other companies.
So I mean, AMC just has so many garbage underperforming theaters.
That is an IMAX shareholder. He does not speak for me.
And I just want to be clear, none of this is investment advice.
No, no, no, never, never, especially not in movie theaters.
Right. But you know, AMC just, you know, they are still burning cash,
raising money to stay open. What do you like about him?
I find him funny. I mean, raising money to stay open. What do you like about him? I find him funny.
I mean, I own a gold mine.
I find him hilarious.
He started a popcorn company.
I mean, he's kind of a carnival barker almost,
where he's on Twitter.
He calls himself the head ape.
I mean, the whole meme stock thing
was one of the just completely outrageous things about him.
Are you pitching him as an Iger successor?
I am not.
Are you behind the scenes?
I am not.
I mean, I actually have had some beefs with him.
At the height of the meme stock stuff,
he sold a bunch of shares.
While he was on Twitter cheerleading all the apes
to take the stock to the moon, he was selling.
Yes.
And he claimed it was estate planning or some garbage,
but he knew what was going on.
I've been on Wall Street 25 years.
I still can't explain it.
Whatever transaction created the second class of shares, whatever that whole thing was.
Yeah, the ape shares.
It's one of the most disastrous things I've ever seen.
Yeah, it diluted them all.
I read about it and I still don't understand precisely the mechanism.
What would have been the best case scenario?
I don't know.
It was short term.
They needed to raise money.
They were trying to avoid bankruptcy
by any means necessary.
Their rivals, Cineworld and Alamo Drac Cows,
they went bankrupt.
Adam's 100% goal was do not go bankrupt
and he did anything he could.
And he's still doing anything he can
to keep them out of bankruptcy.
Okay.
I want to, first of all, guys, Matt Bellamy, ladies and gentlemen.
I want to talk about your show.
As I mentioned before we brought you out, we're huge fans of your show.
It's not to Lucas, by the way.
Oh yeah, Lucas is great.
Lucas Shaw, we love him.
So we have a big podcast listening audience and I would imagine most of the people here
are going to download the show and check it out.
I asked you if you're having a lot of fun.
I would also point out I feel as though you're to some extent driving some of the conversation
at this point.
You're doing three episodes a week?
I do three episodes of the pod a week and I do two Newsletters for subscribers to puck and that has additional information. That's where a lot of the market moving stuff
Yes, I put in break. Cuz you're I was the first report that Ellison was going after paramount. So do you feel like Thanos sometimes?
No on a good day. I can I can move the market but but most days I am writing analysis
I'm writing
sort of insights on what's going on. I will break news when I have it. And I also try to have a little fun with it.
You're like the Matt Levine of Hollywood.
That's a compliment.
Yeah. Okay, I'll take it.
I think, listen, I think of all the more recent shows that have
come along. Yours is absolutely on fire. People love it. People
talk about it. I mentioned to you, people talk about it on Wall Street,
trying to figure out what's really going on
that the analysts aren't figuring out.
So I want to say thank you for everything that you do.
Thank you for coming here to be a part of this.
And please don't stop, keep covering these companies
because we're having so much fun listening and reading you.
Thank you very much.
And you can check out the town, it's on all the platforms.
And then there's a a in the episode bios there's a link if you're interested in
signing up for puck you get a discount if you go through the block. Fantastic and
now my third guest Shari Redstone. Bring her out. We'll have an arm wrestling match.
She'd probably win. Thank you so much. Guys on behalf of everyone at the
Compound Media on behalf of the Compound and Friends
and Reynolds Wealth Management and Advisor Circle and Future Proof, I want to thank you
all so much for coming and we will see you again sometime soon.
We will be back.
This has been a tremendous experience for us.
So thank you guys so much for coming.
Let's get some drinks.
Now stay tuned for what are your thoughts.
All right. Michael say hello to everybody.
It has been a minute, hasn't it?
I was going to say it's been a couple weeks.
Hey everybody, welcome to an all new edition of What Are Your Thoughts?
So excited to be back with me as always, co-host mr. Michael that Nick Michael say hi
Oh, hello. All right, and I am of course downtown Josh Brown
If you're new to the show we talk about some of the most important stories that have been happening in the markets for investors
And sometimes we'll throw some stuff out that is not a big story, but we think is interesting either way
You're about to learn a lot. I think you're about to have some fun before we get started a couple of quick items of housekeeping number one
We have a sponsor this evening and it's our friends at crane shares Michael tell the folks about crane shares
I'd say crane shares is probably best known for their Chinese Internet fun k-web, right? Yeah, I remember when they launched that that's right
20 we were having drinks with Brendan like the night before or something.
13, 14. Yeah. Yeah. We've got, and it's, listen,
it's the last couple of years have been a hell of a go for Chinese investors,
particularly Chinese internet companies, but start seeing some green shoots.
Chart looks it's bouncing. Yeah.
And what's really funny about the Chinese rally is nobody's long yet.
Well, cause we, it's, we don't know why we're talking about this with Jeff
DeGraf is, I mean, there's been plenty of rallies over the years that Jeff
told us he's bullish. He thinks it continues, but, uh, I just, it's,
it's probably the most under allocated us investors, retail,
and institutional art of China for at any point in the last 15, 20 years,
I would guess. No doubt. So let the games begin
Anyway, check out crane chairs comm if you want to learn more about their signature ETFs k-web and KBA
Alright, thanks to Queen chairs. I wanted to say hello to a couple of folks
But first of all, let me just say to everyone who is currently watching us who came out to the live LA taping
We love you
guys special shout out to Cliff Peoples who was the first one there the last
one to leave Cliff you are the man wouldn't be a wouldn't be a live show
without you so thank you so much for coming out and hanging it was a it's
great to see you and everybody else we got a we got a lot of regulars on the live chat tonight. Chris Hayes is here, Drew Heckman,
Benjamin Lupu, Cliff, of course, Jeff, Jerry Gould. Welcome everybody. John Carlo, great
to see you. Jeff Asola, great to see you. So look, we're still in earnings season. Even
though we've gotten through the large technology names, still have some big names and Disney is one of them.
