welcome back everyone to the first day of the second half of 2022 and we are blessed today to have ross gerber uh co-founder of gerber kawasaki they run the etf taker symbol gk welcome aboard ross tell us what's going on man are we gonna survive this tell me because the first half sucks wow wow right i mean the worst first half in our lifetime and yet you've been on vacation most of the last month and and i guarantee you it was packed wherever you went this is like the best recession we've ever had you know and and like people are like it's a recession it's a recession and they're calling me from italy and stuff you know and and then they go oh well the average person and this and that and then i go down to the pier or i go to disneyland we even bought stock and knocked berry farm because it's so packed down there people are spending money and they're out and so it's kind of this weird dichotomy of like markets the fed and then like real life you know and there's and it's rare that you see such a big disconnect between really really negative sentiment in the markets and really positive sentiment among people you know yeah you don't see it in the consumer numbers though you don't see it in the consumer numbers yeah it's it's so weird i mean you um you look at like uh consumer spending you see credit card spending declining but still growing over last year so it's like we're seeing this deceleration but there's still positive numbers so it's kind of like okay so we're we're shrinking but we're shrinking off the sugar high you know it's kind of like we have this like insulin response reaction of like oh shutting down here crashing a little bit but it's really just coming down off this stimulated high exactly you know and and it's it's similar to people who use cocaine where you know you you if you get into this bad habit when you go to the party you just have this phenomenal time right but the party could be bad but it doesn't matter because you're on cocaine right and and that was kind of like 2020. like the markets were way better than we thought they should have been or or would be but it was because of the fed right and then like 2021 it just kept going right and so like now the fed's like okay we have to go back to normal and sorry the party's over and because we were on cocaine that's twice as bad than if we were just not and that's what i think is happening we've seen these just extreme sentiment shifts you know from positive to negative you know extremely negative today you know yeah so what what do you make for the second half i mean is this something where uh do how concerned do people need to be you know a lot of folks i'm hearing this time and time again now now when we've already come down what 33 on the nasdaq now is when people are starting to raid their retirement funds going you know what i've had it i can't take the pain anymore this reminds me of 2008 uh you know beginning at 2009 where my dad's like oh my gosh it's been a terrible stock market for six months my retirement's gonna be gone i need to save what's left i'm going to sell everything meanwhile he ends up selling and capitulating at literally the bottom of the market you know right never gets back in never gets back in no retirement fund still to this day right and you'd be surprised there's still people pissed off about the financial crisis that haven't gotten back in you know yeah um and that's why you need a financial advisor that's kind of what we do at my firm that is what we do is like if you're allocated correctly you haven't been able to avoid losses here nobody has so even the most conservative investors are down 15 to 20 percent and in our balanced accounts are still down over 20 percent you know 20 or such and our growth is down a third you know which is like crazy so from an emotional standpoint you'd be like oh my god get me out but see that's where a financial plan is so important because if you look at your overall situation and you say well i own great companies i have a great balance between stocks bonds and cash so i'm not in any like financial risk but emotionally i hate seeing my accounts go down and that's where we come in and so here's one of the things i tell people and this is and i probably tell people this about 10 times a day right now so you have to look at your money differently than what people look at their money okay so what most people do is they look at the maximum amount of net worth they've ever had then they subtract to where they are and they've lost this money okay so they go to the maximum now this is a recipe for never feeling good because essentially you know because markets do this over time you're always up and down because if you're not at the high of your net worth you've lost money that's the way people think and it's it's a really weird psychology so if you have a client like i have a client that let's say five years ago invest five million dollars and it's grown to eight million dollars today but it was at 10 million dollars a year or two ago let's say a year ago okay so the client had five million dollars and these are this is a real story then got to 10 million dollars and now is that eight million dollars and says that they've lost two million dollars is that in fact true no in fact he's made three million dollars over the five-year period okay and then you start doing returns and you're like you're up eight percent or ten percent or whatever it may be you see what i'm saying yeah so the first problem most people have is the way they think about their money it's wrong your net worth is not the highest point it's ever been and now you've lost it's what was where were you 10 years ago sure how much money did you have 10 years ago how much money did you have five years ago and when i say how much money did you have before the pandemic and how much money do you have now and people have done pretty well through the worst period of time you could ever want now all the restaurants closed all the retail stores closed today you walk down montana or you go into santa monica they're all new stores and restaurants all new that is not a recession so with the fed moving interest rates back to normal and shocking the economy essentially yeah there is this risk that there's a temporary recession because the fed is too aggressive and this is what i told your viewers i think it was the beginning of the year when the fed starts raising rates after the third rate increase this is the scary time and that's exactly where we are now because the question is when does it end because now we see the economy turning it's clear it's turning look at yields so the yields have dropped to 286 or something today yes this is crazy we went from three five to two eight six massive bond rally right i started working once because we started buying bonds okay you started buying because we started doing it everybody else did no i it's because it was just yield like when you know my clients are scared to invest in the stock market but i could go buy a bond i bought netflix bonds paying me seven percent through the rest of the decade that's a great yield seven percent i bought mgm bonds paying me seven and a half percent through the rest of the decade so i went out to my older clients and locked in these yields i'm buying reits like iipr at six and a half percent yield and i said to clients forget the stock market let's get yield now because if there is a recession and rates do come back down and we go back to the old trend line these yields are going to be like 1983. okay yeah and so you know my feeling is if this is really like 1983 which is possible then you want to buy the heck out of bonds because when i started in the business you had all these people that bought bonds in the 80s who made a fortune because you could buy a treasury or immunity yielding 15 percent okay you could buy a tax-free muni for 12 1985. see you know what you need is you got to make like the robin hood for bonds man well i was thinking about you know doing a whole thing and teaching people about bonds because you can actually make a return on bonds over