WEBVTT - What Went Up: Talking Markets with Mike and Sarah 0:00:06.400 --> 0:00:09.120 Welcome you, trilliance. I'm Joel Webber and I'm Eric Baltis. 0:00:12.240 --> 0:00:13.760 Eric is great to be back in the booth with you. 0:00:14.080 --> 0:00:16.720 I was away for a second. Things didn't go so well. Yeah, 0:00:16.720 --> 0:00:18.520 I had to take over your role, and uh it 0:00:18.600 --> 0:00:20.280 was harder than it looks. I gotta I gotta give 0:00:20.320 --> 0:00:23.080 you credit. I don't think I'm gonna mock you anymore 0:00:23.120 --> 0:00:24.960 after you go on what I call the downward spiral, 0:00:25.040 --> 0:00:27.800 especially in the closeouts. First of all, those are incredibly 0:00:27.880 --> 0:00:30.400 rare and you make a bigger deal than they are. 0:00:30.480 --> 0:00:32.520 But you know, it's great to be back. I missed 0:00:32.760 --> 0:00:36.080 I missed my Tony Romo. How was China? Uh? You know, 0:00:36.200 --> 0:00:39.600 there's the conference. This Bloomberg New Economy Forum that we 0:00:39.640 --> 0:00:44.200 do is really interesting huge, Uh turn out, some really 0:00:44.240 --> 0:00:47.159 significant people and a lot of interesting topics that came up. 0:00:47.200 --> 0:00:49.840 So it was an interesting place to go, especially right 0:00:49.880 --> 0:00:51.320 now and in the midst of all the things that 0:00:51.360 --> 0:00:53.639 are happening in the world. I thought it was really interesting. 0:00:53.720 --> 0:00:55.440 And coming back though, I really wanted to have a 0:00:55.480 --> 0:00:58.960 holiday party. So this episode of the podcast we said, 0:00:59.000 --> 0:01:00.400 why don't We Talk to Our Friends? Is over at 0:01:00.520 --> 0:01:03.320 What Goes Up? Podcast? Also here at Bloomberg, which is 0:01:03.320 --> 0:01:05.920 co hosted by Sarah Ponzic and Mike Reagan. So we 0:01:05.959 --> 0:01:08.160 decided let's bring them on and then let's actually like 0:01:08.240 --> 0:01:10.960 talk about what's gone up this year. Yeah, the past 0:01:11.000 --> 0:01:13.679 couple of our podcast episodes have been a little wonky, 0:01:13.720 --> 0:01:19.400 non transparent active direct indexing platforms. So we thought this December, 0:01:19.480 --> 0:01:21.720 let's wrap up what happened in the market where people 0:01:21.720 --> 0:01:25.399 are investing, and that's their specialty. So um, we thought 0:01:25.440 --> 0:01:27.600 we'd look at what went up and what might go 0:01:27.720 --> 0:01:30.240 up next year. What kind of beverages do you serve 0:01:30.240 --> 0:01:34.000 at holiday parties? I don't really have some two young kids, 0:01:34.000 --> 0:01:37.840 so I parties are like nothing too crazy. I picture 0:01:37.920 --> 0:01:41.200 Eric serving ETF That is holiday party. Like, here's some 0:01:41.280 --> 0:01:46.400 t VIX for you, Uncle Joe, or metaphorically, t vix 0:01:46.440 --> 0:01:50.360 would be like grain alcohol, different alcohols, each with a 0:01:50.440 --> 0:01:55.360 sign spy. Pretty easy, it goes down. Well, yeah, yeah, 0:01:55.520 --> 0:02:01.960 here's some o'duel's little voo for you. You You can't handle anything, 0:02:02.000 --> 0:02:05.880 you know, I want some three X leveraged ets. My 0:02:06.000 --> 0:02:07.880 question for you, I'm gonna turn the tables already. Sure, 0:02:08.200 --> 0:02:11.480 I'm used to asking Eric the questions like ten times 0:02:11.480 --> 0:02:15.360 a day over the incident messenger. But why aren't triple 0:02:15.680 --> 0:02:18.120 X levered e t s the biggest thing in the world. 