Speaker 1: Strap on your parachute. It's time for What Goes Up
Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to
Speaker 1: What Goes Up, a Bloomberg weekly markets podcast. I'm Sarah Ponza,
Speaker 1: a reporter on the Cross Asset team, and up Mike Reagan,
Speaker 1: a senior editor at Bloomberg. This week on the show,
Speaker 1: news of a vaccine has ignited a rotation in markets.
Speaker 1: For evidence, some stats, as of midday Tuesday, the SMP
Speaker 1: energy sector was already up thirty seven percent in November,
Speaker 1: which would be the best month on record. Financials are
Speaker 1: in the midst of their best month since two thousand
Speaker 1: and nine. The Russell two thousand, or small caps is
Speaker 1: also on track for its best month in history. Up
Speaker 1: but still. Our guest says the news of a vaccine
Speaker 1: does not change anything about the types of companies he owns.
Speaker 1: The fund he manages is in the nine percentile year
Speaker 1: to date according to Bloomberg data and over the last year,
Speaker 1: three years, and five years. So he'll explain why, and
Speaker 1: as always, we will close out the episode with our
Speaker 1: tradition or gimmick, if you would prefer to call it,
Speaker 1: the craziest thing I saw in markets this week. Uh, sorry,
Speaker 1: you came prepared. I trust I did come prepared. I'd argue, though,
Speaker 1: it's not a gimmick, Mike, it's a tradition. This is
Speaker 1: a real, true tradition tradition, just like mashed potatoes and
Speaker 1: turkey on exactly are you a turkey? Something tells me
Speaker 1: you're like a vegetarian or something. No, Thanksgiving is my
Speaker 1: favorite meal of the air, Mike. I do have a
Speaker 1: vegan brother, which is maybe why you think that, But
Speaker 1: no Thanksgiving. I could eat Thanksgiving dinner every single night
Speaker 1: of the year. I could see you. I have a
Speaker 1: daughter who is a newly minted vegetarian. So it's a
Speaker 1: little challenging this year because I noticed that even my
Speaker 1: vegetable dishes have meat in them, like the bacon bacon.
Speaker 1: It's a tough one. But anyway, as you said, this
Speaker 1: week's guest really uh phenomenal performance from the Investco Global
Speaker 1: Focused Strategy Fund. As you mentioned, Sarah up pretty six,
Speaker 1: closing it on a fifty percent year today gain for
Speaker 1: that fund, top one percentile of similar funds. His name
Speaker 1: is Randy Dishman. Randy, welcome to the show. Thanks glad
Speaker 1: to be here, So, Randy, I you know, I'm looking
Speaker 1: at the holdings of your fund and a lot of
Speaker 1: sort of Internet big tech. I think what this year
Speaker 1: sort of got shorthanded is some of the stay at
Speaker 1: home names, which I know is not what you had
Speaker 1: in mind when you you probably picked them out. But
Speaker 1: talk to us about this whole buzz in the markets,
Speaker 1: about a rotation out of sort of the big growth,
Speaker 1: the real high flying stocks that we've seen over the
Speaker 1: last few years, the facebooks and Googles of the world,
Speaker 1: and into more value oriented stocks and small caps. Is
Speaker 1: this keeping you up at night, this rotation or do
Speaker 1: you do you think it's just a flash in the pen. No,
Speaker 1: it's not keeping me up at night. I mean, I've
Speaker 1: been something in Oppenheimer Now invest Go for twenty years
Speaker 1: and it's not the first time I've seen this kind
Speaker 1: of thing. But you know, everyone's getting excited about maybe
Speaker 1: the end of COVID because of a vaccine. But the
Speaker 1: truth is the economy has been substantially better than most
Speaker 1: people realize. And even if we do get back out
Speaker 1: of our houses, which seems kind of strange right now,
Speaker 1: it's not going to change the structural trends that were started,
Speaker 1: the ones that I've been looking at years ago. They've
Speaker 1: got really nothing to do with COVID. And we'll continue
Speaker 1: long after we stopped talking about COVID, Brandy, I want
Speaker 1: to circle back a little bit. You spoke with one
Speaker 1: of my colleagues, Bill Donna Hiary because also Mike and I,
Speaker 1: she's a crazy Things correspondent we like to color on
Speaker 1: this show. But you spoke earlier this year, and I
Speaker 1: wanted to read a quote from the story that she
Speaker 1: wrote from your conversation, and you said, I've heard bubble
Speaker 1: used to describe it. That's laughably incorrect. I've heard popular
Speaker 1: momentum trade laughably incorrect. And then you went on to say,
Speaker 1: people look at tech and they see what they think
Speaker 1: are high valuations, but they don't fully understand what's going
Speaker 1: on structurally. Can you walk us through what that structural
Speaker 1: change actually is and how that maybe has been affected
Speaker 1: or or unaffected um from what we've seen and experience
Speaker 1: in ding COVID. Sure, So you know, I look at
Speaker 1: the world and try to figure out what's changing structurally
Speaker 1: and and the difference. I mean, to be a good investor,
Speaker 1: you really have to understand the difference between cyclical and
Speaker 1: structural because people talk about growth and value all the
Speaker 1: time and that's the current narrative. But you know, if
Speaker 1: the underlying phenomenon is structural, structural doesn't separate the world
Speaker 1: into growth and value. That's what cyclical does. But if
Speaker 1: if the underlying phenomenon is structural, structural separates the world
Speaker 1: into winners and losers, and losers go bankrupt. You know,
Speaker 1: for instance, e commerce, the rise of e commerce and
Speaker 1: the move to digital is not cyclical. It's not like
Speaker 1: you and I are gonna use Amazon for three years
Speaker 1: and to go, hey, you know what, that was pretty cool,
Speaker 1: Let's go back to the store for the next three years.