inflation for the first time in 15 years right yes real returns that's crazy yeah so see bonds have been a negative return for years years you know what so i mean what what's your take are we going to see another bottoming in the bond market then because you know like you said the tenure was at three five it's at three eight six three eight eight eight now with two two massive 70 basis point move in a matter of a week and a half uh when we get through more of this quantitative tightening cycle and the fed's buying less there's less demand for these bonds we're gonna push those yields back up or like where's the market you know capitulating right so we're seeing it in commodities and like my shipping companies zim just getting hammered today like shipping costs coming down commodities costs coming down oil prices stop going up you know so now gas prices stop going up so so copper prices going down is also a signal of a weaker economy coming forward um so we have the plus side of china coming back online and china reversing what i considered incredibly detrimental policies to now being more open about you know the economy in kovid so she had like a near-death experience locking down shanghai so we're very confident that they're not going to lock down cities again and that's really good because what we're going to see in q2 like we saw with micron and many of the other companies that are going to report is this was a really tough quarter for making money because of war supply chains china lockdowns it was like everything that you couldn't really quantify happen in the second quarter and that hurt markets but as we move forward and you kind of look at like if china china stimulating their economy that's like a hugely positive thing for the global economy versus the lockdown so i was super bearish on china became a little bit more bullish on china we added byd to the portfolio b-y-d-d-y which is just dominating the electric vehicle but battery they're making great batteries at byd um so we added that to the fund and we were adding that to our portfolios to add back a little the china exposure that i had dumped 100 of um and i love the ev business right now so so what's happening is just like beautiful for our portfolio because people are now buying less gas gas demand is going down because the prices have gone up and ev prices are skyrocketing and you can now sell your tesla for a profit every tesla owner can now put their tesla up for sale and sell it for a profit because the demand for electric vehicles in the in the arbitrage between gas and electric prices is so high now that owning electric vehicle saves you five to six thousand dollars a year it's a it's become an incredible value proposition for people who drive do you think that could be a reason why and does this concern you that maybe we're seeing something like these sort of charts where uh you know at the bottom there at the bottom left we've got that red line q2 2022 estimate for model 3 and y orders coming in vertically substantially lower in order quantity and uh and the time that it takes to delivery uh shrinking so kind of like delivering these faster seeing less orders come in do you think that sort of that pacing is is is concerning the comparison where'd you get this chart this is uh uh troy test like he does the estimates on twitter and so uh you know about 67 days into the quarter he was estimating that our pacing for orders was was the lowest that it's been in out of the last five quarters uh the red line there at the bottom yeah i don't know if that's correct i mean demand at tesla's off the charts that's what i thought and delivery times have extended out and i got people calling me saying can you call elon and get me my car i thought it was the opposite problem that it's been taking longer to get a tesla the demand has been so high and then they've had these supply chain issues and if you look at the last week tesla like that's why elon hasn't been tweeting because he's been like probably delivering cars himself you know so they've got production back full plus in china and so they were just like we got to try to make the quarter and they've been pushing out cars like crazy but but but tesla if you buy one today it's it's hard to get one anytime soon so yeah i don't know any demand issue i don't know where those statistics are coming from because yeah i i also in pole star and we're seeing the same thing at pole star you know the demand oh my god it's it's it's a dream come true right i mean he wants to spend 400 a month on gas anecdotally one of the things that i'm hearing is is people are uh wanting to buy an ev but then they look at the wait times for like the tesla or whatever and they say whatever i'll just buy a legacy ev just so i can have any and then maybe you know in three years i'll buy a tesla or something like that like do you do you think that's actually a positive for tesla that maybe we're just delaying demand while we ramp up rather than destroying that demand no i think it's so like five percent of u.s cars sold are evs right now 95 of cars are still gas guzzlers you know and if you drive around la versus let's say texas what you see is vastly different vehicles right so santa monica california today has more tesla's than it's like every other car and then the rest of the cars are are kind of like fuelish efficient cars and we've seen the suvs and the land rovers and the broncos start to trend down in sales and we've seen the small cars the fuel-efficient car this is what happened in the 80s so in the 70s with high inflation the result was the japanese car boom of the 80s where the small fuel-efficient cars became super popular in the 80s and japan became this massive industrial you know success story because of the cars and and that's what's happening with the evs now so what we think and we're seeing this at ford and we're seeing this arian except they can't make that many trucks that if you can just come out with an ev it will be sold it will just be sold so the issue is can we do this profitably can we get our supply chains in order and can we meet demand and we're seeing that like at ford the demand for f-150 is a hundred times supply you know what i mean yeah yeah and so the ev version the mock version yeah and what's crazy is they just came out as well ford and they're like yeah so all of our profits from making the i think it's the uh the suv the mustang maki suv whatever one of those uh i think it's just the maki i don't know i don't pay that much attention to ford but anyway the suv one there uh there were reports that they wiped out all of their margin all of their profit on those cars because of commodity costs but they're selling them like crazy they just can't do it profitably whereas tesla is raising the prices and they're still making profit while selling all of them so tesla's like apple where it's like we're going to make our margin and you'll and also it's kind of like ticket scalpers like if tesla sells the car for 63 000 other people are just reselling it for 70.