0:02:18.200 --> 0:02:21.760 If you're gonna be a bowl on the market, go bigger, 0:02:21.800 --> 0:02:25.320 go home, Right, I'm looking at the triple Q. How 0:02:25.320 --> 0:02:27.040 do you how do the cool et f guys called 0:02:27.080 --> 0:02:29.520 the triple Q or the t Q cu cu um, 0:02:29.560 --> 0:02:33.080 the triple Q the q q Q yeah, yeah qq. 0:02:33.240 --> 0:02:34.920 They must have called the cubes back in the day 0:02:34.960 --> 0:02:36.440 when it was four. But I like the t q 0:02:36.639 --> 0:02:39.280 q Q. Yeah. So that's the triple leveraged version of it, 0:02:39.320 --> 0:02:41.280 which I think is up like four thousand percent since 0:02:41.280 --> 0:02:44.880 it came out for the decade. Yeah. The problem with leverage, 0:02:45.080 --> 0:02:47.320 um well, first of all, they do have a good audience, 0:02:47.360 --> 0:02:50.640 but there's um the way they rebalance every day because 0:02:50.639 --> 0:02:52.239 when new people come in, they didn't make sure their 0:02:52.280 --> 0:02:54.959 leverage is reset for that day, and that resetting can 0:02:55.040 --> 0:02:59.120 cause some corrosion and so your your triple leveraged. It 0:02:59.160 --> 0:03:01.919 doesn't exactly in the long term, and that's why the 0:03:01.960 --> 0:03:04.560 three X and negative three can be both down over 0:03:04.600 --> 0:03:07.160 a year. But if something goes up in a nice direction, 0:03:07.320 --> 0:03:09.480 you get compounding effect and actually you can get four 0:03:09.560 --> 0:03:13.600 or five times. But it's a very um weird market 0:03:13.680 --> 0:03:17.400 that has really got some wacky math. But other than that, 0:03:17.800 --> 0:03:19.280 I agree with you. I think, um, you know, I 0:03:19.320 --> 0:03:21.960 think if you talk to those companies, half their investors 0:03:21.960 --> 0:03:24.519 are hardcore traders, small hedge fund types, and half our 0:03:24.520 --> 0:03:27.240 retail day traders, like I think the new day trader 0:03:27.720 --> 0:03:29.720 uses those kind of things, but you can tell from 0:03:29.720 --> 0:03:31.320 the volume they're probably trading a short term with the 0:03:31.400 --> 0:03:39.320 day this time on trillions. What went up? What else 0:03:39.360 --> 0:03:42.200 went up? I want to start with the SMP five 0:03:42.600 --> 0:03:48.680 because it's relentless, and you know, I call the utopia year, 0:03:49.040 --> 0:03:50.360 but I think that year the market was up with 0:03:51.400 --> 0:03:54.200 something like that. It's up more this year, So are 0:03:54.200 --> 0:03:59.400 we like beyond utopia? Like isn't crazy, but it doesn't 0:03:59.440 --> 0:04:01.560 quite feel like it, does it. I'm gonna let me 0:04:01.760 --> 0:04:04.360 read you a little bit from this this uh column 0:04:04.400 --> 0:04:09.240 I edited by our colleague. Ye. She literally everything went 0:04:09.360 --> 0:04:14.320 up in two in this year two tho, I'm still 0:04:15.800 --> 0:04:25.520 check so right right given away my age. So he 0:04:25.640 --> 0:04:29.360 basically looked at every major asset class. Literally not only 0:04:29.400 --> 0:04:32.240 did everything go up, but everything went up way more 0:04:32.600 --> 0:04:35.279 than the average gains over the last year, and I 0:04:35.279 --> 0:04:38.920 mean I'm talking everything from your haven's treasuries up more 0:04:38.960 --> 0:04:44.960 than average e M debt, high yield, gold, everything. So 0:04:45.120 --> 0:04:46.880 I don't know, to be honest, I don't know what 0:04:46.880 --> 0:04:49.160 the takeaway is from that, other than there's just a 0:04:49.160 --> 0:04:51.640 whole lot of money chasing returns this year. So I 0:04:51.720 --> 0:04:53.720 have one theory on it, which is, and Sarah, you 0:04:53.720 --> 0:04:55.720 correct me if I'm wrong. For the most part of 0:04:55.760 --> 0:04:57.360 the year. The last month is an exception because I 0:04:57.400 --> 0:04:59.479 think people just went all in bullish recently. But for 0:04:59.520 --> 0:05:02.640 the first up through Halloween, I felt that there was 0:05:02.680 --> 0:05:05.440 a Trump trade developing, which is, I'm gonna just hang 0:05:05.440 --> 0:05:08.080 onto equities. I'm not gonna sell them, but I'm gonna 0:05:08.080 --> 0:05:11.880 buy gold, treasuries or low ball because Trump's Twitter feed 0:05:11.920 --> 0:05:14.200 bothers me a little bit. I'm a little nervous and 0:05:14.640 --> 0:05:16.840 eighteen just happened, and I'm still a little spook from that. 0:05:17.279 --> 0:05:19.240 So I think that's why you might have had everything 0:05:19.240 --> 0:05:21.800 go up because people I didn't want to sell equities 