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Why this frothy market is scaring many investors · The Financial Exchange Show

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  Speaker 1: with Chuck Zutta and Paul Lane.
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  Speaker 2: Chuck, Paul and Tucker with you here on the Financial Exchange.
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  Speaker 2: As we kick off hour two. We got stocks selling
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  Speaker 2: off across the board. The DOWS off two hundred and
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  Speaker 2: thirty seven points. If it closes down today, that will
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  Speaker 2: be nine straight down days for the Dow Jones Industrial Average.
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  Speaker 2: The last time it did that it was in the
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  Speaker 2: nineteen seventies.
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  Speaker 3: Paul, Wow, long time been.
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  Speaker 2: A while, been a while since we've seen that. SAP
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  Speaker 2: five hundred also down about half a percent. NASDAK down
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  Speaker 2: almost two thirds of a percent today, So again all
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  Speaker 2: three major US in disees are selling off. Tenure Treasury
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  Speaker 2: down two bases points to three point i'm sorry, to
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  Speaker 2: four point three to eight percent. We've got Oil West
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  Speaker 2: to Intermediate down a dollar forty six barrel to sixty
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  Speaker 2: nine twenty five at the moment, and we've got gold
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  Speaker 2: fifteen sixty an ounce to twenty six fifty four right now. Also,
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  Speaker 2: the TRIPAA national average for gas prices back up another
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  Speaker 2: six tens of percent to three zero three. Even so,
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  Speaker 2: we still can't get that below three dollars a gallon nationally,
• 2:23
  Speaker 2: even though we've got large parts of the country that
• 2:26
  Speaker 2: are floating around kind of that two point fifty three
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  Speaker 2: to two seventy six range. If you're going basically anywhere
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  Speaker 2: from like Texas to Tennessee to Nebraska, that little triangle there,
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  Speaker 2: it's it's all cheap gas there. If you want the
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  Speaker 2: expensive gas, the premium stuff, head out to California, Nevada,
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  Speaker 2: maybe Oregon, Washington State. Those are good places where you
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  Speaker 2: can get the really expensive gas. New York State and
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  Speaker 2: Pennsylvania also falling into that highest cost category as well.
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  Speaker 2: Right now, if you want something a little bit more
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  Speaker 2: local for you know, a more primo gasoline experience, Let's
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  Speaker 2: talk a little bit about this piece from.
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  Speaker 4: The Wall Street Journal.
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  Speaker 2: It's telling why this frothy market has me scared, And
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  Speaker 2: basically what it's talking about is.
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  Speaker 4: Not everyone, but.
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  Speaker 2: Statistically very high numbers of people relative to the long
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  Speaker 2: term average, think that stocks are going to do great
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  Speaker 2: in the next year. And stocks in the US have
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  Speaker 2: done just about the best they've ever done versus the
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  Speaker 2: rest of the world over the recent past. Valuations are steep,
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  Speaker 2: and so there's some concern that maybe markets are a
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  Speaker 2: little bit over exuberant and over optimistic right now.
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  Speaker 5: Your thoughts, Paul, Yeah, if you look at what they
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  Speaker 5: put together in this piece, is whether you're studying investment
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  Speaker 5: newsletters or you're studying just overall sentiment from economists and
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  Speaker 5: illus out there. The point that's me and this Wall
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  Speaker 5: Street Journal said that it's overly optimistic. It's really hard
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  Speaker 5: to find many people who are bearish on the stock
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  Speaker 5: market headed into twenty twenty five, and everyone is of
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  Speaker 5: the opinion that AI and the US economy are in
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  Speaker 5: a great spot. You know, I would agree with the
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  Speaker 5: overall sentinem on the piece that valuations have reached a
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  Speaker 5: really high level. It does feel like, very much so
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  Speaker 5: that we are in a risk on market Chuck, Crypto
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  Speaker 5: reaching its significant you know, fifty two week highs and
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  Speaker 5: things like that always seems to or in recent past,
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  Speaker 5: has seemed to tie into times of intense speculation, whether
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  Speaker 5: it's the spack kind of cannabis wave post pandemic where
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  Speaker 5: there was a lot of savings in excess on the
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  Speaker 5: sidelines that had people investing in those types of companies.
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  Speaker 5: It does feel like a similar sort of market conditions
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  Speaker 5: at this point in time where the market and many
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  Speaker 5: of its participants can do no wrong. I guess recently
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  Speaker 5: there's been some sell off on lesser names. The big
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  Speaker 5: names have still been kind of keeping us up. But
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  Speaker 5: even what's gone on with Broadcon that we'll talk about too,
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  Speaker 5: Just a lot of these companies trading at significant, high
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  Speaker 5: rich valuations on the anticipation for this future earnings growth,
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  Speaker 5: and things are pricey.
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  Speaker 3: I'm with them.
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  Speaker 2: Yeah, and Paul, were you? I can't remember if it
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  Speaker 2: was you or someone else when we were covering. Bank
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  Speaker 2: of America published a set of twenty different valuation metrics
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  Speaker 2: for the S and P five hundred, and statistically, nineteen
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  Speaker 2: of them have the S and P five hundred trading
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  Speaker 2: more expensively than historical average levels.
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  Speaker 4: Were you?
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  Speaker 6: No?
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  Speaker 5: That sounds like a good piece, but no, I was not.
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  Speaker 5: Can we touch on some of these sure?
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  Speaker 2: Trailing PE for the S and P five hundred, So
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  Speaker 2: how expensive are stocks relative to the last twelve months
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  Speaker 2: of earnings? The historical average is fourteen point nine times earnings.
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  Speaker 2: Right now they're twenty five point nine, so they are
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  Speaker 2: again significantly overvalued.
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  Speaker 4: The trailing gap PE.
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  Speaker 2: So trailing generally accepted accounting principles historically fifteen point two.