so like tesla doesn't make the money this is kind of like dynamic ticket pricing you know where like you know you don't want tesla scalpers and that's basically what's happened now is there's tesla scalpers and they're just trying to buy every ev and resell them like people are dumb they're capitalists so so you got hurts in the rental car companies buying all the low-end evs now uber drivers finally figured out like hey if i don't have to pay for gas and i can still depreciate 62 cents per mile on my taxes even though i don't pay for gas hello uber drivers now they're buying evs like crazy because all of a sudden your margin doubles if you're an uber or lyft driver right and then you've got people right who are like oh you know so tesla raises prices their costs go up and there's no problem they could raise prices of 70 000 still sell the car because the scalpers are still selling them for 70 000 right it's wild you know well ford just needs to raise prices but the problem is they got the dealers and the dealers want to make their profit and then and so they're raising prices on the dealer level and they're fighting the dealers who are just gouging the consumers right um and they have no control over that and so that's the problem with ford but many companies are dealing with this and it's not just car companies where sales are going up but margins have gone down because of and we're seeing this at nike for example and this is the story of q2 sales will be decent but margins will be hit and it depends on the business so for netflix probably no margin hit because they don't have to ship anything but a lot of companies like apple are kind of caught in this middle ground of sales in china shipping supply chains it's a tough quarter for apple that's really interesting that you say as well that the dealer is making the margin and i think this is one of the things almost everybody forgets about tesla is there's no dealer they sell direct so see during the whole year and even to some degree now you have dealers that on like the prius put a five or ten thousand dollar dealer markup because they can so the dealer like the dch you know toyota of whatever oxnard or palisades or whatever they take the profit right toyota doesn't whereas with tesla you raise the price that's your dealer markup but it's going into tesla's bottom line and then to tesla stock eps right and their earnings per share and that goes by the the model of the antiquated model of the car companies really exceeding power to the dealers for service and sales which are are the two most crucial elements but then not really having control over what happens with pricing and who gets the profit right now what what do you think about this idea that we'll go through a recession we've seen multiples come down we're going through it right now it's the best recession ever perfect so we've got multiples that have come down on stock valuations we haven't yet seen the earnings recession where earnings are going down and this is where i think exactly what you're saying you're going to see you know maybe flat sales at nike which year over year nike sales are down one percent so you're seeing that like the flat sales now it's a matter of like that eps is probably going to come down one of the like i want to ask you what safe havens you think there are but one of the safe havens i think in an eps recession is actually on the topic tesla because hey they have so much demand you could slice their demand down by 50 still sell more cars than you did last year right and there's many businesses that are recession proof like netflix where people don't just like entertainment actually does well during recessions because we look for escapes so netflix and disney which are incredibly cheap stocks we've been adding to these are the two best brand names in entertainment and they're recession proof now disney less so because of parks and resorts but we are seeing incredible demand for parks and resorts and theaters there's just been no change in demand in the summer season just begun so like once again people are s like so the consumer sentiment survey they say everything sucks my gas prices are up my rent's up my food's up and i'm unhappy and they're saying this on their way to disneyland to buy you know 200 lifesavers and 20 hot dogs you know and i'm like dude how can consumer sentiment be so bad and then you go to the pier in santa monica and people are like fighting to get on a ride you know and these aren't cheap things you know but but is this potentially the difference of of the the upper middle class and upper class versus the lower class and lower middle class it's never been better time to be a lower income person you know what minimum wage just moved up in santa monica to 16 and nobody's making less than 20 or 25 dollars an hour um nannies dishwashers cook line cooks uh hospitality the demand is still huge for labor it's still huge in fact it's the opposite the people getting laid off are the high paid software developers at all these companies tesla throughout 200 you know lazy software developer you're seeing this all over the place in tech world the tech world's like oh we got work by all these people last year who basically work from home and don't do and so they're like they're just like cutting people and you're seeing this across the high paid sector of the workforce but the lower paid sector of the workforce is an enormous demand and that's what's bullish for the economy okay long-term terms is that we've got specular change in in in sort of what the need is and we're bringing manufacturing back to america it is a little bit more inflationary to do this but it creates humongous demand for labor this uh this was just posted a few hours ago uh facebook has plans to cut engineers uh plans to hire what cut plans to hire engineers by at least 30 percent this year uh and uh and has warned them to brace for a deep economic downturn so on one hand we've got a little bit of that sort of warning that you're talking about with with uh you know it's the upper end getting cut but i also want to talk about the second part right after i mention it's really interesting everyone says the lower end is the one that's getting pummeled because oh gas prices are up or rent prices are up and these this makes up a disproportionately large share of their income correct you're right like wow nannies are getting 15 pay raises on top of the 20 they used to make now they're making 35 you know it's just like that's that's almost 100 pay increase you know whereas like the upper middle class maybe like pilots for example they had to go on strike to get a 17 pay increase just yesterday and we're in a huge demand for pilots right i mean that's like crazy so so we work with thousands of families you know across the entire income spectrum because my firm doesn't just focus on wealthy people and so we have people from young people coming out of college to people who make lower incomes who are great savers but the the thing that's most common about our client is that they're investors they're savers they're people who want to get ahead so in our society about 50 of people no matter what their income level want to save money and get ahead and they're able to do this even at lower income levels because that's what their goal is and then 50 of people are relevant of their income level because we see rich people who make tons of money and have no money because they spend it all okay you see this every day it's called basketball players right and so it's like you'll never meet a bunch of people who have less money at 60 years old than professional athletes actually so you so when you look at 225 million dollar deals left and right for basketball players during the recession right these are the people that end up with no money believe it or not wow so so saving and investing is a mentality irrelevant of your income so half the people save and half the people spend so when inflation's bad it actually just really hurts the people in debt rates go higher they don't a lot of cases don't earn higher incomes and then more of their income is spent on rent food gas and debt so if you have more debt where higher rates isn't good for you you see what i'm pointing and so so there is a portion of the economy in society that is going through a tougher time because of inflation and then there's a portion of the economy and society that it's gotten more expensive and nobody cares because they're making more money but but i think zuckerberg and musk and in the tech view of this coming recession is because they work in a digital economy but if they were like working in the hotel business in vegas which we're in through mgm and you saw the demand for vegas right now all these software engineers could go into hospitality and find a new job well i don't think they want to do that right because that's actually hard work um so you know like so so i think the idea that we're gonna go into some sort of like deep horrible recession is based off the concept that the fed is unable to stop raising interest rates okay so if the fed keeps raising interest rates forever we're going