0:05:21.800 --> 0:05:23.839 because the FED was there, but they also felt nervous, 0:05:23.839 --> 0:05:26.000 so they bought these other things. For the most part, 0:05:26.040 --> 0:05:27.599 I would agree. I mean, you think about the first 0:05:27.600 --> 0:05:30.640 half of the year, there were still a lot of 0:05:30.680 --> 0:05:32.960 nervousness out there. There are a lot of concerns out there, 0:05:33.000 --> 0:05:35.200 and that's why even within the equity market for months 0:05:35.200 --> 0:05:38.200 you saw that defensive trade really take off. They see 0:05:38.320 --> 0:05:42.280 people piling into consumer staples, you saw people piling into utilities, 0:05:42.360 --> 0:05:46.080 real estate. Also because of the bond proxy side of 0:05:46.080 --> 0:05:49.120 those trades. I mean yields coming down to one and 0:05:49.120 --> 0:05:52.240 a half percent this year. US people last December, in 0:05:52.279 --> 0:05:54.520 the beginning, what they would have thought yields were going 0:05:54.560 --> 0:05:57.599 to do. I highly doubt anyone really would have told 0:05:57.600 --> 0:06:00.920 you that yields were going to drop from uh till 0:06:01.000 --> 0:06:03.080 one and a half on the ten years. So that 0:06:03.120 --> 0:06:05.560 really drove the trade for a while. But now in 0:06:05.600 --> 0:06:07.320 the back half of the year, the last couple of 0:06:07.320 --> 0:06:09.839 months or so, now people are starting to question if 0:06:10.000 --> 0:06:13.000 a lot of that was way overdone. So you have 0:06:13.200 --> 0:06:16.920 started to see uh some faults in the bond trades. 0:06:17.000 --> 0:06:20.240 You've seen it in gold as well. However, because they 0:06:20.240 --> 0:06:23.359 had such a strong run up in the beginning of 0:06:23.400 --> 0:06:27.400 the year, there's still up an extreme amount, and all 0:06:27.520 --> 0:06:30.920 year long, you've just had risk assets inequities rebounding as well. 0:06:30.920 --> 0:06:34.040 But you think about the return for the SMP. A 0:06:34.040 --> 0:06:36.800 lot of people, when you say year today, the smps up, 0:06:37.760 --> 0:06:39.920 they're gonna say, wait, wait, wait. But if you look 0:06:40.000 --> 0:06:43.640 back towards the beginning of December, uh, it's not quite 0:06:43.640 --> 0:06:46.520 that high. You have to really take into account the drop, 0:06:46.600 --> 0:06:48.560 the meltdown that we did see at the end of 0:06:48.640 --> 0:06:52.600 last year. Yeah, it's a it was a really weird phenomenon, 0:06:52.720 --> 0:06:56.400 this roaring bowl market being led by defensives. I don't 0:06:56.400 --> 0:06:58.320 I can't remember a time when I've seen that. You 0:06:58.600 --> 0:07:01.240 saw what looked like out of textbook what they would 0:07:01.240 --> 0:07:04.600 call crowded trades and these staples and utilities. I mean, 0:07:04.680 --> 0:07:07.040 some the valuation is just going through the roof for 0:07:07.080 --> 0:07:10.680 these really defensive sectors. So a strange year for sure. 0:07:10.840 --> 0:07:13.520 And lately I've started to see some research to looking 0:07:13.560 --> 0:07:16.880 at the latest rally that we have seen, talking about 0:07:16.960 --> 0:07:20.360 the proverbial or really scary blow off top that you 0:07:20.400 --> 0:07:22.640 get before a bear market, or that you get before 0:07:22.680 --> 0:07:25.760 a recession. Uh. Some shops pointing out that as of 0:07:25.800 --> 0:07:28.080 the end of November, if you had looked at stocks 0:07:28.080 --> 0:07:30.760 on a one to four all the way through fifty 0:07:30.760 --> 0:07:34.000 two week basis, the return was positive on all of 0:07:34.040 --> 0:07:37.240 them saying that, Okay, maybe this is it, but you 0:07:37.320 --> 0:07:40.360 continue to have investors in the majority I speak with, 0:07:40.760 --> 0:07:43.680 say you think about the caution that is out there, 0:07:43.720 --> 0:07:47.280 that being the makeup of what's driven returns for a 0:07:47.320 --> 0:07:50.440 decent amount of the year, but also flows too. If 0:07:50.480 --> 0:07:53.320 you look at