In this episode of the VALUE: After Hours Podcast, Jake Taylor, Bill Brewster, and Tobias Carlisle chat about:
- Elon Musk Twitter Activism
- Investing Lessons From The Science of Hitting
- Greenblatt On The Acquirer’s Multiple
- Grandma’s Portfolio Outperformed
- Walk-Rates Improve Your Returns
- Hit Investing Line-Drives
- We’re In A Rolling Bear Market
- Small Caps Crushed
- Is There Any Way To Fix Twitter?
- Housing Building Numbers Fake News
- Kyle Cerminara Blessed By Peter Lynch
- Restoration Hardware Confident But Nervous
- Divergent Opinions Get You Paid
- No Housing Inventory
- 10:2 Inversion Uninverted
- What’s Performing Best In S&P500 Sectors
- A Cricket Match Goes For 5 Days
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
Tobias: We’re going live.
Jake: Hit it.
Tobias: We are a little bit late. Sorry, folks. It’s 10:38 AM-
Tobias: -on the West Coast, it’s 1:38 PM on the East Coast. We had technical difficulties. Entirely, my fault. What’s happening, fellas?
Jake: It’s happy [crosstalk] working.
Bill: We’re live. Yeah. So, we got that going for us.
Jake: Which is nice.
Tobias: It’s Value: After Hours and I’m Tobias Carlisle. I’m joined by Jake Taylor and Bill Brewster as always. Are we in a bear market, fellas? Has it happened?
Bill: I don’t know.
Bill: Jamie Dimon says expect volatility.
Bill: So, there you go.
Jake: Expect volatility.
Tobias: Hey, Barcelona’s in the house. Nova Scotia.
Jake: What’s the market going to do, Mr. Morgan? It will fluctuate.
Bill: Well, he says that, QT and the lack of– [crosstalk]
Jake: QT is that a new rapper I don’t know about.
Bill: Ah, yeah. Well, it’s one that we’re all going to find out about.
Bill: It’s going to be interesting to see. I think it would have been nice if he released this from a timing standpoint six months ago. It would have been a little more helpful, Jamie.
Jake: I think, Jamie.
Morningstar Flipped Negative on ARKK
Tobias: I saw Morningstar is negative on Ark. So, that’s helpful.
Bill: No. Cool.
Tobias: Not at 156, negative at 66. Thanks, fellas. Oh, we’ve lost Bill.
Jake: Well, the fun continues. Yeah, that’s not very helpful, is it?
Tobias: It’s a tough job. I don’t know what the arguments for being long it would have been at 156 other than momentum.
Jake: Other than it’s just been working like a charm for a while.
Bill: No, it’s like JPMorgan flipped on China ADRs at the– What they said, they’re uninvestable at the exact bottom.
Jake: You know what’s funny about that is, I was listening back as I like to do through the Berkshire annual meeting. In 2004, someone asks Buffett about China Petro that they purchased. Of course, his very rational answer was, “At a certain price, you are being compensated for any extra risk that is there and we felt it was worth it.” It’s like, okay, well that was the answer all along if we wanted to just dig for it. [laughs]
Bill: Well, that’s not a secret. I think the more interesting question is, “Will Berkshire come out with any Chinese ADRs in the next 13F? And if not, why?”
Jake: Hmm. I would be very surprised.
Bill: As would I.
Tobias: What was the China Petro? It had a really odd ticker. It was CNOOC was the ticker [crosstalk]
Jake: That makes it uninvestable. [laughs]
Tobias: Well, I don’t know what that was.
Bill: It came by five letters.
Tobias: Yeah, that’s weird, isn’t it? Five letters.
Jake: Came by five letters. [laughs]
Bill: No. All the good ones are four.
Jake: Or, one letter. That’s the real.
Bill: Or, two.
Tobias: Yeah. [crosstalk] Four is NASDAQ, I think. There’s a lot of stuff going on, fellas. We might have to jump into a little bit here.
Elon Musk Twitter Activism
Tobias: What’s the most pressing thing? Elon buying Twitter? Is that the biggest flex we’ve seen so far?
Bill: Yeah. It’s the biggest news of the week, I think.
Jake: [crosstalk] what is a second-class citizen board member? I don’t know what that means.
Tobias: What is he? Is it something funny about the position? Funny about the directorship? He’s got some real– [crosstalk]
Bill: I think he’s taken Jack’s seat.
Tobias: Oh, really?
Jake: Still warm? [laughs]
Bill: Nice to be done by somebody who cares about Twitter.
Tobias: Well, someone who use– [crosstalk]
Bill: But not certain Jack does. Yeah.
Tobias: I saw a funny tweet, where someone said, “I wish that the directors actually used Twitter and then the next thing was like monkeys palm closes. Monkeys finger goes down.” [chuckles] He’s the best Twitter user I’ve seen. It’s probably the biggest account. It makes sense that he’s actually in there. He uses it.
Bill: Well, there’re a number of things. One, it seems to me that guys that get in power want control of a media outlet and he just bought his way onto the board of the most powerful media outlet in the world. So, that makes sense. Two, he probably got insurance from getting kicked off. And three, I wish that the people that worked at Twitter use Twitter. Forget the board.
Bill: Those are some of my thoughts?
Jake: Oh. Is he going to get an edit button added? That’s what everyone wants to know.
Bill: I hope not.
Tobias: Yeah, I don’t want an edit button either. It’s just too open to abuse, unless, there’s some way of tracking the edits.
Bill: Well, I don’t know. The guy I think he goes by Bos. What the hell’s his name? Bosworth. At Facebook, we did this and you can see if a tweet has been edited or whatever, it’s like, once something goes viral, somebody edits it, then, you’re going to have to click on it to see which version went viral. No, just leave it be– [crosstalk]
Jake: [crosstalk] too lazy for that.
Bill: If people don’t like it, delete your tweet. I don’t know. I’ve gone back and forth on the edit button and I’m squarely against it now.
Tobias: You think it’s a weird filing that it was a passive filing, and then it’s been added to the board, and it’s had a sign of standstill and all these other things?
Bill: I don’t know.
Tobias: It was a little bit quiet, too?
Tobias: That’s the most active passive filing I’ve ever seen.
Jake: Yeah, no kidding.
Tobias: It is Elon. They said, they’ve been talking to him before the filing?
Bill: Yeah. I assume a guy like that can get somebody on the phone when he wants them.
Jake: Did you sell Elon, his shares?