into the worst recession ever yeah but that's not what's going to happen in an election year for sure actually the fed just needs a reason to stop raising interest rates yeah okay they just need a reason they need inflation to come down they need a reason and that happens now i know you're big into bonds so this is probably my favorite thing to look at is i look at the uh the break-even rates and uh let me i'll just hide myself for a second here uh we get this peak and break even inflation rates there in march they've come straight down to levels now where you know we haven't seen these inflation expectations since like october of last year so in other words we went through this crazy q1 fear of of inflation and lasting forever and it's plummeted the bond market is telling us inflation is transitory now nobody likes to hear that word but that's what the bond market's saying they're screaming it to us right i think that the term transitory we should probably just get for a long transition that's transitory for three years but yeah no inflation was totally transitory if it wasn't for the war you know like sure the war has been one of the worst things that's happened in the world in 60 years you know so the effects it's had on the global economy have been extreme and certainly not one to discount and just say oh no big deal it's been a big deal and that has caused enormous disruption and inflation but what's happening now is that this war isn't going to go away quickly and it's now a stalemate and you know what's really happening is we're uniting europe into a much better situation than we had before and nato is becoming this massive expansion which may include now south korea australia japan and all of a sudden nato becomes a a global asian force for good wow china china china's pissed about that they're they're you're she you just fell into the trap of creating an axis versus allies scenario very much like world war ii and the allies are getting together so russia's goal has failed miserably and dividing and conquering the world you know some would say that if anything you know we've potentially now risked the dollar's reserve status as as a the reserve currency of the world that we settle oil in dollars now china and russia are settling it in other currencies and i thought it was the royal for 20 percent off i thought bitcoin was the reserve currency of the world yeah stop bitcoin so so you're going to go put all your savings and she's she's bank come on no the dollar is the best that's why people are buying the dollar all right there's one game in the world for sure and it's here if you want to play anywhere else in the world you ain't going to make money you're going to make money here in america and american companies in the dollar i think it's never been a stronger argument america is like the freest best country in the world by like miles right and we have we're totally dysfunctional so like if you know like so think about how bad it is in like england you know they got like wisconsin who can't even like do anything you know it's like he could party yeah it's like oh don't have a party don't get coveted so he goes has a party it gets covered you know that's your president at least our president just falls off a bike you know so going backwards to what you were saying so we went from like runaway inflation fear this is the 70s to now we're going into the worst recession and bear down software developers because we're going to start laying off all you 280 000 a year guys right and and i'm like wait you know the fed might do 50 basis points in july and call it a day you know who knows okay they have no incentive to create a recession if inflation expectations decline which they're plummeting yeah exactly it's crazy right so now they've created the perception of a recession and everything changes and now they've got the cover before the election to then say we're gonna see how this works out and then boom that's when we get our money back that it's funny you say that uh jerome powell commented just two days ago when he was testifying in congress maybe three days ago i think it was tuesday and he's like you know it's great the market basically does our job for us right which is not the way they're supposed to do it which is what screwed us in queue one and two sure basically was behind the curve yeah i don't think they have the confidence in their own actions so it's like if they can just come out and every week they've got a schedule of people yapping we're we're inflation's the worst thing ever forget dual mandate inflation's the only mandate and the market freaks out and prices in the rate hikes basically the fed just moves their lips and they instead of actual actions that's exactly what happened kevin and that's exactly why we misjudged the severity of the first half of the year because typically the fed just raises rates when they're supposed to does it in an orderly fashion and they don't have to talk up long rates the short rates does the job and they kind of march up together and that's why you have a little bit of cover for a few rate hikes before things get dicey okay what the fed did here was they're like we're behind the curve let's just talk up the tenure because we're behind and the ten year goes from one six to three five and stocks just collapse so that's not that's not surprising actually you know because like if you look at mortgage rates like i i want to talk about real estate for a minute because you know i am actually buying my house i want i do want to hate on real estate come on let me quickly bring us in that increase is a big deal well i just because we're still somewhat close to tesla before we get to real estate if you don't mind i gotta show you this okay so i tweeted this in september it says do not buy a tesla uh buy tesla that was in september uh oh it's kind of cut off there uh there we go did not buy a tesla by tesla right well that didn't age too well uh you would have probably been up about 15 right now if you bought the car and you'd be down like 15 or whatever from there if you bought the stock now what's funny about this is you actually replied to this with just question mark yeah so i had to bring that up and it's like you know i mean usually well i tweeted that yesterday that if you would have put all your money in tesla cars instead of tesla stock in january you'd be up 25 on the year yeah that's what i'm saying it's yeah yeah what twisted world is is is what i wrote there wrong but it was listen anybody who's selling tesla stock to people right now at 700 bucks is giving you a gift it's just giving you a gift because one of the things i'm sure of in 29 years of doing this business is that most investors can only remember 12 months ago they just can't remember the past they just can't remember it's unbelievable they don't remember so it's like oh tesla has this problem now tesla's ramping two factories so yes expenses will be much higher this quarter hello there's just that's ram so the als are going to go out and say blah blah blah blah but they don't remember the ramps of the previous years of course it's more expensive in the first six months but when we get out to december and we got four ev factories just humming and you start counting that we're gonna do two million cars it's like that's all that matters so so s so you own a company and what another thing i've been telling clients about 10 times a day is that if you buy private equity if you buy into uh like any private company nobody values the company more than once a year okay so like i have private equity investments and like i put in 100 grand it just says 100 grand on my balance sheet because i don't even know what it's worth and there's no there's nothing to look at you know there's no stock price to look at there's you know it's like i own probably four or five private companies where it's like i i haven't checked the value i don't know how to check them out my 401k for example at work our interface is so poor because 401k interfaces suck most of the time so that people just don't check it very often because