1 00:00:03,720 --> 00:00:07,160 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:07,400 --> 00:00:14,840 Speaker 1: with Sarah Ponziic and Mike Reagan. Hello and welcome to 3 00:00:14,920 --> 00:00:18,560 Speaker 1: What goes Up, a Bloomberg Weekly Markets podcast. I'm Sarah Pons, 4 00:00:18,880 --> 00:00:22,000 Speaker 1: reporter on the Cross Asset Team, and I'm Mike Reagan, 5 00:00:22,160 --> 00:00:25,120 Speaker 1: a senior editor at Bloomberg. This week on the show, 6 00:00:25,239 --> 00:00:27,600 Speaker 1: earning season is now in full swing, as is the 7 00:00:27,640 --> 00:00:30,120 Speaker 1: new year, but the pace of the news flow and 8 00:00:30,160 --> 00:00:33,440 Speaker 1: market action hasn't seemed to have slowed one bit. At 9 00:00:33,479 --> 00:00:36,080 Speaker 1: the same time, this past week, the cyclical and small 10 00:00:36,120 --> 00:00:38,560 Speaker 1: cap trade started to peter out as mega cap stocks 11 00:00:38,600 --> 00:00:41,560 Speaker 1: made a run yet again. Head fake or a reversion 12 00:00:41,680 --> 00:00:44,840 Speaker 1: to what's been the norm for so long, And Sarah, 13 00:00:44,880 --> 00:00:47,919 Speaker 1: we will revert to our norm and finish the episode 14 00:00:47,960 --> 00:00:50,760 Speaker 1: with the craziest things we saw in markets this week, 15 00:00:50,800 --> 00:00:52,800 Speaker 1: and by all means, if you're a listener and you 16 00:00:52,840 --> 00:00:55,760 Speaker 1: saw something crazy, give us a call on the Bloomberg 17 00:00:55,840 --> 00:01:00,200 Speaker 1: Podcast Hotline at six four six three to four three 18 00:01:00,240 --> 00:01:02,720 Speaker 1: four nine, oh, and leave us a voicemail and maybe 19 00:01:02,760 --> 00:01:05,600 Speaker 1: we'll play your crazy thing on the show. I got 20 00:01:05,640 --> 00:01:08,120 Speaker 1: a pretty good one, Sara, and it's not even Bitcoin related. 21 00:01:08,360 --> 00:01:11,160 Speaker 1: My first non bitcoin crazy thing in a while, and 22 00:01:11,280 --> 00:01:13,640 Speaker 1: quite a while. I trust that surprises right then though, 23 00:01:14,280 --> 00:01:19,920 Speaker 1: it is absolutely absolutely get ready, Get Ready. But before that, 24 00:01:19,959 --> 00:01:23,680 Speaker 1: we'll talk about the serious things facing the market this week, 25 00:01:23,959 --> 00:01:26,000 Speaker 1: and we're very happy to have on the show the 26 00:01:26,160 --> 00:01:30,560 Speaker 1: head of equity strategy at Wells Fargo Securities. His name 27 00:01:30,600 --> 00:01:33,600 Speaker 1: is Chris Harvey. Chris, welcome to the show. Thank you 28 00:01:33,680 --> 00:01:38,440 Speaker 1: very much, Thanks Mike, Thanks Sara. Great to be back. Great, great, Chris. 29 00:01:38,520 --> 00:01:40,839 Speaker 1: I want to start up by saying, I'm I'm pretty 30 00:01:40,840 --> 00:01:44,840 Speaker 1: sympathetic to strategists who are required to come out with 31 00:01:44,880 --> 00:01:48,040 Speaker 1: a year end target for the SMP five because I 32 00:01:48,040 --> 00:01:51,160 Speaker 1: feel like you can make a hundred great calls all year, 33 00:01:51,280 --> 00:01:54,400 Speaker 1: get all the sectors right, get your factors right, get 34 00:01:54,440 --> 00:01:57,240 Speaker 1: everything right. But every you know, why is Alex like 35 00:01:57,280 --> 00:02:00,120 Speaker 1: me or just gonna ask you about that target? And uh, 36 00:02:00,280 --> 00:02:04,440 Speaker 1: you know, I can't help. But notice this week SMP 37 00:02:04,880 --> 00:02:08,400 Speaker 1: reaching thirty eight fifty, which is actually your year end target. 38 00:02:08,440 --> 00:02:10,400 Speaker 1: So I'm curious how you're thinking about it. Is it 39 00:02:10,400 --> 00:02:12,160 Speaker 1: are you attempted to go back to the drawing board 40 00:02:12,200 --> 00:02:15,000 Speaker 1: on that, or is it He's one of those examples 41 00:02:15,080 --> 00:02:17,040 Speaker 1: where the market has just gotten ahead of itself and 42 00:02:17,120 --> 00:02:20,639 Speaker 1: you're sticking with that that type of forecast. So, Mike, 43 00:02:20,840 --> 00:02:22,720 Speaker 1: we like to get things done ahead of time. So 44 00:02:22,760 --> 00:02:26,600 Speaker 1: we figured it, let's get done the first three months. Congratulation, 45 00:02:29,639 --> 00:02:31,960 Speaker 1: everyone waits another twelve months. Let's get it done. Let's 46 00:02:31,960 --> 00:02:36,400 Speaker 1: get out of the way, and let's go forward. But 47 00:02:36,639 --> 00:02:39,919 Speaker 1: what we do is we knew this is a very 48 00:02:39,960 --> 00:02:43,480 Speaker 1: conservative target, and we prefer to have we we we 49 00:02:43,600 --> 00:02:46,919 Speaker 1: buyas ourselves on the conservative side. We make very conservative estimates. 50 00:02:47,520 --> 00:02:51,760 Speaker 1: Last year, we also had a lower target than the marketplace, 51 00:02:52,320 --> 00:02:54,200 Speaker 1: and one of the things that was different from us 52 00:02:54,240 --> 00:02:56,320 Speaker 1: is we had a lot of confidence in it. We 53 00:02:56,480 --> 00:02:59,720 Speaker 1: never cut our price target, and when things got really dicey, 54 00:03:00,160 --> 00:03:03,320 Speaker 1: we found real value and felt comfortable in and around 55 00:03:03,520 --> 00:03:06,480 Speaker 1: the market lows telling people to put money to work. Also, 56 00:03:06,480 --> 00:03:08,600 Speaker 1: at this time last year, we ran into a similar 57 00:03:08,600 --> 00:03:10,959 Speaker 1: situation where people are saying, hey, Chris, are you gonna 58 00:03:11,000 --> 00:03:12,679 Speaker 1: raise your price target? What are you gonna do? No, 59 00:03:13,240 --> 00:03:15,239 Speaker 1: we said no, and right now the answer is no. 60 00:03:15,440 --> 00:03:18,560 Speaker 1: But we also know we have very conservative EPs estimates. 61 00:03:19,000 --> 00:03:21,040 Speaker 1: Part of that was we don't know what the tax 62 00:03:21,080 --> 00:03:23,720 Speaker 1: regime is going to look like. It's a long year, 63 00:03:24,360 --> 00:03:27,240 Speaker 1: and we'll say and we have no problems raising our 64 00:03:27,280 --> 00:03:30,280 Speaker 1: targets or changing when when the information changes. What we 65 00:03:30,320 --> 00:03:31,800 Speaker 1: really don't want to do is we really don't want 66 00:03:31,800 --> 00:03:34,320 Speaker 1: to cut our target because we want We don't want 67 00:03:34,320 --> 00:03:36,480 Speaker 1: to tell people there's value there when there really isn't. 68 00:03:36,880 --> 00:03:39,280 Speaker 1: And so we we tend to error on the more 69 00:03:39,320 --> 00:03:41,680 Speaker 1: conservative side. Like I said, we like to get things 70 00:03:41,720 --> 00:03:44,840 Speaker 1: done sooner rather than later. You get right to it. 71 00:03:44,880 --> 00:03:48,000 Speaker 1: But Chris, something that wasn't so conservative on your end 72 00:03:48,160 --> 00:03:50,920 Speaker 1: was you and your team were very early to this 73 00:03:51,120 --> 00:03:54,960 Speaker 1: cyclical value small cap call, I mean, what way ahead 74 00:03:55,000 --> 00:03:57,920 Speaker 1: of the pack, and we've clearly seen it play out 75 00:03:58,000 --> 00:04:01,480 Speaker 1: over the past couple of months. Lately there has been 76 00:04:01,720 --> 00:04:04,320 Speaker 1: a bit of a topping off where we have seen 77 00:04:04,440 --> 00:04:07,440 Speaker 1: big cap tech come back, we've seen small caps start 78 00:04:07,480 --> 00:04:11,400 Speaker 1: to underperform. From your