Bill: No, no, I’ve been out for a bit.
Jake: Okay. That would have been fun.
Bill: No, there would not have been.
Bill: I really would have been mad at myself.
Jake: [laughs] Oh.
Bill: I don’t know. We’ll see. I don’t see how Elon on the board really does much to change Twitter, but maybe I’m wrong. The stock price seems to be reacting positively. I do want to buy some YOLO calls in case it turns into a meme stock.
Tobias: On your comment before about guys getting powerful than buying a mouthpiece, in someway is this sort of the reverse of what he’s doing. He’s trying to get– Well, we’ll think that he ran the poll that said, “Do you think that the Twitter has too many restrictions on free speech?” It was overwhelmingly 70% yes, 30% no. If anything, what he’s going to do or the mandate that everybody seems to think that he has is to go in and take off all of this, [unintelligible [00:07:41]?
Bill: Oh, it depends, would he believe what you’re seeing?
Jake: Care to unpack that conspiracy theory, sir?
Bill: No, look, I don’t doubt that that’s what his tweet said and that’s what the poll said. I don’t know enough about him to know what he’s thinking behind that tweet.
Tobias: He’s been vocal– [crosstalk]
Jake: I think more people imagining that he was going to be starting his own competing network. Wasn’t that–?
Bill: Yeah. Me and Akram’s Razor, we were on a space on Tuesday wondering if he was going to buy clubhouse and try to start something over that. It turns out I think he made the right decision just bought into Twitter, but I don’t know. I just don’t trust what I see. I don’t know what else to tell you.
Tobias: Twitter seems to be like, you’re almost buying it at a discount to what it cost you to put it together until like it’s not so much the coding it up and getting everybody to use it. There are heaps of competing like Twitter kind of clones out there. I don’t know. We’re just going to have this complete balkanization where everybody who’s one political persuasion goes to one and everybody who’s the other political persuasion goes to the other.
Jake: That should help us meet in the middle. [laughs]
Tobias: Yeah, that’d be great.
Bill: I think it’s all just going to stay on Twitter.
Tobias: Yeah, that’s what’s going to happen.
Tobias: Because there’s just nobody on those other ones, I don’t know.
Bill: Yeah. No, you know. Didn’t Truth Social just shut down? I think it did.
Tobias: Which one was that?
Bill: I thought that that was the DWAC. Well, maybe it wasn’t the DWAC one, but hang on.
Jake: [crosstalk] go there anymore.
Bill: Yeah, I don’t know. I guess, Trump’s Truth Social’s still facing financial and technical– Technical, was looks like a bus so far.
Tobias: It’s Gettr, too. G-E-T-T-R, Gettr.
Bill: Yeah. It’s hard to start up a network, man. It’s not so easy. It’s part of the problem with Super Follows, especially if you’re me and you have nothing really intelligent to say. It’s hard to drive a conversation to a secondary network.
Tobias: What is a Super Follow? What does that do?
Bill: Well, if I had product knowledge or something, I would maybe be dumping some knowledge behind a paywall, and then, you have a secondary Twitter feed, and [crosstalk] apparently, some people are smarter than me that can maximize it.
Jake: You give us all the gems here for free.
Bill: I also don’t have any gems, so that helps.[laughter]
Is There Any Way To Fix Twitter?
Tobias: Yeah, it seems like Twitter– I don’t know how you fix Twitter, but it seems there’s something wrong with it. It’s comically small relative to the other social networks. It’s hard to use when you first get on it, but once you use it, it’s highly addictive and it functions as it’s the newsfeed, it’s the way to communicate with people, you can find your little tribe.
Jake: 10x useful. LinkedIn for that type of networking, I mean.
Tobias: Oh, Facebook or anything like that, yeah. 100%.
Tobias: It’s strange that just can’t figure it out. I don’t know. It doesn’t seem that hard for– [laughs]
Tobias: Although, people have figured it out.
Bill: I think they’re in the process of figuring some of it out, but they got–
Jake: There’s an evergreen statement.
Bill: Well, I think they’re subscale. I think they’re SG&A. Look, the revenues have gone from $3 billion in 2018 to $5 billion in 2021. That’s a real company. Whether or not it’s a public stock you want to own, it is a different conversation. But I think if I created a business that had $5 billion in revenue, I’d probably be like, “Fuck you. What have you done? You go create something with $5 billion and tell me that I didn’t figure something out.”
Jake: What’s the revenue on Facebook right now per year?
Bill: Oh, God. I don’t want to misquote it, because I’ll sound like an idiot. So, hang on one second, but it’s big. As are the margins, $117 billion.
Jake: They basically have Twitter’s revenue and I don’t know, what is that? Three weeks or something? [laughs]
Bill: Yeah, no, Facebook’s a different beast.
Tobias: It’s funny how much– [crosstalk]
Bill: They don’t even monetize WhatsApp.
Tobias: Jack’s tweeting got so much better when he left Twitter. What’s that about? There’re some restraints when you’re on the board. Maybe, I don’t know. I don’t know why you would– [crosstalk]
Bill: I guarantee you, Elon isn’t going to use restraint.
Tobias: He’s already got a Twitter, hasn’t he?
Jake: Yeah, he’s already supposed to have that. That’s not a thing.
Bill: Yeah. I don’t know why Jack didn’t use Twitter when he was on Twitter’s board. That was frustrating as someone who cares about how Twitter does.
Tobias: Good comment here from Gaurav Sharma. “Weibo Twitter of China is also in the same boat indicating it’s a universal problem.” Yeah, what is the problem? The reason why Instagram and TikTok have exploded is because they’re much more visual. They’re just all visual.
Tobias: Which tweet are you going to read? So, right away, people were like, “Ah, too hard.”
Bill: Instagram sells to your penis. That helps.
Jake: Let’s say limbic system.
Tobias: Limbic system.
Jake: This is a family program after all.
Bill: Yeah, well, yeah.
Jake: Oh, wait, no, it’s After Hours. It’s fine.
Tobias: Twitter could be doing the same thing though couldn’t it. [crosstalk]
Bill: I don’t think so. You just sell into people’s heads [crosstalk] the head you use.
Jake: Yeah, [crosstalk] talking about.
Tobias: But you could make it visual. You could make your own account visual and you just attach a picture to every single one.
Jake: What does seem like, if you add content like that those tweets tend to do better than just the word ones. I think they push those more behind the scenes.