it's like why and it's like i finally looked at it the other day and i was like oh i'm down 20 of my 401k but i actually hadn't thought about it at all because i just didn't look at it but i put money into it every month and and so it doesn't matter to me if i can buy the greatest companies of the world cheaper that's a huge advantage as long as this isn't the financial crisis and it's not banks are in the best position because banks are in the best financial position they've ever been in and in fact the banks just recently got the fed to say you can pay dividends you can buy back stock you can you can do it you've never been more profitable and now rates are higher so they're just printing money you know nobody said ross we don't want to give you a five percent mortgage they couldn't wait to give me a five percent mortgage they haven't got five percent on a mortgage in 15 years okay now rates are coming down and i said are you lowering it and they're like oh i don't think so it's like i know tell me about oh no okay so you're so you're um uh you're buying uh you're buying place tell me about this well i'm buying the pace i'm renting so you know i've been renting this house for four years and my landlord's like i'll never sell it i'll never sell it don't know how you can't buy property in the palisades and this is a big property it's 15 000 square feet of land and it's on a river so in l.a that doesn't exist so he's like i'm not selling because nobody sells their houses here unless they die and that's how he got this house was the person died so um so real estate changes rates go up this guy does real estate that's how what he does and he panics and he he's just like so the neighbor's house sold two houses down and he was just like if you pay me what the neighbors just got i'll sell the house my wife's like what did you hit your head we've been asking you this for four years you know and it was like i don't know he said send me an offer by you know like tomorrow or else i might change my mind and we were like boom and now i'm in escrow and i'm like paying the highest price ever for a house in the palisades but it's like you just can't find another house wow and you're very excited i'm not excited at all my wife is excited which then i like paying rent my rent is cheaper so now my cost of living goes up a hundred thousand because of interest rates oh yeah yeah yeah are you going to get interested go variable are you going to go fixed i o seven years okay interesting only seven years that's awesome yeah increase your buying power in stocks during a time when they're on sale well this is what i'm pissed about because i was hoping to just renew my lease and i had all this cash for the down payment and i was like honey i could put a lot of money into tesla right now and we could buy like six houses when that works out you know yeah and but that's not the way life works that's why financial planning is financial planning i have a family we don't want to move the guy's going to put it for sale if we don't buy it you know and so it's like sometimes the best opportunity is making your family happy and i'm going to develop this property at some point and i'll make millions of dollars when i do that i'm not excited to do it it's not what i like to do but you know life just is what it is so so i have a wonderful place to live and and now we're going to buy it and so one of the best ways to to submit like plans for for renovations or construction or whatever one of the best ways i found is doing it while either you're living there or tenants living there right because if the city jerks you around for an extra two months doesn't matter you're not losing rent you know but if you have a vacant property you're trying to develop don't even bother in california man no it's a nightmare that's kind of the advantage is because we live here we can apply for permits and and living here either way you know um you know they're building everywhere around us so it's like we're gonna have to build to get value out of because we're paying a high price but but you know it's supply and demand and that's why i think you were tweeting about like real estate going down and and i think real estate will go down in many markets but i think in many markets it will not too just because of supply and demand so i think in the overheated markets where like austin where everything just got bit up to california prices because everybody was moving there and worked from home and this and that those markets i think are somewhat vulnerable to rates but when you look at like the palisades where there's just so much demand you know like multiple bids are still happening on every property because we live on the beach in one of the best places that's not impacted by fire risk and so if you're going to buy a property you want to think about fire risk in california and and there's very very few places that don't have fire risk and that's what makes these houses so valuable yeah what's what's great too uh and people get mad at me when i say it but a lot of people are like oh my gosh how could you invest in california real estate and one of the beautiful things is california has such a massive shortage of homes and the politicians are so dumb with their inability to actually build more homes that you're actually investing in an asset that becomes more valuable simply by the fact that california is refusing to build enough homes it's like that's exactly if you had to pick a state out of all 50 states and go which state is the hardest to build homes in it's california oh yeah and that's what i want to buy well but i don't even look at it as you're like buying a home i look at it as like a membership fee and so it's like there's no like you can't like quantify why it costs so much to live in california it's like cost the switch to build a house cost this much to buy land why would i pay 2x that just to live in california that's the membership fee so we pay a membership and we pay it for a reason because today it's absolutely beautiful anywhere near the coast in california right it's perfect but in austin or i would say 80 percent of the country it's uninhabitable because it's so hot and it's humid and the bugs and the this and that so everybody loves austin but they don't spend the summer in austin california is wonderful in the summer and they're all here right now let me tell you okay the tourism here is insane so they talk smack and they talk smack and then they fly here and pay really expensive hotel prices right and that's why i'm like this is the best recession i've ever seen because disneyland is packed today packed don't go oh my god so are are you uh tell me more about consumer discretionary so since january uh we've been you know worried about certainly e-commerce right the etsy's the amazons right what e-commerce has gotten whacked and as shopify and that's all turned out to be true like those those have gotten hit yeah i mean uh but now we've got with that we've also seen big discounts in like the netflix and disney's but these are seem a little bit more sticky and they also have the disney element of the theme parks i think people are dramatically under valuing how much money people spend at these theme parks people are spending per person per head per capita they're spending 50 percent more in theme parks than they did in 2019. so that means you know twice well you know for every two people it's twice as many hot dogs it's crazy concerts too we're seeing in our music businesses too i mean we were shut down two years ago everybody's losing money now we're adding shows and everything's selling out so where where do you think the better discretionary investment is do you go back into etsy at 50 off or do you go into disney yeah so look at it this way so during pandemic companies that were focused online had this wonderful benefit and made a lot of money and and value valuations grew substantially and a lot of these companies like shopify you know really benefited so now we're getting back to normal and normal is that we go out and we shop and we like doing stuff and