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  Speaker 2: Now it's twenty nine point nine, so ninety six percent
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  Speaker 2: above the historical average. Forward PEES long term average is
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  Speaker 2: fifteen point nine. Right now, you're twenty two point two
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  Speaker 2: thirty nine percent overvalued. Trailing normalized PE Normally it's nineteen
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  Speaker 2: to one. Now it's twenty seven eight forty five percent overvalued.
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  Speaker 4: Price to book.
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  Speaker 2: I skipped some of the other PEES just because we
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  Speaker 2: don't need to do like six different PE ratios.
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  Speaker 4: It's it's fine overvalued.
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  Speaker 2: Price to book normally is two point seventy one right now,
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  Speaker 2: it's five point three two. Enterprise value to EBITA normally
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  Speaker 2: six ten point six right now sixteen point one. Price
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  Speaker 2: to operate in cash flow normally eleven point five right
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  Speaker 2: now twenty point one. Enterprise value to sales normally two
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  Speaker 2: point zh one now three point four to three normalized
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  Speaker 2: earning earnings premium normally three hundred and eighty one basis
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  Speaker 2: points now one hundred and ninety three, forty nine percent
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  Speaker 2: higher valuation. Some other ones that I just don't understand
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  Speaker 2: why these matter. The S and P five hundred in
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  Speaker 2: oil terms. Again, I don't know why this matters, and
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  Speaker 2: why we would expect the price of oil to follow
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  Speaker 2: the price of the S and P five hundred, But
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  Speaker 2: Bank of America put it in here, so I'm gonna
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  Speaker 2: read it normally twenty seven point five times now eighty
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  Speaker 2: six point seven, So two hundred and fifteen percent overvalued.
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  Speaker 2: I don't know there's much meat on that bone, quite honestly.
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  Speaker 2: One interesting one the S and P five hundred versus
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  Speaker 2: the Russell two thousand. In forward PE ratio terms, the
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  Speaker 2: S and P five hundred normally is about four percent
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  Speaker 2: more expensive than the Russell. In terms of forward PE,
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  Speaker 2: it's now twenty eight percent more expensive than the Russell.
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  Speaker 2: And finally, the S and P five hundred market cap
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  Speaker 2: relative to the GDP of the United States, how much
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  Speaker 2: money is in stocks relative to the US GDP historically
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  Speaker 2: point six seven right now one point seventy four, one
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  Speaker 2: hundred and.
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  Speaker 4: Fifty eight percent overvalued.
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  Speaker 2: So you do the math on this, and then you
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  Speaker 2: actually look at where this falls on the historical distribution.
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  Speaker 2: Most of these numbers are in the top anywhere from
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  Speaker 2: one to five percentiles all time in terms of how
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  Speaker 2: rich they are. And it's not to say that stocks
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  Speaker 2: can't continue to move up. It's just that, Hey, in
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  Speaker 2: order for them to continue to move up, the earnings growth,
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  Speaker 2: as you noted, Paul, it's got to be there because
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  Speaker 2: we've already done the multiple expansion piece. We've already done
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  Speaker 2: that one, that that lever has been pulled, and earnings
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  Speaker 2: are gonna have to continue to grow. And specifically, the
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  Speaker 2: big thing that's being priced in for next year is
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  Speaker 2: further margin expansion. So S and P five hundred profit
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  Speaker 2: margins according to fact set right now, if you look
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  Speaker 2: at you know, kind of where we're where we're sitting
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  Speaker 2: on this stuff, see an S and P five hundred
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  Speaker 2: profit margins around eleven or twelve percent, you're expected to
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  Speaker 2: see those expand by fifteen percent next year to somewhere
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  Speaker 2: around thirteen to a half to fourteen percent. That's what
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  Speaker 2: needs to drive the ship as far as where the
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  Speaker 2: earnings growth is projected to come from, because revenue growth
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  Speaker 2: is only supposed to be about five five and a
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  Speaker 2: half percent next year for the S and P five hundred.
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  Speaker 4: So if you're gonna get the growth that.
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  Speaker 2: You want in earnings, analysts are saying it's got to
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  Speaker 2: come from margin expansion, which look from a societal perspective,
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  Speaker 2: isn't one of the things that we've been complaining about recently,
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  Speaker 2: that companies are making too much money and workers aren't
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  Speaker 2: taking home enough. This is an expansion of that, that
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  Speaker 2: phenomenon in progress if you're going to see it, so
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  Speaker 2: we'll see what happens. But this is where we sit
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  Speaker 2: right now with an expensive market. That again, the how
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  Speaker 2: to point to all this is looks if you've questioned
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  Speaker 2: this market for the last two years, you've kind of
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  Speaker 2: got bludged over your head, you know, repeatedly, just blake
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  Speaker 2: whack whack, whack.
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  Speaker 3: Whack wac.
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  Speaker 5: That's the issue of valuations is that no one knows
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  Speaker 5: when they revert back to the means.
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  Speaker 2: They are not a good predictor of short term movements
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  Speaker 2: in any way, shape or form. Quick break here, when
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  Speaker 2: we come back, we got trivia and then we're talking
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  Speaker 2: Broadcom right after.
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  Speaker 4: Paul.
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  Speaker 2: For those who aren't familiar with them, what does Broadcom do?
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  Speaker 7: So?
• 12:29
  Speaker 4: Uh?
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  Speaker 5: Broadcom is a semiconductor developer and manufacturer and supplier, and
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  Speaker 5: so typically you'd be familiar with them because they were
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  Speaker 5: responsible for a lot of the work on putting together
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  Speaker 5: the chip that is used in your Apple smartphone, or
• 12:46
  Speaker 5: was used rather in your Apple smartphone.
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  Speaker 3: More recently, they.