Bill: Yeah. The other thing is, Facebook was set up from the jump to collect information and Twitter really wasn’t.
Tobias: It’s weird. Because you’re talking the whole time, you’re telling everybody what you feel. What you’re thinking about, what you’re interested in all the time, it should be pretty easy.
Bill: Yeah, you would think.
Tobias: It’s easier than trying to figure out what a picture means.
Bill: It turns out, they need credit card data and then third parties to tell them what you want, rather than the interest graph that you’ve created for them.
Jake: Like billions of things that have been like that should give you exactly pinpoint what you’re into.
Bill: Yeah. It’s not very hard to figure out what I like if you follow me.
Tobias: Yeah. You think it would be, I don’t know.
Jake: Classic cars, stocks that go down, and–
Bill: That’s right.
Bill: And hip hop.
Jake: Yeah, that checks all the boxes.
Bill: Yeah, just start advertising to me. It’s not very different and weed.
Jake: Oh, yeah.
Bill: Which they can’t advertise yet, but maybe someday.
Tobias: Let’s talk about some investing stuff just so we have some investing people here.
What’s Performing Best In S&P500 Sectors
Tobias: I’ve got a few things. I had a look at the S&P 500 sectors.
Jake: How are they doing? [laughs]
Tobias: It’s ugly for the year. The only thing that you want to be is energies like rocket and everybody– [crosstalk]
Jake: Not great, Bob.
We’re In A Rolling Bear Market
Tobias: [laughs] But utilities are marginally positive and everything else looks nasty, looks ugly, but you probably didn’t need to be told that. We talk about this a little bit, whether we’re in a rolling bear market or not. I think that we probably are. That’s crazy to have a 2% up day and right in the back of it have a 2% down day, which I guess, that’s pretty classic bear market behavior. But I really do think we’re into this long rolling banner and we’re going to see these, well, lower lows, lower highs, and so on. I don’t know when it goes, but what do you guys think?
Bill: It’s really depressing, Toby. I’d rather not [crosstalk] said that.
Tobias: It is. Yeah. Low T. Someone commented– [crosstalk]
Jake: Low T.
Tobias: A few months ago, we were bearish, beared up.
Bill: There’s a lot of stuff that’s gotten just trashed though and that’s what’s tough. On the other hand, I don’t know that there’s a lot of screaming bargains around. I think there’s a lot of stuff that could work.
Jake: Yeah. Do you get the sense, like, are people waiting around for better prices or is it–?
Bill: Oh, I don’t think so.
Tobias: I thought everybody thought– We had that rally over the last mid-March to a week or so ago. I thought that I got the feeling that all the SaaS tech stuff or everybody thought that was back for a little bit. It’s just bump sideways like Ark bottomed out and then rallied a bit, Tesla’s rallied a bit. Tesla’s over 1000.
Bill: Oh, that’s a good rally. Where did it bottom? 700 or something?
Tobias: I don’t know. I’m not entirely sure, but it’s close to 1100 today, and it was down 4% or 5% for the day.
Bill: Yeah, that was down around seven, yeah, 766. I don’t know. Roughly $800 billion company. Those are big numbers. I don’t know.
Jake: The market cap. Not any other numbers.
Bill: Yeah, I don’t know. I think they’ve gotten more rational, but I also think– [crosstalk]
Jake: How about incurred inverting?
Bill: I was only crying two weeks ago. I can’t get to– [crosstalk]
10:2 Inversion Uninverted
Tobias: Yeah, so, the inversions uninverted, again, as of today. It got inverted over the weekend [crosstalk] inverted.
Jake: Recession cancelled. [laughs] It’s how that works?
Tobias: Recessions over. Well, the 2019 inversion was very, very brief, too. Then, it’s six months later, the recession is officially acknowledged, whatever that means.
Bill: Are you saying that we’re going to get another COVID?
Tobias: Mate, it is amazing what the inversion can predict. The inversion predicted COVID. Yeah.
Bill: Oh, sorry, Spotify for demonetizing us and Google, too.
Tobias: I think that’s okay now. I think that we’re past all that.
Jake: We have been on Spotify?
Tobias: We probably get most listens on Spotify or something like that and then might be Apple. I don’t know.
Jake: Okay. Terrific.[laughter]
Tobias: I just print out the transcript and put it on a bulletin board tend to like a lot– [crosstalk]
Jake: Yeah, exactly.
Tobias: That’s to extent that distribution.
Jake: That’s written on the bathroom wall at the YMCA.[laughter]
Bill: I like it. Yeah, I don’t know.
Jake: Well, Toby, how does that work then for? Is it have to stay inverted for a while before that counts as a tripwire or is just like, at any point does that get the clock started on that six months?
Tobias: I don’t know, because the Cam Harvey version is the 10:3. 10-year, three-month. It’s been very predictive. But somehow through all of that it’s converted to the 10-year, two-year.
Jake: 10, yeah.
Tobias: I don’t know why that is– It doesn’t really matter. I guess, they’re just looking at the midpoint of the curve, and the front end of the curve, and if that’s inverted, I’m doing that top converted–
Jake: Yeah, top converted. [laughs]
Tobias: If that’s inverted, then, that predicts– I guess, there’s a reason for people want to get paid to hold short-term risk and for some reason that they want to get paid more than 10-year risk. I guess, no one thinks that the recession is going to last 10 years.
Bill: The five years are most interesting to me, because that’s when you have a lot of corporate rolls.
Jake: Yeah, that’s something that’s interesting right now, that was probably different than 2007. I guess probably if we asked Michael Burry like, “What’s going to be the catalyst of this?” He would have told you in 2007, “We know all of these mortgages are resetting, then, structurally and that the jig is up then.” So, he knew he had a timeline. But what’s the timeline for today? I don’t even know if that– Is it corporate rollovers like you said, Bill?
Bill: I don’t know. But yeah, I think if you think there’s a lot of debt in the corporate sector, anything between two and five years is probably when a lot of its rolling. You don’t get a lot of corporate paper that doesn’t get rolled within five years.
Tobias: They roll it at any time that they can, any time they get a good number they are rolling.
Bill: Yeah, but the bank market, most of the terms that we wrote were five years.
Tobias: Okay. That term– [crosstalk]
Bill: So, you’re having a conversation every five years. It’s not fully amortizing over that five years. You are always refining somewhere within those five years. Usually, year four, because you have fees every time you do it. So, bankers start pitching on day one, and companies start refining on year four–
Jake: Listening on year four.