And today is a pretty ugly day for Disney shareholders.
Just to recap.
Hand up.
Yeah.
Just to recap, it was a good year for Disney shareholders.
Bob Iger successfully fended off a pretty big activist hedge fund challenge.
Um, Nelson Pelts kind of got his ass handed to him in the vote.
Maybe it was closer than I would have guessed, but still, um, it was sort of
decisive and now what I just saw your name.
Well, I'm good.
Very good at this.
Kendrick, Lizard, Lizard. Oh my God. Oh? I'm good. Very good at this. Kendrick Lazard.
Kendrick Lazard.
Oh my God.
It's gangster, right?
I do, other than the stock market these days, I do literally nothing else but obsess over
Kendrick versus Drake.
This is like, I'm having so much fun.
I'm having so much fun with this whole thing.
Do you see that there was a shooting outside Drake's house?
Yeah, I'm not sure if that's real.
I see that there was a reported shooting and remember it's Canada.
So that might've been a nerf gun. I'm just, I'm not,
I'm just not so sure about that story. It seems fishy. We should,
we should cover Disney though.
Well we'll just do a little bit cause we're, we're doing, you know,
there's more. I know we're doing a lot.
So yeah, Disney, let's just tell this chart. It was an awful day for the stock.
Third worst day going back to the pandemic.
And there were some bad days in the pandemic as well. I don't know. That's the third, but it looks about it's bad. It's bad. The stock is in the gap.
From the last owner support. Yeah, that's not good. Never want to see that. No.
So the story is this. So
can I back you up real quick? When you say it's in the gap from the last earnings report,
why do you never want to see that? Well, listen, all gaps get filled. That's my mindset, right? All
gaps eventually get filled. Price finds a way, but it's just, it's just not good. You just don't want
to see it. It's, it's, it's, it it's psychologically it means it means the buyers did not show up where they ordinarily
would have. So anybody that bought that gap higher after the last earnings report, if
they still hold it, they are now in the water. Just psychologically. You just it's not great.
But for it to not see it. So the transition from a linear network,
forget about the parks, to streaming, it's rocky, right?
And we know it's gonna be rocky, and it is.
So ESPN's revenue rose 3%, I guess that's good-ish,
but the operating income dropped 9%.
And if you think that's bad,
this is from Alex Sherman at CNBC, if you think that's bad, this is from Alex Sherman at CNBC. If you think
that's bad, get a load of this. The decline in the company's other linear networks such
as ABC, Disney, FX, Nat Geo, et cetera, excluding SPN fell 8%. Operating income got destroyed
down 22%. It's ugly.
You know, it's this really tough time. All right, so it's great that Eiger decisively beat back
the activists, that's nice.
But in the wake of that, you still have this.
You have linear television just in, just imploding.
And it used to be in slow motion, it's in fast motion.
Like, think about Disney Junior.
When my kids were babies, we would put them in front of Disney junior all day. Right. Now it's,
it's Disney plus and it's Netflix have children shows and no one's
watching Disney. I don't know.
People couldn't even tell you what channel it is. Right. And that's it.
And now they were making a lot of money,
forcing the cable companies to carry that channel as part of a package plus the
advertisements and both of those things are going to go away.
But the good news is, but the other side of that is that streaming only lost like 18 million
this quarter. And if you take out, by the way, it lost like $660 million at the quarter
a year ago. So they're writing the show. That's insane. If you really think about $660 million in the quarter a year ago. So they lost 18 million this year.
If you take ESPN plus out of it, the direct to consumer streaming program or package actually
made a little bit of money. So it's a transition.
We got some takes on the feed. John Carlo is saying it's YouTube now. That's what I'm Jack.
Let's say another another take here.
Bluey will save Disney.
Who's that?
Drew Hickman.
I don't know.
Bluey.
My kids are too old for me to know what that is.
Jay Luther is saying can't stop the Christian right wing boycott army.
They think Disney is Satan.
I've heard that argument before.
I don't think there's as much boycotting of Disney
as the media makes it sound.
I just, I don't believe that's a material number.
The worst problem for Disney in the guidance
is that travel is softening.
So the parks have been obviously an incredible business
and all the resorts and all the activity around traveling to Disney parks.
And we just know that like travel overall, it doesn't, it's not crashing.
It's cresting.
Well, it can't get better.
Like it's not going to get better.
It's been on fire.
All right.
Can we, uh, can we move off Disney?
Cause we have more to say at the end of the week on that.
Yeah.
Berkshire after Buffett.
So what, well, you're, this is yours. So where do you want to start with us?
Before we get into Todd and Ted, did you listen to any of the meeting?
I did. I caught clips of it. I didn't have three hours to watch it on CNBC.
So I had six hours. I listened to the entire thing. I was.
I swear to God, I was at kids sports all
day, Saturday and Sunday. And so I got through it. I had one
air pods in your ear. Yeah. Father of the year. Come on.
It's a it's a seven year old lacrosse game and there's t
ball. So I was I was I was watching but I was also I was
also listening. It was interesting listening to
Warren Buffett clearly, I mean obviously he's an old man, but he is I don't know that uninvolved is the right word but
Greg energy they are really they are really steering the ship
This is this is gonna sound up, but I can't listen to him anymore because of how hoarse his voice is.
Yeah, it's tough.
I'm like a stand.
Yeah.