Speaker 1: Cyclical is you know, I wear blue things my wardrobe
Speaker 1: this year and orange things next year. I mean, we
Speaker 1: all know the difference, but as an investor, you have
Speaker 1: to really look to see what that difference is. You know,
Speaker 1: you can't really have a discussion about valuation without an
Speaker 1: understanding of what's going on. And the fundamentals of the
Speaker 1: move to the cloud and the fundamentals of e commerce
Speaker 1: are off the chart phenomenal more than justify the valuation.
Speaker 1: And when these growth rates continue for another couple of years,
Speaker 1: the valuation gets swamped. I would say most of what
Speaker 1: I owned today is fairly attractive on a two and
Speaker 1: three year basis, which is all I care about. You know, ready,
Speaker 1: Is it possible though, that the sort of trends we've
Speaker 1: seen this year have pulled forward some of the returns
Speaker 1: of the sort of internet and growth stocks, and that
Speaker 1: they could be sort of infra sort of middling weaker
Speaker 1: returns in one or even the rest of it this year.
Speaker 1: And and um, you know, I don't know whether you
Speaker 1: agree with that or not, But if so, would that
Speaker 1: sort of cause you to to adjust your portfolio at all?
Speaker 1: Or you just kind of the guy that would buy
Speaker 1: and hold and sort of just bear, you know, bear
Speaker 1: through those those weaker quarters if they if they are
Speaker 1: in store for us. Well, you use the word growth stock.
Speaker 1: I believe you didn't say tech. So you asked me
Speaker 1: about growth stocks? Correct, Well, maybe answer growth and for tech? Okay, sure,
Speaker 1: So so the people that know me know that in general,
Speaker 1: I hate labels like that. You know, a growth stock
Speaker 1: is what something that has a high pe something that's growing.
Speaker 1: I don't really know, you know, if you're talking about
Speaker 1: morning Star, you're talking about very quantitative metrics on what
Speaker 1: a growth stock is. If you're talking about what most
Speaker 1: people think about, they're thinking about high growth. You know,
Speaker 1: I don't buy anything because of the label. I buy
Speaker 1: things that you know. Let me put it this way,
Speaker 1: Every great investment ever made in history, regardless of what
Speaker 1: you called it, growth value, large, small, domestic, international, started
Speaker 1: with one thing in common, buying something for less than
Speaker 1: it's worth. And so that's all that matters. You pay something,
Speaker 1: you get something in return. And so I look at
Speaker 1: companies and figure out what the fundamentals warrant. And you know,
Speaker 1: to your point, perhaps some demand has been pulled forward
Speaker 1: in certain areas. But when I was talking to two
Speaker 1: c e o s about the cloud six months ago,
Speaker 1: eight months ago, they were talking about it as well,
Speaker 1: it's a nice to have, but it's not a must have,
Speaker 1: and so we'll get there over the next five or
Speaker 1: seven years. When I was talking to c e O
Speaker 1: s in the depths of COVID, their response was quite different.
Speaker 1: It was if I don't get to the cloud tomorrow,
Speaker 1: I don't have a business in a year. And so
Speaker 1: it pulled forward some demand. But this is structural, it's
Speaker 1: not cyclical. It's going to continue. It was happening before
Speaker 1: COVID started, it was happening during COVID, and it's going
Speaker 1: to continue to happen after COVID. Those are the kinds
Speaker 1: of investments I look for. So with that said, has
Speaker 1: and everything we've been through this year, I mean, granted
Speaker 1: not over yet. Has this at all changed your view
Speaker 1: on companies that have the most leeway for structural growth
Speaker 1: going forwards? Have you made tweaks to your portfolios? Is
Speaker 1: there something that you've seen as a true change at all,
Speaker 1: whether that means adding um new companies or industries and
Speaker 1: detracting from others or the opposite, anything at all. In
Speaker 1: a lot of ways, not really, you know, I was
Speaker 1: one part of being a good investor is to be
Speaker 1: fully prepared to act with conviction when the market makes mistakes.