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  Speaker 5: Have started to utilize putting chips together for data center
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  Speaker 5: operations regarding AI calculations and are rather regarding AI and
• 13:01
  Speaker 5: its development. And that's why this stock has been so
• 13:04
  Speaker 5: hot recently over the last couple of days, is because
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  Speaker 5: of their endeavors and revenue growth in sort of the
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  Speaker 5: AI space thing designing those types of chips.
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  Speaker 2: So here's the big thing that I come back to
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  Speaker 2: with with Broadcom. Here is this one more than in
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  Speaker 2: Vidia This is basically in the last two weeks now
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  Speaker 2: investors saying, hey, this is going to be the next
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  Speaker 2: company that grows like in video without showing any growth
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  Speaker 2: like in Vidio to this point.
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  Speaker 4: And that's the problem to me.
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  Speaker 2: When I look at this because in video, yes, like
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  Speaker 2: the valuation might be high. But we covered this the
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  Speaker 2: other day. If you look at these two companies, you
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  Speaker 2: know and say, okay, like, let's let's look at them,
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  Speaker 2: you know, side by side and view you know how
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  Speaker 2: they might be similar or different, you know, from from
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  Speaker 2: a couple different perspectives.
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  Speaker 4: The biggest one that I like to look at is
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  Speaker 4: just how.
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  Speaker 2: Quickly are they actually growing because I think that's where
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  Speaker 2: a lot of the meat is on this and broad
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  Speaker 2: coom for the last five years, if you look at
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  Speaker 2: its revenue growth, it's averaging seventeen percent seventeen point nine
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  Speaker 2: percent revenue growth for the last five years. Earnings growth
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  Speaker 2: over that time is thirteen point nine one percent. This
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  Speaker 2: is you know, updated for the most recent quarter here,
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  Speaker 2: So you say, okay, like those are those are fine?
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  Speaker 4: Those are you know good?
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  Speaker 2: In video here for the last five years is showing
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  Speaker 2: revenue growth annualized of thirty nine percent thirty nine versus
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  Speaker 2: eighteen more than double. Right in video's profit growth, it's
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  Speaker 2: earnings per share growth forty eight percent per year over
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  Speaker 2: the last five years on average, compared to thirteen point
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  Speaker 2: nine to one. So Broadcom, if, if, especially if you're
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  Speaker 2: buying it with what it just did, which is again
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  Speaker 2: kind of wild to see a company go and do
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  Speaker 2: this is in video. I'm sorry, Broadcom just woke up
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  Speaker 2: one day, or Broadcomm investors woke up one day and said, hey,
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  Speaker 2: you know what, before earnings, your valuation was eight hundred
• 15:21
  Speaker 2: billion dollars and now we're just gonna add three hundred
• 15:24
  Speaker 2: billion to that in the span.
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  Speaker 3: Of a week. You took a lot of the points
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  Speaker 3: I want to make too.
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  Speaker 5: It's just it's so not comparable to say that Broadcom
• 15:35
  Speaker 5: is the next in video when you study the revenue
• 15:38
  Speaker 5: growth comparisons that we're we're looking at here, and in
• 15:41
  Speaker 5: particular the metrics on the price.
• 15:44
  Speaker 3: To earnings valuations.
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  Speaker 5: Now you now have broad cons sitting at a price
• 15:47
  Speaker 5: to earnings multiple of one hundred and eighty six, they're
• 15:51
  Speaker 5: four pe of thirty seven or thirty eight. It's just
• 15:55
  Speaker 5: absolutely crazy to make this comparison, particularly those AI intelligence
• 16:02
  Speaker 5: ships that were speaking of. They saw a twelve percent
• 16:05
  Speaker 5: increase in revenue from a year ago, and so certainly
• 16:10
  Speaker 5: they said that there's going to be some revenue that
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  Speaker 5: jumped in other parts on infrastructure to twelve point two billion.
• 16:16
  Speaker 5: But keep in mind you have a company within Vidia
• 16:19
  Speaker 5: that is doing what thirty thirty five billion a quarter
• 16:23
  Speaker 5: in revenue check total. Yeah, so it's just not on
• 16:26
  Speaker 5: the same scale that these two companies are growing. It
• 16:31
  Speaker 5: is so hard to replicate what Nvidia has done and
• 16:34
  Speaker 5: to trade Broadcom like it is going to grow its
• 16:38
  Speaker 5: revenue like what in Nvidia did To me, It's just
• 16:43
  Speaker 5: it just really blows my mind. I could not believe
• 16:45
  Speaker 5: how much it was up after this earning support. I
• 16:47
  Speaker 5: believe it was twenty or twenty five percent that day
• 16:50
  Speaker 5: when it came out. It blew me away.
• 16:52
  Speaker 2: And the other question that I guess I have as
• 16:54
  Speaker 2: it relates to this, is the AI spending boom has
• 16:58
  Speaker 2: been happening for the last two years. Now, why is
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  Speaker 2: Broadcom not participating in it the same way that the
• 17:05
  Speaker 2: video is, Like what's gonna make the.
• 17:09
  Speaker 4: Next two years?
• 17:10
  Speaker 2: Because the piece in here I'll quote from Bloomberg at
• 17:13
  Speaker 2: the heart of the rally is Broadcomp's prediction that the
• 17:16
  Speaker 2: addressable market not what they think they can sell. The
• 17:18
  Speaker 2: addressable market, which when the term that you see in
• 17:22
  Speaker 2: power points is typically total addressable market TAM or TAM
• 17:27
  Speaker 2: for short, and generally anytime that I see TAM in a.
• 17:30
  Speaker 4: PowerPoint, I'm like, oh my goodness.