perspective, are we going to see 79 00:04:11,400 --> 00:04:13,520 Speaker 1: this continuer? Is the catch up trade that we saw 80 00:04:13,560 --> 00:04:16,240 Speaker 1: at the end of the beginning of one as well? 81 00:04:16,440 --> 00:04:18,320 Speaker 1: I mean, was that what you guys were looking for? 82 00:04:18,520 --> 00:04:22,200 Speaker 1: Was that all said and done? Well, a couple of 83 00:04:22,200 --> 00:04:25,240 Speaker 1: things there. We had a heroic fourth quarter the last 84 00:04:25,240 --> 00:04:27,120 Speaker 1: couple of months in the year with regard to small 85 00:04:27,200 --> 00:04:32,400 Speaker 1: caps and COVID beta and encyclicality. To start the year, 86 00:04:32,520 --> 00:04:35,440 Speaker 1: small caps are now I would say somewhere around the 87 00:04:35,480 --> 00:04:38,360 Speaker 1: high single digits if you will right, we're closing in 88 00:04:38,360 --> 00:04:42,480 Speaker 1: on double digits. Pretty good return. We think it continues, 89 00:04:42,560 --> 00:04:46,359 Speaker 1: but obviously you're over bought here. Um, we got a 90 00:04:46,480 --> 00:04:50,320 Speaker 1: very big bounce from from the sweep in Georgia's people 91 00:04:50,320 --> 00:04:52,880 Speaker 1: think that it's going to be more stimulus and more steepener, 92 00:04:53,480 --> 00:04:54,960 Speaker 1: and what we need to see is we really need 93 00:04:55,000 --> 00:04:57,680 Speaker 1: to see the fundamentals fill in and for that to occur, 94 00:04:58,160 --> 00:05:00,280 Speaker 1: numbers just have to come out and st a bit 95 00:05:00,320 --> 00:05:02,239 Speaker 1: of the consolidation, a bit of the back and forth. 96 00:05:02,680 --> 00:05:05,279 Speaker 1: Sure that that's not unusual, that's something we expect. But 97 00:05:05,360 --> 00:05:08,159 Speaker 1: we still think there's another good six months to this trade. 98 00:05:08,480 --> 00:05:09,960 Speaker 1: What I would say is we thought there was a 99 00:05:10,000 --> 00:05:13,200 Speaker 1: good twelve to eighteen months in this trade. But with 100 00:05:13,320 --> 00:05:16,320 Speaker 1: stimulus and with the sweep in Georgia, what we think 101 00:05:16,440 --> 00:05:19,320 Speaker 1: is everything is now accelerated, right and the window is 102 00:05:19,400 --> 00:05:23,080 Speaker 1: much shorter. Everyone's going to be concentrated. UM evaluation is 103 00:05:23,080 --> 00:05:26,360 Speaker 1: still attractive, easy comps, and I think we're going to 104 00:05:26,440 --> 00:05:28,440 Speaker 1: have a very healthy m and a cycle. We should 105 00:05:28,480 --> 00:05:31,719 Speaker 1: help the group because it's a great point where you 106 00:05:31,720 --> 00:05:33,600 Speaker 1: you made where you said, we we still don't really 107 00:05:33,640 --> 00:05:36,160 Speaker 1: know what the corporate tax situation is going to be 108 00:05:36,200 --> 00:05:39,640 Speaker 1: this year. And I think it's it's clear that uh, 109 00:05:40,080 --> 00:05:43,960 Speaker 1: the you know, Joe Biden was inaugurated on Wednesday, the 110 00:05:44,000 --> 00:05:46,640 Speaker 1: honeymoon doesn't look like it's gonna last very long. Already, 111 00:05:46,640 --> 00:05:50,760 Speaker 1: there are some some Republicans coming out, even the moderates 112 00:05:50,760 --> 00:05:53,760 Speaker 1: like Lisa Murkowski and Mitt Romney coming out and pushing 113 00:05:53,839 --> 00:05:56,520 Speaker 1: back at the the size of that one point nine 114 00:05:56,560 --> 00:06:00,920 Speaker 1: trillion dollar stimules planned from the White House. Um. Obviously, 115 00:06:01,040 --> 00:06:03,480 Speaker 1: I think it's safe to assume they will push back 116 00:06:03,520 --> 00:06:06,440 Speaker 1: at the at the tax uh equiporate tax increase too. 117 00:06:07,279 --> 00:06:09,599 Speaker 1: I mean, is it's two or early to sort of 118 00:06:09,920 --> 00:06:14,080 Speaker 1: start reading the tea leaves in Washington about what we 119 00:06:14,120 --> 00:06:18,440 Speaker 1: can expect from Biden when it comes to taxes and spending. Um, 120 00:06:18,560 --> 00:06:21,840 Speaker 1: where are you, you know, as we sort of begin 121 00:06:21,920 --> 00:06:25,240 Speaker 1: to see the administration take shape, are there any takeaways 122 00:06:25,560 --> 00:06:28,160 Speaker 1: yet that that you have that kind of you know, 123 00:06:28,200 --> 00:06:31,000 Speaker 1: can illuminate what you're thinking about as far as stimulus 124 00:06:31,080 --> 00:06:34,760 Speaker 1: and taxes, um, And as far as stimulus and taxes, 125 00:06:35,279 --> 00:06:38,279 Speaker 1: the the issue here is we're going to get Obviously 126 00:06:38,279 --> 00:06:40,920 Speaker 1: we're going to get more stimulus. Right now, the question 127 00:06:41,000 --> 00:06:43,040 Speaker 1: is is it a trillion dollars? Is it more than 128 00:06:43,120 --> 00:06:46,520 Speaker 1: trillion dollars? How much more for us? We don't care 129 00:06:46,520 --> 00:06:50,359 Speaker 1: that much. Trillion was pretty big number, right, and you 130 00:06:50,360 --> 00:06:52,719 Speaker 1: get that money into people, and what we know is 131 00:06:52,760 --> 00:06:56,279 Speaker 1: it works, it's successful, and we have We're no longer 132 00:06:56,360 --> 00:06:59,200 Speaker 1: talking about when the vaccine is going to come out. 133 00:06:59,680 --> 00:07:01,919 Speaker 1: It is out, and now the question is when people 134 00:07:02,000 --> 00:07:04,640 Speaker 1: want it or are capable of getting it right, and 135 00:07:04,680 --> 00:07:07,599 Speaker 1: I think about June or July, the situation is going 136 00:07:07,640 --> 00:07:10,760 Speaker 1: to look much different. But to get to the tax situation. 137 00:07:11,120 --> 00:07:12,720 Speaker 1: One of the reasons why we say the window of 138 00:07:12,760 --> 00:07:16,080 Speaker 1: opportunities much shorter is it appears to be a rent 139 00:07:16,160 --> 00:07:19,400 Speaker 1: not owned type situation. We're super cheap right in trugal 140 00:07:19,480 --> 00:07:21,440 Speaker 1: is a day is long. We don't want to stick 141 00:07:21,440 --> 00:07:23,880 Speaker 1: around for the bill. You're going to have to pay 142 00:07:23,920 --> 00:07:26,360 Speaker 1: that bill. You're going to have to do that before 143 00:07:26,400 --> 00:07:29,120 Speaker 1: the midterm elections. So that's saying somewhere in the second 144 00:07:29,160 --> 00:07:31,320 Speaker 1: half of this year were the beginning of next year, 145 00:07:31,760 --> 00:07:35,000 Speaker 1: and so you know, we can talk about taxes. We 146 00:07:35,040 --> 00:07:37,880 Speaker 1: can It's hard to say grnually what's going to occur. 147 00:07:38,600 --> 00:07:40,440 Speaker 1: But we know that we've spent a lot of money, 148 00:07:40,720 --> 00:07:42,520 Speaker 1: and sooner or later we do have to pay the bill, 149 00:07:42,680 --> 00:07:45,320 Speaker 1: and we think it's coming, and so, unlike a lot 150 00:07:45,360 --> 00:07:48,040 Speaker 1: of my peers, I'm a little bit worried about that 151 00:07:48,120 --> 00:07:50,280 Speaker 1: because that's not gonna be a whole lot of fun. 152 00:07:50,400 --> 00:07:52,840 Speaker 1: Usually when you raise taxes, it's not great for the 153 00:07:52,880 --> 00:07:56,800 Speaker 1: capital markets and and it's it's not great for risk products. 