so far this year, fixed income ets 0:07:53.360 --> 0:07:55.840 have taken in more than equity ts for the first 0:07:55.840 --> 0:07:58.000 time since two thousand nine, And a lot of people 0:07:58.080 --> 0:08:01.680 keep talking about this cash on the sideline, which I 0:08:01.800 --> 0:08:05.880 find interesting. Yes, you can look at mutual phone outflows. Uh, 0:08:05.920 --> 0:08:08.040 there certainly is a lot of caution out there. But 0:08:08.160 --> 0:08:11.280 ned Davis has another way of looking at it which 0:08:11.280 --> 0:08:13.440 I've kind of taken to, and they look at cash 0:08:13.480 --> 0:08:16.480 actually as a percentage of total market cap, because if 0:08:16.520 --> 0:08:18.880 you look at the absolute level of cash right now 0:08:18.920 --> 0:08:21.680 on the sidelines or cash in money markets, then sure 0:08:21.880 --> 0:08:25.080 it's high. But if you actually look at it relative 0:08:25.120 --> 0:08:27.840 to market cap, because obviously there's a lot more value 0:08:28.360 --> 0:08:30.880 in the markets right now as a whole since two 0:08:30.880 --> 0:08:34.520 thousand and nine, it's actually pretty low, which makes you think, sure, 0:08:34.520 --> 0:08:36.640 on an absolute level, there's a lot of cash on 0:08:36.640 --> 0:08:40.560 the sidelines, but not actually relative to the actual market 0:08:40.559 --> 0:08:43.240 cap out there, and you know one headline that I 0:08:43.280 --> 0:08:45.079 picked some headlines out that you guys wrote that you're 0:08:45.120 --> 0:08:48.840 talking about that I think captured. The year is here. 0:08:48.880 --> 0:08:52.800 It is sick with recession fever. Investors make power their drug, 0:08:53.600 --> 0:08:56.120 and to me, UM, I felt like the FED has 0:08:56.120 --> 0:08:59.200 been the drug for ten years. Was a year we 0:08:59.240 --> 0:09:01.800 saw the patient off the drug and it spassed out. 0:09:01.880 --> 0:09:04.600 Everything went down like that was the year everything went down. 0:09:05.160 --> 0:09:08.600 But then beginning of this year, Powell came out reassured markets. 0:09:08.920 --> 0:09:12.640 Trump's pressure on him I think is part of the deal. Um, 0:09:12.679 --> 0:09:16.960 But it seems like recession impeachment. I track the mentions 0:09:17.000 --> 0:09:19.960 of these words and they spike up, and they're scary words, 0:09:20.040 --> 0:09:23.640 especially recession. But spy volume never really gets shaken, which 0:09:23.640 --> 0:09:26.280 is a fear gauge. I use, nobody's really doing much. 0:09:26.320 --> 0:09:29.800 I think there's headlines and sentiment gets crazy for a 0:09:29.840 --> 0:09:33.439 week here and there, but people just I guess the 0:09:33.640 --> 0:09:35.720 all comes back to the FED being their drug. As 0:09:35.720 --> 0:09:38.439 long as they get that hit, Um, everything else will 0:09:38.440 --> 0:09:40.440 be short lived. And is that really the case? And 0:09:40.880 --> 0:09:43.720 how does this end? I think something that people are 0:09:43.720 --> 0:09:46.360 going to be studying for years is what happened in 0:09:46.360 --> 0:09:49.080 the repo market this year, and how the FED kind 0:09:49.080 --> 0:09:52.520 of came in to rescue save the day by holding 0:09:52.559 --> 0:09:56.760 these auctions repo auctions. Now everyone's saying it's not quantitative easing, 0:09:56.760 --> 0:09:59.920 it's not quantity of easing, okay, But the Fed expan 0:10:00.000 --> 0:10:02.360 of their bounce sheet by more than a quarter trillion 0:10:02.400 --> 0:10:06.760 dollars within a few months. And a big reason why 0:10:06.760 --> 0:10:08.760 I think you have to assume they did that is 0:10:08.840 --> 0:10:13.120 because here we are running a growing economy and yet 0:10:13.280 --> 0:10:17.040 we're blowing out the federal budget deficit to a trillion 0:10:17.040 --> 0:10:20.240 dollars a year. Everyone got a tax cut, corporations got 0:10:20.320 --> 0:10:22.960 a tax cut. So there is all this money chasing 0:10:23.240 --> 0:10:28.040 all sorts of assets around right now. Extra money. So yes, 0:10:28.080 --> 