1 00:00:00,280 --> 00:00:02,579 Speaker 1: You're listening to AC N A podcast? 2 00:00:05,409 --> 00:00:09,550 Speaker 2: Hey, it's Andrea. He on the Money Talks podcast. Quick question. 3 00:00:09,840 --> 00:00:14,800 Speaker 2: Which of these apps do you use each week? Facebook, 4 00:00:14,930 --> 00:00:21,069 Speaker 2: Amazon Google. If you're like me, the answer is almost 5 00:00:21,120 --> 00:00:24,149 Speaker 2: every day. Yep. That's right. Don't judge me, 6 00:00:24,440 --> 00:00:26,469 Speaker 2: but that's what we will be getting into this week. 7 00:00:26,479 --> 00:00:30,819 Speaker 2: Why are they the biggest and currently best performing tech stocks? 8 00:00:31,100 --> 00:00:34,509 Speaker 2: And should you be putting your money into them right now? 9 00:00:34,560 --> 00:00:36,330 Speaker 2: I'm going to get into that in a few minutes. 10 00:00:36,340 --> 00:00:39,930 Speaker 2: But first I have a favor to ask of you. 11 00:00:40,180 --> 00:00:44,470 Speaker 2: If you haven't already followed us on Spotify Apple podcasts 12 00:00:44,479 --> 00:00:48,500 Speaker 2: or youtube music, please do because that way you get 13 00:00:48,509 --> 00:00:51,790 Speaker 2: an alert the moment a new episode drops. All right. 14 00:00:52,180 --> 00:00:54,970 Speaker 2: Ok. So let's get started with some financial news that 15 00:00:54,979 --> 00:00:57,990 Speaker 2: caught our attention this week. And of course, I will 16 00:00:58,000 --> 00:01:03,259 Speaker 2: need to bring in the assistance of my editor Tiffany Tiffany. Hi. So, 17 00:01:03,270 --> 00:01:06,400 Speaker 2: what are we discussing first? Ok. So first our favorite 18 00:01:06,410 --> 00:01:09,569 Speaker 2: antihero pop star is in town. I'm not a swift, 19 00:01:09,580 --> 00:01:12,459 Speaker 2: are you? I'm not a swifty, but you know what? 20 00:01:12,470 --> 00:01:15,260 Speaker 2: I have to admire her business sense. Yeah, I must 21 00:01:15,269 --> 00:01:18,110 Speaker 2: say so. Yeah. And already we're starting to see what's 22 00:01:18,120 --> 00:01:20,899 Speaker 2: known as the Taylor Swift effect. Oh, yeah. 23 00:01:21,120 --> 00:01:23,459 Speaker 2: So a bit of background in an interview, the Thai 24 00:01:23,470 --> 00:01:27,580 Speaker 2: Prime Minister said that Singapore paid a handsome grant to 25 00:01:27,589 --> 00:01:31,639 Speaker 2: Taylor Swift's team to woo her here for an exclusive 26 00:01:31,650 --> 00:01:35,110 Speaker 2: Southeast Asia stop. So that got many people asking how 27 00:01:35,120 --> 00:01:37,730 Speaker 2: much did we pay? And is it worth it? Yeah. 28 00:01:37,739 --> 00:01:39,970 Speaker 2: You know, it may seem like a dig at Singapore, 29 00:01:39,980 --> 00:01:43,220 Speaker 2: but it is a valid question, right? So the Singapore 30 00:01:43,230 --> 00:01:48,069 Speaker 2: Tourism Board didn't really disclose how much they gave in grants, right? 31 00:01:48,080 --> 00:01:49,849 Speaker 2: And never did. No, they didn't. But 32 00:01:50,069 --> 00:01:53,449 Speaker 2: tells and airlines told CN that demand for flights and 33 00:01:53,459 --> 00:01:58,989 Speaker 2: accommodation around the concert dates have gone up by 30%. Wow. Ok. 34 00:01:59,000 --> 00:02:02,720 Speaker 2: That makes sense because Singapore is one of only two 35 00:02:02,730 --> 00:02:05,629 Speaker 2: stops in Asia for Taylor Swift. The previous one being 36 00:02:05,639 --> 00:02:10,449 Speaker 2: Japan and we have six shows here in Singapore. Completely 37 00:02:10,460 --> 00:02:14,570 Speaker 2: sold out. Ok. So we're probably expecting lots of fans 38 00:02:14,580 --> 00:02:18,889 Speaker 2: coming in from Malaysia, Indonesia, Philippines, Thailand and 39 00:02:19,470 --> 00:02:22,350 Speaker 2: disappointed fans in Australia. Maybe we didn't get to catch 40 00:02:22,360 --> 00:02:26,199 Speaker 2: her in the Australia tour. We might see them too. Yeah. Yeah. 41 00:02:26,210 --> 00:02:28,478 Speaker 2: So back to the question, is it worth paying a 42 00:02:28,490 --> 00:02:32,250 Speaker 2: grant to Taylor Swift's team? I mean, I suppose if 43 00:02:32,258 --> 00:02:34,520 Speaker 2: you see that the concerts can be a big source 44 00:02:34,529 --> 00:02:36,038 Speaker 2: of revenue for the country, then 45 00:02:36,360 --> 00:02:40,728 Speaker 2: yes. So earlier on you mentioned Japan, right? Researchers estimated 46 00:02:40,740 --> 00:02:46,570 Speaker 2: that her tour in Tokyo generated up to $227 million 47 00:02:46,580 --> 00:02:49,639 Speaker 2: for Japan and they have fewer shows than we do. Exactly. 48 00:02:49,649 --> 00:02:52,279 Speaker 2: And they are also predicting that the concerts here in 49 00:02:52,288 --> 00:02:59,559 Speaker 2: Singapore will exceed the estimated $787 million in economic value 50 00:02:59,570 --> 00:03:02,399 Speaker 2: from Taylor Swift's time in Melbourne. That is insane. 51 00:03:02,669 --> 00:03:05,270 Speaker 2: You know what I'm thinking? I think it's time to 52 00:03:05,279 --> 00:03:09,309 Speaker 2: look at stocks in the hospitality and travel sector perhaps 53 00:03:09,320 --> 00:03:12,059 Speaker 2: because that's likely to go up. So if you happen 54 00:03:12,070 --> 00:03:14,809 Speaker 2: to be able to have that flexibility to move around, 55 00:03:14,820 --> 00:03:16,350 Speaker 2: this might be the time to do it. And don't 56 00:03:16,360 --> 00:03:19,089 Speaker 2: forget we still have a lot of major concerts and 57 00:03:19,100 --> 00:03:22,989 Speaker 2: events coming up in Singapore, not just Taylor Swift and 58 00:03:23,258 --> 00:03:26,320 Speaker 2: speaking of up, you know what went up to Junior 59 00:03:26,330 --> 00:03:28,288 Speaker 2: Bank staff bonuses. What, 60 00:03:28,386 --> 00:03:30,216 Speaker 2: what am I doing in this job? That's what I 61 00:03:30,225 --> 00:03:33,565 Speaker 2: ask myself every time I see headlines like this. But 62 00:03:33,576 --> 00:03:35,975 Speaker 2: you know what? Congratulations to you. If you are working 63 00:03:35,985 --> 00:03:37,955 Speaker 2: in a bank, it's a great bonus for you. Yeah. 64 00:03:37,966 --> 00:03:42,065 Speaker 2: So specifically CD BS and you will be all announced 65 00:03:42,076 --> 00:03:45,966 Speaker 2: a one off bonus for the junior staff, Junior, Junior Junior. 66 00:03:45,975 --> 00:03:49,005 Speaker 2: So this is to help them cope with rising living costs. 67 00:03:49,255 --> 00:03:52,345 Speaker 2: O CBC and D BS are giving their junior employees 68 00:03:52,356 --> 00:03:53,845 Speaker 2: $1000 each 69 00:03:54,102 --> 00:03:56,962 Speaker 2: Singapore dollars while you will be junior staff are getting 70 00:03:56,972 --> 00:04:00,671 Speaker 2: an extra month of bonus. No guess is where all 71 00:04:00,682 --> 00:04:02,882 Speaker 2: of that bonus is coming from. And I think banks 72 00:04:02,891 --> 00:04:06,171 Speaker 2: had a fantastic year with all the interest rate income 73 00:04:06,182 --> 00:04:08,401 Speaker 2: that they've been generating over the past couple of years. 