• 17:33
  Speaker 2: Be The place where you see it most often is
• 17:35
  Speaker 2: like these fitness things, where it's like, oh, the total
• 17:37
  Speaker 2: addressable market for fitness is like thirty billion dollars and
• 17:40
  Speaker 2: if we just get one percent of that, okay, Like, yes,
• 17:44
  Speaker 2: good luck with that. The addressable market for AI components
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  Speaker 2: it designs for data operation centers will be as big
• 17:50
  Speaker 2: as ninety billion by fiscal twenty twenty seven. Okay, why
• 17:55
  Speaker 2: are you not selling more now because that market has
• 17:58
  Speaker 2: expanded tremendou over the last two years. Why is your
• 18:04
  Speaker 2: growth so much slower than in videos? Why is your
• 18:09
  Speaker 2: growth so much slower than And again I'm just going
• 18:13
  Speaker 2: through like the companies that are on kind of that,
• 18:16
  Speaker 2: even like AI adjacent side on this, Why is your
• 18:20
  Speaker 2: growth so much slower than AMD whose revenue is growing
• 18:23
  Speaker 2: twenty eight percent a year even though they have you know,
• 18:25
  Speaker 2: like a huge legacy computer business and stuff like that.
• 18:29
  Speaker 2: That's that's what I'm trying to get around, is how
• 18:33
  Speaker 2: are you going to capture that differently in the next
• 18:36
  Speaker 2: two years? And if there is anything that stalls out there,
• 18:39
  Speaker 2: because by the way, in Vidia's growth is slowing right now,
• 18:44
  Speaker 2: why are you going to be able to be different then?
• 18:46
  Speaker 3: And why?
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  Speaker 5: You know, why should I have to pay a premium
• 18:50
  Speaker 5: of forty percent to the valuation or fifty percent whatever
• 18:54
  Speaker 5: it's gone, just because of something you're going to do
• 18:56
  Speaker 5: in twenty twenty seven?
• 18:57
  Speaker 4: Chock?
• 18:57
  Speaker 3: You know, why should I have to pay that premium front?
• 19:00
  Speaker 3: See if you can deliver?
• 19:00
  Speaker 5: And I always have skepticism the further out of promises
• 19:03
  Speaker 5: in terms of its deliverable date in twenty twenty seven,
• 19:07
  Speaker 5: for example, in this case where they're mentioning that they
• 19:09
  Speaker 5: are in development with aichips with three very large customers
• 19:12
  Speaker 5: and they want to deploy a million of them by
• 19:14
  Speaker 5: twenty twenty seven. The further it's out, the more skepticism
• 19:17
  Speaker 5: I have, because there's a long time between that runway
• 19:20
  Speaker 5: that things could go wrong or the market could change,
• 19:22
  Speaker 5: like you said.
• 19:23
  Speaker 2: Totally and the thing that well, we got to go
• 19:26
  Speaker 2: to break I have one more thing that I want
• 19:28
  Speaker 2: to say on this when we come back.
• 19:29
  Speaker 4: We've also got the trivia answer right after this.
• 19:40
  Speaker 6: Bringing the latest financial news straight to your radio. Every day,
• 19:45
  Speaker 6: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:51
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• 19:54
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• 19:56
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• 19:59
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• 20:04
  Speaker 7: Trivia question today was what is the best selling Christmas
• 20:08
  Speaker 7: song of all time? Well, that would be a White Christmas.
• 20:12
  Speaker 7: According to the Guinness Book of World Records, the best
• 20:14
  Speaker 7: selling Christmas song of all time is White Christmas by
• 20:17
  Speaker 7: Bing Crosby, with estimated sales of over fifty million copies worldwide.
• 20:24
  Speaker 7: Joe from Hampden, Mass is our winner today, taking home
• 20:27
  Speaker 7: a Financial Exchange Show t you sure. Congrats to Joe
• 20:31
  Speaker 7: and we play trivia every day here on the Financial Exchange.
• 20:34
  Speaker 7: See complete contest rules at Financial Exchange Show dot com.
• 20:39
  Speaker 4: Tuck, do you know who wrote White Christmas?
• 20:41
  Speaker 7: I don't, Paul.
• 20:43
  Speaker 4: Do you know Irving Berlin?
• 20:47
  Speaker 1: It okay?
• 20:49
  Speaker 4: Do you know? So?
• 20:50
  Speaker 2: In terms of you know Irving Berlin again, I know
• 20:53
  Speaker 2: I just threw that name out of you, but he
• 20:56
  Speaker 2: wrote you know a number of you know, pretty big
• 20:58
  Speaker 2: Christmas songs.
• 20:59
  Speaker 1: You know.
• 20:59
  Speaker 4: The interesting thing about Irving.
• 21:00
  Speaker 7: Berlin never heard of him, so I'd go ahead.
• 21:04
  Speaker 4: You've really never heard of him at all.
• 21:06
  Speaker 7: I really have never heard of Irving Berlin.
• 21:08
  Speaker 3: I'll jump in on that as well.
• 21:09
  Speaker 2: Okay, well, I'm sorry to hear that, because again, like
• 21:12
  Speaker 2: White Christmas kind of a big one, Irving Berlin was Jewish,
• 21:17
  Speaker 2: which is just again kind of something that always blows
• 21:19
  Speaker 2: people's minds, is like, hey, like the guy that wrote
• 21:22
  Speaker 2: White Christmas is Jewish. So I just always find that
• 21:26
  Speaker 2: kind of interesting. There, broadcom So, in terms of the
• 21:31
  Speaker 2: last thing that I wanted to say about them, I
• 21:35
  Speaker 2: want us to, Tucker, can you get the time machine
• 21:37
  Speaker 2: fired up for us?
• 21:38
  Speaker 4: By a chance?
• 21:39
  Speaker 3: Stand by?
• 21:40
  Speaker 4: So I want us all to take a little bit
• 21:43
  Speaker 4: of a trip.
• 21:44
  Speaker 2: Back in time right now to August of twenty twenty three,
• 21:53
  Speaker 2: to August of twenty three, the sun shining, it's ninety
• 21:55
  Speaker 2: two degrees out, and our lawns are parched.
• 21:58
  Speaker 4: And in video comes out with.
• 22:00
  Speaker 2: Its earnings report on the twenty third, and here's what
• 22:04
  Speaker 2: we saw from them. I'll quote here from CNBC UH
• 22:08
  Speaker 2: and Video said it expects fiscal third quarter revenue of
• 22:12
  Speaker 2: about sixteen billion dollars, higher than the twelve point six
• 22:16
  Speaker 2: to one forecast by Refinitive. And this is, I think
• 22:20
  Speaker 2: is the key difference between in Video and Broadcom right now,
• 22:24
  Speaker 2: is In Video's stock has done when it's done over
• 22:26
  Speaker 2: the last couple of years because they they're earnings projections, which,
• 22:32
  Speaker 2: by the way, they then topped by like another two billion.
• 22:36
  Speaker 2: They were beating analyst estimates by like fifty percent a
• 22:40
  Speaker 2: quarter and by like billions of dollars on earnings for
• 22:45
  Speaker 2: a quarter for a company that was doing you know again,
• 22:49
  Speaker 2: like mid double digit billions in earnings. So to be
• 22:54
  Speaker 2: able to look at Broadcom, which hasn't done that yet,
• 22:58
  Speaker 2: and be like, well, they're gonna be the next Video,
• 23:01
  Speaker 2: it's kind of hard to because In Video's biggest thing
• 23:04
  Speaker 2: that it's had going for it is that they just
• 23:06
  Speaker 2: consistently over delivered. It wasn't just that they knocked the
• 23:10
  Speaker 2: cover off the ball. It was like, Paul, you when
• 23:13
  Speaker 2: you were a kid, you played video games? Right, sure,
• 23:16
  Speaker 2: do you ever play any any of the sports ones
• 23:18
  Speaker 2: like a Madder, an NBA or something like that. How
• 23:21
  Speaker 2: much time did you spend making players in the creative player.
• 23:23
  Speaker 5: Mode, Oh a lot of time and running the franchises
• 23:27
  Speaker 5: to championships, the whole thing.
• 23:28
  Speaker 4: Yeah, totally.
• 23:29
  Speaker 2: But you're creative player, you're like ninety nine everything, like
• 23:31
  Speaker 2: where ninety nine is the highest rating that you can
• 23:33
  Speaker 2: have for you know, Paul Lane, like, you want to
• 23:35
  Speaker 2: make yourself the best player in the game.
• 23:37
  Speaker 4: Now you're exactly.
• 23:39
  Speaker 2: It's you're you're in Madden and you're throwing eighty six
• 23:41
  Speaker 2: touchdowns in a in a season, which is where the
• 23:45
  Speaker 2: term video game numbers comes from, like just things that
• 23:48
  Speaker 2: can't happen in the real world in video was putting
• 23:51
  Speaker 2: up video game numbers.
• 23:52
  Speaker 4: As far as their earnings. They were beating earnings by
• 23:55
  Speaker 4: so much that it just it was silly.
• 23:58
  Speaker 2: And that's the key difference is while we can talk
• 24:01
  Speaker 2: about Invidia's valuation as being high, it's high because they've
• 24:05
  Speaker 2: consistently delivered the goods. Man Broadcom three months ago had
• 24:13
  Speaker 2: a major earnings miss and they the shares did not
• 24:17
  Speaker 2: do well because investors were concerned about, hey, where could
• 24:21
  Speaker 2: this end up going. The stock fell around earnings from
• 24:25
  Speaker 2: one seventy one down to one thirty four. It's more
• 24:27
  Speaker 2: than a twenty percent drop in late August early September.
• 24:32
  Speaker 2: So this, I think is the key difference here in
• 24:35
  Speaker 2: looking at these companies, which is one of them in video.
• 24:38
  Speaker 2: For as much as we talk about hey, like how
• 24:39
  Speaker 2: long can this go on? This going on is consistently
• 24:43
  Speaker 2: beating earnings by a boat load, whereas Broadcoms, again, they're fine.
• 24:49
  Speaker 2: I'm not suggesting that they're going out of business or
• 24:51
  Speaker 2: that they should go out of business.
• 24:53
  Speaker 4: It's much more.
• 24:55
  Speaker 2: Okay, so you've got this total addressable market of ninety
• 24:58
  Speaker 2: billion dollars by twenty twenty seven, good.
• 25:01
  Speaker 4: Luck with that.
• 25:03
  Speaker 2: It's kind of what it feels like, right, Yeah, So
• 25:07
  Speaker 2: I think that that should close things out. In Video,
• 25:10
  Speaker 2: by the way, is also now into correction territory.
• 25:14
  Speaker 5: I hate that that it's even out there, but anyway, well,
• 25:17
  Speaker 5: you hate what's even out there. When they're up one
• 25:18
  Speaker 5: hundred and sixty percent year of date, I feel like
• 25:20
  Speaker 5: they should be excluded from correction territory. I know it's
• 25:22
  Speaker 5: the headline. I'm not at you, just general financial press.
• 25:25
  Speaker 5: It's frustrating to see that.
• 25:26
  Speaker 4: You know what else is frustrating?
• 25:27
  Speaker 2: No one ever talks about all the other stocks that
• 25:29
  Speaker 2: go into correction territory, right, you know, like no one's
• 25:32
  Speaker 2: sitting there today, like hey, ex on mobiles in correction territory, which,
• 25:35
  Speaker 2: by the way, it is, it's down like ten percent
• 25:38
  Speaker 2: in the last two weeks. No one's sitting there like hey,
• 25:41
  Speaker 2: ex on mobiles in correction territory, but in video goes
• 25:44
  Speaker 2: down ten percent, and it's got to be this giant news,
• 25:46
  Speaker 2: even though as you mentioned, the stock's still been pretty
• 25:50
  Speaker 2: good for people that have held it for a while.