and amazon gets less use and etsy gets less use and there's nothing wrong with these companies but they just come back down to earth and so the omni channel businesses like nike where you can buy online or you can go to a store or a better business model longer term like ulta salons you know wonderful business model but the pure online player like pinterest just lost their ceo and you know founder they haven't been able to monetize a nice platform for a long time but you know when you think about they've had all this this time to to make smart just you know strategic decisions and instead they sort of just keep riding their business down the same path and then things change back and they just haven't adopted and and so they'll go through this this lull and then they'll find their valuations but but maybe these businesses have peaked you know like yelp is the perfect example of a business like that it's peaked years ago and they've done nothing it's still a good service actually but it's just where does it fit in the world i don't need to invest in that you know and i think that's where kathy wood is mistaken with the zooms and the roku as our top holdings is i'm like i like zoom but is zoom ever going to be better is zoom ever going to be more popular than it was two years ago and the answer is no and quite frankly i use teams and teams is great and and zoom is great but like do i want to own that you know i just don't know because the next stage is like what people are actually doing and they're going back to theaters for example and so a company like disney benefits from the rise in theaters they literally lost billions of dollars in revenue because the theaters were shut down and now theaters are open and they got movies coming out they got a marvel movie that just did well they got thor coming out and all of a sudden they start making hundreds of millions of dollars a year in the movie business so so companies like disney which have physical businesses but also did well in the pandemic because of disney plus they're going to see disney plus kind of like stagnate but there are other more profitable businesses will explode and that's what investors are going to have to look at is actual earnings per share and if you look at earnings per share for a company like disney we expect it to grow rapidly over the next two or three years for a company like zoom i was trying to find it i was playing around on their uh their last quarterly report and one of the things and they don't break it out very clearly but one of the things that it seems like at least they're trying to transition to is this idea of creating zoom offices and then leasing businesses the the tv the conferencing phone the voip service and all this basically making these zoom rooms for companies and then not only getting the subscription revenue from that but also uh you know getting a return on the the hardware do you think that's a business that is is intriguing to you not at all it's capital intensive and i i was just in an office the other day because you know how offices are are sort of evolving and we've been kind of on the forefront of it because i'm not really a work from home advocate i think hybrid work spaces make sense where we we prefer people come in at least three days a week in the office i do usually four days a week in the office one maybe one or two days out of the office but but the idea is we need more rooms for for video calls because it's still super efficient to do video calls right so i saw this office and they had these like little like almost like phone booths that they put in the office for zoom calls and stuff and it was like really really cool but like zoom works really well on a phone or it works really well on a laptop and all my employees have you know 5g phones and apple laptops so they don't really need equipment they just need somewhere quiet to do the call and so i just don't i don't want to be in the rework business i don't want to be in the office space business i don't want to be involved with offices in any way i don't want to own office buildings that is not the future the future is the hybrid workspace where companies depending on the industry will have various different types of models for their employees and it will be very different among different companies even within the same industries probably but this is not a place if i'm zoomed that i want to go because i don't want to go into capital intensive businesses if i'm a capital light business like zoom i think zoom clearly sh they're trying to sell more services to people they just haven't been successful that's because of microsoft and we own a lot of microsoft and i think microsoft is one of the best companies in the world because they integrated teams into the 365 experience so quickly and so well that it it's just i use microsoft 365 so it's just easy to use teams now we use zoom at our firm but i use teams almost as much as i use zoom because other people use teams you know right right but microsoft's making money every month on the subscription revenue for everything else not to mention they're in gaming which i want to be in big time with activision and xbox but but i think zoom ultimately is a great company that it was a pandemic winner but over the next five or ten years i think a lot of that you know zooming is behind us you know what do you think about the activision uh arbitrage play i think what it's supposed to close at 96 bucks or something like that yeah two bucks somewhere on there and it's just trading for 78 right now yeah it's like my twitter arbitrage play where it's supposed to close at 54 bucks and nobody believes elon's gonna buy the company um i think there's probably well they each have different risks so the risk with twitter you'll know in two months because he's trying to finish this merger in two months so yeah the twitter result you can make a very good return in two months if if he buys the company which i think he is with activision you have antitrust issues you've got government oversight issues you got workplace issues eeoc investigations so microsoft management's going through this like really painful process of trying to get this merger done and it looks like it's going to be somewhere in the middle of next year so part of the arbitrage trade is like when will this be completed and what's my return over time offset by the risk that the deal might not go through because of the government or something like that and so to me there's still like a year before this is going to be done and so because stocks are so cheap the risk reward you could buy other stocks like tesla for example i think the risk rewards much better than that because activision was such a troubled company now on the other hand i do think the deal will go through and i think that will be something to look at next year what are your favorite stocks right now if you had to pick 10 5 to 10 so look at it this way you have extremely undervalued stocks in one camp like it doesn't matter what business they are they're just like way too cheap right and then you have what we do mostly which are thematic stocks which which themes are really benefiting the most from the current environment so in my mind this is the ev point that i've been waiting for for a long time this is the shock that society is feeling the pain of owning gas cars and there has never been more incentive to buy an ev so when you think about what you want to own and where the future lies and where there's growth and so much opportunity globally the clean energy ev businesses that we own are just phenomenal investments that's core holdings in gk it's about 23 of our fund is in this about 26 percent is in technology companies so so i like ev tech way more than traditional tech okay that's why we just had a byd pole star here at nine dollars is just ridiculously cheap uh arkamoto at three dollars or whatever it's cheap okay you've got um next era sun power solar edge is a company i like a lot okay um so and and then um in commodities uh mp which has gotten cheap um i i it's like the battery situation