Investing Unscripted Podcast 117: August 2024 Mailbag

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Jeff Santoro: [00:00:00] Hey, everybody. Are you paying too much to trade options? Well, if you're not on Public.com, the answer is yes. Public is the only platform where you earn a rebate on every option contract traded, and that's in addition to no commissions or per contract fees. There's no one else out there paying trading rebates.

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Jason Hall: Hey everybody, welcome back to Investing Unscripted, where we ask and answer the hard questions about investing. I'm Jason Hall joined by Jeff Santoro. Jeff is my good friend and Jeff is here with me almost every show. He's also the voice of the people. Hey buddy. 

Jeff Santoro: Hey, how are you? 

Jason Hall: I'm, I'm good. I'm good. It's hectic. A lot of [00:01:00] stuff going on. School starting back this week for the little guy. We start later than most of the rest of the U S. 

Jeff Santoro: Yeah. Jersey schools don't typically start till after labor day. So we got a whole nother, whole nother week until school here. 

Jason Hall: There you go. Here you go. Well, it's time to get ready. It's time to answer questions too. It's a mailbag episode. I want to say I love Jeff. Oh, thank you. We love Jeff. I do.

I do, Jeff. I love you, Jeff. Expectantly waiting for Jeff to reciprocate. All right. What were you saying? Love it. I love that people are kind of taking advantage of the asynchronous, is that the right word? Sure. Asynchronous communication? Uh, yeah, it sounds good. We'll go with that? Email, text, DM us, reply on social.

We've got a ton of questions, and we didn't really put our call out for questions out as early as we usually do. We got a few, we got some, but we had a [00:02:00] bunch already, so whenever you hear this episode, whenever you think about a question, Reach out to us. You know how to find us. Get us your questions for future mailbag episodes.

Jeff, you want to do a little housekeeping before we get going, though? 

Jeff Santoro: Yeah, it's been a while since we've done our housekeeping at all. We used to do it at the beginning of the show, then we did it at the end, then we kind of stopped doing it. So, quick reminders. If you could take a moment to give us a review and or a star rating on your podcast app, we would super appreciate that.

Don't forget that we have a newsletter that you can get at investing on scripted. com. It also will get you the transcript of every episode, which has a lot of links in it. For the things we talk about during the show, you can check out our YouTube channel. There, uh, we post these episodes there and we do other videos to Jason and I do some, Jason does a lot on his own.

Jason does some with other people. Um, and those are more stock focused. So if you're looking for more content, those are some other places to check us out. And lastly we haven't talked about it in a while, but we have a portfolio on SavvyTrader. com and it's doing pretty well, Jason. I was looking today.

We [00:03:00] are pretty much right around the S& P 500's return since we started it at the end of April and we're going to be buying a new stock in it, uh, the next week. So if anyone is interested in checking that out, you can, uh, the link is in the show notes, but you can also just go over to SavvyTrader. com and search Investing Unscripted.

You'll find it. And I think that's it. Ready for the mailback. Bye. Let's do it. First question. First question. So this one came from Simon via email and, uh, it's a two part question. One of the most incredible last names ever. The email. Yes. Simon via email. Great name. Simon says, love the show. You should think about some merchandise, perhaps a line of t shirts with your faces on the front.

So that's not his real question, but I just want to say, while we have very briefly at certain times. Talked about merch. I would never put my face on a shirt. 

Jason Hall: So I would put your face on a shirt, but I would never put a shirt with your face on it on my body. I think is 

Jeff Santoro: fair [00:04:00] enough. This is fair enough. But hey, but if you're listening and you would buy if you would buy Investing Unscripted merch Let us know.

Please do. Hit us up. Let us know if you, if you're interested in that. Well, it's, it's, 

Jason Hall: this is, it's easy to do now. It's really easy to do. So if there were, if there is interest out there, I'll set it up. I'll totally set it up. 

Jeff Santoro: 400, 000 shirts with Jason's face on them. All right. Here's, uh, here's Simon's real question.

I am relatively new to investing, but trying to learn as much as possible. Two questions. What books would you recommend for Giving the best and clearest advice and also I am currently, Oh, and I'm currently reading A Random Walk Down Wall Street, which would have been one of my suggestions as a relatively new investor, I have made some mistakes, which I hopefully have learned from. 

One has been Wolfspeed ticker W.O. L. F. It's down about 60%. Does it make any sense to sell up, take the hit and move the remaining cash to something else or stay with [00:05:00] Wolfspeed and hope that things swing back to normal? Eventually. 

So let's take that question first, Jason, then we'll come back and talk about books. 

Jason Hall: So I'm gonna, we, Jeff and I actually we talked through some of the questions before uh, we decided to tape.

And this is one that I've, I'm not going to answer the question specifically about Wolfspeed. Number one, there's a lot of people listening on here that may or may not own it, and it might not be really relevant to informing how you might want to think about treating that particular stock also. And Simon, I don't know you.

And I happen to think, even though I don't know, you happen to think that you're brilliant and smart enough to not actually just do something because I said it, but there's other people, not you, Simon, that would, I don't want them to hear me give my specifics on Wolfspeed and then just do it. I know you wouldn't, but other people would.