• 25:52
  Speaker 7: If you're retired or nearing retirement and haven't done your
• 25:55
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• 25:58
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• 26:47
  Speaker 1: The proceeding was paid for and the views expressed are
• 26:49
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
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  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
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• 27:00
  Speaker 2: So what can I learn from young Warren Buffett? And
• 27:02
  Speaker 2: how do I meet young Warren Buffett?
• 27:05
  Speaker 3: What this is referring to is, Oh.
• 27:09
  Speaker 2: Thank you O. It's nineteen sixty five, the summer of
• 27:14
  Speaker 2: love is still on the horizon, not yet having happened.
• 27:18
  Speaker 4: Warren Buffett is beginning his investment career. What do we
• 27:21
  Speaker 4: look at? Paul?
• 27:22
  Speaker 5: This is from Buffett's Early Investments, a book by Brett
• 27:26
  Speaker 5: Gardner in which he looks at ten of the companies
• 27:29
  Speaker 5: that Warren Buffett invested on between nineteen fifty and nineteen
• 27:33
  Speaker 5: sixty six when he was in his twenties and thirties.
• 27:35
  Speaker 5: And basically the question that they're asking is could anyone
• 27:38
  Speaker 5: do today what Buffett did?
• 27:40
  Speaker 4: Then.
• 27:40
  Speaker 5: Obviously the market has changed significantly where there is much
• 27:43
  Speaker 5: more information available at all of our fingertips. But you
• 27:46
  Speaker 5: could also argue that the markets are much more efficient
• 27:49
  Speaker 5: than they were back then in terms of looking at
• 27:53
  Speaker 5: bargains out there. So what mister Gardner did is he
• 27:56
  Speaker 5: spent seven years on saturdays in other days week researching
• 28:01
  Speaker 5: what old reports were available during Buffett's time to look
• 28:05
  Speaker 5: at ten companies, many of which listeners wouldn't recognize. I'll
• 28:08
  Speaker 5: rattle off a couple that they would recognize. American Express
• 28:11
  Speaker 5: and Walt Disney are two of the ten that he scrutinizes.
• 28:16
  Speaker 5: And it does differ a bit in the sense that
• 28:19
  Speaker 5: Buffett was going and asking these managers questions, something that
• 28:22
  Speaker 5: you can't readily do now.
• 28:24
  Speaker 3: But basically he was able to.
• 28:26
  Speaker 5: Make great investment ideas and really bet big on them
• 28:30
  Speaker 5: during that period of time. Certainly extremely impossible to really
• 28:35
  Speaker 5: replicate what he did back then, but certainly an interesting story. Nonetheless,
• 28:40
  Speaker 5: other things I've never really looked at pictures of young
• 28:42
  Speaker 5: Warren Buffett, and this piece of the Wall Street Journal
• 28:45
  Speaker 5: has a picture of young Warren Buffett reading the Wall
• 28:48
  Speaker 5: Street Journal, which is kind of nice and meta.
• 28:50
  Speaker 4: I do have to say, did either of you.
• 28:53
  Speaker 2: Guys know Gen Krantz. No, Gene was the flight director
• 28:57
  Speaker 2: at NASA for Apollo thirteen. He was the lead flight
• 29:00
  Speaker 2: director then he was also one of the flight directors
• 29:03
  Speaker 2: on Apollo eleven. And young Warren Buffett looks just like
• 29:08
  Speaker 2: Gene Krantz did in the nineteen sixties. So uh, I
• 29:13
  Speaker 2: don't know, has anyone ever seen the two of them
• 29:15
  Speaker 2: in the same place at the same time.
• 29:18
  Speaker 3: I have no idea Jean's still alive too.
• 29:21
  Speaker 2: So here here's the thing to watch for if Jeene
• 29:24
  Speaker 2: and Warren, you know, go out around the same time.
• 29:28
  Speaker 2: I'm just saying, I'm just saying, but uh, yeah, young
• 29:31
  Speaker 2: Warren Buffett, good looking, dude.
• 29:33
  Speaker 4: Gotta say char yeah, look dude, you know looks good.
• 29:38
  Speaker 4: Just take a quick break when we come back. We
• 29:40
  Speaker 4: got stack Roulette right after this.
• 29:43
  Speaker 3: Miss any of the show.
• 29:44
  Speaker 1: Catch up and you're convenience by visiting Financial Exchange show
• 29:48
  Speaker 1: dot com and clicking the on demand icon, where you'll
• 29:50
  Speaker 1: find all of our interviews in full shows. This is
• 29:54
  Speaker 1: your home for the latest business and financial news in
• 29:56
  Speaker 1: New England and around the country. This is the fin
• 30:00
  Speaker 1: Financial Exchange Radio network this is your home for the
• 30:03
  Speaker 1: most comprehensive coverage of the economy and the trends on
• 30:06
  Speaker 1: Wall Street Face. He's the Financial Exchange Radio Network.
• 30:19
  Speaker 3: Paul, what do you.
• 30:19
  Speaker 4: Got for me for stack Roulet Today we have.
• 30:23
  Speaker 5: One of our listenerships. Main Destination has been named the
• 30:27
  Speaker 5: country's best small town to visit. It's not for the
• 30:30
  Speaker 5: first time. US News and World Report revealed its twenty
• 30:34
  Speaker 5: five Best vacation rankings on Tuesday, and according to them,
• 30:39
  Speaker 5: Bar Harbor, Maine, has been crowned for the fourth straight
• 30:42
  Speaker 5: year as the best small town to visit in the US.
• 30:46
  Speaker 5: It was one of the several New England getaways that
• 30:49
  Speaker 5: made the lists. Nantucket was number ten, Number four was
• 30:55
  Speaker 5: stove Vermont, Oh. Sorry Stovermont ranked fourteen, up from nineteen
• 31:00
  Speaker 5: last year, and Martha's Vineyard also was on there and
• 31:03
  Speaker 5: Kenny Bunkport Main was number twenty twenty one last year. However,
• 31:07
  Speaker 5: it must have done something to slip because they didn't
• 31:10
  Speaker 5: make the cut for twenty twenty five.
• 31:12
  Speaker 4: Always good to see a few of those popping up
• 31:14
  Speaker 4: on the list.
• 31:15
  Speaker 5: Some very nice destinations out there. They also did US
• 31:19
  Speaker 5: cities to visit. Boston ranked number three on the best
• 31:23
  Speaker 5: US cities to visits, jumping from number fourteen last year.
• 31:28
  Speaker 5: Twenty twenty five, New York City was named the best
• 31:31
  Speaker 5: city in the country to visit, while Washington, DC came
• 31:35
  Speaker 5: in at number two.
• 31:39
  Speaker 2: I got some big news out of Poland if anyone's interested, sure,
• 31:45
  Speaker 2: the Polish government has announced that it is releasing one
• 31:48
  Speaker 2: thousand tons of butter from its strategic reserves.
• 31:52
  Speaker 4: Strategic butter reserve.
• 31:54
  Speaker 2: Is there any better reserve than the strategic butter reserve?
• 31:59
  Speaker 7: Is it's salted orsted?
• 32:00
  Speaker 4: That's what I want?
• 32:01
  Speaker 3: Great question, Great questions.
• 32:03
  Speaker 2: So the Polish government Strategic Returves Agency, they have a
• 32:06
  Speaker 2: whole agency dedicated to multiple strategic reserves. Noted that the
• 32:11
  Speaker 2: price of butter has recently increased significantly on world markets,
• 32:14
  Speaker 2: primarily the result of a shortage of milk. The situation
• 32:18
  Speaker 2: has also affected Poland, so in order to stabilize the
• 32:20
  Speaker 2: situation on the market, the agency is announced a tender
• 32:24
  Speaker 2: for the sale of large quantities of butter. So it's
• 32:28
  Speaker 2: a thousand tons of butter, which again, remember that a
• 32:31
  Speaker 2: ton is how many pounds everyone two thousand?
• 32:37
  Speaker 4: You guys didn't know how many pounds are in a ton?
• 32:39
  Speaker 4: And I just looked at each other. You guys didn't
• 32:41
  Speaker 4: know how many pounds an.
• 32:45
  Speaker 2: Oh my goodness, I had a feeling it was two thousand, Okay,
• 32:48
  Speaker 2: so I didn't want to be embarrass myself.
• 32:50
  Speaker 4: It's fine. Long story short. They're releasing two million pounds
• 32:53
  Speaker 4: of butter.
• 32:55
  Speaker 2: It's gonna be in twenty five kilogram blocks. Uh and
• 32:59
  Speaker 2: the minim sales price is six sixty five a euro
• 33:03
  Speaker 2: six six six sixty six sixty five euros per kilogram uh.
• 33:07
  Speaker 2: And the first bids which must be for a minimum
• 33:10
  Speaker 2: of twenty tons.
• 33:11
  Speaker 4: So I think we're out on this one. Guys.
• 33:14
  Speaker 2: The first bids are gonna be accepted on December nineteenth,
• 33:17
  Speaker 2: So if you want to try to line up a
• 33:19
  Speaker 2: bid to get twenty tons of butter, we still have
• 33:23
  Speaker 2: a couple of days to do so, but it's gonna
• 33:26
  Speaker 2: be tight.
• 33:27
  Speaker 3: It's just incredible that there are strategic reserves.
• 33:30
  Speaker 5: For something like better. It just makes me wonder what
• 33:33
  Speaker 5: type of strategic reserves countries have out there. I'm sure
• 33:37
  Speaker 5: the list goes goes on and on.
• 33:39
  Speaker 4: So it's it's it's funny that you mentioned that because
• 33:42
  Speaker 4: some of the other ones that.
• 33:43
  Speaker 2: We do know is maple syrup Canada has that I
• 33:48
  Speaker 2: was aware of.
• 33:49
  Speaker 4: Yes, they do.
• 33:51
  Speaker 2: Are either of you familiar with the great Canadian maple
• 33:54
  Speaker 2: syrup heist?
• 33:55
  Speaker 4: Yeah, we've talked about it before. I don't remember it,
• 33:58
  Speaker 4: but yeah.
• 33:59
  Speaker 2: Yeah, they were speaking of large quantities. Nearly three thousand
• 34:03
  Speaker 2: tons of maple syrup were stolen from a storage facility
• 34:08
  Speaker 2: in Quebec back in twenty eleven and twenty twelve, so
• 34:12
  Speaker 2: that was kind of problematic. But yeah, I think you know,
• 34:17
  Speaker 2: strategic reserves of foods. Man, Butter's one that you can understand,
• 34:24
  Speaker 2: quite honestly, because it's kind of a state that you
• 34:27
  Speaker 2: need that in order to cook the maple syrup.
• 34:30
  Speaker 4: One.
• 34:30
  Speaker 2: You look at it and you go, well, I could
• 34:34
  Speaker 2: go a few years without it if I really had to.
• 34:36
  Speaker 2: You know, the pancakes will be just fine with the butter.
• 34:41
  Speaker 4: Yeah, exactly.
• 34:42
  Speaker 5: So I did a quick serich here for some other
• 34:44
  Speaker 5: obscure ones. China has a national porkstock pile.
• 34:48
  Speaker 4: I'm on board with that.