hasn't changed so i added byd for their batteries in ev production and then mp is a recent addition for the commodities and they make rare earths here in the united states that are critically important for uh eevee motors um so and they're expanding rapidly and we're looking at adding sqm which is also a lithium commodity player in chile but because commodity prices are coming down these stocks have come down and now you have the opportunity to get into the commodities players so we're invested from commodities to evs and solar panels through our system and i don't think there's been a better time to look at alternative energy and and and what are our our things because ultimately just pumping more oil isn't the solution for the cutting russia out of the commodities market ultimately we need to stop buying oil from russia iran saudi arabia venezuela i mean it's like the list of horrible country governments is all we fund and so clean energy isn't just about what's great for the environment it's also what's great for humans it's great for our society so all these things have finally this is like that huge moment cathartic moment where if we don't really accelerate this it's really going to be bad for our society longer term and i think that's what's going to happen so that's one of my favorite places to invest right any thoughts on on uh potentially uh you know the supreme court just had a big ruling on uh epa's ability to regulate and kind of gave a little bit more freedom to uh oil and natural gas producers uh and uh you know with with with their energy do you think this is good for at home like uh for us producing more domestically maybe so the supreme court and and i'm going to say the illegally constructed supreme court because clearly many of the justices perjured themselves during their testimony to be appointed as well as at least one or two justices are completely illegitimate uh clarence thomas and amy comet barrett should not be there um and do do not represent the type of integrity level that supreme court justices should have so let's just say that the court in essence is an illegal court now once we get past that the court has basically decided that states rights supersede all federal rights now this is not a correct interpretation of federalism under jefferson it's not really a correct interpretation of the constitution because federal law like for environment for example if virginia wants to do a lot more coal well that pollution affects states around virginia so it is a interstate issue the pollution that virginia creates doesn't just stay in virginia and that's the way it should be right so if you vote that you're going to do coal and gas then we should put like some sort of like air wall around you and say you got to breathe this air that you're putting out but instead it floats on over to states that don't want coal so that's why it's a federally regulated thing okay like interstate commerce is federally regularly that's why pot companies have to have a store in each state you know so if this is in fact what's going to happen is that half the states are going to make it super restrictive to do any sort of oil and gas development and the other half of the states are like hey do what you want just pay us okay and then what you get is this really weird dichotomy of policies depending on where you live so if you live in texas for example or west virginia you cannot get an abortion you can buy machine guns you can pollute the environment you can do whatever you want in your state no matter how bad it is for everybody because it stays right and you can go live in that state and you can deal with all the problems associated with that state but when you live in california we i think our values represent many of the citizens who live here and our laws are going to do the same thing so we're going to pass a gun law which we just passed that says somebody shoots somebody in california the gun companies can be sued now for this violence so it works both ways because we're actually the biggest place in the united states is california the fifth largest economy in the world so when you think about it now all these same companies that are like yay yay well it's going to be real bad for them in california when they get sued because the same then the supreme court's got to say well we have to uphold california's right to make its laws and enforce its laws because that's the precedence that we've set now that federal law won't supersede any state law no matter how detrimental it is for everybody else and so we're going to have freedoms in california that won't be um the same in other places and we should look at every state like a separate country now and and people from california should really consider who they're doing business with and where they're traveling and spending money because essentially they're supporting rogue states that don't actually agree with the ideologies of many of the tourists that come there and they will only change when it affects them financially so we should boycott all oil producing states that have standards where pollution is what's more important to them than climate now now do you think that's potentially that there's any kind of like anti sort of capitalistic element of like suing gun owners or gun manufacturers for example for the decisions of private individuals no i i look at the exact exact opposite okay nobody's capitalized more than gun companies from what's happened over the last five years gun sales are at all-time highs we have more guns in our society today than any society in the history of human existence okay so capitalism would say that these are companies that are under-regulated and out of control considering how many people are being shot now you're a youtuber i'm a financial advisor we don't sell poison okay there are companies that sell poison they're called cigarette companies it's poison we all know it okay they're trying to regulate nicotine now and just like enough people are so addicted to this poison they can't even stop right there are companies like jewel that are being banned right now that are perfectly happy to get our kids addicted to nicotine again every day oil companies wake up and they don't care how many people die because of climate change they just don't care there's this whole swath of society actually the entire live golf tour are people who have no moral backing at all and literally will play golf at a club where 9 11 victims are protesting them they'll walk by americans who lost their loved ones in 9 11 to go take a check from the terrorists it's unbelievable these people so we have a society that money is much more important than any ethical backdrop led by their president trump okay and this is very detrimental to our country longer term and and we need to address this greed we just so are are you buying the dip on ammo stock no like no what i think is the best place to invest are where you see people doing stuff like callaway golf golf has become incredibly popular among all types of people callaway bought this company called topgolf in the pandemic topgolf is the funnest way to play golf in 100 years like young people top golf is sold out every day okay and events and they're selling apparel and they're selling clubs and everybody's golfing you can't get a tee time anywhere in california anywhere now we don't even have water and they're telling the golf courses they can't use water it's going to be even harder to get a t-top okay so golf is exploding and the consumers buying golfing products callaway is a 20 stock it was as high as 35 it's a great business we know it well and there's only a few in the golf industry and we think golf as an outdoor sport will continue to thrive post pandemic so now for an individual what's what's uh the best thing that you think you know not financial advice for them but just sort of in general do you think that now is the time to be buying the dip or is it let's stay cash heavy you know 50 cash you know bunker down pay off debt i mean pay off debt should be basic for anybody but but what's what's your