74 00:04:08,501 --> 00:04:09,942 Speaker 2: I think this is a good move. It's a bit 75 00:04:09,951 --> 00:04:12,811 Speaker 2: of a thank you as well for people who stuck 76 00:04:12,822 --> 00:04:15,841 Speaker 2: around and work behind the scenes and lots of work 77 00:04:15,852 --> 00:04:18,832 Speaker 2: for banks that were kept busy for the last two 78 00:04:18,842 --> 00:04:19,682 Speaker 2: years or so. 79 00:04:20,019 --> 00:04:23,070 Speaker 2: Now, if you're listening to this and you would like 80 00:04:23,079 --> 00:04:26,630 Speaker 2: a nice bonus too. Just like me, you can tag 81 00:04:26,640 --> 00:04:30,200 Speaker 2: your boss just like I will not. 82 00:04:32,040 --> 00:04:34,700 Speaker 2: I hope you get that bonus. Anyway. Good luck. 83 00:04:37,238 --> 00:04:41,019 Speaker 2: Did you know that the number seven is considered a 84 00:04:41,029 --> 00:04:45,329 Speaker 2: lucky number in Japan, perhaps that's why the biggest and 85 00:04:45,339 --> 00:04:49,480 Speaker 2: currently best performing tech names in the stock market are 86 00:04:49,488 --> 00:04:53,118 Speaker 2: dubbed the Magnificent Seven. But they won't always called that. 87 00:04:53,130 --> 00:05:01,459 Speaker 2: You see tech stocks had their beginnings actually as Fang stocks, Facebook, Amazon, Netflix, 88 00:05:01,470 --> 00:05:02,868 Speaker 2: Google Fang. 89 00:05:03,149 --> 00:05:08,209 Speaker 2: Fang evolved into fam, not as cool because Apple and 90 00:05:08,220 --> 00:05:12,058 Speaker 2: Microsoft joined the league. Netflix dropped out and then Tesla 91 00:05:12,070 --> 00:05:16,190 Speaker 2: and NVIDIA joined to form what's now called the Magnificent 92 00:05:16,200 --> 00:05:19,890 Speaker 2: Seven or if you're cool like me the Mac seven. 93 00:05:19,899 --> 00:05:22,219 Speaker 2: And for that, we can thank Bank of America Analyst 94 00:05:22,230 --> 00:05:23,209 Speaker 2: Michael Hartnett who 95 00:05:23,305 --> 00:05:28,026 Speaker 2: coined the phrase in 2023. He was describing the seven 96 00:05:28,036 --> 00:05:31,526 Speaker 2: tech companies dominating the stock markets, but you know what 97 00:05:31,626 --> 00:05:35,126 Speaker 2: anything shiny is vulnerable to losing its luster and the 98 00:05:35,135 --> 00:05:38,075 Speaker 2: Mac seven, they aren't immune to this. So while tech 99 00:05:38,085 --> 00:05:41,295 Speaker 2: stocks are having a moment, we should also take our 100 00:05:41,305 --> 00:05:43,365 Speaker 2: moment to consider the risks 101 00:05:43,462 --> 00:05:46,921 Speaker 2: and rewards of investing in Mac Seven stocks. What your 102 00:05:46,932 --> 00:05:50,381 Speaker 2: game plan should be if you're already there to help 103 00:05:50,391 --> 00:05:53,522 Speaker 2: us with. That is Jonathan Wu, senior equity research analyst 104 00:05:53,532 --> 00:05:56,141 Speaker 2: with Philip Capital. Hey, Jonathan, thanks for coming. Thanks for 105 00:05:56,152 --> 00:05:59,802 Speaker 2: having me. So in just a span of about three years, 106 00:05:59,812 --> 00:06:02,502 Speaker 2: so much has happened to big tech, most of them 107 00:06:02,511 --> 00:06:05,502 Speaker 2: making up the Mac seven. What are the factors that 108 00:06:05,511 --> 00:06:09,440 Speaker 2: are driving these Mac Seven stocks to their current strength? 109 00:06:09,988 --> 00:06:12,570 Speaker 2: So first of all the revenue growth, right? I mean, 110 00:06:12,579 --> 00:06:16,178 Speaker 2: obviously you've got a lot of demand from consumers for 111 00:06:16,190 --> 00:06:18,209 Speaker 2: a lot of these big tech companies, you just think 112 00:06:18,220 --> 00:06:20,238 Speaker 2: about a couple of them off the top of your head. 113 00:06:20,250 --> 00:06:24,049 Speaker 2: You know, me and Google, everybody uses Google nowadays every 114 00:06:24,059 --> 00:06:28,799 Speaker 2: day for countless hours, everybody's watching youtube people on Facebook. 115 00:06:28,809 --> 00:06:32,130 Speaker 2: If they're not on Facebook, on Instagram, Netflix, everybody uses Netflix. 116 00:06:32,140 --> 00:06:34,510 Speaker 2: Now they've kind of been taken out of the Mac seven, 117 00:06:34,519 --> 00:06:34,730 Speaker 2: but 118 00:06:35,010 --> 00:06:37,010 Speaker 2: you get the point, right? So a lot of consumer 119 00:06:37,019 --> 00:06:39,409 Speaker 2: demand that's really driving a lot of the growth for 120 00:06:39,488 --> 00:06:42,238 Speaker 2: a lot of these tech companies. So they've had quite 121 00:06:42,250 --> 00:06:45,428 Speaker 2: the journey from the.com renaissance that we saw in the 122 00:06:45,440 --> 00:06:46,589 Speaker 2: early two thousands, right? 123 00:06:46,899 --> 00:06:50,739 Speaker 2: And then they had the COVID-19 pandemic surge, right? So 124 00:06:50,750 --> 00:06:54,670 Speaker 2: they were pandemic darlings because everyone was stuck at home. 125 00:06:54,730 --> 00:06:57,289 Speaker 2: They had to use Netflix, they had to use their phones, 126 00:06:57,299 --> 00:07:00,089 Speaker 2: they had to use their Facebook to stay connected with 127 00:07:00,100 --> 00:07:03,609 Speaker 2: their friends and family. But then we saw a painful 128 00:07:03,619 --> 00:07:08,839 Speaker 2: tumble after those COVID-19 restrictions were eased. Now, there's a 129 00:07:08,850 --> 00:07:10,679 Speaker 2: sustained out performance in 130 00:07:10,785 --> 00:07:14,355 Speaker 2: the market. I'm most curious about this current stage we're 131 00:07:14,364 --> 00:07:19,605 Speaker 2: seeing right now, the early months of 2024. How was 132 00:07:19,614 --> 00:07:22,325 Speaker 2: it that they were able to make that stunning recovery 133 00:07:22,334 --> 00:07:26,834 Speaker 2: from down in the dumps post pandemic, which was only what, 1.5, 134 00:07:26,845 --> 00:07:29,214 Speaker 2: 2 years ago to where they are now. So I 135 00:07:29,225 --> 00:07:32,515 Speaker 2: think it's a couple of things. Firstly, when the dip happened, 136 00:07:32,524 --> 00:07:34,565 Speaker 2: you kind of saw growth slowing down a little bit 137 00:07:34,940 --> 00:07:37,109 Speaker 2: and then they were still kind of expanding. So they're 138 00:07:37,119 --> 00:07:39,309 Speaker 2: still spending a lot of money on head count on, 139 00:07:39,410 --> 00:07:42,390 Speaker 2: on a lot of projects that were long shots, but 140 00:07:42,399 --> 00:07:44,299 Speaker 2: at the time because growth was going so well, they 141 00:07:44,309 --> 00:07:46,709 Speaker 2: had enough cash to do it, right. So that kind 142 00:07:46,720 --> 00:07:48,559 Speaker 2: of sent them tumbling down a little bit. And as 143 00:07:48,570 --> 00:07:52,450 Speaker 2: they focus towards efficiency throughout the most of 2023 and 144 00:07:52,459 --> 00:07:54,829 Speaker 2: even now