So, like no disrespect.
He doesn't owe us anything at this point.
But his voice has become difficult for me to listen to a lot of.
The best quote on the entire six-hour marathon was
You should read that podcast
Wait, who said that?
What podcast was you referring to a package? He was talking about a podcast He was I think I can't even remember what it was, but I he said yeah
Yeah, you should read that podcast just dude reading transcripts of pods. That's a direct quote. You should be listening
Is he reading the compound of friends? Cause I hope so. I hope so. I hope he's not listening
to this episode after your mouth. There's a non zero percent chance that somebody would have sent him.
Somebody would have sent him the Lawrence Cunningham episode we did, which was mostly about Buffett.
Yeah, it's a non zero percent chance. So Todd is, I didn't realize that he's your take, your takeaway is Todd and Ted are running
the show or Greg Abel was running the show.
No, no, no, no.
Abel is running the show.
Yes.
Yeah.
That was my takeaway.
Yeah.
That's what they want your takeaway to be.
And it's true.
I want you to believe I didn't realize that Todd and, you know, I'm not like a Berkshire
stand, but I didn't realize that Todd was running, was literally the CEO of Geico.
Yeah.
And he also has an investment portfolio.
That seems like a lot, seems like a lot of work.
The insurance company runs itself.
Come on.
You ever meet an insurance company executive who didn't play golf six days a week?
I haven't.
I don't know if I ever met an insurance company executive, but the FT did an article talking
about Ted and Todd's portfolio results compared with Berkshire Trot on please.
So this is going back, what is this a decade, I guess, Buffett has underperformed, Buffett
stock picks have underperformed the S&P Berkshire has, we know that and Ted and Todd have.
And this is not a surprise
I mean listen it's if they're not although they do have a large position in Apple basically everything
else for the most part has not kept pace with Google and Meta and I didn't read I didn't read
this article how did they delineate between whose stocks were who well so as it turns out it was
company filings but as it turns out they got some of wrong. I'll get to that in a second. But the numbers are in both 21 and 22.
They, meaning Ted and Todd, missed the S&P by double digits.
Last year, they also trailed the index.
They have trailed the index in seven out of 10 years.
That's not great.
And it's been hard.
It's been hard for all stock pickers, but they're not immune from that.
They don't own enough Apple.
If only they own more Apple.
Exactly. Yeah, they need more Apple.
It's ridiculous, right? So, what's your question?
Actually, go ahead. Wouldn't it be dangerous if they outperformed the market over the last five
years given what's gone on in the last five years? Like the tech out concentration, it would be wild
if they beat that. It would, but a fifth of the portfolio is in Apple. So they bought Apple stock in 2016 for the first time.
And that was like a big deal because famously Berkshire is not, they don't invest in technology.
So they spent $40 billion, this is between Ted Todd and Buffett, they spent $40 billion
buying shares of Apple.
Try it on please.
The shares are now worth $175 billion.
I mean, this is kind of hilarious.
The red bar is Apple and the gray bar is all the other holdings.
And it's now...
It's like the greatest stock of all time.
Wait, it looks like it's almost, it looks like it's half.
It's half the holdings.
It is half.
It's a quarter of Berkshire's market cap and half of their stock portfolio, those are the
numbers.
So that's kind of funny.
They own 5.8% of the company.
Think about that.
That's, I mean, really think about that.
That's insanity.
So they sold a little bit of Apple and they were asked why, of course, and they could
buy Nvidia.
The reason that Buffett gave was yes, he was trying to buy Nvidia leaps.
No, he said he just said he said it's tax code.
He said he doesn't think taxes are going down.
And so it wasn't it wasn't a fundamental.
At least he didn't say it was a call in the company or call in the old foreign market
But what he did say what he did say
That he did it in the past and this is where this is in that FT chart previously that shows the performance
He owned the paramount decision now. I don't know if that was covered for the for the for the young bucks
I mean, they're not young kids
But or but I don't know why he would say if it it wasn't true. Cause he said, he's like, oh wait, actually, actually,
there had been reports over the last year
that that was Ted or Todd's decision on parameter.
He goes, that was 100% my decision.
I don't know if he would have said it if it wasn't true.
I 100% believe that it was solely his decision.
And the reason I believe that is because
it feels like it's out of the traditional Berkshire Lane.
They really don't do a lot in that area.
So it seems like the deputies could not have gotten permission from that.
To do that, it feels more like Buffett knows these people.
He definitely knows Shari Redstone. He definitely knew some of the Redstone,
you know, like, of course he knows Mario Gabelli.
Like a lot of the players involved there
are like Buffett era people
whom you know he's had dealings with.
So I just, that's why I think it's obvious that it's him.
I feel like if Todd Combs rolled up and was like,
hey, I want to buy this
piece of shit streaming company that has literally negative cashflow and majority ownership by a
holding company that's owned by a ghost and his daughter. I don't feel like he would have
greenlit that. So I definitely believe that. Pretty remarkable that he was able to do a six hour marathon at this age.
Let's read this.
In 2021 and 2022, Todd and Ted, the younger stock pickers, who we're referring to.
I did this.
No, but they missed the S&P by double digits.
That sounds really aggressively bad.
Don't you think?
I mean, well, in 21, it's not so bad given that the market was screaming. That sounds really aggressively bad. Don't you think?
I mean, well, in 21, it's not so bad given that the market was screaming. I'm not surprised that they underperformed by double digits, but in 2022 in the
market, shit the bed, I'm kind of surprised that they missed by 10 points that
year too.
Do you think the overall organization has become more risk averse because they've
been underperforming and maybe it's like a tacit admission that they don't
understand the markets right now?
No, I don't think so.
And I think that the next chart proves that point.
Okay.