So. The other thing is I haven't actually looked at Wolfspeed's most recent financial results. It's one that I own and one that I'm thinking about more as far as what I may want to do, but here's how I [00:06:00] think about this. And we've got a similar question. We're going to answer a little bit later dealing with another company is, I think this is where having that really business focused investing approach as regular individual retail investors.

Is really valuable because we know our timelines, you know, when you're retiring or when you want to send a kid to college or pay for a second home or whatever your goals are, you know, when those goals are, so you know how much time you have to work with. You know, how much capital you're intending to deploy every year until you're just going to be coasting on whatever you've deployed and that money has to do all of the work for you.

So like, you know, all of those factors. That's our biggest advantages as regular individual investors. We know all of those things. So everything that's happening quarter in and out with the market, we get to focus on our game and not chasing the quarterly game. And when it comes to a company like Wolfspeed, this was a pretty, and still is a relatively speculative investment [00:07:00] because they're spending a ton of money to build out.

Their capacity to manufacture these analog semiconductors with a specialty material that can handle higher currents and it could be a big deal for EVs and other industrial applications where higher current. higher power applications extreme environments like automotive, where you may be paying a premium for those, uh, semiconductors make sense versus the lower cost commodity stuff that may be like Texas instruments is, is making today. So my suggestion is. It's time to go back to fundamentals and look more closely at the business.

And this is a little bit of a version of something that I'm going to say later. It's the hardest thing to do, but maybe the most important thing to do is pressing reset on all of your price anchoring and your biases and your knowledge about the ride so far of owning Wolfspeed. And just [00:08:00] imagine that if you read about Wolfspeed for the first time today.

And the thesis was maybe something along the lines of, cause this is what it is today. The stock is down. Results have been slow to come. The EV market demand is kind of getting squeezed. Interest rates have gone up. So cost of capital has gone up. Is this the, like the low point before the market starts to take off over the next five years?

If that rings true to you and you can objectively look at the business with fresh eyes and say, Okay. I don't own this stock. I'm looking to deploy capital. Does this meet like my threshold for an investable idea or not? If you're thinking about selling it, munger inverting it and thinking about whether you would be buying it today I think can be a useful, a useful step.

Jeff Santoro: Yeah. The only other thing I would add to that. And I agree with everything you just said, is to me, there's certain stocks you buy, not being okay with seeing them drop [00:09:00] 60%, but expecting them to drop 60%. There you go. That's right. And to me, a company And again, 

Jason Hall: not, not expecting it to, that, that Not expecting that 

Jeff Santoro: it's a possibility, but expecting that it's an inevitability, I guess is what I'm trying to say.

Jason Hall: But not that it, here's, I want to say this, it's not that you're going to buy it today for 100. Planning to just buy more when it's 40, but knowing that you may buy it for a hundred, it may go to 200, and then it may fall 120 bucks from there. Right, right. 

Jeff Santoro: No, no. That's the whole thing. Like you, the volatility is the price you pay.

It's a feature, not a bug. Yeah. And it's the price you pay for outsized returns. Yeah, yeah. Right, right. So pick any like mega winning stock that has performed over decades, and you will find drawdowns. Greater than 50 percent in probably all if not most of them, right? The famous cliche one is Amazon was down 90 percent at one point.

And so I think a company like Wolfspeed, you [00:10:00] buy it expecting it to drop massively at some point. But then also you're also expecting slash hoping that it may be at 10 Xs, right? So versus if you bought Berkshire Hathaway and it dropped 60% Something very wrong probably happened right with the economy, because that's not the kind of company you expect.

You can get a drawdown. Don't get me wrong, you know, but so I think that's, you know, I think what you said in terms of hitting reset and evaluating the business as well as it is today is a great thing to do now, moving forward, or for people who are interested in more speculative bets, you do have to go into them, you know, Just saying to yourself, this will drop 60, 70, 80 percent at some point.

And I have to decide if I'm going to be okay with that. 

Jason Hall: And always, always revisiting the business, always holding management accountable. 

Jeff Santoro: Yeah. And know, and know what you're, and know what you're, why you're owning it, what you're looking for. 

Jason Hall: Yeah. 

Jeff Santoro: Yeah. [00:11:00] You know, cause if, you know, I don't know, we'll speed at all, but.

Of the speculative companies I do own or the more speculative ones I own, there are certain things I'm, I want to see happen over time and I'm okay waiting a decade for those things. If I don't see those things happening, I might bail, right? So like, that's the other piece of it. Know the business, know why you own it.

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Let's talk books. All right. Yeah. Let's go back to the book part. So, uh, the one that he mentioned in the email was A Random Walk Down Wall Street, which is great book, maybe not my top choice. So here are ones that I have really enjoyed. I'm going back through my, my app here that tells me what I've read. So all of the Peter Lynch books, I think are really great reads and good starting points.

So Beating the Street, One Up on Wall Street, I liked One Up On Wall Street. Yeah. 

Jason Hall: Got my, my copy of One Up on Wall Street. I'm holding it right here. If you're watching our YouTube video, you can see me holding it up. 

Jeff Santoro: So I, and I liked those better than Random Walk Down Wall Street. I think those are good places to start.

Common Stocks and Uncommon Profits, by Phil Fisher is pretty good. I really enjoyed, there was a book I found early on, [00:14:00] it's by an author called Daniel Pecaut. I don't know how to P E C A U T and it's called University of Berkshire Hathaway, 30 years of lessons learned from Warren Buffett. And it's just, it goes through like every annual meeting and it gives a couple statistics like how many people were there, where it was held.

And then it kind of summarizes the big points of the meetings and it just goes through all the decades. I thought that was really good. It was just really interesting to get a quick way to get insight from, you know, a Munger and Buffett. I don't know that those books. Really give clear advice necessarily.

Jason Hall: I mean, there's useful tenets in there, that I think that can be helpful. So I will say this, and this is one that I love to pitch. Every chance that I get Lou, Lou Anne Lofton, who, who wrote, it's actually one of my editors for some of the work that I do for the Motley Fool now, which is a really weird full circle thing, but the book is called Warren Buffett Invests Like a Girl And Why You Should, Too. And why this book, the first time I read it, it's been over a decade ago now, Jeff, [00:15:00] and it talks about temperament.

And as much as like the Peter Lynch stuff is great. And I agree that it kind of helps ground some basic principles and try to demystify and like simplify successful investing approaches. It doesn't talk that much about temperament and in ways that I think are useful and Lou Anne Lofton's book is so good because it talks about how Warren Buffett's, like his mindset is so valuable.

And he's so grounded and so patient in his decisions and is glacial when it comes to letting things play out and not rushing. And he tends to be more conservative and less of a risk taker. And I think that's a really important thing because he's an excellent example of how just making good investments.

And then letting time do the hard work can deliver extraordinary returns. So I think this is a really good, useful book for [00:16:00] people. I think maybe the most important book that I've ever read about Buffett in terms of like resetting the way you think about. Investing success is a Roger Loewenstein's book called Buffett: The Making of an American Capitalist because it's a lot about Buffett, the man and how- 

Jeff Santoro: Not all the great parts.

Jason Hall: No, no, no. All the parts. So how this is somebody that's so utterly devoted to business and investing. And then a lot of times to the detriment of maybe other aspects of his personal life what do you really want? For me, that was just from a sec. Okay. What, what's my enough, you know? Yeah. So there's, that's a few.

Jeff Santoro: Yeah. One last one that I, we don't need to talk about much, but it's not really an advice book, but just super interesting. And it tails nicely off of the conversation of Wolfspeed and that's Chip War by Chris Miller. We both just read it in the last year, I think. And, uh, it just goes into the semiconductor industry and and how that's played out over the last 30, 40, 50 years. So that's another good one. 

Jason Hall: All right. I have one, I have one [00:17:00] more. I have to do, I have to do this one. So, uh, Morgan house has written the two books. The first one is The Phsychology of Money, and his second book, Same as Ever, came out, not all that long ago.

I think it's better in terms of, if you think, if you're thinking about kind of the advice aspect of it, because it talks about how. Same as ever, it's all there in the name, right? Um, the human aspect of, of investing in finance. So, I would actually suggest if you haven't read either of Morgan's books, same as ever, I think is, is, is my favorite of the two.

Jeff Santoro: Those are both great books. All right. Next email is from Ian in Scotland. So, the international listener here, Ian writes really enjoying the podcast following on from your building a crash resistant portfolio episode. What are your thoughts on doubling up on companies from similar sectors? So for example, I currently own Visa and MasterCard, Airbnb and booking holdings, Elf Beauty and Ulta Beauty, Monster Beverage and Celsius.

Each of these position pairings totals [00:18:00] less than 5 percent of my portfolio and I feel it's a bit of a hedge if the growthy upstart isn't the eventual winner. P. S. Enjoyed hearing , that Jason was terrible with money in his twenties as I was exactly the same. I'm sure you and Jason are not the only two people who are bad with money in their twenties.

I think that's probably more common than not. So I really like this idea. He phrased it as doubling up on companies from similar sectors. For me, it I immediately was thinking of like the basket approach of investing, like finding a theme that you think is a durable secular tailwind, but not necessarily choosing the winner.

And these pairings are exactly what you would do, right? Visa, MasterCard, Airbnb and booking, Elf and Ulta, Monster and Celsius. Those are the number one and number two big players that at least publicly traded in those respective spaces. I think that makes a lot of sense. I think I've, I, I've had times.

Yeah. At times. Go ahead. You 

Jason Hall: first. 

Jeff Santoro: I mean, I've not consciously done that. [00:19:00] Really? Like I've not set out to buy, I'm going to buy these two or three or four stocks because I want a basket approach, but I've sort of accidentally done it. Like, so for example, in cyber security, I own CrowdStrike and I own Fortinet.

And those are two companies I've, I've followed for a couple of years now and know pretty well and think they both do a great job. So I've kind of unintentionally done the exact same thing. Now, yeah. There's a lot more cyber security companies out there. So that's right. And yeah, they don't exactly do the same 

Jason Hall: exact thing in cyber security.

Yes, definitely. But to your point, and I saw also, I think to Ian's point is, I think when this kind of approach works, it works when there is. A massive secular trend where they're likely to be multiple winners. And I think cyber security is likely to prove that to be the case. Now all it's too, this is too short notice or too short term to really weigh it out.

But like Sentinel one just went, uh, [00:20:00] public back in 2021, July of 2021. So that was very close to the high watermark for cloud tech. Internet sort of stocks. We saw the drawdown after that. Sentinel Ones, I think it was in July, IPO it and CrowdStrike stock fell like 70 percent and Sentinel Ones fell.

85 percent from their highs, but even in upside since then, again, since that IPO crowd strike stock is up 6 percent sent to the ones is down 41%. So the downside risk can, you can get a lot of overlap, right? With again, these two, there was a peak period of buying, you know, that, that sort of that sector of stocks.

But you start stretching out timelines. And again, thinking about like some of those companies like Visa and MasterCard. Yeah, they're, I mean, they're not a duopoly. It feels like they're a duopoly. And they're massive in [00:21:00] North America and Europe, but you start getting into other places in the world and there's other big payers.

Discover is a massive, business and American Express is a massive business. So you think about payment networks and those are closed loop payment networks. We think about the growth of the Venmo's of the world, right? So, definitely not like single winner sort of markets.

But I think like beyond that kind of the downside risk, I think we can look back at like the 3d printing industry is another one. We go back about a decade or so ago that you could have picked the two best in that category. And while you got two really sucky companies. 

Jeff Santoro: Yeah, it's definitely not a, yes, do this all the time-

Jason Hall: yeah 

Jeff Santoro: -situation, but it can make sense. I think so. There's a couple things to think about if you're going to do something like this. I think you want to you want to do it in a sector or an area that you isn't maybe brand new right to get to your 3d printing idea. Like I don't know that I would do it right now.[00:22:00] 

AI trends, 

Jason Hall: right? 

Jeff Santoro: Because I think I really do believe we're in this space like we were at the beginning of the internet where there's going to be a whole bunch of noise. A few things will survive, but five or six years down the road from now is when the next Pick the company the next Facebook emerges, right?

The next big winner out of this new tech, right? So I think maybe avoiding like brand new emerging tech, right? Because you're right There's a chance that like everything goes to zero so to speak I think you want it and I think you want to hold on I think you want to also avoid doing this in times when the market is Writ large is really frothy.

Jason Hall: Right. Yeah. 

Jeff Santoro: No, I think 2021 was, was the bad time to like pile into almost anything, right? Just cause the hype 

Jason Hall: cycle. I mean, I think that's exactly right when you're thinking about that, but like, I love it as an idea and Ian's kind of already telling us that. He's taking an approach that I think is smart.

Again, not direct them individual advice to anybody here, but thinking about position sizing. That's [00:23:00] one of the ways you minimize the potential downside risk. Um, I think that's important, but I love this because I've talked about it before. You know, Coca Cola. Of course, that's one of the big. Buffett stocks, and we've done a little bit of kind of beating it up because it's since the mid nineties when Berkshire completed its investment.

It hasn't really been a good stock. Uh, it's vastly underperformed the S and P 500. I mean, it's been better than a bond generated a ton of income. Uh, but Pepsi's done like a thousand percent better in total returns, uh, over that same period. So, I mean, there's a perfect example. A lot of times when somebody say, well, it's the Pepsi to, to Coke.

It's kind of a backhand, a compliment. Sometimes that second player, the second fiddle is actually the better investment, right? So. Yeah, I like this idea. I really do. It's a good, good hedge against like lack of specific knowledge, expert, uh, industry expertise 

Jeff Santoro: too. So yeah. [00:24:00] The only, the other thing that popped into my head and we don't need to discuss it, but I'll just leave it as something to consider.

It's not really related to this, but it's sort of is when you find a company or a sector that you like, sometimes you can get more ideas and maybe even the better stock by. checking out the competitors of the company you're interested in. 

Jason Hall: Yeah. 

Jeff Santoro: So, yeah, you know, let's just pick whatever Airbnb is the example, because it was one of the ones he gave.

So let's say you're like, I'm really, you're really interested in Airbnb. So you do some research on them. But then you also who are their biggest competitors and booking holdings would certainly be one. But then maybe you find Marriott, or maybe you find a REIT, like Ryman hospitality properties that owns a whole bunch of hotels that focus on large group gatherings.

You know, like you could You end up going down a different path and you might find even a better investment. So just something to think about. That's tangentially related. You can 

Jason Hall: also fail terribly too. I mentioned a little bit like the short term stuff with Sentinel one, but I, I think like over the longterm, we have certainly seen in a lot of [00:25:00] industries and a lot of areas where the, the dis one disruptor.

Has been massively successful and nobody else really has. So thinking about like smartphones, Apple, right? They've dominated that, that particular space. Netflix nobody else has really done exceptionally well in, in media, certainly in streaming. Uh, you mentioned Amazon. There's been some others along the way, Mercado Libre.

But certainly nobody that was competing with Amazon when Amazon was the nascent player. Like you said, Amazon stock was down 90%. Everybody else disappeared. So, yeah, so that's not always the perfect hedge, but when it works, it can work pretty well.

Jeff Santoro: Agreed. All right. Next one is from adventureswithroobs, Roobs. Roobs, R O O B S, uh, who sent us this question on Twitter.

And, uh, Uh, this person says, just listened to your short podcast covering CrowdStrike. I also think they will outperform over the next 10 or [00:26:00] 20 years. My question for you, if you had to pick three to five stocks to outperform the market over the next 20 years, what would they be? And then second part, which mag seven stock do you think will underperform the others over that same time period?

Interesting two part question here. 

Jason Hall: Yeah, I like it. As I often do with these sorts of things, I'm not going to answer the question exactly. I'm going to give the answer that I want to. All right, I'll actually answer it, but go ahead. No, you won't. You're going to do the same thing I am. It's, it's hard.

And this, this answer can change from week to week for me. But what I will say is here are the five stocks that on a cost basis, I have invested the most dollars of my family's wealth into. So this should give you some idea of where I have a lot of conviction. Brookfield infrastructures. It's number one almost 4 percent of my cost [00:27:00] basis.

Live Oak bank shares 3. 7%, just a little less than Brookfield infrastructure, Mercado Libre and Confluent are both about three and a half percent, two very, very different businesses. Mercado Libre is now the rule maker. Uh, confluence trying to be the disruptor and bonus when I'll give you a, I'll give you a fifth one here, uh, Brookfield renewable, uh, about 3.

3%. Uh, behind this, those particular stocks and why those stocks. So I'll just take the two Brookfields and put them together.

Brookfield renewable Brookfield infrastructure, uh, massive secular tailwinds, uh, spending. Behind energy growth of energy, lower carbon intensive energy is a big, big trend for Brookfield Renewable, uh, Brookfield infrastructure. We have a growing global middle class. We have aging infrastructure in all of the developed world.

Uh, it's trillions of dollars that are flowing into those markets. The Brookfield entities are incredible [00:28:00] capital allocators. They're value shops. They are very disciplined buyers when they buy these assets. A lot of times they'll lay in wait until an industry goes into a downturn. And they have money when other people need money.

And that's a really, really great position to be in when you want to deploy capital into assets that you can hold for decades and just ring the cash flows out of, so love that Live Oak Bank shares is so well run and they're smart about the way they're building out a business focusing on different small business lines.

It's paying off really well. It's not really much I can say about Mercado Libre and I'll leave confluent for other people at another time. 

Jeff Santoro: Hey everybody, we'll be right back, but first, a word from our sponsors. Earlier in the show, you heard us talk about investing platform Public.com. That's where you can trade options with no commissions or per contract fees, and you get a rebate of up to 18 cents per contract traded. NerdWallet recently gave Public five out of five stars for options trading.

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Hey, Investing Unscripted listeners. My name is Brett, one of the hosts of the Chit Chat Stocks podcast. If you love Investing Unscripted, we think you will love listening to Chit Chat Stocks on our show. We research individual stocks, interview investing experts and well chitchat about investing every week.

From hot stocks, such as Nvidia and Celsius to hidden small cap gems. We have something for every type of investor. Follow the Chit Chat Stocks podcast on YouTube, Spotify, or Apple podcasts and level up your investing skills today.

Jeff Santoro: What about you, Jeff? So I sorted my portfolio by cost basis as well. But what's interesting, I haven't done this before. I don't think this is a correct ranking of my conviction to beat the market over the next 20 [00:30:00] years.

And there's a few reasons for that. One, none of these are a large part parsh portion of my invested wealth like they are for you. Because as I said, bazillions of times, my entire stock portfolio was like 12 percent of my Investment portfolio, right? So I'm, it's a hundred percent of my invested wealth, correct?

And some of these I added a lot to a while ago and they've done well for me And i've not added more recently because i'm just not as Super confident. There's other ideas. I have more confidence in I guess is the best way to say it Yeah, I would also say this so I I now own 41 stocks So if i'm being honest and fair with myself, with the exception of maybe the five to seven that I'm either worried about or losing conviction and that I just haven't sold yet.

I think all of these should beat the market over 20 years, right? Like, or else why would I own them? If I had closer to 100 positions, and a lot of them were sort of tests, maybe less less so. So [00:31:00] anyway, Here's my top five. I'll say not necessarily in order of cost basis, but they're sorted that way.

So my biggest one actually is Mercado Libre like you. So that's and I do believe about that before. Yeah, that's when I have a lot of conviction. And so that's correct. I actually have a pretty large position for me in Ryman Hospitality Properties, which is a I mentioned it a second ago. It's a REIT that owns all of the Gaylord properties.

So, big hotels under glass bubbles that are like mini cities and they cater to large group gatherings and conferences and things like that. They also own a whole bunch of entertainment stuff in Nashville, like the Grand Ole Opry and a bunch of bars on downtown. I have a lot of conviction in that company.

My third is CrowdStrike, which I still think will be fine in the long run. It remains to be seen what the impact has been and will be from their glitch they had back in July. And then I would say Shopify. And then I have like Live Oak bank shares also and [00:32:00] Fortinet are kind of tied for my last two here.

And then, yeah, the other ones that are high cost basis, I don't necessarily have as much conviction it because again, a lot of these I added to a long time ago and then sort of cooled off on interesting. Exercise to sort it this way. I hadn't really ever done that. So that was kind of fun to do. All right, let's let's flip to the mag seven because I could make the case as I was thinking about this.

I can make the case for all of them underperforming the rest. And I could make that case almost entirely based on the fact that they've all done so incredibly well over the past 10 years. I don't know that it. It would be a bad bet to pick any one of them to underperform over the next 20.

Because there's not that many companies that are that dominant for 30 or 20 or 30 or 40 years. I mean, just go back and look at the top companies in the S& P 500 20 years ago. The turnover is immense. Yeah. So like, you know, if I had to pick one right off the top of my head, I would pick Tesla. Because I don't like the company [00:33:00] or its CEO.

I think it's overvalued as a car company. I don't know that their solar aspirations or battery aspirations will ever live up to the valuation. It currently has. Yeah. I think it 

Jason Hall: probably has the widest range of potential outcomes of all of these. If I hit on one or two of those other things. There's a case of this being the most valuable company in the world, right?

Yes, I tend to lean in the same direction as you though that 

Jeff Santoro: I 

Jason Hall: anticipate 

Jeff Santoro: that that's not going to be the case I mean you could make the case for Nvidia being underperforming simply because it is in a cyclical industry like at some point People will start buying less AI chips like that will happen Yeah.

It might not happen for another three years, but it'll happen. We don't know what the high water mark looks like yet. Correct. Yeah. And you know, 20 years is a really long time. It really is. It really is. In 20 years, semiconductors could be obsolete for some reason. Like, I don't know. I'm not a technologist, but maybe there's some newer thing that we don't know about yet.

Yeah. You can make the case for Apple, you know, like, do they just at some point turn into a [00:34:00] just a 2 percent growth a year dividend paying cash generating kind of okay stock that middles around for 20 years? I don't know. And then, you know, with when it comes to for me, like Google or Alphabet, I don't know, man, I, if they get broken up, I think that some of their parts could actually, you know, Are the parts that create the sum could all become very good businesses, but then that kind of changes what alphabet is if AI, if generative AI can actually replace search, right?

Like if you can go to other places and ask questions and get internet answers, maybe that erodes their, one of their biggest competitive advantages you know, and then, so I don't know, like, I don't want to keep going through all seven of them, but like, you really could kind of make the case, For all of them.

It's just it reminds me of, we did a really fun episode, which is actually one of our most popular ever called five stocks for the next 10 years. I think 

Jason Hall: I've stocks for 10 years. Yeah. 

Jeff Santoro: Where we pick five stocks for the next 10 years. And, uh, thinking on that long of a timeframe really does change.[00:35:00] 

The way you approach investing, I think, and thinking about 20 years is really, really hard, right? 

Jason Hall: It really is. And it's interesting, right? Because of all of these companies. The only one that was one of the 10 most valuable companies on, on the market 25, you know, 24 years ago, 2000, and then again, 10 years after that, and then now is Microsoft, none of the others, right?

Which is just remarkable. And it's an incredibly different company today than it was, right? It's basically not the same. I mean, it kind of is, but it's very, very different. Yeah, no, the, the way that it derives money has, has changed substantially because back then it was still making the majority of that money when people bought desktops.

Right? And the money rolled in with that Wintel duopoly. Um, and that has changed sub, substantially. And I want to say too, thinking about what Apple has done, I mean, I don't know if there is a, Parallel. I mean, it is, it is a company [00:36:00] that so many people carry around with them every day of their lives and spend more time interacting with than they do their families.

And in some cases, then their employers, right? It is remarkable how much more. Embedded in our lives it is. And I just don't know what the staying power of that is in terms of being able to derive profits. I think they're going to continue to face changes to their walled garden, uh, with the app store.

Jeff Santoro: Yep. 

Jason Hall: That, that could undermine some of the profits 

Jeff Santoro: that it's generated. And that's the thing, like we're not, the question isn't will any, will these companies go to zero in the next 20 years? I don't think that's going to be the case for any of them, but like, 

Jason Hall: will they, these are going to perform the worst 

Jeff Santoro: out of the seven, like underperform the others.

That's why you could make the case for all of them. I mean, there's anti competitive stuff for all these. Plant 

Jason Hall: your flag in a, in a hill here. Which one? Pick one.

Jeff Santoro: Tesla. My heart says Tesla. 

Jason Hall: Okay. Then, then I will not pick Tesla because you picked it. I might actually buy stock tomorrow. Now that you've I want to, I want to say Tesla. I do. But 

Jeff Santoro: You're right though. It is, there is a scenario where [00:37:00] I mean, as much as I don't like the antics that go along with Elon Musk, the dude is a straight up genius.

I mean, like, I would not put it past him to figure out a way to get some part of that company to be huge. Like I gotta be honest. Yeah. 

Jason Hall: Yeah. And bleep it. I'm saying Tesla too. 

Jeff Santoro: Great. Now we have to bleep something out. 

Jason Hall: You like bleeping stuff out. 

Jeff Santoro: Let's move on to the next. Question here. This is from cunning project also on Twitter, who says, I was seduced by Kathy wood in 2021 and bought UI path without doing due diligence.

FOMO set in and now I am down 81 percent holding a dog with fleas. Do I cut my losses and by a proven winner like applied materials, uh, Broadcom or Amazon it's in my IRA. So there's no, uh, there's not even a tax harvesting capability. All right. So just to be clear, we're assuming. The seduction by Kathy Wood was simply about stocks.

We're just going to roll with that [00:38:00] assumption. Of 

Jason Hall: course. 

Jeff Santoro: Okay. 

Jason Hall: Well, I mean, what else will we assume, Jeff? 

Jeff Santoro: I'm just making it perfectly clear. All right. So I think this is the one you were referring to earlier, Jason, when you said you're going to answer a look for a future question earlier on as it pertains to buying FOMO with no due diligence.

 My first assumption is at this point due diligence has happened and you know what you own. Right. If you bought a stock back in 2021 and you don't know now, there's a lot of things we need to talk about here. So we're just going to make the assumption that, that you've built some knowledge up.

Jason Hall: And that's really important, Jeff, because I haven't done any due diligence on UiPath.

Jeff Santoro: Yeah, I don't know much at all, but it's a universal question. We could, we could plug in any stock that you're, that you buy without doing any research on and goes down 81%. 

Jason Hall: Well, you say dog with fleas again, that leads me down the path of this is a business that you've studied that you understand and it gets back to two things.

So number one, I talked about it before is like trying to remove all of that bias of the dog with [00:39:00] fleas and what you already own decisions you've already made and trying to take that, that accumulated knowledge. And Charlie Munger inverted and say, is this, is this something that would appeal to me today?

But that only answers part of the question, right? Because whenever you're selling something and intending to redeploy that capital, you have to make two correct decisions, 

Jeff Santoro: right? And, the question he wrote, They wrote, don't know if this is a guy demo, you know, statistically probably is do I cut my losses and buy a proven winner like, and then gave three examples.

And yes, those companies are all proven winners. That doesn't mean you're going to sell UI path and buy one of those right now and have it be a good financial, a good investing decision. So cause you know, of those three, I know Broadcom specifically cause it's a company I own and follow. It's pretty expensive right now.

So if we're using today as a guy, as a. I'm just going to pick that one because I've looked at it [00:40:00] from a valuation standpoint. I feel fairly confident to say that it's trading at valuations it has never seen before. So you could sell UI path right now by Broadcom and let's just say, hypothetically, this is the peak, the top of the mountain.

And it goes down from here or just, you know, not because the business is bad, but just because it was overvalued. And now you're holding a dog again from the standpoint of, you know, when you bought it price wise. So, yeah, that you're right. It is two decisions. It's the decision to sell. And then it's the decision to buy.

You have to be right twice. 

Jason Hall: And I think it's important to, to not force either one, right? We've talked about this before, like the quote unquote bullshit selling where you don't keep cash in your portfolio and there's a stock you really want to buy and you come up with a reason to sell another stock just to have money to use to buy the other stock.

And I don't think that's the case with with this listener at all. But I do think you still have to kind of [00:41:00] firewall off the two independent decisions. In other words, It's good to have a plan to have a short list of stocks, to have a watch list of stocks, to have your list that of stocks. That's okay.

This stock I'm ready to buy this stock. I really like, but I have these questions that I need to see management answer before I'm really ready to commit, or I'm ready to, I've just got to start a position. I don't want anybody more until whatever it is. And try, trying to be objective about that and not just create arbitrary reasons to act.

But when it comes to UiPath again, it's, you kind of have to just come to the decision. Is this, is this a business that I no longer want to be associated with, right? Because it's pretty clear you don't like the business. And one of the biggest mistakes that I see people make is taking a stock that they want to sell because they don't think it's going to go up anymore.

And insisting that they're not going to sell it until it actually goes up you know, I'm going to sell it when it goes up 20%. Well, you just said it sucks. Why is it [00:42:00] going to go up? So sometimes it's just better 

Jeff Santoro: to 

Jason Hall: move on 

Jeff Santoro: it. But it is. I mean, look, I, this is something I struggle with all the time.

You know, something I have is down a lot. And you know, the math is it would take a whatever, several 100 percent gain To get back to even right so that's the other thing you have to know the math about this right down 81 percent 

Jason Hall: by half it has to double to go back to where it was 

Jeff Santoro: but the flip side of that is but if you buy more right let's say you double your position and that is that part of it goes up a lot you know you can catch up back catch back up to zero so to speak quicker those are all the different-

Jason Hall: you can also lose more money. 

Jeff Santoro: Absolutely yeah so none of this is advice this is You know, everyone's got to make these kind of decisions for themselves, but these are the kind of things you have to think about.

Jason Hall: Well, and I hope that's the key, right? I hope this is a useful kind of thought experiment to step back. And I know nobody listens to our podcast. They want our answers They know these are our answers and that they [00:43:00] have to find their own answers jeff. We tell them every episode We do if they stay till the end they hear that nobody stays to the ending.

Jeff Santoro: last question that we got from a Well, actually we have, we have two more. One's a surprise, Jason. You don't know about the last one. I'm excited about 

Jason Hall: that one. 

Jeff Santoro: Listeners are going to want to stick around. There's a, there's a fun one at the end here. All right. Last, uh, real question. This is from Trevor also on Twitter.

What is the stock that the overall market seems super bullish on, but that you just don't see why, and you can't pick CrowdStrike?

Jason Hall: Okay, Jeff, I've got one. This is an odd one and it's one that I don't follow particularly closely, but I did notice recently the stock is very close to an all time high and that's Cameco, it's a uranium miner. I don't know if it's the largest in the world, but it's definitely one of the largest in the world.

Uh, they're based up in Canada. Uranium prices have skyrocketed. Uh, some producers have cut back on production. That's sent prices up and the stock price has gone way, way up. It trades for like a hundred times [00:44:00] earnings. So I know why the stock is up, but what I don't understand is why this. Like, I mean, I get why it's us, but also like, I just can't wrap my head around why when we have companies that mine products, that's a commodity, that's mostly the pro this, that's mostly driven by spot prices on the market, why the stock price just shoots up when the price of that commodity is way up when everybody knows that it's eventually going to come back down.

It blows my mind how many billions of dollars of investor wealth get destroyed by people chasing. Lithium stocks, uranium stocks, gold stocks, silver stocks, uh, steel makers, uh, iron producers, fertilizer producers, like all of these commodity price driven stocks, oil and gas stocks, it's the same thing. I just don't understand what hap why people do it.

Jeff Santoro: Yeah, I, I'm having a hard time coming up with a specific stock [00:45:00] because there's plenty of stocks that are expensive, that are, that people are bullish on, but you can at least kind of like see, understand why I, I agree with you, like finding a sector is probably easier, like anything cyclical is probably interesting to look at.

Here's one for you though, because the stock has not done as well recently, but over the last year it's up 174 percent and that's Coinbase. The crypto trading stock or company. And I don't know that I have no idea why people are bullish on it. Cause I, I think I do get it. It's just one that I will never completely wrap my head around.

Cause I just feel like it's, it's so dependent on vibes and. Something that's has proven at least to me to be very kind of fleeting, which is people's interest in trading cryptocurrency. It's almost like a cyclical. It is like you could take, 

Jason Hall: you could take coin basis stock and you could take bitcoins to me, goes stock.

Oh, okay. And you could track them against uranium prices and it [00:46:00] gets bitcoin prices. And it is like, it's a direct correlation. Like they chase each other. They really do. So, you know, with these is over the longterm, you want to see sure that correlation happened in the short term, but over the longterm, you hope the really, really high quality natural resources companies and materials companies, the stock continues to move ever and ever higher.

And a few of them, like Nucor is a big steel maker. That's one that's been a huge winner because they've been able to over time, their earnings have been the longterm benchmark and it keeps pulling it away. But the volatility is commodity prices. 

Jeff Santoro: Right. Cause like when you look at Coinbase, like since it's IPO, it's down 46%.

Uh, over the last year. It's up 174 percent year to date 17. So like around market, around the market return. But over the last six months up 23%, you know, so it's just like, it depends when you get in and when you get out. [00:47:00] So I think from, from that standpoint, 

Jason Hall: folks go to, go to YouTube and check this and check this out.

Yeah, there you go. Purple line is, is, uh, is Coinbase's stock and the yellow line, the school best yellow line is Bitcoin. And you can see like, it's. 

Jeff Santoro: Yeah they follow each other. So, so that's, yeah, I mean, so if people are interested in Bitcoin until the end of time, I guess the stock will be okay.

And what, what's weird about it is they're going to make money. Regardless, because they make money on people trading. Um, it's the activity. So I guess the 

Jason Hall: activity moves up when the price moves up. 

Jeff Santoro: So even Bitcoin going down could benefit them because people sell it. You know, it's like, I don't know.

That's why I don't get. All right. Last one, Jason. And this is one you didn't do not know about. So we did get a question on in our DMS from A gentleman named Pearl Adolph, whose profile picture, uh, would suggest that he is a very muscular man who doesn't like to wear shirts. And [00:48:00] Pearl would like to know, or Pearl writes, hi, I think your smile is very warm.

Can we get to know each other? Now, I don't know who he's reaching out to, you or I, because it was the show account, but I'm going to put the question to you because you have a warm smile and I want to know if you would like to get to know Pearl Adolph. 

Jason Hall: Pearl?

Do you, uh, do you want to get to know some infrastructure stocks? Is that your pickup line? If you do. Give me a call. So I love that. I'm assuming that that came from the spam folder. 

Jeff Santoro: Yeah. So, uh, for our regular listeners, we have decided to add a segment to our, uh, mailbag episodes moving forward. Well, we will, we will answer a spam email question in every mailbag moving forward.

So do 

Jason Hall: you even spam bro? That's what we're going to call it. 

Jeff Santoro: Yeah. Here's a few others just cause we won't use these in the future just to wet people's appetite. Uh, we got one that says, Hey, I heard you also like playing games. Can we chat about it? Here's one that says, being alone at home, I feel a bit lonely.

I hope to find an interesting friend to chat with and share, the bits and pieces of [00:49:00] life. And a lot of these have suggestive emojis.

Jason Hall: I could, I could connect, I could connect, uh, Flexi shirtless guy with that one. And they could talk about infrastructure stuff. 

Jeff Santoro: Yeah, maybe that's the, that's the way to go.

Jason Hall: All right. I'm here to bring lonely bots together. 

Jeff Santoro: That concludes our mailbag, Jason. Why don't you, uh, why don't you, uh, Read our disclosure and we can wrap things up before 

Jason Hall: I do that. Thank you for the questions. Really appreciate it. It's a lot of fun to interact with you, our listeners, because it means I don't have to talk to Jeff and plan a show with ideas that me and Jeff come up with.

So thank you all so much for that. And as always, you've got our answers. You need to figure out your own answers. You can do it though. I believe in you. All right, Jeff, we'll see you next time. 

Jeff Santoro: See you next time. 

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