they cut a lot of their fat off 145 00:07:54,839 --> 00:07:57,619 Speaker 2: the bone. They are much leaner. They've got a lot 146 00:07:57,630 --> 00:08:00,640 Speaker 2: of operating leverage and demand has actually returned or remain 147 00:08:00,649 --> 00:08:03,589 Speaker 2: consistent at least. Yeah. And so that's what fueled the 148 00:08:03,600 --> 00:08:04,589 Speaker 2: rally a little bit. 149 00:08:04,696 --> 00:08:07,217 Speaker 2: Plus you have this A I effect, everyone's really hyping 150 00:08:07,226 --> 00:08:10,636 Speaker 2: about it personally. I think it's less of a game changer, 151 00:08:10,647 --> 00:08:13,717 Speaker 2: more of a game improvement kind of tool. I don't 152 00:08:13,726 --> 00:08:16,557 Speaker 2: really think it's that significant at this point in time. 153 00:08:16,566 --> 00:08:19,497 Speaker 2: So it's not as revolutionary as people are making it 154 00:08:19,506 --> 00:08:22,076 Speaker 2: out to be. That's what you're saying. Yeah. It's probably 155 00:08:22,087 --> 00:08:26,566 Speaker 2: similar to, like office 365. It's good. It will make 156 00:08:26,576 --> 00:08:29,786 Speaker 2: your life better. It will increase efficiency. Yeah. Change your 157 00:08:29,796 --> 00:08:32,236 Speaker 2: life all that much. Yeah. Ok. But do you think 158 00:08:32,247 --> 00:08:34,236 Speaker 2: though at the mild 159 00:08:34,453 --> 00:08:38,353 Speaker 2: pace and position that A I is throwing itself into 160 00:08:38,362 --> 00:08:41,232 Speaker 2: the tech names and the tech industry, how do you 161 00:08:41,242 --> 00:08:45,182 Speaker 2: think that is going to shape the path forward for 162 00:08:45,192 --> 00:08:47,723 Speaker 2: the Mac Seven in terms of their stock performance and 163 00:08:47,732 --> 00:08:50,153 Speaker 2: their growth? I think it was in the near term. 164 00:08:50,163 --> 00:08:52,292 Speaker 2: You still be a driver because they're still hype around it. 165 00:08:52,302 --> 00:08:55,112 Speaker 2: Take a look at NVIDIA, for example, they feel the 166 00:08:55,122 --> 00:08:58,513 Speaker 2: immediate benefits and immediate effects of increasing A I demand 167 00:08:58,523 --> 00:09:00,703 Speaker 2: because they supply the chips, right? Yeah. And you can 168 00:09:00,713 --> 00:09:04,002 Speaker 2: see backlog is still increasing quarter on quarter. Yeah, 169 00:09:04,210 --> 00:09:06,069 Speaker 2: still so much demand. And so until this kind of 170 00:09:06,080 --> 00:09:09,680 Speaker 2: dwindles down and enterprises stop spending on A I or 171 00:09:09,690 --> 00:09:12,651 Speaker 2: at least stop increasing spending in A I, which is 172 00:09:12,660 --> 00:09:14,620 Speaker 2: we're still kind of far away because right now you're 173 00:09:14,630 --> 00:09:16,510 Speaker 2: seeing a lot of not just enterprises but a lot 174 00:09:16,520 --> 00:09:20,510 Speaker 2: of sovereign nations. They're starting to build up A I infrastructure. 175 00:09:20,520 --> 00:09:22,890 Speaker 2: Getting out their own A I models, everyone's kind of 176 00:09:22,901 --> 00:09:25,931 Speaker 2: playing catch up now. So that backlog is where the 177 00:09:25,940 --> 00:09:28,231 Speaker 2: money is at. Yeah. So that's really driving the demand 178 00:09:28,241 --> 00:09:30,791 Speaker 2: for A I products. And so that helps NVIDIA, helps Google, 179 00:09:30,801 --> 00:09:33,290 Speaker 2: helps Amazon because of a lot of cloud infrastructure that 180 00:09:33,301 --> 00:09:33,870 Speaker 2: is needed. 181 00:09:34,190 --> 00:09:37,718 Speaker 2: So that is really the main kind of revenue driver 182 00:09:37,729 --> 00:09:40,359 Speaker 2: in the near term. I'm not sure when the demand 183 00:09:40,369 --> 00:09:42,830 Speaker 2: will subside because it's getting a bit out of hand 184 00:09:42,849 --> 00:09:45,419 Speaker 2: right now. I'm inclined to agree. I mean, this A 185 00:09:45,429 --> 00:09:50,169 Speaker 2: I hype is really out there. It's really hard to ignore. Now, 186 00:09:50,179 --> 00:09:52,890 Speaker 2: speaking of NVIDIA, I'm glad you brought it up because 187 00:09:53,070 --> 00:09:56,929 Speaker 2: looking at the charts of the stock performance of the 188 00:09:56,940 --> 00:10:00,319 Speaker 2: MAC seven over a three month period, one year period 189 00:10:00,330 --> 00:10:01,608 Speaker 2: and five year period, 190 00:10:01,890 --> 00:10:06,319 Speaker 2: the first whopping number that sticks out to me is 191 00:10:06,330 --> 00:10:09,989 Speaker 2: Nvidia's stock. I mean, the three month percentage change shows 192 00:10:10,000 --> 00:10:17,109 Speaker 2: 12.35 to the five year percentage change is 1094.64. What's 193 00:10:17,119 --> 00:10:19,590 Speaker 2: causing this crazy spike? A big part of it is 194 00:10:19,599 --> 00:10:23,969 Speaker 2: expanding valuations. People expect a lot more growth out of them. Ok. 195 00:10:23,979 --> 00:10:25,218 Speaker 2: So that just drives the price up in 196 00:10:25,325 --> 00:10:27,684 Speaker 2: yearly, right? You compound that with a lot of operating 197 00:10:27,695 --> 00:10:31,103 Speaker 2: leverage that companies like NBA has. They don't have to 198 00:10:31,114 --> 00:10:33,114 Speaker 2: spend a lot to drive revenue growth. They don't have 199 00:10:33,125 --> 00:10:35,375 Speaker 2: to increase their operating expenses that much. They don't really 200 00:10:35,385 --> 00:10:38,224 Speaker 2: have to invest that much in capital expenditure. So their 201 00:10:38,234 --> 00:10:42,255 Speaker 2: cost base is relatively fixed, more or less. I see. 202 00:10:42,265 --> 00:10:45,744 Speaker 2: So revenue just translates to earnings. Any additional revenue just 203 00:10:45,755 --> 00:10:47,984 Speaker 2: translates to the bottom line and you see this big 204 00:10:47,994 --> 00:10:48,664 Speaker 2: spike there. 205 00:10:48,890 --> 00:10:50,789 Speaker 2: And that's what you see with a lot of tech 206 00:10:50,799 --> 00:10:54,669 Speaker 2: companies and compared to maybe traditional businesses like consumer products, 207 00:10:54,679 --> 00:10:57,489 Speaker 2: like maybe Coca Cola or mcdonald's, right, they don't really 208 00:10:57,500 --> 00:11:00,738 Speaker 2: have this kind of leverage where one additional revenue dollar 209 00:11:00,799 --> 00:11:03,890 Speaker 2: translates to 80 cents on the bottom line, right? So 210 00:11:03,900 --> 00:11:08,070 Speaker 2: that's really the main kicker. If demand slows down naturally, 211 00:11:08,080 --> 00:11:09,590 Speaker 2: you start to see it kind of slow down a 212 00:11:09,599 --> 00:11:14,669 Speaker 2: little bit. OK. Is this what will spell volatility for 213 00:11:14,679 --> 00:11:17,190 Speaker 2: the tech sector? Is that why they're so volatile 214 00:11:17,580 --> 00:11:19,750 Speaker 2: initially? Yes, because at the same time, a lot of 215 00:11:19,760 --> 00:11:22,320 Speaker 2: these companies are still in their growth stages, right? So 216 00:11:22,489 --> 00:11:26,098 Speaker 2: exponential growth, exponential expansion, right? So they're kind of like 217 00:11:26,109 --> 00:11:29,250 Speaker 2: adjusting not just to demand but also to what they 218 00:11:29,260 --> 00:11:31,840 Speaker 2: need to do in order to expand. Yeah. OK. Yeah. 219 00:11:31,849 --> 00:11:34,150 Speaker 2: So once this growth kind of slows down and we're 220 00:11:34,159 --> 00:11:36,419 Speaker 2: actually seeing it a little bit with the more mature 221 00:11:36,429 --> 00:11:40,809 Speaker 2: companies like me, Google Apple, especially Apple is very mature actually. 