154 00:07:57,280 --> 00:08:00,640 Speaker 1: So what's the allocation scenario for then? I mean, the 155 00:08:00,720 --> 00:08:03,160 Speaker 1: understanding right now, at least as I've understood it, is 156 00:08:03,160 --> 00:08:05,440 Speaker 1: that there are many who are still unsure if we're 157 00:08:05,440 --> 00:08:07,960 Speaker 1: actually going to see a big change in the tax code, 158 00:08:07,960 --> 00:08:10,560 Speaker 1: just considering that we did see a blue sweep by 159 00:08:10,560 --> 00:08:14,120 Speaker 1: a very narrow margin. Then at the same time, it's 160 00:08:14,160 --> 00:08:16,600 Speaker 1: just it's difficult to know what policy is really going 161 00:08:16,640 --> 00:08:18,920 Speaker 1: to be in focus when it might hit. So when 162 00:08:18,960 --> 00:08:22,120 Speaker 1: you guys think about policy proposals that are going to 163 00:08:22,160 --> 00:08:24,680 Speaker 1: be coming down the pipeline over the next two years, 164 00:08:24,680 --> 00:08:28,400 Speaker 1: over the next four years, when clients are possibly asking 165 00:08:28,440 --> 00:08:31,760 Speaker 1: you about these changes, how soon do you have to 166 00:08:31,840 --> 00:08:38,240 Speaker 1: actually start implementing allocation strategy to mirror what might happen 167 00:08:38,360 --> 00:08:40,719 Speaker 1: when you're unsure at the time, and what would those 168 00:08:40,800 --> 00:08:44,520 Speaker 1: changes actually look like. So, Sarah, it's a great question, 169 00:08:45,000 --> 00:08:47,679 Speaker 1: right what we're looking at and what we typically use 170 00:08:47,840 --> 00:08:51,160 Speaker 1: to to lead us into an allocation change or regime changes. 171 00:08:51,480 --> 00:08:54,440 Speaker 1: The market is telling us we look for repricing. We've 172 00:08:54,480 --> 00:08:58,720 Speaker 1: seen that repricing in bond proxies, in low volatility strategies, 173 00:08:58,920 --> 00:09:01,200 Speaker 1: whether it's utilities or reads or or what have you. 174 00:09:02,000 --> 00:09:03,400 Speaker 1: Then what we need to do is we need to 175 00:09:03,400 --> 00:09:06,400 Speaker 1: find a catalyst, right and at this point in time, 176 00:09:06,440 --> 00:09:09,199 Speaker 1: we don't have that catalyst. What we think is by 177 00:09:09,200 --> 00:09:12,240 Speaker 1: the summertime we'll start to hear the talk of tax 178 00:09:12,280 --> 00:09:15,320 Speaker 1: bubble up. That's the beginning of it. By that point 179 00:09:15,320 --> 00:09:17,640 Speaker 1: in time, we also expect to see small caps having 180 00:09:17,640 --> 00:09:20,480 Speaker 1: outperformed even more. We expect a lot of the good 181 00:09:20,480 --> 00:09:24,080 Speaker 1: news that in and around earnings and fundamentals to be 182 00:09:24,160 --> 00:09:27,800 Speaker 1: reflected in price, and we expect to see another leg 183 00:09:27,920 --> 00:09:31,600 Speaker 1: up in the euphoria within the marketplace, and that will 184 00:09:31,640 --> 00:09:35,000 Speaker 1: give us the opportunity to make that shift, that repricing, 185 00:09:35,320 --> 00:09:48,880 Speaker 1: that catalyst in that timing juncture. Because I'm curious, if 186 00:09:49,200 --> 00:09:52,000 Speaker 1: you're bullish on small caps, what sort of the best 187 00:09:52,040 --> 00:09:55,040 Speaker 1: approach to executing on that is it would it be 188 00:09:55,120 --> 00:09:57,840 Speaker 1: just a sort of a passive vehicle on eat TF 189 00:09:57,920 --> 00:10:01,000 Speaker 1: for would you know, if you're an averag investor who 190 00:10:01,240 --> 00:10:03,400 Speaker 1: sort of doesn't want to get into the nuts and 191 00:10:03,440 --> 00:10:05,680 Speaker 1: bolts of all two thousand stocks and the russell, would 192 00:10:05,679 --> 00:10:08,120 Speaker 1: you find an active fund or you know, how how 193 00:10:08,120 --> 00:10:11,680 Speaker 1: would you sort of go about expressing a bullishness on 194 00:10:11,720 --> 00:10:15,600 Speaker 1: small caps? So em bullishness on small caps. If you're 195 00:10:15,600 --> 00:10:18,320 Speaker 1: a retail investor, there's there's probably one of two two 196 00:10:18,320 --> 00:10:19,800 Speaker 1: ways to do it. You can do it in some 197 00:10:19,880 --> 00:10:22,040 Speaker 1: open ended mutual funds, and I would look for funds 198 00:10:22,080 --> 00:10:25,920 Speaker 1: that that will provide you this exposure but with low fees. 199 00:10:26,400 --> 00:10:28,520 Speaker 1: Or you can do it on an exchange excuse me, 200 00:10:28,720 --> 00:10:32,440 Speaker 1: exchange traded mutual fund or e t F right, and 201 00:10:32,520 --> 00:10:35,480 Speaker 1: those are pretty tax efficient. The fees on those are 202 00:10:35,559 --> 00:10:38,520 Speaker 1: quite low and you can get in and out rather quickly. 203 00:10:38,960 --> 00:10:42,480 Speaker 1: So I prefer because of liquidity in e t F, 204 00:10:42,840 --> 00:10:44,440 Speaker 1: but some people if you're going to buy and hold 205 00:10:44,440 --> 00:10:47,720 Speaker 1: it for some period of time, mutual fund also also 206 00:10:47,760 --> 00:10:50,319 Speaker 1: makes sense for a lot of retail investors. But you're right, 207 00:10:50,600 --> 00:10:53,440 Speaker 1: buying two thousand stocks of the Russell is probably not 208 00:10:53,480 --> 00:10:57,040 Speaker 1: your best use of your time. I feel like whenever 209 00:10:57,080 --> 00:11:00,360 Speaker 1: we talk about small caps, oftentimes, especially the skeptics, bring 210 00:11:00,440 --> 00:11:03,440 Speaker 1: up the term zombie companies, and especially coming off the 211 00:11:03,440 --> 00:11:09,520 Speaker 1: back of COVID nineteen and worries about insolvency or debt 212 00:11:09,520 --> 00:11:13,520 Speaker 1: repayment and companies not being able to bring up the 213 00:11:13,559 --> 00:11:17,400 Speaker 1: cash that they need to actually move forwards from this 214 00:11:17,400 --> 00:11:19,360 Speaker 1: point in time, even if we are going to see 215 00:11:19,400 --> 00:11:23,079 Speaker 1: a rebound and earnings, UM, there's a concern there. So 216 00:11:23,960 --> 00:11:26,600 Speaker 1: from your perspective, when you say that the concern about 217 00:11:26,840 --> 00:11:31,719 Speaker 1: zombie companies at this stage is overblown, I mean particularly 218 00:11:31,720 --> 00:11:34,120 Speaker 1: in the small cap space, or is it just a 219 00:11:34,200 --> 00:11:38,040 Speaker 1: situation where if you're going to get into investing in 220 00:11:38,120 --> 00:11:40,720 Speaker 1: small caps you just need to be aware of the 221 00:11:40,840 --> 00:11:45,160 Speaker 1: risks that that are at stake. Uh. Sorry, I think 222 00:11:45,160 --> 00:11:47,920 Speaker 1: the risk is overblown, And I think I had a 223 00:11:47,920 --> 00:11:52,240 Speaker 1: conversation recently about bankruptcyes and the whole creative destructive process, 224 00:11:52,840 --> 00:11:55,640 Speaker 1: and there were many companies that did go belly up 225 00:11:55,679 --> 00:11:59,280 Speaker 1: or go bankrupt and when you needed that to clear 226 00:11:59,320 --> 00:12:02,120 Speaker 1: out certain things, and we needed that creative destructive process 227 00:12:02,160 --> 00:12:04,520 Speaker 1: too to reach a final end. I think there's more 228 00:12:04,559 --> 00:12:07,360 Speaker 1: to go. But as far as investing in small caps, 229 00:12:07,920 --> 00:12:10,360 Speaker 1: I don't see if you you look at the exposure, 230 00:12:10,360 --> 00:12:12,240 Speaker 1: to look at the names in there, I don't think 231 00:12:12,240 --> 00:12:16,000 Speaker 1: you haven't an obscene amount or even a significant amount 232 00:12:16,000 --> 00:12:19,280 Speaker 1: of zombie companies or zombie risk there. The other thing 233 00:12:19,320 --> 00:12:21,959 Speaker 1: to think about to know is that if you're a 234 00:12:21,960 --> 00:12:26,760 Speaker 1: public company, access to the capital markets, credit is widely available. 