The cash position.
We're not going to go there yet.
Um, well, are we going to go?
Yeah, I guess we will.
All right.
Let's talk about the cash.
So it's a new record amount of cash on the books at Berkshire Hathaway.
It's a hundred and eighty9 billion with a B. Now, that money is mostly earning 5. something
percent, which makes it forgivable if you're a shareholder. It's not like they were doing this
seven years ago. And what this chart, this wonderful chart, thanks Sean Russo, thanks Chart Kid,
what this wonderful chart shows us
is that it's been growing,
but then the next chart makes it clear
that if you look at it as a-
Back, back, back.
Before we move to the next chart.
All right, fine, move to the next chart.
Apologies. Why, what'd you wanna say?
I forgot.
It's a safe space. Okay, so this, what we're showing you here now All right, fine. Move to the next chart. Apologies. Why? What do you want to say?
I forgot.
It's a safe space.
Okay.
So this, what we're showing you here now is that $189 billion in the context of the overall
market cap of the company, which I think is, what's the market cap now?
Oh, I don't know.
What is it?
$600 billion?
I don't know.
I don't even know.
No, higher.
$750 or $800 billion.
Oh, what I want to say on the previous chart is, yeah, chart back please, John.
Thank you.
So you know what else looks like this?
The market cap, the operating income,
Yeah.
the liabilities, it is after all an insurance company.
So to your point, Josh, about are they getting
more conservative given the market?
I think the next chart, back on, this is really important,
shows that no, I mean, they got super conservative in the run-up.
So it's cash as a percentage of the overall market cap.
So it got super conservative in the run-up after the technology bubble burst, excuse
me. after the technology bubble burst, excuse me, and then the cash as a percentage of market
cap crashed in 09 as it was going bargain hunting.
And it did so again in 2021.
So I don't think it says that.
So right now, the cash on the balance sheet is 21% of the market cap.
And that is about average going back to 2005.
Yeah, it's about average.
So if you look at it just in terms in dollar terms and you don't see it as a percentage of market cap, you could easily be misled to think that there's some sort of massive
change in direction for Berkshire. The truth is they typically are somewhere in the range
of like, let's say 15 to 30% cash and they're right in the middle right now.
So I thought that this call in particular was a lot about Berkshire after Munger's gone.
And by the way, at one point, Buffett said, what do you think Charlie?
Not as like, not as a joke.
And he, he caught himself and they had a good laugh.
But it was a lot about Berkshire operational stuff, what they're doing, and I think less about
the overall economy and market related questions
that they typically have.
Yeah, I think that's good though.
Cause I don't think there's much that needs to be said
about the overall economy.
I think everybody gets it.
Like inflation is sticky, but there's GDP growth
and now there's economic growth around the
world.
Some of it is nominal because prices are up.
So what blah, blah, blah.
Like what, what, there's nothing to add to that conversation right now.
It's much more interesting for shareholders to hear about the, the, the mechanism of succession
and to just get, get a sense that like there'll be continuity.
I'm a shareholder. So that matters. I'm a shareholder, so that matters.
I'm a B shareholder, and that matters a lot to me.
I mean, at one point, Buffett said, he was asked,
I don't know if it was back here, somebody else asked
if his phone rings these days, or if they just go straight to Greg or Ajeet.
And he was like, my phone doesn't ring much these days anymore.
Oh, man. Do you think he misses, like, you think he's lonely?
I do.
Lonely?
Yeah.
Maybe.
I think he probably talked to Charlie two, three times
a day, I wouldn't know, I'm just guessing.
I think he said at one point though that they had been
communicating less in recent years than they did
in the past.
That could be, they're old, there's less to do
during the course of the day.
Tied of each other's bullshit, what else are you gonna say?
Well they didn't live, so Charlie was in LA
and Buffett was in Omaha.
And it's not like they had lunch together every day,
but I do think he misses him,
especially at the first annual meeting without him.
That's rough, man.
Oh, they said they had six tons of chocolate there.
That's a lot of chocolate.
I mean, it's a giant to do.
All right, let's move on.
Anything else?
No, shout to Berkshire and everyone who went to, uh, to,
to Berkshire weekend. Good for you guys. All right. Um,
you're up with some earnings. Let's do some learning stuff. Um, all right.
Carl Kintunia is, uh, quoting at your Denny.
Earnings are blooming. The fed put his back with it comes increased risk of a stock market melt up
I love your daddy as a P 500 forward earnings are well correlated with actual earnings chart off for a sec
I want to get back this chart, but you know what you know what credit to add
People are like afraid to be bullish now
He doesn't write like people are afraid to say something like this because they're afraid of the the potential egg in their face and your
He's like F that this, this is how I feel.
So I love it.
So chart back on.
This is showing the earnings per share and the forward earnings per share.
And why should the market be doing anything other than what it usually does, which is
following earnings?
Ben made this point in a recent post.
I forget what the post was called, but the gist of it was like, earnings are higher.
Why are you surprised that stock prices are higher?
This is what stocks are,
I don't know if he said most correlated with,
but stock market follows earnings.
Over time, yes.
Right?
So, now you could be surprised that earnings are up.
That's fair.
I think most people are surprised.
Gina Martin Adams, S&P over at Bloomberg,
she says S&P 500 net 12 month forward
estimate revision momentum surging in Q1.
So it's, you know.
This is a chart that makes the bears
want to kill themselves because when earnings
were declining, they got the sell off in equities.
They just didn't get the whoosh. They didn't get the down 40% that they wanted.
Some areas they did, but overall not even close. Not even close. First quarter earnings are
reported so far are 7% above expectations. Is that bad?