thought on on sort of generic uh non-personal input on on what people should be thinking about well this is youtube so the average user is probably younger than than you know a typical person in our society and so if you're younger you should just be happy okay you have very low unemployment the most important thing to you should be your job so if you got a job you probably recently got a raise or you should ask for a raise right you got more benefits you got 401k so what we teach our clients at our firm is not to worry about just like your 401k you work each month and you save 10 to 20 of your income a month okay that's what we recommend anywhere between 10 to 20 of your income you should save every month the younger you are the more you should put into equities now if i'm in my 20s and 30s right now and i have my job and i'm working and i'm saving 10 20 of my money i would put 100 in equities right now i would just be piling into equities right now okay a safer investor what we would recommend is what we call a balanced fund there are many different balance funds that you can buy at all the mutual fund companies um and balance funds are typically 60 or 70 stocks 30 to 40 bonds and it's a safer smoother ride than just going into growth with your money each month but because of the volatility and because stocks are so cheap if i dollar cost average if i save each month into equities or like my fund a growth fund or any growth fund or the index like the nasdaq for example if i just do that every month forever then it doesn't really matter what the stock market does you see what i'm saying so what we teach clients is if you're accumulating assets you just want to worry about saving and investing each month and keeping your job and doing well because over time that just works so in times like this this is ideal so if you have a good job you want to be plowing into your 401k right now growth people be concerned about uh job loss uh if if we do go through a you know recession here let's say they're in tech and they're watching like how much should they actually be worried about their job i think that they're trying to make you worry more about your job than you should be because that will slow the economy um you're not going to lose your job on the lower side of the income ladder i mean the demand i mean you can walk down the street and see the first say the wanted signs still for basic jobs i think a lot of people who benefited greatly in the pandemic financially like in the software industry these companies got big and bloated and there's going to be turnover okay as these companies now resize and and sort of get to the right level of demand and supply but those people will find new jobs there are college educated people there's tons of demand in other companies and they'll just you know you have churn it's churn so there it creates insecurity like netflix fires you know three or four hundred people uh coinbase fires twenty percent of the people but these are people who can easily get other jobs you know many companies are still hiring and we've seen this with crypto with many of the financial players coming in and just acquiring you know just flat out just acquire some of these crypto guys that are suffering right now yeah let's talk about exactly your job security is 100 related to how well your companies run how conservative their your company's run so nobody in my company is worrying about job losses okay we had a record six months to be honest we had a record six months our our revenue was at all-time high now congratulations yeah thanks it's going to be affected in the next six months because obviously we lost a certain amount of assets but compared to last year you know we're still doing great i don't know so what do you think i mean in the crypto world we've basically got this unofficial fed called sam bankman freed who did he where did he come from uh yeah yeah it came from a lot of venture capital fundraising over at ftx and uh they are plowing plowing money or he is into bailing out other companies like block fi and voyager these companies that that went crazy lending money to try to make a spread by lending it to somebody for you know borrowing it for eight percent and lending it for 17 percent you know and then obviously stuff's collapsing how much further does this collapse and at what point do you think we have a further risk to maybe some of the dollar-backed stable coins yeah there's people showing these dollar packs you know stable coins i think the term stable coin is an oxymoron and should not be used they are not stable coins they are high-risk coins that have the perception of stability okay so let's not be confused boys and girls okay if a crypto guy calls it stable it's not stable so i think i've been doing crypto for a long time and i think the idea that you're going to give some south korean 30 year old 14 billion dollars to run a stable coin and he lives in a little apartment and he's never done anything in finance and he just made up luna and all this crap and you think some guy can manage 14 billion dollars correctly for people that is the biggest joke i've ever heard now i manage 2 billion and i have 48 employees and i've been doing it for 29 years and there isn't a day that it isn't challenging as hell including yesterday i had all these problems with my fault just trading issues just trading for thousands of people and then mistakes get made somewhere and we make people whole if there's a mistake but it is freaking so hard running a financial institution correctly and honestly it's it's the biggest challenge of my life i can't tell you how hard it is yesterday i was like i can't if i have another meeting with a lawyer i'm going to freak out excuse my language but that's where you spend half your time just dealing with risk and this and that because we do things right but when you think about the crypto industry that's brand new it's 12 years old or whatever 15 years old and a bunch of people with no financial backgrounds all of a sudden with billions of dollars they're responsible for and you're at all surprised if they screw this up and lose your money or have it stolen come on just read about the banks in like 1890 read about like banks in the united states in 1890 it's the same thing yeah so do you think that uh the bottoms in for crypto or could there be more pain is this just the beginning there's no bottom in crypto remember it's not a stock it's a currency so the more users who buy into it the more valuable it is the less users that buy into it the less valuable it is okay we only own bitcoin and ethereum mi firm for clients and there's a reason for this because i've gone through this over and over and over again and the lesson i learned is these will come back because people will re-adapt bitcoin and ethereum again once they feel more confident again and that'll probably be around the having so one of the things i've learned about bitcoin is bitcoin goes up when supply goes down and that's in the having and that's every four years i think that was about two or three years ago was the last having and that's when bitcoin rallied the last time it took about six months for the bitcoin market to finally realize there was half as many bitcoin being made and then it jumped right to 60 000. now it's back down to 20 000. and i i don't know maybe you can google it i think that having comes up again in 2024 may 24.

so that's really when you get your rally and that's just supply and demand you cut the supply in half and and it just has to go up 2x so so be patient hold your crypto accumulate same idea i buy a dollar cost average it's just part of my life i save money i buy a little crypto i buy my stocks that's what you do you're okay with the btc and the eth but you're you're uh cautious about the stable coins no no it's not cautious i don't own any of this i highly recommend you sell all of it you should not know own any other crypto than bitcoin and ethereum at this time it is a very dangerous time it is a time where remember the people in my business want to crush these people and they'r