235 00:12:27,120 --> 00:12:29,680 Speaker 1: And if you want to issue stock, excuse me, well, 236 00:12:29,720 --> 00:12:31,679 Speaker 1: you can issue stock, but if you want to issue 237 00:12:31,720 --> 00:12:34,480 Speaker 1: dead you can do it at very low rates, and 238 00:12:34,559 --> 00:12:37,520 Speaker 1: you can do it in significant size. So liquidit is 239 00:12:37,559 --> 00:12:39,120 Speaker 1: really not an issue at this point in time. And 240 00:12:39,200 --> 00:12:42,120 Speaker 1: I don't think the whole zombie risk is a big 241 00:12:42,160 --> 00:12:44,640 Speaker 1: issue for smaller caps. Chris, I wanted to get back 242 00:12:44,640 --> 00:12:49,360 Speaker 1: to your your head uh note and a few predictions 243 00:12:49,360 --> 00:12:52,400 Speaker 1: you made. One is very productive provocative, So of course 244 00:12:52,440 --> 00:12:54,640 Speaker 1: I'm gonna I'm gonna key in on that. But you 245 00:12:54,720 --> 00:12:59,040 Speaker 1: wrote that Tesla in December of echoes A O. L 246 00:12:59,240 --> 00:13:04,079 Speaker 1: in December of boy, that's that's gonna put some shivers 247 00:13:04,160 --> 00:13:06,520 Speaker 1: up some spines, I think. But walk uster sort of 248 00:13:06,559 --> 00:13:10,400 Speaker 1: unpacked that first. Why why you're making that comparison, right? 249 00:13:11,320 --> 00:13:16,520 Speaker 1: So we're getting lots of things, getting the spidy senses 250 00:13:16,559 --> 00:13:21,680 Speaker 1: starting to tingle. Right, I remember remember nine nine, and 251 00:13:21,720 --> 00:13:24,120 Speaker 1: I remember what was happening. You had a lot of speculation, 252 00:13:24,720 --> 00:13:27,520 Speaker 1: had a lot of retail investors getting involved. If you 253 00:13:27,679 --> 00:13:29,600 Speaker 1: recall the phrase, I think it was each rade clicking 254 00:13:29,679 --> 00:13:31,719 Speaker 1: in their steward, right, And we have a lot of 255 00:13:31,720 --> 00:13:34,200 Speaker 1: a lot of funny things going on now. But what 256 00:13:34,240 --> 00:13:37,199 Speaker 1: was what was amazing to me is a o L 257 00:13:37,240 --> 00:13:39,920 Speaker 1: at the time, was was a game changer. Right, It's 258 00:13:39,960 --> 00:13:44,520 Speaker 1: an amazing technology. The stock had an incredible run run 259 00:13:44,679 --> 00:13:47,760 Speaker 1: I really hadn't seen before, and it was going into 260 00:13:47,760 --> 00:13:51,600 Speaker 1: the SNP late in the year at a very large 261 00:13:51,800 --> 00:13:55,280 Speaker 1: market cap or a very large waiting Okay, that that 262 00:13:55,400 --> 00:13:57,959 Speaker 1: to me was the beginning of the end. Right. Ninety 263 00:13:58,040 --> 00:14:01,760 Speaker 1: nine was a fantastic year for stocks. But but after 264 00:14:01,880 --> 00:14:03,679 Speaker 1: ninety nine, many of your tech companies and many of 265 00:14:03,720 --> 00:14:08,840 Speaker 1: your growth companies lost their value. Now you have another 266 00:14:08,920 --> 00:14:13,400 Speaker 1: game changing technology right in Tesla, and you have a 267 00:14:13,480 --> 00:14:18,000 Speaker 1: stock that has performed amazingly well, and it's going into 268 00:14:18,000 --> 00:14:22,680 Speaker 1: the SMP December late in the year um at a 269 00:14:22,800 --> 00:14:26,680 Speaker 1: very large waiting our market cap. Right, what this signals 270 00:14:26,720 --> 00:14:30,360 Speaker 1: to me is this growth at any price. This this 271 00:14:30,440 --> 00:14:33,000 Speaker 1: is signaling and that we're close to the end of 272 00:14:33,040 --> 00:14:36,840 Speaker 1: the growth at any price type investment strategy. Right, it's 273 00:14:36,880 --> 00:14:39,200 Speaker 1: not a call on a particular stock, but what it 274 00:14:39,240 --> 00:14:42,120 Speaker 1: shows you is that we've reached a level. And so 275 00:14:42,800 --> 00:14:45,000 Speaker 1: back in the late nineties, it took twelve months for 276 00:14:45,200 --> 00:14:48,160 Speaker 1: that for the regime change to cur And what I'm 277 00:14:48,160 --> 00:14:52,520 Speaker 1: telling clients now is everything is accelerating, right. Everything that 278 00:14:52,560 --> 00:14:54,800 Speaker 1: I thought was going to happen more or less occurred, 279 00:14:54,840 --> 00:14:57,400 Speaker 1: but just in a very compressed time period. So if 280 00:14:57,400 --> 00:15:01,120 Speaker 1: it took twelve months um back in late nineties, we 281 00:15:01,120 --> 00:15:03,600 Speaker 1: think it probably takes six months now for that regime 282 00:15:03,680 --> 00:15:06,400 Speaker 1: change really to occur. And it was more. This is 283 00:15:06,400 --> 00:15:09,120 Speaker 1: a signal, and what we're seeing, you know, funny enough, 284 00:15:09,280 --> 00:15:12,000 Speaker 1: is I think the big pain trade for a lot 285 00:15:12,000 --> 00:15:14,600 Speaker 1: of people on the buying side either a recovery or 286 00:15:14,640 --> 00:15:18,760 Speaker 1: a strong recovery, because many people haven't traded in a 287 00:15:18,800 --> 00:15:22,200 Speaker 1: post recessionary environment. Many people have been trading in a 288 00:15:22,280 --> 00:15:27,560 Speaker 1: low growth recessionary environment, and when growth is abundant, different 289 00:15:27,600 --> 00:15:31,479 Speaker 1: things happen. The market rewards value in small camps and cyclicals, 290 00:15:32,120 --> 00:15:34,720 Speaker 1: and that could cause a lot of pain for much 291 00:15:34,760 --> 00:15:37,480 Speaker 1: of the BI side, because they're so steeped in that 292 00:15:37,560 --> 00:15:42,040 Speaker 1: growth trade. All I can hear is that a O 293 00:15:42,160 --> 00:15:46,600 Speaker 1: L noise from back in the day, you know, the 294 00:15:48,800 --> 00:15:53,560 Speaker 1: I still have an up and running a O L emailed, 295 00:15:53,960 --> 00:15:56,560 Speaker 1: but it exists that I'm not going to tell you 296 00:15:56,600 --> 00:16:01,120 Speaker 1: what it is. It's embarrassing, but you still have the 297 00:16:01,160 --> 00:16:06,600 Speaker 1: floppy drives anymore. You get like five in the mail 298 00:16:06,640 --> 00:16:10,360 Speaker 1: a day. And Uh, Chris, I want to ask you, though, so, 299 00:16:10,960 --> 00:16:13,800 Speaker 1: if you believe that Tesla and its addition to the 300 00:16:13,880 --> 00:16:16,400 Speaker 1: SMP five hundred marks a shift from this growth at 301 00:16:16,400 --> 00:16:20,000 Speaker 1: any price regime, do you also believe that it signals 302 00:16:20,440 --> 00:16:24,720 Speaker 1: a possibility that what we're experiencing now ends in a 303 00:16:25,080 --> 00:16:28,360 Speaker 1: dot com crash fashion. I is something I find so 304 00:16:28,440 --> 00:16:33,880 Speaker 1: amazing is that we have heard since June that many times, 305 00:16:33,920 --> 00:16:36,280 Speaker 1: many people saying the markets in a bubble, there's plenty 306 00:16:36,320 --> 00:16:39,520 Speaker 1: of euphoria. Then we go on to the summer, Then 307 00:16:39,560 --> 00:16:42,440 Speaker 1: we see retail traders buying options. We hear it again 308 00:16:42,520 --> 00:16:45,440 Speaker 1: that the markets very euphoric. We hear it again in December, 309 00:16:45,480 --> 00:16:47,400 Speaker 1: and all of a sudden we're in the new year 310 00:16:47,440 --> 00:16:51,160 Speaker 1: and months have gone by, markets have gone up. How 311 00:16:51,200 --> 00:16:55,560 Speaker 1: many percentage points since the original euphoria calls and we're 312 00:16:55,600 --> 00:16:58,200 Speaker 1: still sitting here. So even if that were the case, 313 00:16:58,240 --> 00:17:01,560 Speaker 1: I mean, what can you even possibly do out right? 