Wait, say this again? What's 7% above? Oh, Q1 earnings were 7% above expectations. Is that bad? Wait, say this again. What's 7% above it? Oh, Q1 earnings
were 7% above expectations. That's wild. That's first of all, that is higher than normal,
at least in the post bubble period, it looks like, right? Yeah. And it's above the pre-COVID
average level of surprise, which is what? 3%, 4%? Looks so.
However, this is interesting, Kevin Gornachwab,
he has a chart showing that investors are not excited
about tech companies beating earnings.
Looking at average tech members return
in excess of the S&P 500,
when a company beats EPS estimates,
we're down to negative 1.5%,
which is the worst spread going back to early 2015.
So what we're looking at are the beats, so the blue line.
Now I think that this is just a function chart off please of how freaking strong the market
is.
Yeah.
Right?
So Data Dog, for example, just had a double beat this morning and the stock was down 10%
pre-market.
They've had such a tremendous run. So the one-day reaction
is probably, they got over their skis, it's fine. Oh, it's down 10%, but they beat and raised,
or they beat on earnings and revenue? Yeah, but the stock was up 40% in the last three months.
So what do you expect? Yeah, right. It's not as though stocks sit at a stable price like a bond,
It's not as though stocks sit at a stable price like a bond, like a savings bond, and then all of a sudden wait for earnings to react.
They presuppose.
You know what came out today?
A GOAT headline.
Druckenmiller sold half of his Nvidia stake, something like that.
Good for him.
Not to brag.
I owned it like eight years before him, but that's great.
All right.
I wanted to throw this last thing in.
I don't know where else to put it.
Nick Kolis at Datatrek, one of my personal favorite market watchers.
This is his quote, how bearish can anyone be when the S&P 500 is within 1.4% of a new high. The NASDAQ composite is just 0.6% away.
And European small caps slash MSCI emerging markets just made one year highs.
Not very is the only logical conclusion.
So let me just run through a couple of things that Nick is citing.
I mentioned the S&P, the NASDAQ.
The Russell is 3.1% away from one year high.
MSCI Europe is only 0.3% away from a
one year closing high. Small Cap Europe, new one year high today. European Financials,
which have been underperforming since I've been born, made a new five year high today.
MSCI Emerging Markets, new one year high. MSCI China, which is 27% of the EM index, has 11% to go before it makes a new one-year
high but has been on a tear.
One of the things that's accompanying the strength in those international markets and
the US markets is a strong dollar.
When the dollar gets strong, there's always a concern that there's going to be some kind of calamity overseas or that it's going to hurt the report and earnings of the Fortune 500.
Nick doesn't think that's a huge concern. We have a chart.
But the basic idea is that strong dollar matters, but it's outweighed by economic strength and rallying stocks from around the world.
Nick's chart is showing how much international exposure, so this is what percent of revenue
US companies have. He points out only communication services, materials, and tech
have more than 40% non-US revenue. Every other sector of the economy has about 40% or less exposure in terms of how much
revenue they get from overseas.
So if the strength in the dollar is going to be the next thing everyone's going to point
to and panic about, I think that's a good chart for people to keep in the backs of their minds. What do you think?
Yeah. And I think that the fact that these international markets, in terms of the US
investor perspective, are as strong as they are, should tell you that the risk is not
to the downside, it's to the upside. This is in spite of a strong dollar. So if there's
some relief there, these things are going to moon. I found this really interesting.
Uh, Alan Roth, who is a financial advisor in Colorado, um, did an article for AARP
about the change in the asset management business from 1989 until now.
And I want to start with the chart because this really blew my mind.
So I wasn't in the business in 89. I was in 99. So I witnessed most of this. So in 1989,
the largest fund families by assets were as follows, Fidelity and BlackRock, both 97 billion.
both $97 billion. DWS Investments $58 billion. Franklin Templeton $58 billion. Vanguard $48 billion.
And then rounding out the list, Dreyfus and Vesco Federated Morgan Stanley and Putnam. You've heard most of those names. Fast forward to March of 2024. Vanguard is now the largest $7.9
trillion. The iShares BlackRock combo is $3.1 trillion. Fidelity is $2.9 trillion. The iShares BlackRock combo is 3.1. Fidelity is 2.9. American funds, wow, 2.3 trillion.
By the way, we're not saying billions anymore, we're saying trillions, my bad. State Street is
number five, 1.3 trillion. The next five are Invesco, T. Rowe Price, JP Morgan, Dimensional,
and Franklin Templeton. One, but one more time.
So like Franklin Templeton is still the 10th largest fund family by assets at $529 billion
and it has 10x since 1989 when it was $58 billion.
But still, like that's a big, going from number four to number 10 is interesting.
Vanguard going from number five to number one and decisively number one, more than double
the next highest is really interesting.
Chart off.
Alan's got some reasons for why he thinks this took place.
I think most people would guess, but let me just read his quote.
Those fund families that put their own profits ahead of investors lost market share or became
extinct.
This can best be illustrated by my first two index funds, Fidelity and Dreyfus.
Fidelity lowered fees to match and then best vanguard in some funds.
Dreyfus did not and outside of money market funds faded away.
Remember Dreyfus commercials?
They had the Lions?
No, they were a huge brand.
Okay. Dreyfus was bought by Mellon. No, they were a huge brand. Okay.
Dreyfus was bought by Mellon Bank, which then merged with Bank of New York.
Today the combined funds of BNY Mellon are only $55 billion, barely larger than Dreyfus
was 35 years ago.
Investors have pulled money out of BNY Mellon funds every year over the past decade, according
to Morningstar.