0:10:31.000 the FED did reverse course on rates and uh, you know, 0:10:31.080 --> 0:10:34.360 started lowering rates. That's one part of it. But I 0:10:34.360 --> 0:10:37.280 would not discount the effect of their moves in the 0:10:37.280 --> 0:10:40.920 repo market because they kept by keeping those uh treasury 0:10:40.920 --> 0:10:45.560 bill rates low. Um, you uninvert the yield curve, so 0:10:45.920 --> 0:10:48.480 people stop worrying about that. All this would qualify under 0:10:48.520 --> 0:10:52.199 the FED. Has the markets back, Yeah, absolutely, And I 0:10:52.200 --> 0:10:54.680 would say even Trump wants to Fed to have the 0:10:54.720 --> 0:10:57.840 markets back right. This is all speculation, but there are 0:10:57.840 --> 0:10:59.760 a lot of people throwing around the idea that a 0:10:59.760 --> 0:11:03.360 few weeks ago when Powell met with manution in Trump, 0:11:03.440 --> 0:11:06.040 that maybe that was something they discussed. If they decided 0:11:06.080 --> 0:11:08.719 to pull the plug on the trade war, do something unexpected, 0:11:09.080 --> 0:11:11.920 will the FED have the markets back? And I've spoken 0:11:11.920 --> 0:11:13.679 to a couple of people, including the head of asset 0:11:13.760 --> 0:11:17.319 Allocation UH this week over for Pacific Life Investments, who 0:11:17.320 --> 0:11:19.720 said that's part of the reason that we are seeing 0:11:19.800 --> 0:11:23.440 this end of year rally continue. I spoke with another 0:11:23.520 --> 0:11:26.440 investor at another point this week who said that he 0:11:26.520 --> 0:11:29.280 sees the possibility that the FED could actually cut rates 0:11:29.320 --> 0:11:32.200 on the first quarter of next year. Also part of 0:11:32.200 --> 0:11:34.600 the reason that the market is continuing to gain, not 0:11:34.679 --> 0:11:37.559 because they think we're going to fall into a recession, 0:11:37.640 --> 0:11:40.720 but because if something unexpected does happen on the trade front, 0:11:41.000 --> 0:11:43.640 or if you do continue to see some deterioration and 0:11:43.679 --> 0:11:46.480 growth but that's not horrible, well, the FED has your back, 0:11:46.520 --> 0:11:48.680 and the FED put is still there, the power put 0:11:48.720 --> 0:11:50.680 is still there, and that's part of the reason we 0:11:50.720 --> 0:11:53.760 continue to see this risk on attitude. There's people on 0:11:53.800 --> 0:11:56.200 Twitter and they are very funny they'll see something like 0:11:56.200 --> 0:11:58.640 I heard today, like somebody taped a banana to a 0:11:58.679 --> 0:12:00.880 wall and it sold in an art exhibit for like 0:12:00.920 --> 0:12:04.640 a d and the person will just say, FED definitely 0:12:04.640 --> 0:12:08.120 has to cut rates or s andp hits all time five, 0:12:08.320 --> 0:12:10.960 FED has to cut rates. They're making fun of like 0:12:11.240 --> 0:12:14.120 it's the best market all time highs all the time. 0:12:14.440 --> 0:12:17.280 Yet Trump's on the FED to cut rates, and I 0:12:17.360 --> 0:12:19.840 kind of get it. I mean, it's almost become a joke. Sir. 0:12:19.960 --> 0:12:23.800 You mentioned something about growth and value a second ago. 0:12:23.880 --> 0:12:25.839 Can we dwell on that for a little bit, because 0:12:25.880 --> 0:12:28.280 this has been actually been a kind of a remarkable 0:12:28.360 --> 0:12:31.480 year for value of all things. So I'd say over 0:12:31.520 --> 0:12:34.400 the last couple of months, if you still look over 0:12:34.440 --> 0:12:36.760 the year, growth not so much in e t F 0:12:36.760 --> 0:12:39.880 flows because we started have started to see a lot 0:12:39.920 --> 0:12:42.760 of et F flows going into not so much just 0:12:42.960 --> 0:12:46.120 value funds like low volatility funds, dividend funds, also those 0:12:46.120 --> 0:12:48.600 bond proxy areas of the market. But if you look 0:12:48.640 --> 0:12:51.199 at performance, I mean, gross had a pretty stilar year 0:12:51.240 --> 0:12:53.800 from the beginning of the year as well. But what 0:12:53.960 --> 0:12:58.120 happened and my colleague Lucawa wrote about it very very 0:12:58.200 --> 0:13:01.320 early on after the steps that happened with Whee Work, 0:13:01.320 --> 0:13:03.360 and he called it the we Work flu the idea 0:13:03.440 --> 0:13:05.680 that all of a sudden, people are going to start 0:13:05.800 --> 0:13:10.280 actually caring about profits again and stop throwing money at 0:13:10.360 --> 0:13:13.920 companies that just have have very high growth prospects. And 0:13:13.960 --> 0:13:16.480 we did see that play out for quite a while. 