Tobias: I don’t know what the catalyst is going to be, but it’ll only be obvious in hindsight. We’ll look back and say, “Oh, yeah, of course.” Predicting them is harder.
Restoration Hardware Confident But Nervous
Bill: I think this earning season is not going to have a lot of exciting commentary out of it, if I were to predict it. Restoration Hardware, I’ve talked about a lot. I don’t think we talked about it here, but that was a very, very interesting call. I don’t know how to feel about that guy, but one of the feelings that I don’t have is I don’t think that he was putting on an act in that call. [crosstalk]
Tobias: Can you just tell– [crosstalk]
Bill: Yeah, I get to it, I get to it. Let me wind up, Toby. That’s how I do it.
Tobias: It’s going to be some clear pictures just like the commentaries before we get to that. Give us the news, then the commentary.
Jake: Yeah, [crosstalk] either.
Bill: No, I like to wind up. Anyway, he’s confident, but nervous.
Bill: Well, what he’s saying is like, “Anything that hits the industry is going to hit us as well. But we will outperform the industry.” Now, I don’t know. He said a lot of stuff that I think everybody should listen to it, I think they should listen to it 1x. It’s either entertaining, or informative, or both. But he was really candid about a lot of problems that he’s seeing and he’s just like, “Look, supply chains aren’t getting any better, inflation is going to go up–” He said, he was going off on Janet Yellen, but he was like, “I don’t know why–”
Tobias: Why, Yellen, particularly?
Bill: I don’t know. I just think he was like, he doesn’t– [crosstalk]
Tobias: What should Treasury Secretary rather than not Fed [crosstalk]?
Bill: Yeah, I just think he was like, she doesn’t think that inflation’s higher than 2%. Call any business person will tell you it is.
Jake: Oh, yeah. [crosstalk] that ivory tower once in a while, see what’s going on in the real world.
Bill: Yeah, he said, “Either businesses are going to make a lot less or they’re going to charge a lot more,” and it’s going on everywhere. I think he’s pretty true.
Tobias: She’s in the administration. So, you’re never going to admit to inflation if you’re in the administration. You never going to admit to inflation, if you’re in the Fed. We talked about that last week, just like stock markets at all-time highs, property markets, white hot, consumer price indexes at 7.9% year on year still can’t find it. Looking really hard, got our best bang on it. 2%, we’re hoping to hit 2%.
Bill: Well, here’s something that I think we’ve talked about a lot and I’m just interested. I don’t really have a strong opinion either way. But a lot of growth companies have gotten these huge valuations relative to current size. It’s going to be interesting as always and I’ve said this and been way wrong for a long time, but what lessons have people learned and are they the right ones?
I think it’s going to be interesting, because there’re a lot of signal and– You look at direct to consumer what’s going on and streaming. A lot of the reason that all these platforms are releasing their own streaming service now is they saw the multiple that Netflix got and they said, “Okay, well, now I can do this.” Where else is that going on?
Do these multiple stick, does it actually make sense, are certain investors that we are looking at really smart, or did they buy the right factor at the right time? A lot of that stuff will figure out. I don’t need to figure out myself. I am not smart.
Jake: Got it. Nailed down already.
Bill: That’s right.
Tobias: Gaurav Sharma just talking about– Yes, he’s certainly not panicked, but concerned. I don’t know. I’m glad that he qualified with confidence. This is from Gaurav. ” He said container cost’s up 3x, actual inflations double digit, profit margins all-time high, stimulus going away, Fed raising rates.”
Bill: I don’t think he said containers are up 3x. I think what he said is the last time that we re-upped our containers, it doubled and I’m not going to tell you what it did.
Jake: I’m not going to tell you, yeah? [laughs]
Bill: This time, but it made that look good.
Bill: It was a good listen.
Jake: Yeah, I thought it was pretty earnest myself.
Bill: That’s like I’m already in. Yeah. Right.
Jake: He’s got a pretty good keyhole into the economy, right?
Bill: Yeah. I have questions on the entire value proposition of the [crosstalk] in general, but yes.
Tobias: He’s probably got a funny comp, though, doesn’t he? Because they would have gone with everybody bunkering down for COVID, probably everybody was fitting out their household the money they would have spent on a vacation. So, they probably spent a little bit of that Restoration Hardware. They had a good year, and now they’re going to have a less good year.
Bill: Yeah, that’s slightly offset by the G650 that you can lease to go to their new luxury hotel called Guest House-
Jake: Yeah. What is that all about?
Bill: -and then if you want to go to Paris and have caviar and champagne on the roof, and look at the Eiffel Tower, you can do that. If you want the RH3 yacht, you can do that. I don’t know. This is part of what I don’t like about them.
Tobias: Because they are trying to make it a luxury experience?
Bill: Yeah. He’s trying to make it a luxury lifestyle brand. Anytime you say, “Well, now, we’re tapping into the 200 billion TAM of the travel market,” It’s like, “Oh, give me a fucking break. Your furniture company and your furniture’s not that good, anyway, but it is expensive.”
Tobias: [laughs] That’s the most important.
Tobias: Good margins.
Jake: It is a nice, long inequality play.
Housing Building Numbers Fake News
Tobias: It is weird. I saw some figures again today that the homes booked by decade over the last– This thing goes back to 1930, but that’s less relevant. Last three decades, excluding the 2,000 tents, we’ve built like 20 million plus houses.
Bill: I think that’s fake news.
Tobias: Do you think that’s fake news?
Bill: I saw it, too. I think it’s fake news.
Tobias: What they were claiming was that, the last three decades they had built excluding the most recent decade, 20 plus million houses. In the last decade, they built six, 5.8 or something like that.
Bill: Yeah. I don’t think– [crosstalk]
Tobias: Why do you think that is? Do you think that was so wrong. [crosstalk]
Bill: Well, I don’t think that data is correct. [crosstalk] the start.
Jake: Let’s get Mike Mitchell on auto call right here. Get this cleared up batch signal.
Tobias: It is weird. I don’t know. Possibly, we’re over built. There was a big housing boom in 2005, 2006, 2007, I guess, maybe that overbuilt and so. I don’t know. Maybe there were lots of stuff sitting empty. But now, it seems to be mostly owned by investors, right?
Bill: No, the investors is not a huge– [crosstalk]
Tobias: Also, fake news?