314 00:17:01,680 --> 00:17:04,439 Speaker 1: So again, there there's a lot in that question that 315 00:17:04,600 --> 00:17:07,800 Speaker 1: there's a lot to unpack. Um. And I'm gonna, like 316 00:17:07,840 --> 00:17:09,879 Speaker 1: all good equity strategies, I'm gonna talk my book a 317 00:17:09,880 --> 00:17:11,880 Speaker 1: little bit, and I'm gonna say I told you so, right, 318 00:17:12,359 --> 00:17:18,000 Speaker 1: I had to, Um, but I gave you the disclaimer. Right. 319 00:17:19,840 --> 00:17:21,600 Speaker 1: So at the beginning of the summer, what we told 320 00:17:21,600 --> 00:17:24,800 Speaker 1: clients is we're expecting a market melt up. We're expecting 321 00:17:25,560 --> 00:17:28,760 Speaker 1: tem per cent tem percent plus run. And what we 322 00:17:28,840 --> 00:17:31,440 Speaker 1: said is we don't expect to sell off until we 323 00:17:31,440 --> 00:17:35,280 Speaker 1: reach higher levels, um, because as we go higher, that 324 00:17:35,359 --> 00:17:38,879 Speaker 1: makes the foundation a little less stable. We hear a 325 00:17:38,920 --> 00:17:41,639 Speaker 1: lot of the talk about speculation and bubbles and so 326 00:17:41,720 --> 00:17:45,120 Speaker 1: and so forth. I've been through several bubbles. Yeah, it's 327 00:17:45,160 --> 00:17:47,159 Speaker 1: true that there's a lot of retail investors and I 328 00:17:47,200 --> 00:17:50,560 Speaker 1: have friends that that now in theory trade better than 329 00:17:50,560 --> 00:17:54,560 Speaker 1: George Soros and it's a day and all this other stuff, right, Um, 330 00:17:54,680 --> 00:17:57,359 Speaker 1: But what we where we are? Right, if you go 331 00:17:57,440 --> 00:18:00,240 Speaker 1: back to late nineties we were heading into a set ship. 332 00:18:00,960 --> 00:18:03,640 Speaker 1: We've already had that recession, and if you go back 333 00:18:03,680 --> 00:18:08,119 Speaker 1: to late nineties UM, there are many companies that really 334 00:18:08,160 --> 00:18:10,600 Speaker 1: didn't have a business model. It was things like clicks 335 00:18:10,640 --> 00:18:13,119 Speaker 1: and eyeballs and so and so forth. A lot of 336 00:18:13,200 --> 00:18:15,840 Speaker 1: big tack, a lot of big growth. The underlying fundamentals 337 00:18:15,840 --> 00:18:18,240 Speaker 1: are good, and what we're arguing about, what we're talking 338 00:18:18,240 --> 00:18:21,800 Speaker 1: about is relative value relative performance. We think it's just 339 00:18:21,840 --> 00:18:25,960 Speaker 1: stretched too far at this juncture. Typically when growth works, 340 00:18:26,480 --> 00:18:30,000 Speaker 1: it is in a lower growth, lower rate environments, and 341 00:18:30,000 --> 00:18:33,960 Speaker 1: it's because there's a scarcity value and there's no alternative. Well, 342 00:18:34,000 --> 00:18:36,639 Speaker 1: now you have an alternative. The growth from any of 343 00:18:36,640 --> 00:18:39,040 Speaker 1: these small cap and make cap stocks going to be, 344 00:18:39,280 --> 00:18:42,399 Speaker 1: we we think, quite impressive. We think the reaction function 345 00:18:42,480 --> 00:18:44,720 Speaker 1: is going to be quite strong. And what we think 346 00:18:44,800 --> 00:18:47,040 Speaker 1: is there's probably a two tier market, which is what 347 00:18:47,080 --> 00:18:49,800 Speaker 1: you're beginning to see. And one of the reasons why 348 00:18:49,920 --> 00:18:53,960 Speaker 1: we haven't been so euphoric on our price target is 349 00:18:54,000 --> 00:18:56,600 Speaker 1: we can see a big rotation up the capitalization with 350 00:18:56,680 --> 00:19:00,840 Speaker 1: the ubercaps where people do rotate UM. A lot of 351 00:19:00,880 --> 00:19:03,440 Speaker 1: the uber caps just trade water or perhaps even sell 352 00:19:03,480 --> 00:19:05,760 Speaker 1: off as as people use them as a source of funds, 353 00:19:06,160 --> 00:19:09,399 Speaker 1: but it's not this massive capitulation because the underlying pladimentals 354 00:19:09,680 --> 00:19:13,040 Speaker 1: are actually okay. You will see certain strategies, whether it's 355 00:19:13,040 --> 00:19:16,640 Speaker 1: momentum or other things, have some difficult time, and we'll 356 00:19:16,680 --> 00:19:19,720 Speaker 1: see some you know, double digital corrections at some point 357 00:19:19,720 --> 00:19:22,600 Speaker 1: in time. But I'm not in the camp that we're 358 00:19:22,640 --> 00:19:25,119 Speaker 1: in a bubble and and this is this is terrible 359 00:19:25,119 --> 00:19:26,760 Speaker 1: and it's all gonna end in a in a very 360 00:19:26,760 --> 00:19:29,880 Speaker 1: sad story. Um, there's a lot of good values out there, 361 00:19:30,160 --> 00:19:32,760 Speaker 1: but it really is more similar to the late nineties 362 00:19:32,960 --> 00:19:36,359 Speaker 1: down the capitalization in those mad caps, in the places 363 00:19:36,400 --> 00:19:40,960 Speaker 1: where COVID has really had had a significant effect. And 364 00:19:41,040 --> 00:19:44,280 Speaker 1: as we go forward, what you pay for something is 365 00:19:44,320 --> 00:19:47,240 Speaker 1: going to mean a lot more. And if you're trading 366 00:19:47,240 --> 00:19:50,080 Speaker 1: at a hundred and fifty times earnings, yeah, suddenly the 367 00:19:50,119 --> 00:19:53,040 Speaker 1: stocks will work, but most of them probably don't. And 368 00:19:53,080 --> 00:19:55,719 Speaker 1: you can see a really healthy correction in some of 369 00:19:55,760 --> 00:20:17,240 Speaker 1: these high flyers if you will. So, Chris, A lot 370 00:20:17,280 --> 00:20:20,600 Speaker 1: of people listen to this podcast solely for my brilliant 371 00:20:20,600 --> 00:20:25,600 Speaker 1: cryptocurrency analysis. It's true, right, that's it's I Actually, they 372 00:20:26,680 --> 00:20:30,560 Speaker 1: they think whenever I whenever I mentioned it, people I 373 00:20:30,560 --> 00:20:33,240 Speaker 1: think the listeners roll their eyes and shake their fists 374 00:20:33,640 --> 00:20:37,560 Speaker 1: at their phone. Um, but uh, you did make an 375 00:20:37,560 --> 00:20:41,800 Speaker 1: insitioning call on crypto and your look ahead peace. Let 376 00:20:41,880 --> 00:20:44,399 Speaker 1: me read it here. We sturgence of interest in crypto 377 00:20:44,480 --> 00:20:48,199 Speaker 1: as a preferred speculative instrument further presses the topic of 378 00:20:48,359 --> 00:20:53,639 Speaker 1: institutionalization of digital assets. I'm curious if you can unpack 379 00:20:53,720 --> 00:20:55,719 Speaker 1: that for us a little bit. Um. You know, I 380 00:20:55,760 --> 00:21:00,720 Speaker 1: hear further install institutionalizing crypto and I worry, well, does 381 00:21:00,760 --> 00:21:04,840 Speaker 1: that bring with it sort of systemic risk along for 382 00:21:04,880 --> 00:21:08,200 Speaker 1: the ride? Um? So I'm wondering how you see that 383 00:21:08,760 --> 00:21:12,840 Speaker 1: shaping up in one as far as the institutions embracing crypto. 