So Alan's conclusion is like,
if you were focused on charging the most you could, you lost. And if you were focused more
on scale and lowering costs for investors, you gained, like you won. And that's what that
business turned into. But you're talking about the business, right? So people are driven in their own
self-interest. And people that were at these large companies in 1989 people are driven in their own self-interest and people that
were at these large companies in 1989 might have maximized their own earnings potential
in the short term at the expense of the ongoing success of the business that they operate.
That's interesting. So if you were an executive at Dreyfus, you were probably raking in money
in the 80s and 90s. Yeah. You're probably like, I don't give a shit what happens in 2024.
Right. And so if you were an executive at Vanguard, you were not being paid as highly as the executives
at what were the, what were the funds in that?
Exactly right.
It's incentives, right?
As Munger has described a million times, it's all incentives.
Yup.
Tiro Price was not on the list in 89 and is on the list now.
It's got to be an interesting story behind how they managed to do that.
I know they've been a big technology investor and they have had success in active management.
So I'd be curious to look more at that.
Anyway, hold on.
So in terms of the, I wonder what the asset value in 89 versus today, if you adjust for
like market performance and inflation, obviously it's so much bigger now. But I also wonder if
just the fund complex and the financialization of everything is so much larger today in 1989,
there were still a lot of individual stocks that were being held by investors. You know what I mean?
There were still a lot of individual stocks that were being held by investors. You know what I mean?
Like outside of the mutual fund wrapper.
Also a lot of the companies that are still on the list, that were on the list, one of
the things they have in common is they made the ETF leap.
Like Invesco owns the Q's.
So Invesco was 39 billion in 1989 and now it's 778 billion. Like that's now an ETF business is the point that I'm trying to make.
Most of the companies that made the leap and stayed on the list eventually came around to ETFs,
which from 89, it was four years before the ETF really debuted's been, they've had a long time to figure it out is, is my point. Um, okay.
Anything else sir? Uh, no. Well, yeah.
What will this list look like in 35 years? Oh,
you feel confident that Vanguard and I shares are still one and two
and fidelity. Number three. Do you think that,
I mean who the hell knows, but,
I feel pretty confident that they will be.
I think that if I had to guess which of the three am I most confident will be at the top of the list or in the top three,
I would say fidelity because of the custodial nature of their business.
Okay. All right. I don't know if I'd go that way because I actually think I'm the most confident that
BlackRock will still be on the list.
Okay.
I was going to say Fidelity.
I mean, this is tough.
This is just for argument's sake.
I would have said Fidelity Vanguard iShares.
And the reason why I would have said Vanguard is just the incentive structure, the mutual
ownership of the company.
I think that that like could keep costs lower than black rec, but I don't know.
It seems right now it seems impossible that any of these get replaced. I know they,
you know, probably there will be some tone over here, but I don't know.
Yeah. Uh, those bottom three, JP Morgan, 615 billion,
dimensional 537 billion Franklin Templeton, 529 billion.
Those are incredible asset management businesses, but they're in a knife fight.
Well, JP Morgan's climbing like they're their business doing very well.
But I'm just saying, like it's a it's a knife.
It's a knife fight. It's tough. It's really good business.
Not an easy business.
All right. Let's we can we can we can move on.
What do you got?
Respect. But if I had to predict one that would be out of the top 10. Easy business. All right. Let's we can we can move on. What do you got? No disrespect.
But if I had to predict one that would be out of the top 10.
Now you don't have to.
We're not we're not going to ask you to do that.
Okay.
All right.
Social media.
So I found this.
This is a chart from Semblest and it just jumped off the page to me anyway.
So we're looking at social media market cap per active
user. Okay. And the biggest one, like hilariously on the latest truth social, of course, this
will not stay there. It's 890 was a million market. Hold on on this is the market cap of publicly traded social media
companies divided by how many users?
Yeah.
Okay.
And what this is saying is that the quote unquote value of a truth social user based
on the market cap is $1,700.
That was I think the day of the IPO is now 890.
I think that's what it's saying.
Dude, maybe I'm an idiot.
How is that stock not zero?
Well, I don't know, but I don't short stocks, but what they just had their
auditor just got investigated by the SEC.
Bullish.
It's great.
What the hell?
I don't know what the hell is going on there.
It's a new meme stock, but it's a political meme stop. It's like, I don't know what the hell is going on there. It's a new meme stock, but it's a political meme stop.
It's like, I don't know.
So put that back up.
Reddit is only being valued at $8 per user.
Well, so Reddit stock is up a metric shit on after hours.
At last I checked it was 17%.
I know, but still look at this.
This is a really interesting way to think about. Um,
this is a really interesting way to think about this. So there's,
so basically like a meta or a Tik TOK user is worth much more than a Twitter or
a snap user. That intuitively makes sense to me because both of those companies,
um, meta and Tik TOK are really good at advertising.
Well, that's the thing. If you look at the revenue per user,
it's probably even more, uh, it's probably even more,
there's probably been a bigger disparity. You know what I mean?
Yeah. So for me, I don't, I don't own Reddit.
I don't think I'm going to invest in it. I, I understand the thesis for me,
that's going to look more like Twitter than it's going to look like Metta.
So like if you miss being able to invest in Twitter in the public markets by Reddit because
it's a similar user based similar use case.
And they have a similar lack of awareness of who their users are.
Let me ask you this.
It's anonymous users.
It's the same bullshit.
This might be a dumb question I guess you would
classify social meta as a social media company because Facebook Facebook is but is Instagram
social media what do you think what is Instagram I guess I would I would classify meta as an
advertising business well utilize social networks to facilitate advertising.
That's, yeah, that's right.
We put it snap calls itself a camera company.
Like literally that's the first line of its corporate description.
They don't even, they don't even own the fact that they're social media.
So I don't even, it's not like really a such thing as a social media company.
Actually snap reported earnings and I don't think the stock blew up.
Oh, my God. This is great.