0:13:16.600 --> 0:13:20.560 We saw it happen with certain companies after earnings. Twitter 0:13:20.679 --> 0:13:24.160 comes to mind, for example. UM. But then we saw 0:13:24.520 --> 0:13:27.600 if I focus on software companies one portion of growth, 0:13:27.640 --> 0:13:31.200 we saw software start to perform pretty well. Again. One 0:13:31.240 --> 0:13:33.840 thing in there is like we work being classified as 0:13:33.880 --> 0:13:36.320 a tech company. Right, everybody came back to reality, Well, 0:13:36.400 --> 0:13:40.320 everything is a tech company. But can I just go 0:13:40.360 --> 0:13:42.880 over this one headline that is totally on this topic. 0:13:43.000 --> 0:13:46.360 I think who wrote it? I think Sarah did. This 0:13:46.440 --> 0:13:50.520 is UM after latest IPO setbacks, there's unicorn blood on 0:13:50.559 --> 0:13:54.680 the streets. That was That was an early, early story. 0:13:55.400 --> 0:13:59.000 That was a business week. Yes it was business people 0:13:59.000 --> 0:14:03.480 get started. That was no problems. But the problem is 0:14:03.520 --> 0:14:10.400 I I wasn't even aware because I've probably written something like, yeah, 0:14:10.440 --> 0:14:13.760 that one was. That was the story. You know, when 0:14:13.840 --> 0:14:17.280 we um a business week, we're thinking about the year 0:14:17.320 --> 0:14:19.800 we did a cover story back in like March, I 0:14:19.840 --> 0:14:24.200 think right as Uber basically listed in I p O 0:14:24.360 --> 0:14:26.880 that we kind of wanted to mark that moment and 0:14:26.920 --> 0:14:29.520 we did cover that had that was by both of 0:14:29.520 --> 0:14:34.400 these guys, both Mike and Sarah about um, the moment 0:14:34.480 --> 0:14:38.040 of private companies leaving Matt what Matt Levien calls the 0:14:38.160 --> 0:14:40.480 enchanted forest of the private markets for the public markets. 0:14:40.480 --> 0:14:42.960 And we marked that moment with a cover story that 0:14:43.080 --> 0:14:45.040 had a Instead of a deer crossing a road, it 0:14:45.080 --> 0:14:48.360 was a unicorn um, which I thought was fitting because 0:14:48.640 --> 0:14:51.280 you know, deer get hit by cars all the time, 0:14:51.280 --> 0:14:52.840 and like, some of these companies are not going to 0:14:52.920 --> 0:14:55.600 make it to the other side of the road. Uh, 0:14:55.640 --> 0:14:57.600 and they and they actually you know, for a long time, 0:14:57.640 --> 0:14:59.400 a lot of them have struggled and I think will 0:14:59.440 --> 0:15:01.680 continue to of them struggle, with Uber being one of 0:15:01.840 --> 0:15:05.120 one of those examples. But later on in the year 0:15:05.200 --> 0:15:07.600 we came back to it with another story which was 0:15:08.040 --> 0:15:11.000 how bloody this this has been for all these companies, right, 0:15:11.040 --> 0:15:14.560 and that really that headline relates exactly to that theme, 0:15:14.640 --> 0:15:18.520 because man, we saw blood bath for a while and um, 0:15:18.960 --> 0:15:20.680 just I want to go back to growth and value 0:15:20.680 --> 0:15:23.400 because I feel like, and Michae will get this because 0:15:23.400 --> 0:15:26.760 he's a sixers fan. Value is like when Ben Ben 0:15:26.840 --> 0:15:29.760 Simmons hitting a jump shot because he's so bad, so 0:15:29.840 --> 0:15:31.680 he hit a three pointer and the place why crazy, 0:15:31.720 --> 0:15:35.800 Like they won the championship. Value was up this year. 0:15:36.240 --> 0:15:39.480 Growth was up thirty like, just because value didn't lose 0:15:39.520 --> 0:15:41.320 by more. It's like