384 00:21:13,359 --> 00:21:15,440 Speaker 1: And you know, if I can add throw one more 385 00:21:15,480 --> 00:21:18,520 Speaker 1: in there, if you know Gary Gensler as the uh, 386 00:21:18,560 --> 00:21:21,560 Speaker 1: if he gets confirmed for the SEC, if that plays 387 00:21:21,560 --> 00:21:23,560 Speaker 1: any role in how that all shapes out? You know, 388 00:21:23,640 --> 00:21:26,439 Speaker 1: the best I can tell is he probably knows more 389 00:21:26,480 --> 00:21:31,040 Speaker 1: about crypto than probably most government regulators. I'm not sure 390 00:21:31,080 --> 00:21:33,200 Speaker 1: if that ends up being good or bad. I it's 391 00:21:33,280 --> 00:21:35,200 Speaker 1: kind of a two handed economist with it as far 392 00:21:35,240 --> 00:21:36,680 Speaker 1: as I can tell. But how do you see it 393 00:21:36,720 --> 00:21:41,240 Speaker 1: all shaping out? Yep? Um? How do I see it 394 00:21:41,240 --> 00:21:45,160 Speaker 1: all shaping on. It's um. It's still very murky, right. 395 00:21:45,200 --> 00:21:47,879 Speaker 1: But the point that we were trying to make it 396 00:21:47,840 --> 00:21:50,520 Speaker 1: at the end of the year is cryptos are are 397 00:21:50,600 --> 00:21:55,199 Speaker 1: here and people are beginning to accept them more and more. Um. 398 00:21:55,200 --> 00:21:57,399 Speaker 1: Whether you look in the NFL and an NFL player 399 00:21:57,400 --> 00:22:00,240 Speaker 1: wants to be paid in crypto, right, Um that you 400 00:22:00,280 --> 00:22:02,400 Speaker 1: look at and when I go out and I talk 401 00:22:02,480 --> 00:22:07,040 Speaker 1: to people. One of my associates, um part of is 402 00:22:07,119 --> 00:22:10,720 Speaker 1: a millennial. She and our friends have been involved in 403 00:22:11,000 --> 00:22:13,879 Speaker 1: cryptos for some time. And now what you're seeing is 404 00:22:13,920 --> 00:22:17,160 Speaker 1: some of the larger institutions talk about it, say we're 405 00:22:17,160 --> 00:22:19,440 Speaker 1: going to put it in our mutual funds, and there 406 00:22:19,520 --> 00:22:22,280 Speaker 1: is a more of an acceptance to it, right. And 407 00:22:22,359 --> 00:22:26,640 Speaker 1: so what you would expect to see is more regulation, um, 408 00:22:26,720 --> 00:22:30,440 Speaker 1: but more liquidity. You should expect to see a lot 409 00:22:30,480 --> 00:22:33,720 Speaker 1: of volatility, right. There has been and continues to be 410 00:22:33,720 --> 00:22:36,639 Speaker 1: a lot of volatility, but over time that that volatility 411 00:22:36,680 --> 00:22:39,040 Speaker 1: to come down somewhat. And I think what you would 412 00:22:39,040 --> 00:22:42,439 Speaker 1: also expect to see is a widowing out of a 413 00:22:42,440 --> 00:22:45,639 Speaker 1: lot of there's a ton of cryptos out there. I 414 00:22:45,680 --> 00:22:47,760 Speaker 1: think what will happen is there will be some sort 415 00:22:47,760 --> 00:22:51,760 Speaker 1: of consolidation and you'll have just a handful of cryptos 416 00:22:51,760 --> 00:22:54,520 Speaker 1: that people really want to try transact on. But it 417 00:22:54,640 --> 00:22:56,800 Speaker 1: really still is, you know, and I don't want to 418 00:22:56,800 --> 00:22:59,280 Speaker 1: be evasive, but it really still is wide open, and 419 00:22:59,280 --> 00:23:02,199 Speaker 1: it's just developed so quickly. And the point being is 420 00:23:03,080 --> 00:23:06,200 Speaker 1: it's going to be accepted to some degree. It has 421 00:23:06,320 --> 00:23:09,800 Speaker 1: lots to change, there's lots to do um but it's 422 00:23:09,800 --> 00:23:13,680 Speaker 1: an exciting part of the market. And by the same token, 423 00:23:13,920 --> 00:23:15,639 Speaker 1: a lot of people are using it, we think, are 424 00:23:15,720 --> 00:23:18,159 Speaker 1: using it to speculate, and that could cause a lot 425 00:23:18,200 --> 00:23:21,000 Speaker 1: more volatilities we go forward. But when when we talk 426 00:23:21,040 --> 00:23:23,840 Speaker 1: about institutional acceptance, I mean, even just this past week, 427 00:23:23,920 --> 00:23:27,040 Speaker 1: for example, black Rock came out and filed these updated 428 00:23:27,080 --> 00:23:30,000 Speaker 1: perspectus is to make bitcoin an eligible investment in two 429 00:23:30,040 --> 00:23:32,520 Speaker 1: of their funds. So just shows I mean, people are 430 00:23:32,600 --> 00:23:35,000 Speaker 1: clearly thinking differently about it. But Chris, before we get 431 00:23:35,040 --> 00:23:39,600 Speaker 1: to sharing our crazy things, Uh, there's one more prediction 432 00:23:39,640 --> 00:23:41,800 Speaker 1: that I wanted to call you out on and then 433 00:23:41,880 --> 00:23:43,800 Speaker 1: ask you if it's made you kind of think about 434 00:23:43,840 --> 00:23:46,520 Speaker 1: any of your other predictions, and that just being the 435 00:23:46,560 --> 00:23:50,560 Speaker 1: one that's already occurred about the Georgia runoffs, the idea 436 00:23:50,640 --> 00:23:53,920 Speaker 1: that you had predicted that the GOP would retain Senate control. 437 00:23:54,800 --> 00:23:59,399 Speaker 1: We're now when this runs twenty two days into a 438 00:23:59,440 --> 00:24:02,640 Speaker 1: cross one off the list. Are you second guessing any 439 00:24:02,720 --> 00:24:05,879 Speaker 1: of your other top ten predictions at this point or 440 00:24:06,000 --> 00:24:10,240 Speaker 1: is it too early to say? Um, not not second guessing. 441 00:24:10,280 --> 00:24:16,640 Speaker 1: So again, full disclosure and and and full responsibility and accountability. 442 00:24:16,680 --> 00:24:19,600 Speaker 1: We were wrong, right we we expected GOP to hold 443 00:24:19,600 --> 00:24:22,320 Speaker 1: onto the Senate, But to be quite honest, we weren't 444 00:24:22,359 --> 00:24:26,720 Speaker 1: wrong by very much. UM. And I have to say 445 00:24:26,840 --> 00:24:30,080 Speaker 1: that it's helped our book. It's helped small caps, it's 446 00:24:30,080 --> 00:24:33,240 Speaker 1: helped high COVID beta, it's helped the cyclical trade more 447 00:24:33,280 --> 00:24:36,439 Speaker 1: so than I ever would have thought. UM. With regard 448 00:24:36,480 --> 00:24:38,760 Speaker 1: to the rest of our prediction, it's a long year. 449 00:24:39,080 --> 00:24:40,520 Speaker 1: What we tend to do is we want to be 450 00:24:40,560 --> 00:24:43,880 Speaker 1: more than last year. I think we were somewhere around seventy, 451 00:24:43,960 --> 00:24:47,320 Speaker 1: which was a great year. This year, yeah, it's I 452 00:24:47,359 --> 00:24:49,960 Speaker 1: can't say it feels good to lose one right out 453 00:24:49,960 --> 00:24:53,160 Speaker 1: of the gate, but by the same token, uh, it's 454 00:24:53,200 --> 00:24:56,120 Speaker 1: really helped our book a lot. UM And I think 455 00:24:56,200 --> 00:24:59,440 Speaker 1: you know the point that we're just talking about this 456 00:24:59,520 --> 00:25:02,200 Speaker 1: is more what we're trying to do is predict things 457 00:25:02,240 --> 00:25:05,160 Speaker 1: that you know, I have a high degree of probability, 458 00:25:05,240 --> 00:25:07,520 Speaker 1: are a little out there, but have a high degree 459 00:25:07,520 --> 00:25:10,320 Speaker 1: of probability of occurring. And the crypto is a good 460 00:25:10,359 --> 00:25:14,159 Speaker 1: example of that. So yeah, a little painful, um, but 461 00:25:14,359 --> 00:25:16,280 Speaker 1: I'm not going to change this yet. In the next night, 462 00:25:18,280 --> 00:25:21,200 Speaker 1: and I will say I hit rate of s which 463 00:25:21,359 --> 00:25:23,960 Speaker 1: I think many people were surprised by the entire year. 464 00:25:24,400 --> 00:25:27,320 Speaker 1: It's pretty impressive. I was gonna say, I like that 465 00:25:27,400 --> 00:25:30,560 Speaker 1: Chris grades his previous year and seventy is you got 466 00:25:30,640 --> 00:25:32,800 Speaker 1: a grade these on a curve? Seventy percent is pretty 467 00:25:32,840 --> 00:25:35,640 Speaker 1: dark good I think for for this, for this type 468 00:25:35,640 --> 00:25:40,840 Speaker 1: of thing, if you're you know you're you're winning. Yeah, 469 00:25:41,119 --> 00:25:43,720 Speaker 1: I would be lying if I wasn't surprised as well. 470 00:25:44,240 --> 00:25:48,680 Speaker 1: I was looking for and we've got somewhere I'll take 471 00:25:48,760 --> 00:25:54,679 Speaker 1: you stand clear of the craziest things we saw in 472 00:25:54,760 --> 00:25:58,320 Speaker 1: markets this week. Well, Sarah, I think it's that time. 473 00:25:59,320 --> 00:26:02,040 Speaker 1: Have you come for pared? I did come prepared, I've 474 00:26:02,040 --> 00:26:05,679 Speaker 1: I always come prepared. Mike, I'm just trying to increase 475 00:26:05,720 --> 00:26:09,080 Speaker 1: the drama a little bit. Does that mean I'm kicking 476 00:26:09,160 --> 00:26:12,320 Speaker 1: us off? Alright? So I don't have a price is right. 477 00:26:12,359 --> 00:26:14,520 Speaker 1: But I do have a bit of a trivia question 478 00:26:15,080 --> 00:26:18,600 Speaker 1: for you. If you had to guess what's the best 479 00:26:18,680 --> 00:26:22,800 Speaker 1: performing stock in the SMP five this year, what would 480 00:26:22,840 --> 00:26:26,199 Speaker 1: you say? Oh, man, best performing? I know the worst 481 00:26:26,320 --> 00:26:30,040 Speaker 1: is Twitter? So if you're short the Twitter is uh 482 00:26:30,960 --> 00:26:39,800 Speaker 1: the worst? The best performing, I'm gonna say one of 483 00:26:39,800 --> 00:26:42,480 Speaker 1: the banks? I don't know that. All right, good guess Chris. 484 00:26:42,520 --> 00:26:46,280 Speaker 1: Do you have any thoughts? I would say game Stop, 485 00:26:46,320 --> 00:26:48,240 Speaker 1: but I'm not sure a game Stop is in the 486 00:26:48,400 --> 00:26:54,880 Speaker 1: SP five, So let's go with Western Digital. Alright, So 487 00:26:55,560 --> 00:26:58,119 Speaker 1: a bit surprising at least I was caught off guard. 488 00:26:58,440 --> 00:27:01,600 Speaker 1: Your best to performing stocks in the SMP five hundred 489 00:27:01,600 --> 00:27:04,439 Speaker 1: this year General Motors and Ford and each is up 490 00:27:04,960 --> 00:27:11,040 Speaker 1: more than thirty Interesting. What a change. That's quite to change. 491 00:27:11,200 --> 00:27:14,160 Speaker 1: I mean, there's been a lot of talk of technological 492 00:27:14,200 --> 00:27:18,960 Speaker 1: investments and Microsoft teaming up there with with GM and 493 00:27:19,040 --> 00:27:22,879 Speaker 1: getting into the autonomous car space. But still I think, uh, 494 00:27:23,040 --> 00:27:26,120 Speaker 1: I mean, clearly, as we just discovered, I think many 495 00:27:26,119 --> 00:27:30,159 Speaker 1: people would be surprised by that very young. But you 496 00:27:30,160 --> 00:27:32,120 Speaker 1: know what I wonder, is it back in the day 497 00:27:32,160 --> 00:27:34,280 Speaker 1: it used to be every day there is a different 498 00:27:34,880 --> 00:27:38,480 Speaker 1: speculation about who is going to buy Tesla. Maybe now 499 00:27:38,520 --> 00:27:42,320 Speaker 1: everyone's speculating on who Tesla is gonna buy, just throwing 500 00:27:42,359 --> 00:27:48,520 Speaker 1: it out there. That's some good speculation, Mike. It's one 501 00:27:48,520 --> 00:27:52,040 Speaker 1: way to wrap up production just by Ford, By four, GM, Volkswagen. 502 00:27:52,080 --> 00:27:53,920 Speaker 1: They could probably buy all of them at this point. 503 00:27:54,200 --> 00:27:56,959 Speaker 1: It's secondary offering and just take out the entire car 504 00:27:57,000 --> 00:28:00,000 Speaker 1: industry that don't listen to me by listeners, by the way, 505 00:28:00,000 --> 00:28:03,480 Speaker 1: none of that's going to happen. That's that's just me. Uh, 506 00:28:03,560 --> 00:28:08,240 Speaker 1: that's that's my prediction. We'll see that he's gonna bank 507 00:28:08,320 --> 00:28:12,760 Speaker 1: his entire predictions that he'll get his zero percent or 508 00:28:13,480 --> 00:28:16,879 Speaker 1: if he gets real lucky. That's that's a good one, 509 00:28:16,880 --> 00:28:19,879 Speaker 1: though I did not know Ford and GM interesting. How 510 00:28:19,880 --> 00:28:22,680 Speaker 1: about you? Christis witness anything crazy in the past week 511 00:28:22,800 --> 00:28:25,600 Speaker 1: or so? So that one of the craziest things I've 512 00:28:25,640 --> 00:28:27,840 Speaker 1: seen over the last couple of days and over the 513 00:28:27,920 --> 00:28:32,919 Speaker 1: last week has been the reaction um or the performance 514 00:28:32,960 --> 00:28:37,040 Speaker 1: of some of the heavily shorted consumer stocks. These stocks 515 00:28:37,040 --> 00:28:41,840 Speaker 1: are going up many days at double double digit returns, 516 00:28:42,360 --> 00:28:44,880 Speaker 1: and the amount of short or short interest in these 517 00:28:44,880 --> 00:28:48,440 Speaker 1: stocks is obscene, and so I think this can continue. 518 00:28:49,040 --> 00:28:52,840 Speaker 1: But I haven't seen this kind of movement in a 519 00:28:52,960 --> 00:28:55,440 Speaker 1: number of a group of stocks in a long, long time, 520 00:28:55,880 --> 00:29:00,000 Speaker 1: and it is very consistent, and it speaks to um 521 00:29:00,040 --> 00:29:04,520 Speaker 1: heavily shorted stocks being covered and covered rapidly. And I'll 522 00:29:04,520 --> 00:29:06,000 Speaker 1: have read on this a little bit more because I 523 00:29:06,040 --> 00:29:08,280 Speaker 1: know you. When I asked you what the best performing 524 00:29:08,320 --> 00:29:10,400 Speaker 1: stock in the SMP five hundred was, you guest, game 525 00:29:10,480 --> 00:29:14,040 Speaker 1: stop and game stop. I mean, just a couple of 526 00:29:14,080 --> 00:29:15,960 Speaker 1: days ago, or about a week ago on the four teen, 527 00:29:16,080 --> 00:29:21,320 Speaker 1: short interest as a percentage of shares outstanding was and 528 00:29:21,360 --> 00:29:24,640 Speaker 1: now it's already come down to about sixty seven percenter. 529 00:29:24,720 --> 00:29:27,000 Speaker 1: So and like you said, I mean it's almost at 530 00:29:27,080 --> 00:29:30,560 Speaker 1: least last week, every single daycent game fifty seven percent Game. 531 00:29:30,600 --> 00:29:36,320 Speaker 1: I mean, it's just it's it's remarkable to watch. It's 532 00:29:36,360 --> 00:29:38,800 Speaker 1: it's amazing to me someone would short a stock that's 533 00:29:38,800 --> 00:29:42,080 Speaker 1: already that heavily shorted. I mean, you know, I don't know, 534 00:29:42,360 --> 00:29:44,400 Speaker 1: it's have you not heard of these guys on Reddit 535 00:29:44,440 --> 00:29:45,920 Speaker 1: that are going to take you to the cleaners on this? 536 00:29:48,160 --> 00:29:50,600 Speaker 1: But that's that's pretty good though. And I wonder, you know, Chris, 537 00:29:50,640 --> 00:29:53,720 Speaker 1: I wonder if it's just people looking at the vaccine 538 00:29:53,760 --> 00:29:57,600 Speaker 1: coming and stimulus coming and and just getting over excited 539 00:29:57,640 --> 00:30:01,120 Speaker 1: about these consumer names. To some degree, I think that 540 00:30:01,160 --> 00:30:03,640 Speaker 1: could be part of it. Um, there could be some 541 00:30:03,680 --> 00:30:07,480 Speaker 1: liquidations that are going on, and obviously the fundamentals are 542 00:30:07,600 --> 00:30:11,280 Speaker 1: changing and and that's all playing into it. But you're right, well, 543 00:30:11,280 --> 00:30:15,480 Speaker 1: when you're you're that heavily shorted, funny things can happen, 544 00:30:15,880 --> 00:30:21,440 Speaker 1: and that's exactly what's occurring. Yeah, well that's pretty good, alright, Sarah. 545 00:30:21,600 --> 00:30:25,160 Speaker 1: I'm ready for for prices right. We'll see how Chris 546 00:30:25,200 --> 00:30:28,440 Speaker 1: does that the prices right game here in the alternative 547 00:30:28,480 --> 00:30:32,680 Speaker 1: assets space, and this is really alternative, Sarah. You know 548 00:30:32,720 --> 00:30:35,400 Speaker 1: those little stickers you get on a banana, you know, 549 00:30:35,640 --> 00:30:40,520 Speaker 1: it'll say like dold banana, like Ecuador, Panama, wherever. Don't 550 00:30:40,680 --> 00:30:43,800 Speaker 1: don't tell me that banana stickers are now being auctioned 551 00:30:43,840 --> 00:30:48,240 Speaker 1: in some strange marketplace sort of sort of. So one 552 00:30:48,280 --> 00:30:50,800 Speaker 1: of those stickers ended up on a twenty dollar bill 553 00:30:51,400 --> 00:30:53,360 Speaker 1: and it wasn't just placed there by someone. It was 554 00:30:53,560 --> 00:30:56,800 Speaker 1: landed on there during the printing process of this twenty 555 00:30:56,840 --> 00:31:00,520 Speaker 1: dollar bill at some you know, government printing facility in 556 00:31:00,800 --> 00:31:05,160 Speaker 1: Texas in to the point where you know that little 557 00:31:05,480 --> 00:31:08,600 Speaker 1: the seal of the treasury and the serial number are 558 00:31:08,600 --> 00:31:13,440 Speaker 1: both printed over top of the the dull banana sticker. 559 00:31:14,120 --> 00:31:16,320 Speaker 1: And you can make your own jokes about banana republics 560 00:31:16,360 --> 00:31:18,240 Speaker 1: if you want. I will not. I will not make 561 00:31:18,240 --> 00:31:23,720 Speaker 1: that joke. But so, my favorite part about the story, 562 00:31:23,720 --> 00:31:26,960 Speaker 1: and this is on CNN dot com, by the way, UM, 563 00:31:27,160 --> 00:31:29,840 Speaker 1: is the theories on how it got there. Uh. One 564 00:31:29,840 --> 00:31:31,760 Speaker 1: guy saying, well, it might have been sort of part 565 00:31:31,760 --> 00:31:35,160 Speaker 1: of their quality control process. Someone put it on there 566 00:31:35,160 --> 00:31:37,400 Speaker 1: to see if it could get through and they forgot 567 00:31:37,400 --> 00:31:40,120 Speaker 1: to weed it out. Another guy's like, no, I'm pretty 568 00:31:40,120 --> 00:31:42,640 Speaker 1: sure it's just a joke. Someone just did a practical joke, 569 00:31:42,720 --> 00:31:45,479 Speaker 1: put the banana sticker on the twenty and it got printed. 570 00:31:46,560 --> 00:31:49,120 Speaker 1: Of course, as you can probably guess, that twenty dollar 571 00:31:49,200 --> 00:31:52,760 Speaker 1: bill is now up for auction. UM and collectors of 572 00:31:52,840 --> 00:31:56,000 Speaker 1: these types of things loved mistakes like this, Like if 573 00:31:56,000 --> 00:31:59,520 Speaker 1: you're collecting a coin or a piece of currency, if 574 00:31:59,520 --> 00:32:03,800 Speaker 1: there's some a steak involved, Uh, it totally raises the 575 00:32:03,920 --> 00:32:07,000 Speaker 1: value of the item. And clearly this is about his 576 00:32:07,520 --> 00:32:12,960 Speaker 1: hilarious sized mistakes can get. So, what's the what's the bid? Sarah? 577 00:32:13,520 --> 00:32:16,000 Speaker 1: If you're playing prices white, what would you bid for 578 00:32:16,040 --> 00:32:19,840 Speaker 1: a twenty dollar bill with a banana sticker embedded into 579 00:32:19,880 --> 00:32:22,480 Speaker 1: it underneath the Treasury seal. All right, not what I 580 00:32:22,480 --> 00:32:25,840 Speaker 1: would bid, but maybe what one of these fanatics who 581 00:32:25,840 --> 00:32:31,880 Speaker 1: love mistakes would bid. I'm gonna go. I'm gonna go 582 00:32:31,920 --> 00:32:37,880 Speaker 1: with nine hundred. I'm gonna keep my my poker face. 583 00:32:38,000 --> 00:32:39,800 Speaker 1: But Chris, what's your what's your bid on the twenty 584 00:32:39,840 --> 00:32:42,680 Speaker 1: dollar bill with the banana stickers? Since I love bomb 585 00:32:43,040 --> 00:32:46,280 Speaker 1: Bombarker and prices, right, I'm gonna go nine one. That's 586 00:32:46,280 --> 00:32:50,600 Speaker 1: how you play. That's how you play the game exactly. 587 00:32:51,560 --> 00:32:55,520 Speaker 1: That's a that's how you play. Current bid and this 588 00:32:55,600 --> 00:33:00,560 Speaker 1: is Heritage Auctions in Dallas. Current bid fifty seven thousand dollars. 589 00:33:00,680 --> 00:33:04,640 Speaker 1: Are you serious? Yeah? Well, there's like some sellers speed too, 590 00:33:04,720 --> 00:33:08,000 Speaker 1: so it's closer to sixty nine or the buyer's premium. 591 00:33:08,000 --> 00:33:12,920 Speaker 1: They caught these auctions, so seventy grand for the bill. 592 00:33:14,080 --> 00:33:16,800 Speaker 1: The last the last few times around, I had done 593 00:33:16,880 --> 00:33:21,440 Speaker 1: really well with learning my lessons about overshooting. Now after today, 594 00:33:21,680 --> 00:33:24,520 Speaker 1: I'm going to start overshooting again, and then I start 595 00:33:24,520 --> 00:33:30,440 Speaker 1: being way off once again. Wise move. I love the 596 00:33:30,520 --> 00:33:32,320 Speaker 1: nine and one. That's how you play it. That's that's 597 00:33:32,400 --> 00:33:36,560 Speaker 1: this guy's congratulations. We gotta get Chris on Prices right, 598 00:33:37,160 --> 00:33:41,120 Speaker 1: sponsor him all right, well, Chris Harvey, winner Price is right. 599 00:33:41,520 --> 00:33:43,680 Speaker 1: We'll have to catch up again sometime soon and also 600 00:33:43,760 --> 00:33:46,360 Speaker 1: at the end of so we can see if you 601 00:33:46,440 --> 00:33:50,280 Speaker 1: get that higher hit rate again. Predictions for the year 602 00:33:50,600 --> 00:33:52,800 Speaker 1: of a Chris Harvey of Wells Fargo Securities, Thanks so 603 00:33:52,840 --> 00:34:02,080 Speaker 1: much for joining the show today What Goes Up. We'll 604 00:34:02,120 --> 00:34:05,160 Speaker 1: be back next week. Until then, you can find us 605 00:34:05,200 --> 00:34:08,360 Speaker 1: on the Bloomberg Terminal, website and app, or wherever you 606 00:34:08,400 --> 00:34:11,040 Speaker 1: get your podcasts. We'd love it if you took the 607 00:34:11,080 --> 00:34:13,719 Speaker 1: time to rate and review the show on Apple Podcasts 608 00:34:13,880 --> 00:34:16,279 Speaker 1: so more listeners can find us. And you can find 609 00:34:16,360 --> 00:34:19,919 Speaker 1: us on Twitter, follow me at at Sarah Pontzack, Mike 610 00:34:20,120 --> 00:34:23,160 Speaker 1: is at Rea Anonymous, and you can also follow Bloomberg 611 00:34:23,200 --> 00:34:27,000 Speaker 1: Podcasts at podcasts. Also thank you to Charlie Pellett of 612 00:34:27,000 --> 00:34:29,280 Speaker 1: Bloomberg Radio and the voice of the New York City 613 00:34:29,280 --> 00:34:32,560 Speaker 1: Subway System. What Goes Up is produced by Topur Foreheads. 614 00:34:32,680 --> 00:34:36,400 Speaker 1: The head of Bloomberg Podcasts is Francesco Levi. Thanks for listening. 615 00:34:36,560 --> 00:34:37,359 Speaker 1: See you next time.