So you and I both sold Snap after the bomb last quarter, right?
Down 30 percent in that day. Yeah.
Guess what? It's about to take out.
It's about to make new highs.
Good. I hope it goes to zero.
All right. That was not that was not one of my final moments.
Three different two different people sent me this tweet.
Okay.
So I'm not going to comment on this guy personally.
I don't, I'm not a Twitter person.
I don't know who the f**k this is.
Uh, Grant Cardone.
I understand he's like a real estate tycoon and his like catchphrase is 10 X.
Like that's, I don't know anything.
Maybe he's amazing.
I didn't care for this tweet and let's put it on screen.
I'm going to read it.
So Grant Cardone tweeted this warning with a with a fucking siren emoji.
Warning. It's all.
Yeah, it's gross.
Stock market is due for 50 percent correction, taking S&P below 26 74. Okay, let's stop right there
That level of specificity just tells you this is bullshit
Okay
Anyway, tens of millions of households will have their retirement and savings destroyed by being invested in stock market at these levels question mark
Well, why is there a question mark there? So no, I'm Ron'm Ron Berg has been inverted for 500 plus days
This has only happened three times since 1920
1929 1974 2009 each time markets decline more than 50% if your retirement account loses 50%
Before considering the destruction of your principal purchasing power due to inflation
Resulting in a 75% loss. What is that
sentence? Wait is that a sentence? No. I have helped thousands of people move
their retirement accounts. This is important. There is spelled T-H-E-R-E.
Yeah. Okay. Move their retirement accounts with no penalty. That's not true. To have
their money backed by real assets providing cash flow to your retirement
account monthly.
And when it's time to retire, you live off the cashflow, not the principal.
To see if your plan qualifies, text, and there's a phone number.
I did this for my sister and it changed her life forever.
I can't.
Hold on. I'm texting. I'm texting.
I can't.
And then there's a chart of the United States yield curve showing the 10 year three month and putting like, like with some dates of
these inversions. Now, tweet who said tweet off, please, Chris. That's right, Chris. Thank
you. Tweet off forever. So forget about the grammar and the run on sentences and the misspelled words.
Forget about all of that. There's a couple of things that I think are, and now by the
way, this tweet was ratioed into the stone age, which almost makes me think that was
the point. Yeah. Number one, since the initial inversion of the yield curve this time around,
the stock market's up like 50%. So if we're using inverted yield curves as timing tools,
we're already fishing in the wrong pond. Number two, stocks already fell 25% in 2022.
We had a bear market. Doesn't mean we definitely won't have another one. It would just be highly unlikely to have had the recovery we've had in a year and then go right
back into the next bear market. Again, could totally happen. Number three, not every yield
curve inversion has led to a 50% decline in stocks. Yes, yield curve inversions prior to this one have been observed before recessions.
Michael and I did a live event in Charlotte with the godfather of the yield curve indicator,
the man who first observed it and invented it. And we have covered this subject a lot.
Dude, just text to see if your plan qualifies.
Shut up. Let me finish. Not every recession causes a stock price crash. You could have
a recession and it doesn't have to crash the market. It's funny that he's citing the three
of the three times one is 1929 lol. That's right out of the charlottens handbook. Then he's citing
09 and 1974. Those were both bottoms. Those were two of the greatest buying opportunities in stock market history. This is really more important. If you think stocks are about to crash by 50%,
literally, the last place you'd want to be is in a private real estate fund.
You would want your liquidity in hand so that you could buy that 50% decline.
It should go without saying, but if the stock market crashes and gets cut in half,
leveraged real estate investments are truly f***ed.
There are funds that would go to zero in this scenario.
Many, many funds would go to zero.
This is the last thing, and then I want your reaction.
People registered with the SEC cannot come out and make claims like this.
People who actually work in the investment industry, not newsletter guys,
not day trading alerts guys, but like actual professionals cannot and do not
speak this way and that's the tell by the way.
Um, so again, it's not personal and maybe the market will crash
and he'll look like a genius.
I just really do not like anything about that messaging and I don't particularly think it's
constructive for like finding great clients for whatever it is that you're selling.
It's awful.
It's so I don't know any anything else to add there?
I mean, I think you said it pretty well.
This is a pretty this is, this is the bad shit.
So, all right.
So let me ask you a couple of questions.
Do you think other than the ratio and everybody
that probably lined up, you know,
to smack this thing with a baseball bat,
do you think there are people out there
that couldn't wait to text that number
and are now actively like taking part
in whatever real estate thing is being offered. Unfortunately, if they're right, I don't think so.
Well, what do you mean? Of course I don't believe it.
You don't think that there are people that are texting that number?
Not with any money. No. Well, that's even worse. Yeah. I think people with,
is there an idiot that will,
that will read that tweet and send somebody $3,000 dollars Yes, but can you buy real estate that way?
So I don't think there's anybody of means
Who would react first of all who the hell is even on Twitter anymore, but that's worse
That's worse if you if all you have is forty thousand dollars, and you give this guy thirty like well
Maybe maybe maybe he'll ten exit
I don't you know I'm not
no comment by the way on the on the investment product because I didn't send a text I don't know what's I don't know what's being offered maybe it's amazing I just I just I can't believe that
anyone's really reacting to that so you think there are I know there are. Okay. All right. We can move on. We're going to make the case.
Oh, so Sean Russo and I put together a list of some of the best stocks in the market.
And we periodically take a look at some of the changes happening in that list.
And it's mostly technical.