Speaker 1: And so much of this job is you know, most
Speaker 1: people that have been doing this a long time and
Speaker 1: doing it well read five six hours a day, over
Speaker 1: over decades, and so you know you're going to be
Speaker 1: prepared when the market makes mistakes. Back in March, the
Speaker 1: market made some fairly large mistakes, some of the biggest
Speaker 1: I've seen in my career, and I was able to
Speaker 1: take advantage of those. In many cases it was things
Speaker 1: that I already owned. In a few cases, I was
Speaker 1: able to add some companies that I had wanted to
Speaker 1: own at a better price for a long time, and
Speaker 1: the market mistakenly threw everything out at once, and I
Speaker 1: was able to do that. And so I haven't really
Speaker 1: changed much in terms of the names and the composition
Speaker 1: of the fund, which is not not unusual for me
Speaker 1: in times of stress. Though I was very active in
Speaker 1: adding to the opportunities that I saw ready. I was
Speaker 1: reading one of your blog posts and you sort of
Speaker 1: laid out some of the main themes that you've talked about,
Speaker 1: you know, the move to the cloud, the rise of
Speaker 1: e commerce, diagnostics and research. One ball point you haven't here.
Speaker 1: I found really interesting and also it cracked me up
Speaker 1: a little bit. Let me just read a little bit
Speaker 1: from this post. You're talking about the electronification of money,
Speaker 1: and you say, but you're right basically that you expect
Speaker 1: that to continue. And you say, why ever, look at
Speaker 1: money under a microscope, don't it's discussing I guess in
Speaker 1: the in a in a newly germ germophobic world, that
Speaker 1: that that's a trend to accelerate. But yeah, so I'm
Speaker 1: looking at it through some of the big holdings, the
Speaker 1: top holdings in the focus fund. I see PayPal. That's
Speaker 1: kind of an obvious expression of that theme. Is there
Speaker 1: anything else that we're not saying? You know, I think
Speaker 1: I'm only looking at the top holdings though, But are
Speaker 1: there other sort of holdings that that expressed that theme
Speaker 1: of the electronification of money? And if and if you
Speaker 1: allow me to turn this into a three part question,
Speaker 1: he usually asks amount taking it easy? Does cryptocurrencies play
Speaker 1: any role in that thinking? And given that theme is
Speaker 1: is one of your top teams? I'm I was kind
Speaker 1: of surprised not to see Square in the portfolio, although
Speaker 1: maybe it's down lower in the in the lower waitings.
Speaker 1: But if it's not in the portfolio, something about square
Speaker 1: you don't like? And again about the crypto, what's what
Speaker 1: you're thinking on crypto? Okay? So, so when it comes
Speaker 1: to the electronification of money, I don't think people see
Speaker 1: it for what it is. One. It started in the
Speaker 1: nineteen fifties with the rise of the first credit cards,
Speaker 1: and back then, to get a credit card meant basically
Speaker 1: you didn't need one, you had to be wealthy to
Speaker 1: get a credit card. Uh, and it was a true
Speaker 1: convenience right. And then in the eighties, about the time
Speaker 1: I was coming out of college, you could get a
Speaker 1: credit card, but socially, what it implied was you couldn't
Speaker 1: afford what you were buying if you if you used it.
Speaker 1: And so through my whole life, I've watched the social
Speaker 1: attitudes change around a credit card and the late nineties
Speaker 1: and early two thousands, and I think, you know you
Speaker 1: can identify with this is you would use a credit card.
Speaker 1: There was no social stigma around you couldn't afford what
Speaker 1: you were buying, but you still only used it for
Speaker 1: large purchases. And nowadays the social attitude is it's back
Speaker 1: to being a true convenience. People will now go into
Speaker 1: a convenience store by a bottle of water and a
Speaker 1: back of potato chips on a credit card and think
Speaker 1: nothing of it. But ten years ago you wouldn't have
Speaker 1: done that. And so it's become a convenience item in
Speaker 1: your life. You don't have to carry money. Covide comes
Speaker 1: along and just reminds you that money is one of
Speaker 1: the is one of the biggest common touch points in
Speaker 1: your life. Money is filthy. We just got lucky on
Speaker 1: that one. But social attitudes around credit cards have been
Speaker 1: changing literally for sixty years, and we're still only about
Speaker 1: penetrated globally in terms of all purchases. You asked about
Speaker 1: you know, so I own MasterCard as part of that,
Speaker 1: and I have for quite a while. But you asked
Speaker 1: about crypto. I've looked at crypto, and for the life
Speaker 1: of me, I can't figure out what purposes What is
Speaker 1: it that you want to do with crypto that you
Speaker 1: can't already do. The one thing I can do with
Speaker 1: crypto that I can't already do is hide, And you know,
Speaker 1: hiding suggests something to me that I might not want
Speaker 1: to be part of as an investor. I'll leave it
Speaker 1: at that. And you asked about Square as well. Square.