Bill: Yeah, I think there’s a lot of narratives that are going on that are not reality. Homestarts from 1968 to 1992 look like the average like one and a half million and they had big peaks, where you would have a year of two and a half million, and then, troughs of a million. But objectively, from the peak to the trough after the housing crash, we did under build–
Tobias: Just not to that extent. Not to that– [crosstalk]
Bill: Yeah, I think it’s overstated. Yeah, I think the data overstated the problem.
Tobias: Yeah, fair enough. The invested number that I saw is, it had gone from something like investors were about 20% of the market to about like 31%, or 32%, or 33% of the market. At the margin, that’s a pretty big change. That’s a material increase in the amount the investors are holding. I don’t know if that’s a true fact or not.
Bill: Well, I think that some of what happened was a lot of private equity came in and built out multifamily. If you look at units, that may be some of it, I think mom and pop saved up in housing. I don’t think it’s all Blackstone, I guess is what I’m saying. But then, again, private equity is Blackstone.
Tobias: All right. Gaurav Sharma is crushing it. Research assistant. He’s got. “Container prices averaged 1350 in early 2019 and now sits at 9400.” And then, he’s coming with another fact here. ” 30% of new demand is from investors but investors only own 3% of total housing stock.”
Bill: Bang. There you go. Thank you, you.
Jake: You’re hired.
Bill: Yeah, that’s right. We will pay you what we get paid, which is just absolutely nothing.
Jake: What it means we’ll be sending you a bill.
Tobias: Exposure. You get exposure.
Tobias: I don’t know what any of that means. I had some housing stocks, but they’re not doing very well.
Bill: Well, we need completions. There’s just no inventory. There’s no inventory anywhere. I listen to Logan a lot, because I think he’s been the most correct, Logan Mohtashami– I’m going to mess it up. But check it out. I use it on my podcast. Mohat– Mohat– [sighs] anyway.
Bill: I feel horrible.
Jake: Come on, whitey. Sound it out. [laughs]
Bill: I got another sponsorship and I think it’s Bastiat and I said Bastiat. like a freaking hick. Like “Hey, Bastiat. My man Logan.” Anyway, I had a Spanish at Auburn, you know? It was hilarious listening to Alabama kids speak Spanish. It’d be like, [speaks Spanish]. Yeah, that’s not the accent. Anyway, I digress. His point on rates is, nothing is slowing housing. Rates going up is maybe the only thing that’s going to make inventories come into equilibrium, because there’s just no freaking inventory anywhere. It’s just wild.
Tobias: I saw a stat yesterday that said that, whatever it’s called like enter into a contract and its pending whatever that before you complete.
Tobias: Escrow, yeah, it’s got name in the statistics anyway and they had– There’s 70% higher than the number of houses that are available for sale, which is that’s inverted bid to ordinary the other way around. It’s more houses for sale than there are sitting in Escrow, I guess or pending, whatever searches or whatever is going on there, and that has to uninvert before there’s any relief in housing. But I saw another thing that Zillow guy came up.
The Zillow has got a state of the market research report that said that, “The increase in rates is biting a little bit,” which makes some sense. You might see some cooling and they have been seen fewer searches, fewer applications for mortgages as this year relative to last year, a pretty material change and it might be that the fact that interest rates on any given day, they’re going to be going up half a percent a day.
No Housing Inventory
Bill: Yeah, I think Housingwire every Monday, Logan’s on their podcast. I think one of the things he said recently is, “Builders last–” When was the last builder cycle like 17, I think it was? It was 15. I don’t know. But when mortgages hit 5%, that becomes an issue for the building completions.
Tobias: What are we at now? We’re pushing up against 5%, 4.68%. But the move has been like, it’s half a point. Our day, sometimes, they could be wrong next week. Could be over 5% next week.
Bill: Yeah. If you talk to buyer’s agents, there’s still a lot of demand out there to buy the house. I think this is probably good. I don’t think you want a real runaway housing market and I think it’s already run.
Tobias: What happens if rates go up? In order to move, you got to refi at a higher rate. No one’s going to do that.
Bill: You just got to like the house you own.
Jake: Yeah, that can be crippling for mobility.
Tobias: We have already seen like this. There are many, many fewer houses available for sale now than they were even 10 years ago. It’s 10% or something. That’s the lowest on record.
Jake: You better love where you’re living now.
Bill: Are you saying currently?
Bill: Yeah. But I think if you look at the number that turn each year, the number that turn are hire, so, it’s really that the days on market are super short.
Tobias: Is that right? Because I think– [crosstalk]
Bill: I believe so.
Tobias: That’s interesting if that’s the case. But I thought it was the other way around. I thought it was– [crosstalk]
Bill: I don’t know that it’s going to be the case going forward with retire. But last year, I think that’s what was going on was they were just hitting and gone.
Tobias: When I look at that the number of days on market or the number of things to get turned, there’s more activity at the top of the market and at the bottom of market nothing happens. The stock market, all liquidity goes away at the bottom. There’s all liquidity is there at the top.
Jake: I think volume is the other way around in a stock market, all the volumes at the bottom.
Tobias: Negative, Ghost Rider. Oh.
Bill: Yes, so– [crosstalk]
Jake: We’ll look it up later and tweet about.
Bill: Yes. So, 2017, five and a half million homes were sold. 2018-534, 2019-534, 2020-564.
Tobias: What do those numbers represent?
Bill: Those are sales. 2021, according to statistics, 6.1 million. So, I think it’s just the things are returning quick.
Tobias: So there are more returning [crosstalk] I see. Okay.
Bill: This is no inventory.
Tobias: Yeah. That puts all the [crosstalk] Restoration Hardware.
Bill: Was that like a supply issue?
Tobias and Bill: Yeah.
Divergent Opinions Get You Paid
Bill: If it’s a supply issue, that’s good for housing stocks. Nobody thinks it’s good, which is potentially where some money can be made. Used to be that divergent opinions paid you.
Tobias: They may, again. Definitely having a divergent opinion on energy has got you paid over the last 12 months.
Jake: Fair enough.
Tobias: It’s so true.
Jake: Guys, you want to transition to something– [crosstalk]
Bill: Divergent opinion, shorting tech also got you paid.
Tobias: Yep. Eventually, if you went wiped up–
Bill: But it was a rough ride on the way up.
Tobias: If you went wiped up.
Jake: You’re going to want to time that one well.
Bill: Yeah, that’s right.
Tobias: Let’s do the veggies.