And there are a lot of utilities and defensive stocks on on this list, which is really interesting
I can't I can't believe I sold my utes
So can we roll through a bunch of these? Yeah, okay. This is Southern company. So this is Georgia and Alabama
It's a gigantic utility
There's a utility rally going on maybe not for defensive reasons. A lot of people are talking about this being it's interest rates. Yeah. But a lot of people are saying like, this is an AI play, which
I don't. Yeah. All this AI stuff apparently requires tons of electricity. Oh, okay. So
there are people saying that this is like a conservative AI play, which I find silly.
Are you telling it easy? Don't stop. You don't like it. I don't like it either.
But look at it.
But hey, man, no, I don't own Nvidia.
I own a Southern Co.
All right.
Whatever.
Look, you got a 50 day above a 200 day.
You got to stop challenging the 2021 all time highs.
You got an RSI of 66 not overbought yet.
It looks great.
It looks this thing looks good, dude.
That's great.
All right.
Next one.
Duke is the same size as Southern Company, except instead of Alabama and Georgia, it's
Carolina and Florida and a few other Southern States.
These two companies are really similar, even down to the yield.
By the way, most of these Utes are paying 3% plus dividend yields.
So this one doesn't look as good, but very similar setup, right? Yeah. Okay. I think you'll get a moving average crossover there soon. Next.
We can go faster. Public service enterprise group, PEG, gigantic. This is one of the better looking
charts in the group. This is about to make a new record high. And this has left its 200 day far behind.
So these stocks are acting well.
Let's do some more.
The other group that's very heavily represented
on our best stocks in the market.
Look at the staples.
Look at this mother.
Colgate, Palmolive, ladies and gentlemen,
trading like a goddamn AI stock, 93.
The 200 day is down at 78. The stock is in
orbit right now. When you see that massive overseas stocks rally, this is a name that's
benefiting because of that. Why? Because the consumer staples companies sell their shit
all over the world and they're going gonna get an earnings contribution from a good economy
everywhere.
Next this is Procter and Gamble.
This one hasn't launched yet but this is a bull market chart bro.
No it's it's all time high.
Yeah no I know the other one went vertical this hasn't done that yet.
Wow wow wow.
Philip Morris which I would never buy as long as I live but so what look at it
This looks like a breakout in in in progress not quite there yet
But that is a nice setup
One more not a ute or a consumer
Staple, but it's a defensive. This is a hospital read called well tower
That is so Orwellian of a name
called well tower that is so Orwellian of a name so basically this is a company that owns the land that hospitals and medical facilities are built on this is
a breakout in progress would you agree I would yeah this thing looks fantastic
so from December through February XLU which is which I owned I mentioned
several times now made a series of lower highs and it was below its 200 day and it looked fugly.
And I got out. And guess what?
Sometimes this happens. This is part of the game.
Sometimes you get out and then the thing leaves you in the dust.
It happens. Roger Weatherford said, I get nervous when downtown Josh Brown hypes these boring stocks.
I don't own any of those stocks, sir.
I'm just pointing out charts that are going stocks. I don't own any of those stocks, sir. I'm
just pointing out charts that are going up. They don't require my help.
I feel like if I'm in the comment section talking to the listener during the show, you
would lose your mind. Can you pay attention? I'm with you, babe. I'm with you. Well, we're
doing a live show. We're doing a live show. All right. What else? No, these are all the
great. I can't believe that cold. I just made the case. Do you like my case?
What's the case?
Your case is that these stocks look amazing.
What do you buy them here?
These sectors are becoming leadership.
Look how many great charts there are in defensives, consumer staples, utilities.
It's interesting.
It is very interesting.
Yeah.
I think as you're talking, I'm looking at XLP, XLY.
I should probably equal weight it because XLY is all Amazon and Tesla
But I wonder if a bottoming in these names like the XLP to XLY is that that's probably JC
Probably would say that's not that's not super bullish. No
It's not what you typically would quote unquote want to see but here it is happening. Anyway, what are you?
Okay, I have a mystery chart and it's gonna be a bit redundant,
but that's a clue, that's a breadcrumb for you.
Chart on please.
So we have two charts, as you can see.
Well, ooh, nice, 69.52.
Nice.
We've got a sector and like a subsector, I guess,
and these are both, would you say,
certainly the top one looks phenomenal,
the bottom one potentially, you know, it's basing, could break out, who knows?
These are beneficiaries of what I think the market is telling you that the bond market
is, where the bond market is heading, interest rates specifically.
Ooh.
Okay.
So the top one is XLU?
Yeah.
Okay.
And the bottom one is a subsector or it's a stock?
No, it's not a stock. It's a, is it an industry group or a sub? No, one is a subsector or it's a stock. No, it's not a stock. It's a
it's an industry group or a sub. No, it's a subsector. A subsector of utilities. No,
no, no, I'm sorry. What has nothing to do with utilities other than it's highly an industry.
Oh, got it. Got it. Got it. Got it. Got it. Got it. Got it. It's an industry group. Yeah.
Telecom? No.
I mean, this chart is not doing anything.
Well, basically, like when you look at its regional banks.
I don't know.
So I think that both of these are telling you that the market is no longer worried.
And I mean, obviously, the market's no longer worried about a rate hike.
Like, that's obvious.
So do I get half credit for guessing this?
Half credit, half credit. Take the half credit. So do I get half credit for guessing this or half crud?
Take the half credit.
Hey everybody. Did you know that tomorrow was Wednesday morning,
which means an all new edition of my favorite podcast,
animal spirits with Michael and Ben.
It'll be a waiting for you as soon as you open your pretty little eyes.
And uh,
tomorrow was a real Brunson burner.
All right. Uh, Thursday, new ask the compound featuring Ben and Duncan Friday. We are back
with an all new edition of the compound and friends and Saturday, of course,
Jill on money. Keep it locked on the compound YouTube channel and the podcast feeds and we will see you soon. today, visit riddholtzwealth.com.