Speaker 1: I looked at Square. I knew Square had a great product.
Speaker 1: This is years ago. I knew Square had a nice
Speaker 1: business model. I knew it would take the long tail,
Speaker 1: and I made a mistake in not buying it. I
Speaker 1: thought the valuation was a bit rich. I thought there
Speaker 1: was little technology in its platform that it could hold
Speaker 1: onto from a from the standpoint of advantage, And turns
Speaker 1: out the first mover advantage was enough and so I
Speaker 1: missed it. Sorry. I think he's the first one to
Speaker 1: answer every part of a multi pronged question like that.
Speaker 1: That was pretty good. I think I might agree with
Speaker 1: that too. Congratulations, you deserve a pad on the back.
Speaker 1: I want to I want to run through a couple
Speaker 1: more of your top holdings though, Randy, and then kind
Speaker 1: of dig a little bit deeper into this idea of
Speaker 1: the rotation that a lot of sell side strategists are
Speaker 1: at least calling for us. So if I look at
Speaker 1: some of your top holdings on all your funds fact sheet, Facebook, Twilio, Salesforce,
Speaker 1: Service now, CrowdStrike, i'd say usually when I get and
Speaker 1: it's been often lately, sell side strategist notes are just
Speaker 1: filled with this idea of a rotation. I won't even
Speaker 1: use style or I won't use these descriptions or boxes,
Speaker 1: but just this idea that companies that have performed very
Speaker 1: well recently over the last couple of years, they're going
Speaker 1: to start underperforming areas of the market that just haven't
Speaker 1: performed quite as well. What is it, though, about the
Speaker 1: way that you see the world in a in a
Speaker 1: structural way that you maybe don't believe that a bank
Speaker 1: or an energy company is all of a sudden going
Speaker 1: to truly, for a long term period, start to outrun
Speaker 1: say these five companies that I just listed, Well, you
Speaker 1: know the boxes that you're that you're not talking about
Speaker 1: but talking about. I remember stepping up in front of
Speaker 1: a room full of people twelve thirteen years ago when
Speaker 1: I first launched the fund, and I put those boxes
Speaker 1: up and I said, this is where money goes to die.
Speaker 1: And I stand by where I said thirteen years ago. Um,
Speaker 1: the world doesn't work that way, and allocating that way
Speaker 1: has never made any sense to me. It's a great
Speaker 1: way to own too much, too many things, and to
Speaker 1: lock in under performance. But but anyway, you know, cyclicals
Speaker 1: will rebound. I mean, you're already seeing it now. But
Speaker 1: that doesn't change the fundamentals. I'm talking about the different
Speaker 1: between price action and fundamentals. It's not surprising to me
Speaker 1: that some of these things are rebounding because many of
Speaker 1: them were priced for bankruptcy. But at the end of
Speaker 1: the day, you know, take energy. Energy is going against
Speaker 1: the trend. I mean, there's no doubt in my mind
Speaker 1: that electric cars are going to continue to take percent
Speaker 1: of the fleet. Transportation is twenty plus percent of the
Speaker 1: energy uses in this country. GDP continues to be less
Speaker 1: energy intensive globally. It's not a place I would want
Speaker 1: to invest money under the best of circumstances. This is
Speaker 1: certainly not the best of circumstances. Might you get a bounce, Sure,
Speaker 1: you're already getting it, But you know, that's a trading
Speaker 1: kind of mindset that I think makes it very difficult
Speaker 1: to be a really great long term investor. Some of
Speaker 1: the other things financials financials to me, the money center banks,
Speaker 1: particularly things like JP Morgan c Group, Bank of America,
Speaker 1: Wells Fargo, I think Post DoD Frank Their balance sheets
Speaker 1: are so gold plated that it's very difficult to lose
Speaker 1: money in those in those banks at these prices. I'm
Speaker 1: not saying it won't be dead money for a few years,
Speaker 1: but I find that situation interesting as an investor, and
Speaker 1: so I'll set those off to the side. Most of
Speaker 1: the other cyclical value type rotation things that you're talking about,
Speaker 1: I think are a waste of time. I think you
Speaker 1: might get a good short term trade in those things,
Speaker 1: but short term trading is a very difficult way to
Speaker 1: make real money, and whatever rotation is happening is definitely
Speaker 1: not changing the trends that I'm invested in right now.
Speaker 1: M You know, Renny, one thing I wanted to ask you.
Speaker 1: The Global Focus Fund, as its name implies, it is
Speaker 1: a global fund, pretty decent allocation to China about ten.
Speaker 1: I'm curious how all of the tensions between the US
Speaker 1: and China over the recent years if they affected you're
Speaker 1: you're buying it all? You know, were you were you
Speaker 1: restrained on sort of looking at Chinese stocks because of that?
Speaker 1: Were you know, under a Biden administration, would you be
Speaker 1: inclined to look a little harder in China? Or does it?
Speaker 1: Does it not really matter that the whole trade war
Speaker 1: and geopolitical situation to you? I appreciate that question. I
Speaker 1: get that question a lot, and my short answer would
Speaker 1: be total waste of time to even think about it.
Speaker 1: I've been through many elections as an investor, I've been
Speaker 1: through many pretty severe macro phenomenon and I've not yet
Speaker 1: seen the one that mattered to long term outcomes. China,
Speaker 1: to me, I recognized fifteen years ago is a phenomenon
Speaker 1: that I'm unlikely to see again in my lifetime. A
Speaker 1: country at that scale coming out into the modern world
Speaker 1: from emerging two developed. There are other countries that will
Speaker 1: do that. There aren't any other countries left that will
Speaker 1: do it at that scale. And you know the advantage
Speaker 1: that China had, you think about something like Amazon. For
Speaker 1: Amazon to become Amazon, it had competitors, thousands of competitors
Speaker 1: that had a one year head start. They had the
Speaker 1: best real estate, They had four generations of customer relations
Speaker 1: that they could use against you. Amazon had to bankrupt
Speaker 1: twenty thousand different companies just to become Amazon. Ali Baba
Speaker 1: was competing with nothing Ali Baba. You know, there was
Speaker 1: no organized retail in China prior, and so Ali Baba
Speaker 1: could become Ali Baba quite quickly. I knew that China
Speaker 1: would happen faster than the analogs people look to in
Speaker 1: the United States, and so it was just a matter
Speaker 1: of going there, figuring out who the winners were, what
Speaker 1: advantages were necessary to win obviously, and then finding them
Speaker 1: and it wasn't really that difficult. I continue to be
Speaker 1: impressed by what they're able to do and how relevant
Speaker 1: they are globally. Most of the political noise is just
Speaker 1: that noise, and it doesn't really affect the outcol So
Speaker 1: another question that maybe fits into this bucket. Ali Baba
Speaker 1: also one of your top holdings the regulatory front. There's
Speaker 1: been a lot of talk lately about regulation over in
Speaker 1: China for big tech companies. Also here in the US, uh,
Speaker 1: Facebook being one of your top holdings. Of of course,
Speaker 1: there's a lot of talk about Facebook and other big
Speaker 1: tech companies facing antitrust concerns here in the US. Does
Speaker 1: that at all concern you know? And it's not for
Speaker 1: lack of thinking about it and for lack of looking
Speaker 1: One of the best things you've du to Facebook from
Speaker 1: an investment point of view would be to break it up.
Speaker 1: Most people don't really look at and understand Instagram for
Speaker 1: what it is. Instagram is one of the best e
Speaker 1: commerce and advertising assets ever created and will definitely at
Speaker 1: some point be as big as core Facebook, and could
Speaker 1: even be bigger because of the e commerce aspect of
Speaker 1: it digital advertising. You know. One of the things that
Speaker 1: people aren't looking at when they talk about the recovery
Speaker 1: post COVID is they talk about the rotation back into
Speaker 1: brick and mortar retail and airlines and carnival cruises and
Speaker 1: things like that things that have historically through the cycle
Speaker 1: been terrible investments and this time won't be any different.
Speaker 1: But all of that comes with advertising and digital continues
Speaker 1: to take share. And one of the things that COVID
Speaker 1: did induce was trial. If you were someone who weren't
Speaker 1: advertizing primarily on digital, you had no choice during COVID
Speaker 1: but to do that. And every time I've seen advertisers
Speaker 1: adopt digital, they don't go back. Their return on investment
Speaker 1: for every digital dollar spent is so much greater than
Speaker 1: everything else they could they could do with that dollar,
Speaker 1: they don't go back. And so Facebook, Instagram, Google are
Speaker 1: all natural beneficiaries of a return to a more normalized environment. Ready,
Speaker 1: what are your themes you talk about is diagnostics and research? Um,
Speaker 1: I'm curious, what's uh what you're seeing there that's exciting
Speaker 1: and where do you see that space going? I mean, um,
Speaker 1: this is obviously a trend that predates COVID, got quite
Speaker 1: a shot in the arm from COVID. But where do
Speaker 1: you see you know, what's exciting you in that space?
Speaker 1: Any any stocks we don't know about, um? And and
Speaker 1: where do you see that going in the future? Well,
Speaker 1: you know, diagnostics is something that me and my and
Speaker 1: colleague internally, we're talking about seventeen eighteen years ago. I
Speaker 1: met Aluminium, one of my larger holdings, for the first
Speaker 1: time in two thousand and three and sat on a
Speaker 1: banker's box in the parking lot of the building that
Speaker 1: the founder was in the process of moving into. He
Speaker 1: told me, he told me the advantage that he had,
Speaker 1: how things were going to play out for the company,
Speaker 1: and everything that he said was absolutely correct. You know,
Speaker 1: the rise of point of care diagnostics has been going
Speaker 1: on for twenty five years, and so you know, I
Speaker 1: owned two foundational platform assets in Ilumina and Thermo Fisher
Speaker 1: that if you're doing research and development in the healthcare space,
Speaker 1: you're highly likely and and this is globally, you're highly
Speaker 1: likely to be a customer of one or both of
Speaker 1: those companies. Uh. They are the de facto standards in
Speaker 1: diagnostics research and in research automation, and so the things
Speaker 1: that have started years ago. You know, imagine and if
Speaker 1: you're old enough, remember what it was like to get
Speaker 1: a test twenty years ago. You can wait three weeks
Speaker 1: for a result and the doctor's office couldn't do it. Nowadays,
Speaker 1: you can get the test done at your doctor's office
Speaker 1: and you can have many times results before you can
Speaker 1: make it through the parking lot. Uh. That's where medicine
Speaker 1: is going. That's where diagnostics is going. And those two
Speaker 1: assets are critical and taking it there that you know
Speaker 1: it used to be they were necessary, but they weren't
Speaker 1: leading it there. Now they're driving and h that's where
Speaker 1: it's headed and it's going to play out over the
Speaker 1: next ten fifteen years. Uh. And there's no way to
Speaker 1: avoid those two, those two companies. It really is amazing.
Speaker 1: And UH. Rewinding a little bit to your point on
Speaker 1: e commerce and Instagram. I have a bit of a
Speaker 1: crazy story before we get to sharing our crazy things. Uh.
Speaker 1: Just the other day, so I'm in Michigan for the holiday.
Speaker 1: We ran into a golf store and I just got
Speaker 1: a puppy, Randy, and we are joking around. They have
Speaker 1: all those animal heads that you can stick on your
Speaker 1: driver as a cover, and we're joking around. We needed
Speaker 1: to get one that looked like our our puppy for
Speaker 1: the golf clubs. And next thing I knew a couple
Speaker 1: hours later, I went on Instagram and what did I get?
Speaker 1: An advertisement for cloning your dogs for a driver Head,
Speaker 1: and I was like, okay, coincidence or not, but that
Speaker 1: is a little bit too specific. And I'm just gonna
Speaker 1: say these driver dog Head clones were honestly a little
Speaker 1: bit too creepy, Like it looks like your actual dog
Speaker 1: sitting on top of your golf club. That's a little crazy,
Speaker 1: all right now. But what did you shoot, sir? That's
Speaker 1: the real question. What what did I? Oh, I didn't,
Speaker 1: I didn't actually golf. We just want to pick out
Speaker 1: some shoes. You just like the fashion you just like.
Speaker 1: I know. I'm not. I'm not. I'm not that good.
Speaker 1: Don't don't worry. I don't get to play that often
Speaker 1: in New York City. Um, but but I do enjoy it.
Speaker 1: I like the Michigan reference. There, I know now why
Speaker 1: you booked Randy another another Michigan U M b A there,
Speaker 1: we'll all allow it. Hey, you guys have the same
Speaker 1: football helmets as my Delaware Blue hens, so I will
Speaker 1: I will allow. I will allow the Michigan love to
Speaker 1: some degree. I don't think either of us want to
Speaker 1: openly speak about Michigan football at this point in time. Mike, alright, well,
Speaker 1: no basketball season, so it's gonna be a lot. I'm excited,
Speaker 1: all right, anyway, I think that is our segue. If
Speaker 1: I'm not mistaken, You're not all right, stand clear of
Speaker 1: the craziest things we saw in markets this week. You know,
Speaker 1: I'll kick it off from once. I'll kick it off.
Speaker 1: Two crazy things I wanted to bring up, Sarah. One
Speaker 1: was this last week we as you wrote about Tesla
Speaker 1: getting added to the SMP five finally, So naturally you
Speaker 1: would assume that would cause a rally, a little bit
Speaker 1: of a pop in Tesla. It's amazing to me is
Speaker 1: the short covering rally it caused in all these Tesla
Speaker 1: like companies like Blink Charging fuel cell Energy. I don't
Speaker 1: know how to pronounce this one. A row I row
Speaker 1: stickers at a y r. Oh. They're all up like
Speaker 1: in the hundreds of percent since Tesla was added, and
Speaker 1: the thinking is that it just caused a massive cover
Speaker 1: I think the Biden presidency is somewhat bullish for for
Speaker 1: green energy as well. Uh so that's one of them.
Speaker 1: But here's my real crazy thing. British airways. Have you
Speaker 1: ever flown on British air Lovely airline and there I've
Speaker 1: never flown first class on them, but apparently their first
Speaker 1: class services is to die for. They've had so few
Speaker 1: flights that they're just selling off all the year from
Speaker 1: first class. So you can buy like the champagne flutes,
Speaker 1: the fine china, the slippers. You can even buy those
Speaker 1: heated boxes that they bring your meals around it, which
Speaker 1: I kind of want one of them. The heated the
Speaker 1: heated but it keeps it warm. Yeah, yeah, there's the
Speaker 1: things that keep the So in the spirit of prices, right, Sarah,
Speaker 1: what and Rerandy? What would you guys pay for a
Speaker 1: British Air first class blanket counts just not talking the
Speaker 1: meal box or the flute, just just you could buy
Speaker 1: a British Air says you can buy it all and
Speaker 1: recreate the first class experience in your living room when
Speaker 1: you're stuck at home, which which I don't know. I
Speaker 1: don't know if anybody in the world will do that.
Speaker 1: Someone is found to do that, though, I I guess,
Speaker 1: but I'd pay zero. I've done too many miles in
Speaker 1: British AIRLA first class globally, so no novelty there. You're
Speaker 1: not looking to experience. I mean, if you're bringing this
Speaker 1: up for prices, right, it's got to be something that's
Speaker 1: a bit ridiculous, and you wouldn't normally pay for a blanket.
Speaker 1: I'm gonna go, I'll go three hundred. I wouldn't. I
Speaker 1: wouldn't pay three hundred dollars for a blanket, but you
Speaker 1: never know. I'm gonna buy one and resell to you
Speaker 1: only nine pounds for for the British Air blanket. See
Speaker 1: you checked me again. I was thinking that it's got
Speaker 1: to be something ridiculous if if you're bringing it on
Speaker 1: the show, you can get the slippers for ten pounds,
Speaker 1: which is probably which I think you can pretty much
Speaker 1: walk off a flight with them normally. Right, they don't.
Speaker 1: I don't think they don't think they frisk you free
Speaker 1: your slippers when you're getting light. So all right, Randy,
Speaker 1: what how about you? Have you seen anything crazy this week?
Speaker 1: You know? A colleague, me and a colleague, one of
Speaker 1: one of my analysts, were just talking about a data
Speaker 1: point that I I'm surprised people aren't talking more about
Speaker 1: existing home sales, one of one of the best leading
Speaker 1: indicators of spending because of the multiplier you know effect,
Speaker 1: when people buy a house at a fifteen year high,
Speaker 1: the highest since two thousand and five, and not only
Speaker 1: the highest since two thousand and five, but double the
Speaker 1: peak in two thousand and five. Now, if you have
Speaker 1: been around as long as I have, you remember two
Speaker 1: thousand and five was a crazy housing market. People were
Speaker 1: knocking down million dollar houses and building two million dollar houses.
Speaker 1: You had taxi drivers owning three properties in Florida. It
Speaker 1: was really an off the hook housing market. Existing home
Speaker 1: sales are twice that peak right now, so so ready. Obviously,
Speaker 1: I mean the low mortgage rates are a big part
Speaker 1: of that, right, and maybe a bottleneck of of uh,
Speaker 1: you know, purchases that didn't go through during the pandemic.
Speaker 1: Or is it people moving out of the cities? What
Speaker 1: do you what do you think is driving all this
Speaker 1: other than obviously the low rates, Well, part of it's
Speaker 1: definitely COVID related. Um. And what my analyst thinks, and
Speaker 1: and I think he's right, is, uh, there might be
Speaker 1: a new trend towards de urbanization. You know, I remember
Speaker 1: thinking twenty years ago and looking at data twenty years
Speaker 1: ago that jobs were moving to the cities, people were
Speaker 1: moving to the cities. Uh, and you could see urbanization
Speaker 1: in the numbers. I think you are now starting to
Speaker 1: see signs and it's totally trade by COVID of d urbanization. Uh. Now,
Speaker 1: granted it's technologically enabled. Look at what we're doing right now.
Speaker 1: We could be anywhere doing this and I can do
Speaker 1: my job from anywhere, but it might be spreading a
Speaker 1: bit more broadly in the economy. And you know that
Speaker 1: comes with positives and negatives, sir. That means that means
Speaker 1: suburban dads like me are the coolest right now? Is
Speaker 1: that right? It does. Yeah, it's exactly what it means.
Speaker 1: That's right, That's what I thought. Yeah, yeah, obviously I
Speaker 1: also wanted to ask you, Randy, after Mike brought up
Speaker 1: the bit on Tesla and the electric vehicle market, because
Speaker 1: you are always looking for structural growers in almost companies
Speaker 1: of the future. What what's your vision there? Well, I
Speaker 1: looked at Tesla and again, so back in two thousand
Speaker 1: and four, I was co managing a global fund with
Speaker 1: one of my senior colleagues and we were talking about
Speaker 1: electric vehicles back then, uh, you know, sixteen years ago,
Speaker 1: and we went around the world and looked at everything
Speaker 1: that had to do with any electric vehicle, every battery
Speaker 1: company everywhere, the electric power training, every component wherever you
Speaker 1: could find someone that had any input into electric vehicles.
Speaker 1: We looked at it and evaluated it because I only
Speaker 1: invested in what I consider to be advantaged companies, and
Speaker 1: so you have to be able to find the advantage.
Speaker 1: There's actually very little advantage to be had in the
Speaker 1: electric power training. It's mostly there's not a lot of
Speaker 1: intellectual property there. But Tesla obviously a great design, obviously
Speaker 1: a good company in terms of its product. What I
Speaker 1: didn't like about Tesla was the corporate governance when when
Speaker 1: the management team bailed out the solar company using Tesla
Speaker 1: shareholder money. You know, I've got to get three things right.
Speaker 1: I've got to get is the company worth owning ever? Right?
Speaker 1: And that's about advantage. And then I've got to get
Speaker 1: at what prices it worth owning? Right? And then the
Speaker 1: third thing I've got to get right is are the
Speaker 1: people running this company running it for shareholders? Uh? That's
Speaker 1: where Tesla failed for me, and I chose not to
Speaker 1: buy Tesla. Some things just have to go up without you.
Speaker 1: But I do believe electric vehicles are going to continue
Speaker 1: to take share of the overall fleet. All right, Sarah,
Speaker 1: what do you got alright? So in honor of Thanksgiving.
Speaker 1: I wanted to do something that was food related. And
Speaker 1: they'll say this has come from this past weekend. But
Speaker 1: did you see this story about this big coco trade
Speaker 1: from her? She So I'm just going to read you
Speaker 1: the top. I'm gonna read you to the top of
Speaker 1: this story. It just says one of America's top chocolate
Speaker 1: makers is up ending the New York coco market. Hershe
Speaker 1: is taking the unusual unusual step of directly sourcing a
Speaker 1: large amount of cocoa through the Ice Futures US Exchange
Speaker 1: instead of buying beans in the physical market. And then
Speaker 1: it goes on to say the massive trade has set
Speaker 1: December delivery futures to a record meum over the next contract.
Speaker 1: And supposedly this purchase was so large that they required
Speaker 1: special permission from the exchange. If you look at this chart,
Speaker 1: it really is just i mean pun intended off the charts.
Speaker 1: Uh it's it's it's pretty crazy. It is as an
Speaker 1: amazing story. My favorite part of that story is apparently
Speaker 1: there's like uh opeque type of cartel for for cocoa,
Speaker 1: which which I was not aware of. I mean, like personally,
Speaker 1: I'd rather be part of the chocolate cartel than the
Speaker 1: oil cartel, but right right. They also said chocolate demand
Speaker 1: had been reduced during COVID. I don't see that at all.
Speaker 1: I would have thought it went through the roof people stress.
Speaker 1: They're not They're not at our households. Mike, Yeah, so
Speaker 1: I don't know, Randy, I don't know if you've ever
Speaker 1: dabbled in cocoa futures. That's that seems like a perilous
Speaker 1: market to me only as a consumer. As an investor,
Speaker 1: I think that's the right good side to be on.
Speaker 1: Plenty of chocolate these days. Uh, alright, Well, we're gonna
Speaker 1: have to leave it there. We wanna wish a very
Speaker 1: happy Thanksgiving to all. Know it's past, but we really
Speaker 1: hope that you could enjoy it even in a year
Speaker 1: as strange As and Randy Dishman, thank you so much
Speaker 1: for joining the podcast this week. It was a blast.
Speaker 1: Thanks for having me what goes up? We'll be back
Speaker 1: next week. Until then, you can find us on the
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Speaker 1: We'd love it if you took the time to rate
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Speaker 1: can find US and you can find us on Twitter,
Speaker 1: follow me at Sarah pont Sec, Mike is that Reaganonymous,
Speaker 1: and you can also follow Bloomberg Podcasts at podcasts. Also
Speaker 1: thank you to Charlie Pellett of Bloomberg Radio and the
Speaker 1: voice of the New York City Subway system. What Goes
Speaker 1: Up is produced by Jordan Gospore. The head of Bloomberg
Speaker 1: podcast is Francesca Levie. Thanks for listening, See you next time.