Investing Lessons From The Science of Hitting
Jake: All right. This one’s hopefully a little bit more fun than the normal veggies. Almost, we can hardly call it veggies, but as you guys know, I have a couple of boys that are very into baseball. They are on travel comp teams. I spend most evenings and all the weekends pretty much at the baseball field. Yeah, let’s think about all of the– Well, what are the crazy analogies that I can pull while I’m sitting around here coaching for space. I recently read, actually read instead of just talking about reading it, The Science of Hitting by Ted Williams.
A lot of people are familiar with that, because Buffett’s talked about it and he’s talked about the waiting for the fat pitch. By the way, shoutout to Alex for picking such a great name, The Science of Hitting. I think that was a homerun choice there.
Jake: I think everyone knows that the chart looks like a box in front of a batter that shows 77 ball sized cells that fit within the strike zone. Ted Williams figured out what his batting average was for, where a ball was pitched and if he hit it– he swung at it there, He realized that the pitches that were middle in on the plate for him were what he called his happy zone, that was where he made the best contact and he had the highest batting average. He had cells that were at 400, but the pitches that were down in a way for him, he batted like 230.
Therefore, to have a good batting average, he had to choose carefully, which pitches he decided to swing at. Buffett took that and made an analogy of investing, and that there’s no called third strike, and that he’s looking for pitches that are fat pitches in his happy zone.
He really correlated it to the circle of competence. Like the pitch that’s right in your spot is your circle of competence. But it turns out that there’s actually a lot more in the book than just that graphic that is famous from it.
What’s interesting is that, Williams was just a total fanatic about batting. He thought about every single little detail that you could even imagine. I love to read those kinds of books about people who are just maniacs about a particular subject and just to see how deep that they will go into something.
For instance, he knew that the batter’s box at Fenway was just a little bit off tilted, so that the back of it was a little bit lower. He felt he always hit well there, because he could drive off of that little bit of an incline. And conversely, he knew that at Kansas City, it was a little bit the other way. He felt he was always batting uphill and he told the groundskeeper about that like, “Hey, I don’t think your batter’s box is flat.” The groundskeeper then like, “Well, okay, it’s supposed to be flat.” He fixes it. Then, Williams hits two home runs that day and the groundskeeper almost gets fired for-[laughter]
Jake: -making that adjustment. He didn’t want to ever use a bat that had any chips in it or that was discolored, because he felt even that would potentially distract him from concentrating on swinging and hitting. He took his bats down to the post office to weigh them exactly, because that’s what they show up and they’d be whether it was a little different type of wood or where the cut came from and the tree. It would be different weights and he wanted it to be exact.
Another thing that was interesting was that, he talks about how if he added basically two inches around the outside of the strike zone. Let’s say that you’re swinging at a pitch that’s just a little bit outside of the strike zone, a pitcher’s pitch. You increase the target area total, then of what you’re responsible for is the strike zone from 4.2 square feet to 5.8 square feet, which is 37% increase then of plate that you have to cover. That’s a big difference to think that you’re going to be able to get out or to make a good swing on 37% more coverages is quite a bit to overcome.
All right, so, another thing is that, he was famous for using a very light bat and he used a 35-inch bat with a 33-ounce weight, which would then be a drop too that’s in baseball parlance. He used a light bat, because he believed that quickness of the bat was super important, because it allowed you to see the pitch for longer, and then decide, is it going to end up in the place that you want to take a swing at. A big heavy bat like Babe Ruth’s swung this, but just absolute– It was 54-ounce bat sometimes, which is ridiculous. But you have to really get going to swing that bat. You’re committed, you can’t see the pitches long to then decide is this the pitch that you want to swing at.
I think there’s a little bit of an analogy there with Buffett and being able to like he will wait until the last– He’s not going to go chasing, he doesn’t participate in auctions. He’s going to wait and then, he’s going to have a really quick bat when it does show up in his zone, he can make a decision in five minutes, whether he wants to do an acquisition. A lot of hitting is about anticipating what the pitcher is going to do. I think there’s an analogy for us there, where Williams wanted to make sure that he got a fastball to hit and he would take until he got the fastball that he wanted.
We similarly have to anticipate what the Mr. Market might throw at us. We have to always have an inventory of potential ideas that we would want to swing at, so that then, when they do show up, we’re ready to take our good swing, you don’t catch that ball right where we want it.
But if you’re waiting until Mr. Market throws something and then, you’re like, “Oh, okay, maybe I should look into this one and research it.” We are already behind and you’re not going to be starting your swing soon enough. The ball is going to get on you a little faster than it probably should and you just can’t expect as good a result.
Another thing that Williams talked about was like maximizing the amount of time that the bat is going through the zone and swinging on plane with from where the ball is coming in, so that you have the best chance of getting good clean contact.
I think the analogy for us there is that, it’s going to be really hard to bottom tick your purchases or top tick yourselves. But if you can have your bat in the zone for a long time, which might be like dollar cost averaging into a name and maybe trimming out of a name, maybe that gives you the best chance at making a good contact with an idea.
The next day, we’ll try on a transition. I’m going to add a little bit more to The Science of Hitting the book and talk about Joey Votto, who is the closest thing that we have to Ted Williams today. He’s a left-handed hitting first baseman for the Reds. His bible actually is The Science of Hitting.
He talks about it all the time, but it just should probably be no surprise. By the way, some of these numbers I’m going to talk about right now, I got from a YouTuber that my son likes to watch this guide called Foolish Baseball, who just dives into all these crazy numbers and talks about different players. This one is about in 2016, Joey Votto hit over 400 for a half of the season, which is the closest that anyone’s really gotten to hitting 400 since Ted Williams did it.
Bill: Better than Ichiro?
Jake: Well, other guys have done– Yeah, other guys have had that. But Ichiro, I think this is the most recent time that someone’s gotten hit that well for that long.
Bill: All right, I’d have to call fake news.
Hit Investing Line-Drives
Jake: Maybe. Let’s not ruin the story of the facts, Bill. Foolish Baseball’s talking about how Votto– There’s three things that are important to this equation. Number one is avoiding strikeouts. We can already imagine what the investment implications of that are.
Taking zeros, really painful, hard to overcome. Number two is called BABIP, which is batting average on balls in play. If you actually make contact with the ball and hit it somewhere between the lines in fair ball, what is your batting average when it is put in play?
It turns out that the typical batting average on a ball in play is about 300 and anywhere from 250 to 350 around is what you could expect on a ball that you put in play. Anything lower or higher than that is probably a fair amount of luck. Either bad luck if you’re below 250 or overly good luck if you’re above 350.