222 00:11:40,820 --> 00:11:42,599 Speaker 2: So growth has kind of slowed down a little bit. 223 00:11:42,609 --> 00:11:42,890 Speaker 2: I mean, 224 00:11:43,219 --> 00:11:45,630 Speaker 2: they're still growing faster than the average company on the 225 00:11:45,640 --> 00:11:48,750 Speaker 2: S and P 500 but it's no longer your 30 40% 226 00:11:48,760 --> 00:11:50,739 Speaker 2: year on year. Ok. So you're starting to see these 227 00:11:50,750 --> 00:11:53,000 Speaker 2: companies slow down a little bit and mature a little bit. 228 00:11:53,210 --> 00:11:56,919 Speaker 2: Whereas on the back end of the magnificent seven Tesla, NVIDIA, 229 00:11:56,929 --> 00:12:00,809 Speaker 2: they are still relatively new compared to Apple. Yeah. Yeah. 230 00:12:00,849 --> 00:12:03,169 Speaker 2: And so they are a little bit earlier in their 231 00:12:03,179 --> 00:12:05,099 Speaker 2: growth stages. So there is a little bit more room 232 00:12:05,109 --> 00:12:07,869 Speaker 2: to run for that. I see. So it's not necessarily 233 00:12:08,000 --> 00:12:11,669 Speaker 2: that NVIDIA and Tesla have better value growth. 234 00:12:11,960 --> 00:12:14,510 Speaker 2: It's just that there are newer players in the game 235 00:12:14,760 --> 00:12:18,429 Speaker 2: and that explains the exponential increases that we're seeing. It's 236 00:12:18,440 --> 00:12:20,218 Speaker 2: just where they are in the business cycle and where 237 00:12:20,229 --> 00:12:22,530 Speaker 2: they are in the consumer demand cycle. Ok. Well, that's 238 00:12:22,539 --> 00:12:25,750 Speaker 2: a really good explanation. Now, I have a clearer idea 239 00:12:25,890 --> 00:12:29,669 Speaker 2: of why certain names are just performing better than others. 240 00:12:29,679 --> 00:12:32,309 Speaker 2: It's not necessarily an out performance per se. It's just 241 00:12:32,320 --> 00:12:36,289 Speaker 2: where they are in their business lifespan, right? So one 242 00:12:36,299 --> 00:12:38,799 Speaker 2: thing that I want to know is how much do 243 00:12:38,809 --> 00:12:40,270 Speaker 2: these guys cost me 244 00:12:40,549 --> 00:12:42,590 Speaker 2: if I want to buy alphabet, if I wanna buy 245 00:12:42,599 --> 00:12:46,590 Speaker 2: apple shares, how much am I looking at? Because if 246 00:12:46,599 --> 00:12:47,919 Speaker 2: they're so high, 247 00:12:48,409 --> 00:12:53,140 Speaker 2: does it become unsustainable and too expensive to buy? Are 248 00:12:53,150 --> 00:12:56,840 Speaker 2: they worth it? So price is just one element of it, 249 00:12:56,849 --> 00:12:59,339 Speaker 2: I mean, it's all relative. So what you're really looking 250 00:12:59,349 --> 00:13:02,130 Speaker 2: for when you talk about value, most of the times 251 00:13:02,140 --> 00:13:05,659 Speaker 2: you look at ratios. So price to earnings ratios, price 252 00:13:05,669 --> 00:13:08,069 Speaker 2: to sales ratios and you look at it as an 253 00:13:08,080 --> 00:13:11,479 Speaker 2: industry whole and what this company is, is priced at 254 00:13:11,489 --> 00:13:14,390 Speaker 2: versus that particular industry, right? What was something like price 255 00:13:14,400 --> 00:13:16,640 Speaker 2: to earnings ratio, tell you as an investor? 256 00:13:17,039 --> 00:13:19,590 Speaker 2: So it gives you basically an idea of whether a 257 00:13:19,599 --> 00:13:23,059 Speaker 2: stock is overpriced compared to its peers or undervalued, right? 258 00:13:23,070 --> 00:13:26,520 Speaker 2: So it's a relative valuation, let's say NBA right now 259 00:13:26,530 --> 00:13:30,460 Speaker 2: is priced at about 40 times earnings forward price earnings. 260 00:13:30,469 --> 00:13:32,500 Speaker 2: You can't compare it to a company 261 00:13:32,739 --> 00:13:35,189 Speaker 2: that has much lower growth and maybe has a price 262 00:13:35,200 --> 00:13:37,260 Speaker 2: earnings ratio of eight times if they are in a 263 00:13:37,270 --> 00:13:40,609 Speaker 2: totally different industry and in a totally different part of 264 00:13:40,619 --> 00:13:43,228 Speaker 2: their business cycle and growth stage, right? So it's all 265 00:13:43,239 --> 00:13:46,489 Speaker 2: relative straightforward. Yeah, when you look at the stock price, 266 00:13:46,500 --> 00:13:48,069 Speaker 2: it really doesn't tell you anything because 267 00:13:48,500 --> 00:13:52,030 Speaker 2: it doesn't mean that because NVIDIA is 700 bucks versus apple, 268 00:13:52,039 --> 00:13:54,809 Speaker 2: that's over 200 bucks, you know, it's more expensive. Yeah. Yeah, 269 00:13:54,820 --> 00:13:58,590 Speaker 2: it's just a relative term. So what are the factors 270 00:13:58,599 --> 00:14:01,869 Speaker 2: should an investor consider then when deciding which of the 271 00:14:01,880 --> 00:14:04,729 Speaker 2: Mac seven stocks to buy? So I think firstly, you 272 00:14:04,739 --> 00:14:07,400 Speaker 2: got to figure out where's the demand flowing to right now. 273 00:14:07,580 --> 00:14:09,080 Speaker 2: So if you look at the seven of them, 274 00:14:09,500 --> 00:14:12,280 Speaker 2: by far, the weakest one would probably be Apple actually 275 00:14:12,289 --> 00:14:15,590 Speaker 2: because everybody kind of has an iphone. Yeah, the only 276 00:14:15,599 --> 00:14:18,699 Speaker 2: way they grow their iphone revenue is when people upgrade 277 00:14:18,710 --> 00:14:20,599 Speaker 2: their iphones, right? So usually you've got this 3 to 278 00:14:20,609 --> 00:14:21,469 Speaker 2: 4 year cycle. 279 00:14:21,890 --> 00:14:24,090 Speaker 2: And over the last few years, they haven't actually raised 280 00:14:24,099 --> 00:14:26,789 Speaker 2: their prices on their pro models or any of the 281 00:14:26,799 --> 00:14:30,890 Speaker 2: iphone models. Right. So the average selling prices hasn't really 282 00:14:30,900 --> 00:14:33,250 Speaker 2: been increasing that much. And if your user base is 283 00:14:33,260 --> 00:14:36,419 Speaker 2: growing maybe 3 4% every year and you don't really 284 00:14:36,429 --> 00:14:39,369 Speaker 2: raise prices, then you have to look to other areas 285 00:14:39,380 --> 00:14:41,229 Speaker 2: for growth. And right now they're seeing a little bit 286 00:14:41,239 --> 00:14:44,700 Speaker 2: coming from their services. So if you think about Apple TV, 287 00:14:44,710 --> 00:14:46,070 Speaker 2: subscriptions and so on, but 288 00:14:46,609 --> 00:14:49,609 Speaker 2: because most of the revenue comes from selling iphones and 289 00:14:49,619 --> 00:14:51,820 Speaker 2: that's kind of taken a back seat a little bit. 290 00:14:51,830 --> 00:14:54,260 Speaker 2: They are in terms of revenue growth a little bit 291 00:14:54,270 --> 00:14:56,210 Speaker 2: weaker compared to the rest on the flip side. I 292 00:14:56,219 --> 00:14:58,200 Speaker 2: don't want to keep talking about NVIDIA. But if 293 00:14:58,640 --> 00:15:00,539 Speaker 2: you know, if people keep wanting to invest in A 294 00:15:00,549 --> 00:15:02,979 Speaker 2: I and there's no need for their A I GP 295 00:15:03,000 --> 00:15:05,030 Speaker 2: U si mean one GP U that they're selling is 296 00:15:05,039 --> 00:15:07,940 Speaker 2: like $30,000. So if you just calculate how many units 297 00:15:07,950 --> 00:15:09,700 Speaker 2: are being sold, I don't need to, I think that 298 00:15:09,710 --> 00:15:12,369 Speaker 2: number alone was mind blowing. Yeah, I mean, it's very 299 00:15:12,380 --> 00:15:14,919 Speaker 2: different compared to a consumer and video GP U that 300 00:15:14,929 --> 00:15:18,109 Speaker 2: we have in our computers. It's like 300 bucks bucks. Yeah, 301 00:15:18,119 --> 00:15:21,530 Speaker 2: I mean when governments and private sector companies are buying 302 00:15:21,539 --> 00:15:21,780 Speaker 2: them whole 303 00:15:22,289 --> 00:15:25,400 Speaker 2: in big volumes that changes the whole game. Yeah, I mean, 304 00:15:25,409 --> 00:15:29,090 Speaker 2: you're talking about like billions and billions of dollars. Wow. Yeah, 305 00:15:29,099 --> 00:15:32,260 Speaker 2: I mean when you just look at earnings calls for matter, 306 00:15:32,630 --> 00:15:34,500 Speaker 2: they mentioned that by the end of this year they 307 00:15:34,510 --> 00:15:39,059 Speaker 2: want to have 600,000 GP us like worth of gps. Yeah. 308 00:15:39,440 --> 00:15:41,039 Speaker 2: So I mean you just calculate how much you're spending 309 00:15:41,049 --> 00:15:43,820 Speaker 2: 600,000 times 30,000, you know, roughly 310 00:15:45,119 --> 00:15:46,940 Speaker 2: are laughing all the way to the bank for the 311 00:15:46,950 --> 00:15:49,619 Speaker 2: next few years. So it's really the growth story that 312 00:15:49,630 --> 00:15:51,780 Speaker 2: matters here because it's the mileage that it gives you 313 00:15:51,789 --> 00:15:55,539 Speaker 2: as an investor. Yeah, yeah, it's really a growth story. Ok. 314 00:15:55,549 --> 00:15:58,450 Speaker 2: So we talked about how sometimes the tech sector can 315 00:15:58,460 --> 00:16:01,739 Speaker 2: be quite volatile but it's not as volatile as other 316 00:16:01,750 --> 00:16:05,099 Speaker 2: kinds of stocks out there. Still, they've experienced pretty drastic 317 00:16:05,109 --> 00:16:07,580 Speaker 2: movements in a relatively short period and we talked about 318 00:16:07,590 --> 00:16:13,140 Speaker 2: this earlier. Some even believe that there's a performance dispersion 319 00:16:13,460 --> 00:16:17,159 Speaker 2: that has led to a disproportionate increase in stock valuations 320 00:16:17,260 --> 00:16:19,840 Speaker 2: relative to the rest of the markets. And I guess 321 00:16:19,849 --> 00:16:23,119 Speaker 2: when they do that, they are comparing it to equities. 322 00:16:23,729 --> 00:16:28,479 Speaker 2: Do you think that the mag seven are indeed overvalued, overweight? 323 00:16:28,960 --> 00:16:32,340 Speaker 2: I don't think as a group they're overweight because the 324 00:16:32,349 --> 00:16:35,450 Speaker 2: earnings potential is really strong. But if you nick, obviously, 325 00:16:35,460 --> 00:16:38,520 Speaker 2: some of the companies probably a little bit more overvalued 326 00:16:38,530 --> 00:16:41,140 Speaker 2: compared to others. So it's not fair to say as 327 00:16:41,150 --> 00:16:44,940 Speaker 2: a whole, they are overvalued. If you're looking at other 328 00:16:45,130 --> 00:16:49,859 Speaker 2: consumer equities or healthcare, you know, other defensive wise 329 00:16:50,000 --> 00:16:52,280 Speaker 2: talks out there. So if you invest in them, you 330 00:16:52,289 --> 00:16:54,059 Speaker 2: really need to have kind of the stomach to be 331 00:16:54,070 --> 00:16:56,299 Speaker 2: down like 10 15% 1 day and be ok with 332 00:16:56,309 --> 00:16:58,309 Speaker 2: it because you know that they can make it back 333 00:16:58,320 --> 00:17:01,510 Speaker 2: in three days. I think it boils down to why 334 00:17:01,520 --> 00:17:04,819 Speaker 2: you've chosen to invest in that particular company, right? Because 335 00:17:04,829 --> 00:17:07,780 Speaker 2: like you said, the gross story matters, the value matters 336 00:17:07,969 --> 00:17:10,949 Speaker 2: where they're spreading their revenue to where they're gaining the 337 00:17:11,040 --> 00:17:15,180 Speaker 2: revenue and reinvesting the revenue as well, right? So the 338 00:17:15,189 --> 00:17:19,339 Speaker 2: Mac 7 may have had its origins in Fang as 339 00:17:19,349 --> 00:17:23,250 Speaker 2: I prefaced earlier. But there are still key differences that 340 00:17:23,260 --> 00:17:25,478 Speaker 2: the thing that sticks out to me immediately would be 341 00:17:25,489 --> 00:17:29,579 Speaker 2: Netflix because I don't necessarily see Netflix as a tech 342 00:17:29,589 --> 00:17:31,920 Speaker 2: stock per se. It's a very consumer stock, 343 00:17:32,369 --> 00:17:35,130 Speaker 2: but then the lines are blurred, right? Because a lot 344 00:17:35,140 --> 00:17:38,729 Speaker 2: of tech companies are consumer driven. So tell us about 345 00:17:38,739 --> 00:17:41,530 Speaker 2: the key differences here. How do I tell what a 346 00:17:41,540 --> 00:17:45,209 Speaker 2: true mag seven versus a Fang stock? So actually the 347 00:17:45,219 --> 00:17:47,379 Speaker 2: mag seven, I believe at the time it was coin 348 00:17:47,390 --> 00:17:50,920 Speaker 2: is because they were the biggest seven companies, right? Tech company. 349 00:17:50,930 --> 00:17:53,920 Speaker 2: So Netflix had, I think like 60% draw down in 350 00:17:53,974 --> 00:17:55,864 Speaker 2: price. So they kind of fell out of it. I 351 00:17:56,224 --> 00:17:58,645 Speaker 2: think at the time they were maybe only worth only 352 00:17:58,655 --> 00:18:02,604 Speaker 2: worth $200 billion. Whereas the rest, you know, they're like 353 00:18:02,614 --> 00:18:07,395 Speaker 2: closer to one trillion. I mean, it's a, yeah, so 354 00:18:07,405 --> 00:18:10,364 Speaker 2: that's why they got dropped. And also because streaming companies 355 00:18:10,375 --> 00:18:13,344 Speaker 2: in general if you take much as Netflix, but even 356 00:18:13,364 --> 00:18:16,824 Speaker 2: to some extent, Disney or Spotify, the way they earn 357 00:18:16,834 --> 00:18:19,635 Speaker 2: their revenue and the way it translates to earnings is, 358 00:18:19,645 --> 00:18:21,755 Speaker 2: is a little bit more constrained because 359 00:18:22,349 --> 00:18:24,859 Speaker 2: they really bank on just two things. One is user 360 00:18:24,869 --> 00:18:29,089 Speaker 2: growth and two raising prices which just happened by and 361 00:18:29,099 --> 00:18:32,130 Speaker 2: three to a small extent nowadays, it's starting to incorporate 362 00:18:32,140 --> 00:18:34,650 Speaker 2: a little bit more digital advertising in their business model. 363 00:18:34,819 --> 00:18:37,640 Speaker 2: But for the most part, right, it's how much dollars 364 00:18:37,650 --> 00:18:38,969 Speaker 2: can I increase, right? 365 00:18:39,050 --> 00:18:41,209 Speaker 2: Without losing all my customer. Yeah. Yeah. So there is 366 00:18:41,219 --> 00:18:45,380 Speaker 2: that limitation then for companies like the streaming platforms. So 367 00:18:45,390 --> 00:18:50,489 Speaker 2: economy driven volatility aside, tech stocks do face some risks 368 00:18:50,680 --> 00:18:54,770 Speaker 2: including regulatory risk purely because of their size and their 369 00:18:54,780 --> 00:18:57,839 Speaker 2: global reach. And as you rightfully pointed out early in 370 00:18:57,849 --> 00:19:01,469 Speaker 2: the conversation because of how new they are in terms 371 00:19:01,479 --> 00:19:05,040 Speaker 2: of market players, what are some of the 372 00:19:05,609 --> 00:19:11,510 Speaker 2: regulatory risks and what's the impact of those regulatory risks 373 00:19:11,609 --> 00:19:15,839 Speaker 2: on these tech stocks immediately? I'm thinking about me and 374 00:19:15,849 --> 00:19:19,229 Speaker 2: the hearing in the US Senate, for example. So there 375 00:19:19,239 --> 00:19:22,000 Speaker 2: are two main regulatory risks right now and it's been 376 00:19:22,010 --> 00:19:24,439 Speaker 2: going on for the last few years. One would be 377 00:19:24,449 --> 00:19:27,698 Speaker 2: data privacy because all of these companies, they take all 378 00:19:27,709 --> 00:19:30,890 Speaker 2: your data whenever you use them. And so regulators are 379 00:19:30,900 --> 00:19:32,979 Speaker 2: trying to draw clear boundaries between what you can and 380 00:19:32,989 --> 00:19:34,790 Speaker 2: what you can't do. And this has been 381 00:19:35,119 --> 00:19:39,119 Speaker 2: a relatively new phenomenon where they are using a lot 382 00:19:39,130 --> 00:19:42,689 Speaker 2: of data churning, a lot of data to drive more insights. Obviously, 383 00:19:42,699 --> 00:19:46,688 Speaker 2: with the event of higher computer technology, better computers, you've 384 00:19:46,699 --> 00:19:49,629 Speaker 2: been able to do that. The second area which is 385 00:19:49,640 --> 00:19:52,020 Speaker 2: also very important and it has a lot of scrutiny, 386 00:19:52,030 --> 00:19:56,780 Speaker 2: especially in Europe is around monopolistic practices, right? And that 387 00:19:56,790 --> 00:19:59,140 Speaker 2: actually has a bigger impact, I think because 388 00:19:59,479 --> 00:20:03,449 Speaker 2: look at companies like Google that essentially a monopoly in 389 00:20:03,839 --> 00:20:07,550 Speaker 2: multiple business, I mean, Google Maps. Yeah, Android. So they've 390 00:20:07,560 --> 00:20:10,680 Speaker 2: gotten so big and the downside for this regulation is 391 00:20:10,689 --> 00:20:13,030 Speaker 2: that you will have a lot of smaller players, maybe 392 00:20:13,040 --> 00:20:16,930 Speaker 2: smaller news outlets, smaller advertisers claiming that, you know, Google 393 00:20:16,939 --> 00:20:19,540 Speaker 2: is bullying them because they are so big. Yeah, which, 394 00:20:19,550 --> 00:20:20,579 Speaker 2: which is a fair argument 395 00:20:20,920 --> 00:20:23,500 Speaker 2: in Europe. They take it really seriously. They impose serious 396 00:20:23,510 --> 00:20:26,359 Speaker 2: punishments up to I believe 10% of their revenue from 397 00:20:26,369 --> 00:20:28,349 Speaker 2: the last year. And then on top of that, they're 398 00:20:28,359 --> 00:20:31,369 Speaker 2: able to break up the company or at least try 399 00:20:31,380 --> 00:20:33,719 Speaker 2: to break up your company into smaller bits. We've seen 400 00:20:33,729 --> 00:20:36,709 Speaker 2: that actually done in China somewhat with Alibaba. 401 00:20:37,084 --> 00:20:39,984 Speaker 2: What regulators have kind of done? China is a totally 402 00:20:39,994 --> 00:20:42,435 Speaker 2: different animal. Oh yeah. But, but when you look at 403 00:20:42,444 --> 00:20:46,114 Speaker 2: Europe and North America, that's kind of the biggest downside 404 00:20:46,125 --> 00:20:47,864 Speaker 2: risk for a lot of these companies because if you 405 00:20:47,875 --> 00:20:51,074 Speaker 2: break them up, then obviously they don't operate as efficiently 406 00:20:51,125 --> 00:20:52,954 Speaker 2: because have to have separate teams. 407 00:20:53,339 --> 00:20:54,859 Speaker 2: You got to spend a little bit more money. So 408 00:20:54,869 --> 00:20:56,500 Speaker 2: you use a little bit of your operating leverage and 409 00:20:56,510 --> 00:20:59,890 Speaker 2: a little bit of your synergies and investors just don't 410 00:20:59,900 --> 00:21:01,599 Speaker 2: really want it because, you know, if I'm going to 411 00:21:01,609 --> 00:21:03,959 Speaker 2: invest in a company that's so big, I don't want 412 00:21:03,969 --> 00:21:06,089 Speaker 2: them to be broken up. Exactly. Yeah, you lose all 413 00:21:06,099 --> 00:21:09,089 Speaker 2: their competitive advantages. Yeah. exactly. So those two will be 414 00:21:09,099 --> 00:21:13,209 Speaker 2: the main risk in terms of regulatory oversight. Another risk 415 00:21:13,219 --> 00:21:16,270 Speaker 2: that is actually quite important nowadays is your geopolitical risk. 416 00:21:16,280 --> 00:21:18,500 Speaker 2: And what we're seeing with China and the US, 417 00:21:19,349 --> 00:21:21,479 Speaker 2: you know, us banning a lot of technology, a lot 418 00:21:21,489 --> 00:21:23,899 Speaker 2: of the high end chips. So that has really impacted 419 00:21:23,910 --> 00:21:27,489 Speaker 2: NVIDIA a little bit. Fortunately for NVIDIA, a demand is 420 00:21:27,500 --> 00:21:29,910 Speaker 2: so strong that for right now it doesn't really matter, 421 00:21:30,189 --> 00:21:33,000 Speaker 2: but China makes up about 20% of Nvidia's revenue. So 422 00:21:33,010 --> 00:21:35,389 Speaker 2: you kind of have that taken away if you did 423 00:21:35,400 --> 00:21:37,770 Speaker 2: have strong demand and you are just a regular company, 424 00:21:37,780 --> 00:21:39,670 Speaker 2: I mean, 20% of your revenue gone is a lot 425 00:21:39,680 --> 00:21:43,859 Speaker 2: like in three weeks, essentially is huge. It's a big chunk. Yeah. 426 00:21:43,979 --> 00:21:46,229 Speaker 2: Right. So these kind of ongoing tensions, you can't really 427 00:21:46,239 --> 00:21:48,599 Speaker 2: control it. You just got to sit back and watch 428 00:21:48,609 --> 00:21:51,579 Speaker 2: and hope that they can work it out as an investor. 429 00:21:51,589 --> 00:21:54,389 Speaker 2: You have no idea what about key person risk. You're 430 00:21:54,400 --> 00:21:57,589 Speaker 2: looking at the Elon Musk and Mark Zuckerberg's of the world. 431 00:21:57,599 --> 00:22:01,270 Speaker 2: Is this a potential major risk or pretty minor? You think? 432 00:22:01,280 --> 00:22:03,319 Speaker 2: I think for most of Mac Seven it's pretty minor 433 00:22:03,329 --> 00:22:05,530 Speaker 2: because they have very strong teams around them. So you 434 00:22:05,540 --> 00:22:07,530 Speaker 2: have to know when you're looking at a company like 435 00:22:07,540 --> 00:22:09,239 Speaker 2: this on top of the financial performance. 436 00:22:09,689 --> 00:22:11,199 Speaker 2: Who is the guy at the top? What kind of 437 00:22:11,209 --> 00:22:14,390 Speaker 2: character is he? Is it true that some investors actually 438 00:22:14,400 --> 00:22:18,540 Speaker 2: buy into the company because of that key person? Yeah, 439 00:22:18,550 --> 00:22:20,660 Speaker 2: so I mean, this is huge in maybe not so 440 00:22:20,670 --> 00:22:23,619 Speaker 2: much public equities, but when it comes to private equity 441 00:22:23,630 --> 00:22:26,250 Speaker 2: venture capital, that's something they look at because you want 442 00:22:26,260 --> 00:22:28,849 Speaker 2: to see what kind of leader your CEO is, right? 443 00:22:28,859 --> 00:22:31,609 Speaker 2: So here's the other thing that made the news very 444 00:22:31,619 --> 00:22:34,609 Speaker 2: recently meta announcing that they would 445 00:22:34,890 --> 00:22:38,540 Speaker 2: be paying its first ever dividend to investors. And word 446 00:22:38,550 --> 00:22:42,629 Speaker 2: is that Amazon and alphabet are also going to follow suit. 447 00:22:43,319 --> 00:22:46,569 Speaker 2: Have they indeed reached that level of maturity in the 448 00:22:46,579 --> 00:22:50,180 Speaker 2: market where they can pay back their investors and not 449 00:22:50,189 --> 00:22:52,900 Speaker 2: just for the one year, I mean, once you start 450 00:22:52,910 --> 00:22:55,810 Speaker 2: doing that, I'm sure investors are going to expect you 451 00:22:55,819 --> 00:22:58,969 Speaker 2: to continue paying some form of dividend over the next 452 00:22:58,979 --> 00:23:02,579 Speaker 2: at least five years. Yeah, so definitely it was big 453 00:23:02,589 --> 00:23:05,949 Speaker 2: news for a matter, it really showed their maturity as 454 00:23:05,959 --> 00:23:08,489 Speaker 2: a company especially, you know what happened over the last 455 00:23:08,500 --> 00:23:10,290 Speaker 2: three years when they were just pushing growth and then 456 00:23:10,300 --> 00:23:11,540 Speaker 2: I was like, oh no, we are going to focus 457 00:23:11,550 --> 00:23:12,329 Speaker 2: on efficiency. 458 00:23:12,979 --> 00:23:15,530 Speaker 2: But when it comes to returning value to shareholders, they've 459 00:23:15,540 --> 00:23:18,800 Speaker 2: always done that through share buybacks, their dividends is not 460 00:23:18,810 --> 00:23:21,329 Speaker 2: on top of the share buybacks that they are already doing. So, 461 00:23:21,339 --> 00:23:25,060 Speaker 2: they just are splitting the capital allocation accordingly. For example, 462 00:23:25,069 --> 00:23:27,530 Speaker 2: if they're buying back 100 billion worth of shares, now, 463 00:23:27,540 --> 00:23:29,188 Speaker 2: maybe they're going to buy back 80 billion and then 464 00:23:29,199 --> 00:23:31,709 Speaker 2: do 20 billion in dividends by making these kind of 465 00:23:31,719 --> 00:23:34,218 Speaker 2: strategic moves. It shows what kind of company they are 466 00:23:34,229 --> 00:23:37,669 Speaker 2: maturing into and it probably would appeal a little bit 467 00:23:37,680 --> 00:23:40,329 Speaker 2: more to dividend investors, for example, or for people that 468 00:23:40,339 --> 00:23:42,550 Speaker 2: would have stayed away in the past because 469 00:23:42,819 --> 00:23:45,239 Speaker 2: they were unsure of what kind of trajectory this kind 470 00:23:45,250 --> 00:23:48,770 Speaker 2: of company was heading towards. Right, right now, they've mentioned 471 00:23:48,780 --> 00:23:51,680 Speaker 2: that they're going to be just doing quarterly dividends for 472 00:23:51,689 --> 00:23:54,560 Speaker 2: the foreseeable future. So they've really laid out the lines, 473 00:23:54,569 --> 00:23:55,849 Speaker 2: you know, we're going to do this. It's not a 474 00:23:55,859 --> 00:23:58,060 Speaker 2: one time thing we're going to continue doing it. That's 475 00:23:58,069 --> 00:24:00,209 Speaker 2: a huge commitment. Yeah, and I think that has given 476 00:24:00,219 --> 00:24:02,679 Speaker 2: investors quite a lot of confidence. You can see that 477 00:24:02,689 --> 00:24:05,550 Speaker 2: the stock price this year. Oh yes, it has surged 478 00:24:05,560 --> 00:24:09,619 Speaker 2: tremendously and obviously it begs the question, have they become 479 00:24:09,630 --> 00:24:10,669 Speaker 2: too big to fail? 480 00:24:11,540 --> 00:24:13,510 Speaker 2: I don't think so. I think they still have to 481 00:24:13,520 --> 00:24:15,640 Speaker 2: be quite focused, especially if they are doing a lot 482 00:24:15,650 --> 00:24:18,760 Speaker 2: of investments in R and D and capital expenditure, right? 483 00:24:19,170 --> 00:24:21,780 Speaker 2: When you grow your assets that much, you still have 484 00:24:21,790 --> 00:24:25,170 Speaker 2: to be somewhat prudent in terms of how you're allocating money. Yeah, 485 00:24:25,339 --> 00:24:27,810 Speaker 2: there will come a point where their user base is 486 00:24:27,819 --> 00:24:29,619 Speaker 2: also going to be saturated right now. They are at 487 00:24:29,630 --> 00:24:34,069 Speaker 2: 4 billion users. Yeah, I mean, that's like almost 60 70% 488 00:24:34,079 --> 00:24:36,369 Speaker 2: of the world's population, right. So how much more can 489 00:24:36,380 --> 00:24:38,669 Speaker 2: they actually grow in terms of user base? And then 490 00:24:38,680 --> 00:24:40,000 Speaker 2: on the monetization side, 491 00:24:40,469 --> 00:24:42,660 Speaker 2: yes, they're still in the early stages, but they will 492 00:24:42,670 --> 00:24:44,399 Speaker 2: peter out a little bit in the next 5 to 493 00:24:44,410 --> 00:24:47,030 Speaker 2: 10 years. It almost feels as if A I came 494 00:24:47,040 --> 00:24:49,899 Speaker 2: at the right time. Like the timing is impeccable that 495 00:24:49,910 --> 00:24:53,199 Speaker 2: they're able to leverage on this for then the next 496 00:24:53,209 --> 00:24:55,369 Speaker 2: chapter of their growth story. I think the A I 497 00:24:55,390 --> 00:24:57,630 Speaker 2: hype came at the right time because these companies have 498 00:24:57,640 --> 00:24:59,890 Speaker 2: been doing it for the last 10 years. Yeah, exactly. 499 00:24:59,900 --> 00:25:01,379 Speaker 2: It's nothing new to them. Yeah. 500 00:25:01,829 --> 00:25:05,790 Speaker 2: So as an investor looking to add a tech stock 501 00:25:05,800 --> 00:25:07,800 Speaker 2: to a portfolio, what do I need to be paying 502 00:25:07,810 --> 00:25:13,189 Speaker 2: attention to particularly deciding on Mac Seven, I'm thinking about 503 00:25:13,199 --> 00:25:17,810 Speaker 2: things like Time Horizon, you talked about tech stock investors 504 00:25:17,819 --> 00:25:21,880 Speaker 2: being the kind that needs to have the stomach for it. 505 00:25:22,109 --> 00:25:24,109 Speaker 2: So I'm not thinking long term here. This has to 506 00:25:24,119 --> 00:25:27,849 Speaker 2: be a quick turnaround or a medium term outlook or 507 00:25:28,420 --> 00:25:32,180 Speaker 2: can they still be long term stocks that we can 508 00:25:32,189 --> 00:25:36,560 Speaker 2: invest in actually for more volatile stocks like tech stocks, 509 00:25:36,569 --> 00:25:38,939 Speaker 2: you really want to have a longer time horizon because 510 00:25:39,170 --> 00:25:41,609 Speaker 2: it kind of mitigates a lot of the volatility risk 511 00:25:42,040 --> 00:25:44,099 Speaker 2: at the same time, if you have companies like the 512 00:25:44,109 --> 00:25:46,890 Speaker 2: max seven, that fundamentally are very sound, if you look 513 00:25:46,900 --> 00:25:49,439 Speaker 2: at their financial statements, you know, the flush of cash, 514 00:25:49,910 --> 00:25:52,020 Speaker 2: you know that if anything 515 00:25:52,300 --> 00:25:55,430 Speaker 2: inadvertently happens, they'll still be able to function, they will 516 00:25:55,439 --> 00:25:57,520 Speaker 2: still be able to pay out their investors. And so 517 00:25:57,530 --> 00:26:00,218 Speaker 2: actually these kind of companies, yes, you can do short 518 00:26:00,229 --> 00:26:01,880 Speaker 2: term trading and stuff like that. But if you really 519 00:26:01,890 --> 00:26:04,718 Speaker 2: want to look long term, that's probably where you're going 520 00:26:04,729 --> 00:26:06,339 Speaker 2: to be able to maximize your returns. 521 00:26:06,729 --> 00:26:08,910 Speaker 2: So then you really have to look at how much 522 00:26:08,920 --> 00:26:11,218 Speaker 2: value can I get at this current price? If you 523 00:26:11,229 --> 00:26:12,790 Speaker 2: think maybe I can get a little bit more, you 524 00:26:12,800 --> 00:26:15,639 Speaker 2: wait for a pullback, right? Because inevitably it will happen. Yeah. 525 00:26:15,650 --> 00:26:18,510 Speaker 2: And then you find that, ok, this is somewhere where 526 00:26:18,520 --> 00:26:20,170 Speaker 2: it's a bit more value to me as a company. 527 00:26:20,180 --> 00:26:22,899 Speaker 2: It doesn't diminish the performance or the capabilities of the company. 528 00:26:22,910 --> 00:26:25,429 Speaker 2: It's just where you want to enter and then you 529 00:26:25,439 --> 00:26:27,310 Speaker 2: just hold it for 10 years because I'm quite sure 530 00:26:27,540 --> 00:26:29,050 Speaker 2: in 10 years all of these companies are still going 531 00:26:29,060 --> 00:26:31,400 Speaker 2: to be. Oh, yeah, it's hard to imagine a world 532 00:26:31,410 --> 00:26:34,079 Speaker 2: without them. Now their game changer, they are 533 00:26:34,410 --> 00:26:37,699 Speaker 2: tech disruptors for the most part they all basically use 534 00:26:37,709 --> 00:26:39,760 Speaker 2: every day. Yeah. It's almost as if we can't live 535 00:26:39,770 --> 00:26:42,500 Speaker 2: without them. Yeah. So my final question to you is, 536 00:26:42,510 --> 00:26:45,369 Speaker 2: do you think max seven will still be mag seven 537 00:26:45,380 --> 00:26:49,550 Speaker 2: in 2025? Yeah, I think in 2025 there will still 538 00:26:49,560 --> 00:26:52,589 Speaker 2: be mag seven. Right. The seven is still there. I'm 539 00:26:52,599 --> 00:26:55,579 Speaker 2: quite confident that this will happen for at least the 540 00:26:55,589 --> 00:26:57,468 Speaker 2: next 2 to 3 years. They'll still be up there. 541 00:26:57,810 --> 00:26:59,369 Speaker 2: Do you think anyone will drop out the way net 542 00:26:59,380 --> 00:26:59,869 Speaker 2: fix it? 543 00:27:01,260 --> 00:27:04,139 Speaker 2: I think the only company that has the potential to 544 00:27:04,150 --> 00:27:07,099 Speaker 2: do that would be Tesla, the rest of them, they 545 00:27:07,109 --> 00:27:09,579 Speaker 2: are very solid. Even though we talked a little bit 546 00:27:09,589 --> 00:27:13,150 Speaker 2: about Apple and slowing growth, there's still a huge company, 547 00:27:13,250 --> 00:27:16,079 Speaker 2: very high value, very high value because they generate a 548 00:27:16,089 --> 00:27:19,069 Speaker 2: lot of revenue earnings are also good and they're very stable. 549 00:27:19,079 --> 00:27:21,458 Speaker 2: It's tough to find a better company than Apple if 550 00:27:21,469 --> 00:27:23,679 Speaker 2: you're looking for something that's stable, right? It may not 551 00:27:23,689 --> 00:27:26,530 Speaker 2: give you the 30 40% performance that you want, 552 00:27:27,963 --> 00:27:30,373 Speaker 2: but right now, not right now, but they will still 553 00:27:30,383 --> 00:27:32,862 Speaker 2: be pretty solid better than most other companies. You know, 554 00:27:32,873 --> 00:27:36,652 Speaker 2: you just gave us a really detailed lay of the land, Jonathan. 555 00:27:36,662 --> 00:27:38,942 Speaker 2: So thank you so much for helping us understand the 556 00:27:38,953 --> 00:27:42,342 Speaker 2: Mac seven, the whole tech stock industry, especially as an 557 00:27:42,353 --> 00:27:44,243 Speaker 2: investor as well. What to look out for. So, thank 558 00:27:44,253 --> 00:27:46,522 Speaker 2: you very much. You're welcome it was fun. It's still 559 00:27:46,532 --> 00:27:49,003 Speaker 2: a very exciting space to watch. However, the journey turns 560 00:27:49,012 --> 00:27:51,152 Speaker 2: out just got to make sure that you know, you 561 00:27:51,162 --> 00:27:51,863 Speaker 2: as an investor 562 00:27:52,365 --> 00:27:56,645 Speaker 2: know what you can stomach as Jonathan painted. If you 563 00:27:56,656 --> 00:27:59,406 Speaker 2: enjoyed this episode, please let us know by leaving us 564 00:27:59,416 --> 00:28:02,245 Speaker 2: a comment or a rating on any of the platforms 565 00:28:02,255 --> 00:28:04,946 Speaker 2: you are listening to us from, we're streaming on Apple 566 00:28:04,955 --> 00:28:08,936 Speaker 2: podcasts and Spotify as well as youtube music. Let's not 567 00:28:08,946 --> 00:28:13,406 Speaker 2: forget the team behind Money Talks, Joanne Chan Tiffany, Jaini, Johari, 568 00:28:13,416 --> 00:28:17,125 Speaker 2: Christina Roberts win and I'm Andrea He catch you next time.