[Music] So let's get into this um I want to Start with probably the biggest thing That happened last week is Amazon So Amazon It was down 20 after hours but then it Rebounded I think it finished the day Down like seven percent something like That Um but missed it's uh it's expected uh Uh Guidance the guidance was lower than The expected Um still profitable still made a ton of Money but just missed wall Street's Expectations and it dropped to a 52-week Low like I said rebounded a little bit From that Um but yeah it's interesting man it Really Um you know had a really tough day and It's been having a tough year yeah Um it's been having a tough couple years Actually Um well so now The stock market oh are we going to get The the dialogue and debate that we get Sports Stock market is up for the month of October yeah that was up 11 Um the NASDAQ is up Even the other day when when Amazon Crashed NASDAQ was up s p was up that Was up but so Amazon was your pick of The Year yes it was so I'll let you
Start off this conversation is Um do you want to reverse that Um Which way are we going essentially which Way are we going yes attention or Descension is key Um yeah I mean based on everything that I have read in my in my information you Know I stuck by that pick has it gone The way I predicted no no um do I still Believe in the company absolutely Um so I The report the earnings uh report was Interesting right because there was some Like if you looked inside of it there Was some good spots but the bad spots Were so bad that it got overlooked so I'm gonna break it down by the numbers And so a good spot the revenue grew by 15 anytime you have a business and it Grows that's great the advertising right Which is we said was going to pass Google at some point was up by 25 Percent The big Pitfall was the operating income That fell by 49 right so those who don't Know what operating income is can you Really quickly explain to them I mean I Think the best way to say it is the Money that they are taking in and how They're going to use it now and Specifically for tech companies and Inflationary environments this does not Bold well right and so as inflation goes
The cost to do things operate your Business obviously goes up and so when You see interest rate rise you see right Since January if you look at the NASDAQ The tech stocks have Taking uh descension we're going to Stick with that word Most people died riding down ever or Walking down Everest right so count most Counts die on a decent Um so that that that was huge right the Earnings per share dropped right by an Estimated 45 so those those two things When you're talking about operating Costs and the earnings per share drop in There you can see why a company like Amazon which I still think is a top Three if not top two companies in the World has such a Negative quarter Operating cash flow also declined by 25 So like now we're talking about three Major factors of things that are like All right this is a rough quarter but Even Bezos when they asked him about it He was like look we're going to have to Really tighten the belt because the Climate's about to get a little tricky So those are three factors you add on to One other thing that was almost positive And kind of got overlooked but the Fourth quarter revenue is expected to Grow by two to eight percent fourth Quarter obviously we know is holiday Shopping holiday season more people in
E-commerce the only thing is that what They're seeing is that more people are Going back into the stores we thought That obviously from the covet time that People were shopping online and it was a Positive but People are back outside right Commerce Numbers are not looking the same as they Did when you know it was a lockdown so All those things taken into account I Understand it do I still believe in it Absolutely is it going to be the stock Of the Year absolutely not it's still One of my top two or three companies Though Um the big thing I want people to Realize Um is that even in a company when it's Going down if you wait for a great price To get in everyone in the stock Club Please put in chat what was the number I'll call for Amazon Um you can still make money on a heavy Drop like that so uh the fundamentals of The company haven't changed that much Their global market share dominance has Not changed that much Um when you have interest rates of Course going up and we're now going Through I think this ultimately will be A bigger recession when it's all said And done than 2007-2008 but Amazon is Primed no pun intended to uh do really Well
Once things start to settle out Um they could be a hell of a lot lower Being in that Tech space they haven't Fallen to the 70s or the 60s 99 was like A good spot that we liked got in and so Like Curly like a 104. if you're holding It for the long term you'll be good also For a quick homework assignment Internationally if you're going to order Online from someone who are the four Biggest competitors of Amazon Now ask yourself Who's going to get the goods to you There faster than Amazon No one they'll fix the operating income That any money they're losing right now They'll fix going into next year You're going to be really upset if you Don't hold the stock due 2025 2026. yeah And if you look at the the climate of The world like every country is trying To create a business that replicates Amazon Right and I won't give them the names Because you gave them the homework Assignment but go look in China right Well we know that company but go look in South America There's another company there that is Duplicated the business model of Amazon And so they'll figure it out I believe In it well let me ask you this Ian you You said a few times that you get a Theory of two Tech Two index
Um if inflation gets something to over 11 then right 11 yes and that that that Is going to hurt your your theory so why Is high inflation bad for technology Uh especially when quantitative easing Goes away all the easy wins like um for All my hoopers like when we play on like A nine foot Rim we all look like LeBron 10 feet dramatically different so that Difference between having zero interest Rates and being able to borrow money Like imagine if we if I said hey come to Invest fast Euro we'll give every Entrepreneur hundred thousand dollars And you never have to pay us back the Upside for the entrepreneur Is probably a 95 win rate if we give a Hundred thousand pounds away and say hey You got to pass 25 back now maybe only 30 of the businesses will actually be Profitable as a result so That Arbitrage is one of the biggest Reasons now Apple inside of that two Tech Two index model Has worked well that's why I would say Pair with the top two but if you're Going through Tech and you're looking at Something that's 15th or 20th it's not Going to do really well because what the Technology Industry really has done has gotten Venture capital Which has funded all of the ideas and we Haven't funded Innovation we've really
Funded the ideas that can get funded That's why we have a whole bunch of Social media apps we could talk about it Later now Jack from square is looking to Make another social media app which I Think is a mistake but you're really Playing an interest rate Arbitrage game So if I'm getting loan money at three Percent when I can find a way Ultimately to sell advertising or a Subscription to my user base at nine Percent I'm playing an Arbitrage game And getting the profit in between if Interest rates is higher than no one's Loaned the money out It's really hard to win that game so we Are in a space but we need more Innovation And ironically enough Tech has not done A great job at making a bunch of Innovation how we thought like when we Were kids I thought we would have flying Cars by now yeah Jetson's for sure we're Not there like Ray J is the only one Still making scooty bikes Shout out to Ray J so we need more Innovation and I think now we're just Going to clear the way More people to be able Um to get out all the bad companies and Create companies that will actually have A real impact All right fair enough Um so let's talk about this
Um how are you able to predict the fall Of feta Can we get the horns Um so three things this is normally the Moment where I would like Pat myself on the back but I want this To be a very instructional lesson number One you always have to understand what The macroeconomic environment is So if the economy if the entire world is Thinking things are going well You have to dig and do the research and Say what is wrong with the industry or The cycle that we're in because it's Easy in 2020 2021 everyone just to throw Money into Options Forex Venture Capital Angel and Think they're genius but you have to see When is the Fed going to stop funding This big bubble that they created Number two if you look at the hiring Spree the Facebook went on it's Unsustainable Um a couple times I've been to Meadows Offices they have some of the brightest People in the world but if I'm looking At the balance sheet They have hired more people than Apple And Google with an inferior product in Comparison that's a recipe for disaster Um number three the date in which so I Calculated if And this is a homework assignment for Everyone if we stay without quantitative
Easing for the next five years what are The top two industries that will do well And which companies in Tech will be hurt By it Advertising is a really thin margins Game and I was in it before it's part of The reason I got out If you make a company 200 million Dollars and they won't even allow you to Get 10 of it which most ad agencies Don't On the tax side how much money is Meta making if Ford makes two billion Dollars in a year off of sales It's a horrible business model if we Walked right now into GM and increase Their sales by three billion dollars in One year how much money should we get I'm minimum gonna actually get 25 Percent So I think the business model is broken And then lastly um if you look at the Fang Revolution when that started Everyone in that fan category ended up Being better the biggest issue in terms Of leadership and you talk about this a Lot Zuckerberg won't listen to anyone on his Team in terms of how they should pick it I really think They should have left Sandberg were on Facebook He should have ran AR and VR and they Should have bought Square a partner with
Square to do the payment and crypto side But that would take all the control out Of his hands Um so when I'm looking at leadership Even though Tim Cook is a tough CEO Steve was a tough CEO if you had a great Idea he will listen as crazy as me and 19 could be when we have ideas you guys Listen Zuckerberg hasn't listened to his team Or employee base in a long time and That's one of the reasons why most Companies fall apart and that was the Final reason that I saw okay if he's Trying now if we can be very honest He has to go steal another idea the First great idea was stolen every idea That he created after that were Big Ideas And now that you have everyone blocking All of your deals Because they don't like him and Congress Is constantly calling him up to speak on Behalf of checking what he's doing to Society that is not a good recipe for The disaster that's why it's really Important to be Innovative and not to Copy because if now you're not able to Copy anyone else's ideas like how you Did the WinCo box wins you're in trouble He needs to build build a team around Him that actually will make some great Um Innovation he should have bought 10 Cents should have bought Square I can
Argue you should have about Roblox Um Facebook Marketplace was good Should have put an offer in to maybe buy Some of those other applications that Sell Um it was just a lot of mistakes made And what's up [Music]