How the ball exits is a big deal on your BABIP. A ground ball that you hit in play has expected batting average in the majors of 2.39. 239 batting average on a ground ball that you hit. A line drive has a batting average of 685. It’s quite a bit higher if you can hit line drives. And a fly ball has a batting average of 207, which is obviously not that great.
But the part that you have to factor in in today’s game is that, the fly balls often turn into homeruns and that helps this idea of slugging percentage that some investors have talked about. They don’t care what their batting average is, they care what their slugging percentage is. They famously cite like George Soros, where he was wrong probably 70% of the time, but when he was right, he was very, very right and he bet big, and he had a huge slugging percentage that overcame that.
Well, I would argue that it’s really, really hard to have a high slugging percentage, and to be very, very right, and hit homeruns, like that. Only 12.7% of fly balls that are hit turned into homeruns. I don’t know what the exact investment numbers are. It probably depends on whether we’re talking about VC, which is I don’t know, maybe one in a hundred turn into a fly ball that turns into a home run.
Or, maybe in public markets, it’s a little bit higher some of those numbers. But I would say that, we should probably be, at least for me like, my takeaway from this is that, I want to hit investment line drives that have a high batting average, that are going to get on base a lot, and are unlikely maybe to have as many fly balls that turn into homeruns, and that’s okay.
I’m just going to take the home run and the fly ball out of the equation, and I’m going to hopefully take the week ground ball contact out of the equation, and just tried to hit line drives, and look for pitches that are that line drive swing that I could take. Maybe it’s different for everybody, because we all have our own circle of competence. But in my mind, that’s the model that I want to use.
Walk-Rates Improve Your Returns
One of the things that’s really important, too, is this idea of walk rate. Joey Votto has the highest on base percentage and the highest walk rate of any active player. It’s 16% of his at bats, he gets a walk. And Ted Williams has the highest of all time, which was 20.6. One in five at bats, Ted Williams was getting a walk. Why that’s so important is that, you’re taking then those bad outcomes of a ball in play that’s not hit real well.
This is how you get your average up as you don’t swing at bad pitches and therefore, you’re going to end up walking a lot. I think there’s implications for us as investors and like cash management, you’re going to end up walking a lot if you’re only waiting to swing good pitches. I would say looking at Berkshire’s cash balances over the years, you could say, “Shoot, that guy’s walking a lot.” There’re always tons of cash on the balance sheet, but then when he does swing, I think he’s hitting a lot of line drives.
The other thing, too, is that walk rate versus strikeouts. Ted Williams had probably the best season ever for anybody in 1941. 147 walks to only 27 strikeouts. That’s an absolutely insane season. Anyway, I think there’s just a lot of interesting analogies or at least I like it, because I’m a baseball fanatic, because my kids are so into it that I think that we might be able to take away in the investment front that might help us to hone in on like…
When you swing at a pitch, what are you trying to do with it? Are you trying to hit a fly ball home run, or are you trying to hit a line drive, or is it ground balls, are you trying to bunch your way on? There’re lots of different analogies that we can use. But know what you’re doing, know what pitch you’re looking for, and know what swing you’re trying to take on it.
Tobias: The pitches walk guys, do they intentionally walk guys all the time.
Jake: Yeah, and maybe, even more they pitch around guys. It’s a semi-intentional walk. You just won’t see a strike in the strike zone. If you swing at something, it’s going to be the pitchers pitch, because he’s not giving you anything to hit.
Tobias: Right. There was a girl in the softball, who was going for the record for the season. The homerun record for the season and she was– [crosstalk].
Jake: They just walked her.
Tobias: Yeah, they walked her.
Jake: Barry Bonds, 2004 season, I can’t remember what it was, but I think it was over 200 intentional walks. I don’t know maybe that’s not right, but whatever the number was, it was just the second-place person, if I remember was not even in the same galaxy as far as a number of intentional walks. We can’t pitch to this guy. He’s hitting a homerun every time he’s up.
Jake: He was chosen, right?
Bill: Barry Bonds career OPS is over one.
Jake: That’s pretty cool.
Bill: That means, every time he got to the plate, you could expect him to get at least one base. That’s crazy. Somehow that guy’s not in the Hall of Fame, because we all get upset about steroids, even though we all knew what was going on. Okay.[laughter]
Bill: So stupid.
Jake: I saw something that 2004 season, if a player went and got a single and a homerun every single game that they played, it would have been a comparable OPS to what he had for that 2004 season. It’s just insanity.
Bill: Yeah, dude. He is nuts. I didn’t realize Votto’s OPS is over 900. My man, Ichiro’s 770 something. So, more hits, less power.
Jake: Yeah. Votto’s legit. [crosstalk]
Bill: Also, get to the hall, though.
Jake: Yeah, I think that’s right.
A Cricket Match Goes For 5 Days
Tobias: Yeah, a few requests to turn this into make an analogy for the cricket. Sorry, dudes, I don’t know enough about baseball, or tennis, or cricket discussion.
Tobias: I saw someone mentioned the scoop bats from the 80s. Yeah, remember that. Had the Gray-Nicolls double scoop. It didn’t help.
Jake: No idea what you are talking about.
Bill: How does cricket still exist? We’re having enough problems with baseball being too long. Cricket can go like a day.
Tobias: Cricket goes for five– test match goes for five days.
Bill: It’s insane, makes no sense.
Jake: How many hours per day are they doing it?
Tobias: The first ball might be at nine and they might play until it’s dark. It could be five or six.
Jake: Oh, God.
Tobias: It’s a war of attrition, you know?
Jake: Because you just lose interest as a player or– [laughs]
Tobias: Cricket’s like it’s a beautiful blue sky, it’s a nice green lawn, players are in whites and red cherry, red ball, it’s very soothing to watch it. It’s very calming. It’s strategic. There’s a strategy element to it and you can retire people hurt. You get the super quick bowlers, the express guys. There are doctor pitches too. If you know that– [crosstalk]
Jake: [unintelligible [00:52:24] something?
Tobias: If you’re the home groundskeeper and you know that you’ve got some quick bowlers who can do a lot of damage, they make it a very dry pitch that crumbles, so the ball bounces really high and bounces all over the place and reverse that. If you’ve got some spinners, it will be a very sticky wicket.
Bill: The old sticky wicket.
Jake: The only sticky wicket on a spinner.