• 34:49
  Speaker 5: Yeah, I'm gonna have new source Classic City News. So
• 34:53
  Speaker 5: I know we've had this debate about whether Google's good anymore,
• 34:55
  Speaker 5: So throw that out there as a caveat as to
• 34:58
  Speaker 5: the source of this information. US cheese stockpile, isn't they
• 35:02
  Speaker 5: know about that one? Yeah, we have a US federal
• 35:05
  Speaker 5: helium reserve as well as that this is a strange one,
• 35:09
  Speaker 5: a US national raisin reserve.
• 35:11
  Speaker 3: It would not I would not have guessed that.
• 35:13
  Speaker 4: Why do you need that? All you got to do
• 35:14
  Speaker 4: is grow grapes and leave right.
• 35:16
  Speaker 5: I think grapes would cover that if that were the case,
• 35:18
  Speaker 5: and they'd say Europe's butter reserve. But it sounds like
• 35:20
  Speaker 5: this is specific to Poland that we're talking about here.
• 35:23
  Speaker 5: And of course the maple syrup one that you already
• 35:25
  Speaker 5: spoke about.
• 35:25
  Speaker 4: I feel like they should have.
• 35:26
  Speaker 7: Like an instant coffee reserve or something.
• 35:29
  Speaker 2: Do you just know how maybe you can work on that, tuck?
• 35:33
  Speaker 2: Do you guys know how big the US cheese stockpile is? No,
• 35:37
  Speaker 2: but a ton one point five billion pounds? We got
• 35:43
  Speaker 2: one point five billion pounds of cheese just sitting around.
• 35:46
  Speaker 4: Now.
• 35:47
  Speaker 2: Granted it doesn't just sit around. Uh, you obviously can't
• 35:50
  Speaker 2: just leave it there forever. So it's kind of cheese
• 35:52
  Speaker 2: in cheese out is the way it tends to work.
• 35:55
  Speaker 2: But this is also where the term government cheese comes from.
• 35:58
  Speaker 3: Right, And we now know that's seven hundred five tons.
• 36:02
  Speaker 2: Yeah, a lot of cheese. Do you guys know how
• 36:04
  Speaker 2: they make American cheese?
• 36:07
  Speaker 4: I don't.
• 36:07
  Speaker 7: I avoid American cheese because I know it's like super process,
• 36:11
  Speaker 7: isn't it.
• 36:11
  Speaker 4: So here's what you do. You take cheddar cheese.
• 36:14
  Speaker 2: Yeah, you melt it and adding a mulsifier that basically
• 36:16
  Speaker 2: makes it all rubbery.
• 36:18
  Speaker 4: And that's how you get American cheese. Just have cheddar.
• 36:21
  Speaker 4: Then it's kind of gross.
• 36:22
  Speaker 2: Actually, And I say this is someone who loves cheese,
• 36:27
  Speaker 2: but listen, American cheese. In my opinion, it's two potential uses,
• 36:34
  Speaker 2: grilled cheese and occasionally.
• 36:36
  Speaker 4: On a burger. But I'd still prefer cheddar on a burger.
• 36:39
  Speaker 3: Sure, that's fair.
• 36:40
  Speaker 5: I'm trying to see if there's anything else that we
• 36:42
  Speaker 5: had that I missed on Strategic reserves, Nah, con reserve
• 36:45
  Speaker 5: in India, that's that's not that saiding we cover most
• 36:47
  Speaker 5: of the the obscure ones out there, but hopefully all
• 36:53
  Speaker 5: those Polish companies out there really make those big purchases
• 36:57
  Speaker 5: to take down that butter reserved to move things out.
• 37:00
  Speaker 2: Yeah, so the butter's gonna be flowing like water in
• 37:03
  Speaker 2: Poland now.
• 37:04
  Speaker 3: So right around the holiday, it's good timing.
• 37:06
  Speaker 4: It's it's good news. It's it's good news out there.
• 37:09
  Speaker 2: Taking a look at markets, we got the Dow off
• 37:11
  Speaker 2: two hundred and eleven points, the S and P is
• 37:14
  Speaker 2: down nineteen, Nasdaq down sixty five, so all three major
• 37:17
  Speaker 2: indices still in negative territory today. We've got bonds the
• 37:21
  Speaker 2: ten years still down two basis points to four point
• 37:23
  Speaker 2: three eight percent, and so overall.
• 37:27
  Speaker 4: A little bit of a downward day here, but nothing
• 37:29
  Speaker 4: too big.
• 37:29
  Speaker 2: We've just had the S and P five hundred kind
• 37:31
  Speaker 2: of chopping between like six fifty and six thousand and
• 37:35
  Speaker 2: eighty for the last two weeks now.
• 37:37
  Speaker 4: It has not gotten any momentum in either direction.
• 37:40
  Speaker 2: And we've got a FED meeting tomorrow, so maybe just
• 37:43
  Speaker 2: all quiet in advance of a FED meeting that I
• 37:47
  Speaker 2: think people are anticipating pretty strongly at this point. So
• 37:51
  Speaker 2: we'll be covering the FED meeting quite a bit tomorrow
• 37:53
  Speaker 2: in terms of previewing what to expect from J. Powell
• 37:57
  Speaker 2: and his Purple Tie Crew, which would, by the way,
• 37:59
  Speaker 2: be a great name for a band. And we'll make
• 38:02
  Speaker 2: sure that we get you caught up on any economic
• 38:04
  Speaker 2: data as well as we do have building permits and
• 38:07
  Speaker 2: housing starts data coming out tomorrow morning as well, so
• 38:10
  Speaker 2: we'll fill you on on what's going in in the
• 38:12
  Speaker 2: housing market tomorrow. Have a great rest of the day,
• 38:17
  Speaker 2: get your bids ready for the Polish butter, and we'll
• 38:20
  Speaker 2: see you tomorrow on the Financial Exchange