a big year for value. I 0:15:41.320 --> 0:15:43.080 know what you mean. It seems like value had its 0:15:43.080 --> 0:15:45.280 big year, but it's still trailed the market and it's 0:15:45.280 --> 0:15:47.920 still lost to growth again. So it's just it's relative 0:15:47.960 --> 0:15:50.920 to its it's relative because the past performance has been 0:15:50.960 --> 0:15:52.920 I think value it's called a little bit because people 0:15:53.040 --> 0:15:54.880 like it's so bad. I thought you were going to 0:15:54.920 --> 0:15:59.640 go with the Marquel false example of Orlando getting stepping 0:15:59.760 --> 0:16:03.480 up the biggest value stock in the NBA history. Um, yeah, 0:16:03.560 --> 0:16:06.760 I was. Actually Joel has this list for Business Week 0:16:06.800 --> 0:16:09.600 called the Jealousy List. Uh, And I was, you know, 0:16:09.760 --> 0:16:12.240 scrambling around lookier than me. It's the Business Week Business 0:16:12.240 --> 0:16:15.960 Week guest and and forthcoming. Still, Joel informed me he 0:16:16.000 --> 0:16:19.280 was looking for submissions to this after the deadline already. 0:16:19.320 --> 0:16:22.560 So I'm go scrambling around looking looking for examples, and 0:16:22.840 --> 0:16:25.400 Josh Brown. You know, the Reformed Broker blog had a 0:16:25.440 --> 0:16:29.360 really what I thought. I didn't submit it because and 0:16:29.400 --> 0:16:32.560 I'll explain why. But it's definitely an honorable mention because 0:16:33.320 --> 0:16:37.800 he it's before the value rotation started, and he's talking. 0:16:37.840 --> 0:16:41.360 He basically tries to explain why growth is it, why 0:16:41.360 --> 0:16:44.040 it has been for the last decade, and he does 0:16:44.040 --> 0:16:46.080 this great job of it. You know, I actually have 0:16:46.080 --> 0:16:48.040 in front of me. Is like an analysis of book 0:16:48.080 --> 0:16:50.800 value captures things like plant and equipment and facilities and 0:16:50.840 --> 0:16:54.560 hard money, real assets that corporations have managed to accumulate 0:16:54.560 --> 0:16:57.360 over their lifetimes. We're saying, in an era of cheap, 0:16:57.800 --> 0:17:01.080 free money, you don't value of those things anymore because 0:17:01.080 --> 0:17:03.760 they're depreciating assets obviously, So what do you value? You 0:17:03.880 --> 0:17:07.840 value this recurring revenue stream that you get from from 0:17:07.840 --> 0:17:10.879 the dot com you know, your your Google's and your 0:17:10.880 --> 0:17:13.960 facebooks and that's that sort of thing. But he makes 0:17:13.960 --> 0:17:16.040 the point I might be calling the top here of growth, 0:17:18.640 --> 0:17:21.080 you know, very self aware. But the reason I didn't 0:17:21.080 --> 0:17:23.159 submit it is because he does give we Work as 0:17:23.200 --> 0:17:26.240 an example of why growth. Everyone everyone loves growth. But 0:17:26.359 --> 0:17:29.080 I will go out on a limb and say, uh, 0:17:29.200 --> 0:17:34.080 the story is still true. I think growth is perennially perennially, 0:17:34.880 --> 0:17:39.120 perennially perennially. Yeah, this is why, Sarah, we're halfway through 0:17:39.160 --> 0:17:43.040 the party. I'm gonna just predict I don't think the 0:17:43.119 --> 0:17:46.240 value rotation is gonna last forever. I mean, I think 0:17:46.280 --> 0:17:50.439 growth is is what investors want going forward. Can you 0:17:50.440 --> 0:17:56.239 pull his duels bies? You know. I think it's an 0:17:56.240 --> 0:17:59.840 interesting take because after we did see those couple of 0:18:00.000 --> 0:18:02.199 teks of immense value at performance, all of a sudden, 0:18:02.560 --> 0:18:06.040 value managers or even people who aren't value managers but 0:18:06.080 --> 0:18:08.920 aren't growth managers, are saying, Okay, this is values time. 0:18:09.000 --> 0:18:12.200 They've been under performing for way too long. Uh, they've 0:18:12.240 --> 0:18:14.160 got to come back on top at that point, right, 0:18:14.200 --> 0:18:18.160 But they've said it so many times, but actually came 0:18:18.160 --> 0:18:21.720 out right. So Cliff as News, he is known he 0:18:21.800 --> 0:18:24.040 does not like to time the markets, and he actually 0:18:24.040 --> 0:18:27.120 did put out an entire research paper talking about quote 0:18:27.200 --> 0:18:29.760 unquote sinning a little and maybe timing the market a 0:18:29.800 --> 0:18:31.600 bit and saying this could be the time for value. 0:18:31.800 --> 0:18:33.480 But I find it interesting because in the beginning of 0:18:33.520 --> 0:18:35.399 the year or the past couple of years, when you 0:18:35.440 --> 0:18:38.680 talk to investors about the growth out performance. They say, 0:18:39.000 --> 0:18:40.520 the fact of the matter is we are in a 0:18:40.600 --> 0:18:43.280 glow growth environment, and that is when growth that performance 0:18:43.320 --> 0:18:45.679 because people need to go look for growth. Well, if 0:18:45.720 --> 0:18:49.040 you think about the economic environment for next year, how 0:18:49.119 --> 0:18:51.960 is it any different with us GDP expected to be 0:18:52.000 --> 0:18:55.080 one cent sub two percent or around two percent at least. 0:18:55.440 --> 0:18:58.040 I mean, you're not saying that we have a very 0:18:58.320 --> 0:19:01.879 high growth environment that value should outperforming technically, Yeah, And 0:19:01.960 --> 0:19:03.840 I you know, I don't like to look at growth 0:19:03.880 --> 0:19:06.679 and value as sort of these separate asset classes. I 0:19:06.720 --> 0:19:09.520 think it's a matter of what stocks are considered value 0:19:09.640 --> 0:19:12.320 at any given time. And this year it was those 0:19:12.400 --> 0:19:18.320 very cyclical you know, banks, financial companies, UH, material commodity producers. 0:19:18.720 --> 0:19:21.800 And again it's that that sense that everyone had sort 0:19:21.800 --> 0:19:24.719 of recession fever earlier in the year, and those stocks 0:19:24.760 --> 0:19:27.600 were just you know, unloved to the point where they 0:19:27.640 --> 0:19:30.240 got ridiculously cheap in a lot of cases on a 0:19:30.280 --> 0:19:32.240 relative basis, you know, cheap in a in a an 0:19:32.240 --> 0:19:35.639 expensive market otherwise expensive market. So they're gonna kind of 0:19:35.800 --> 0:19:38.520 mean revert back to a reasonable valuation. I don't know 0:19:38.560 --> 0:19:42.960 if it necessarily signals this total regime shift where we're 0:19:42.960 --> 0:19:46.119 gonna see a decade of value outperformance. We did you 0:19:46.160 --> 0:19:48.080 know two thousand nine was a good year for value, 0:19:48.119 --> 0:19:49.720 So I think if there's some kind of a sell off, 0:19:49.760 --> 0:19:52.679 the rebound will be very good. By the way, interesting 0:19:52.720 --> 0:19:55.800 factoid on how growth and value can be a blurry 0:19:56.000 --> 0:19:59.040 apple isn't exactly fourteen value et f s and fourteen 0:19:59.080 --> 0:20:01.280 growth each. I love about that. UM. So there's a 0:20:01.280 --> 0:20:03.240 lot of stocks that you you know, well, you just 0:20:03.240 --> 0:20:05.720 can't miss out on a stock that's up this year, 0:20:05.720 --> 0:20:08.680 so you just gotta put them in everything. It looks 0:20:10.080 --> 0:20:20.119 back again, and at this time of year, there are 0:20:20.119 --> 0:20:23.199 a lot of different UH investment firms that start having 0:20:23.240 --> 0:20:26.919 their outlook events and I was that one recently, and 0:20:26.920 --> 0:20:29.199 I've also been reading a lot of outlooks, and it's 0:20:29.280 --> 0:20:33.359 unbelievable how many firms right now for their expectations for 0:20:34.000 --> 0:20:37.000 if you're just talking about equities US equities, you asked 0:20:37.000 --> 0:20:38.719 some of stocks are likely going to go up? They 0:20:38.720 --> 0:20:42.359 say yes, because stocks typically go up. You say how 0:20:42.480 --> 0:20:45.479 much every single time? Load of mid single digits. No 0:20:45.520 --> 0:20:49.400 one has high conviction about this rally that we saw 0:20:49.520 --> 0:20:53.720 this year really continuing on with the force UH that 0:20:53.760 --> 0:20:55.960