Tobias: It’s what it is. It might be one of the most popular games in the world.
Jake: Fair enough.
Tobias: Thank God for the Indians. They are keeping it alive.
Bill: Yeah. I think the only thing is you got to be okay, just not swinging.
Tobias: This is true for cricket, too. It is very true for cricket. Same idea. You just don’t want to hit the bat. The guys trying to trick you all the time into taking a swing at something you shouldn’t be swinging at.
Take Strike One To Get Your Timing
Jake: One thing that I just realized, Williams would always take strike one to get his timing, which is almost like Buffett’s equivalent of like, “Never buy an IPO.” Wait to see what it does for a while before you a swing at it.
Tobias: They put snow at the IPO, didn’t they?
Dealing With Negative Performance
Bill: [crosstalk] Yeah. that’s true. I think part of my indexing fetish, part of it is the divergence of performance, both positively and negatively. I’m not sure that I deal with that very well.
Tobias: Nobody does.
Jake: [laughs] You don’t deal with it positively?
Tobias: I’ve never experienced it positively. So, I can’t comment on the negative stuff.
Jake: Some day we will find out what you are made of.
Tobias: I’ve been the value investor for about 14, 15 years. So, it’s too short a time period to comment on the positive side. [crosstalk]
Bill: Yeah, I think it’s a skill to be ahead and keep discipline.
Jake: Yeah, be a good winner, be classy.
Greenblatt On The Acquirer’s Multiple
Tobias: I like Greenblatt’s quanty approach. I saw he was on– William Green did a podcast.
Bill: Yeah, that was a good interview.
Jake: Was it? I haven’t checked that one?
Bill: Yeah, it was. It was very good.
Tobias: And he got asked about mine, The Acquirers Multiple and he just said that we didn’t back test it to try and figure out which was we ran one back test, which I thought I knew that that was the case. It was a good answer. I don’t have any criticism of the way that he put together.
Bill: He actually said, I don’t know that you can say, but I can say, I think I can say. He actually said, “A deep value strategy has higher expected return, but is more cyclical.”
Tobias: Yeah, more volatile. I think.
Tobias: But possibly, that’s right.
Tobias: I don’t know. We’d have to get back and run it– [crosstalk]
Bill: Check out the podcast. Hear what he said. Don’t quote us.
Tobias: It’s Investors Podcast with William Green. I can’t be too critical of what he’s done. I like his approach to it. I didn’t practice mine. I didn’t like data-mine mine to get the answer. I just was wondering about the impact of blindly buying high-return on equity. But I do think that there’s a lot to be said. If you can find some defensible high returns on equity, assets, capital whatever, and buy them reasonably cheaply, clearly, that’s the best way to do it. It’s just a little bit harder to do than to say.
Bill: Yeah, and valuing the options. There’re a lot of companies out there that have a lot of option value, but then, you look at the enterprise value and it’s like, well, they better have option value, because you’re not paying for the current enterprise.
Jake: Yeah, it’s on the cup.
Bill: Yeah, that can work. But I do think that the question that I’ve asked myself on those ideas is, how much can you really size them? Because I think if you have a portfolio of those– I don’t know. It can work, but I think they’re correlated, I know they’re correlated in the short term. I’m certain of that. So, you got to have an investor base, that’ll let you get through that. Then, you got to have an emotional makeup, that’ll get you through that, and then, you got to be right.
Jake: This is trying to hit a fly ball. Let’s say, you’re going to only be evaluated on 10 at bats, like you only take 10 swings, so super high concentration portfolio, and you’re trying to hit a home run with those 10. Chances are you might hit a lot of fly balls as well and just turn into outs. So, sometimes, I think that really high variance plus high concentration might be a little bit of a dangerous game to play.
Bill: Yes, [crosstalk]
Grandma’s Portfolio Outperformed
Tobias: It can work and you could be in a cohort of people who do that, and somebody in that cohort does really well. But I don’t want to be the guy that misses out. I want to capture as much as I can. That’s one of the things that– I’ve done some testing, where I just like, “You hold it for as long as from when the screen identifies it to today,” which could be two plus decades and it’s very, very hard to predict from the outset, which ones it’s going to be.
But I think it’s a pretty good argument for having smaller position sizes, if you’re going to hold for a long time. Because the ones that work go up 50 times. So, it doesn’t matter if you start out with 1% or 2% and that carries the whole portfolio. You end up at the end of the whole thing with this portfolio. It’s filled up with all the stuff that’s worked is the stuff that’s the largest in your portfolio. You look like a genius, even that’s just all pure randomness.
Bill: Yeah, that’s more or less what happened on my grandma.
Tobias: What was she concentrated in?
Jake: Yeah, that’s the– [crosstalk]
Bill: Now, I am, because she gave it to me, but my biggest position is Microsoft, by far.
Tobias: Congrats. Good call.
Bill: Yeah. Do you know what her cost basis is? $1.38.
Jake: Pre split.
Bill: Yeah. I think her cost basis in Coca-Cola is 97 cents. Her cost basis in Berkshire is super low. It’s crazy, it’s crazy. But she’s 93. So, that’s what will happen.
Jake: She got any hot tips for today?
Bill: Oh, her situation is real– [crosstalk]
Jake: Let’s ride that hot hand.
Bill: Yeah, I know.
Jake: She likes Baba. [laughs]
Kyle Cerminara Blessed By Peter Lynch
Bill: Yeah, shoutout to my man. I’m not saying this a hot tip, but Kyle Cerminara, who just got somewhat blessed by Peter Lynch. I would be pretty proud of Peter Lynch take a 5% position in my company. I think that’s pretty cool, even if it is a small percentage of his net worth.
Tobias: We are coming up on time. Thanks very much, everybody.
Jake: We made it.
Tobias: We did it. We’ll be around next week. Are you off next week, Billy?
Bill: Yeah, I am. Yeah. In Hawaii.
Tobias: It’ll be in Ian Cassel, next week.
Tobias: Filling in for Bill. So, we’ll do some– [crosstalk]
Small Caps Crushed
Bill: He’s got fruitful basket right now that he’s picking through. Small caps got crushed.
Tobias: Yes, small caps have been dinged up over the last 12 months.
Tobias: Rough run.
Jake: This game’s hard.
Bill: Forward returns are good.
Tobias: Forward returns looking good.
Bill: That’s right. Cathie Wood, you got a small cap.
Tobias: All right, dudes. Thanks very much.
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: