Fox Business – Melissa Francis – Time To Buy The Market


IT IS ALWAYS ABOUT MONEY MELISSA: OUR TOP STORY TONIGHT, THERE IS NO STOPPING THE WALL STREET RALLY. THE DOW CLOSEDED AT A RECORD HIGH FOR THE 7th DAY IN A ROW AT 14,455. SO WHAT ARE YOU DOING ABOUT IT? WHERE IS YOUR MONEY RIGHT NOW? TODAY’S POWER PANEL IS HERE WITH WHAT THE AVERAGE INVESTOR SHOULD BE MAKING OF ALL THIS LANCE ROBERTS, CHIEF ECONOMISTND CEO OF STREET TALK ADVISORS. SPENCER PATTON, CHIEF INVESTMENT OFFICER AT STEEL VINE INVESTMENTS. YOU RECOGNINIZE JONATHAN HOENIG, HE IS PORTFOLIO MANAGER MANAGER AT CAPITALIST PIG.COM AND FOX NEWS CONTRIBUTOR. THANKS TO ALL THREE OF YOU FOR JOINING US. LANCE, LET ME START WITH YOU. THE AVERAGE PERSON IS WATCHING THIS AND HEARING RECORD, RECORD, RECORD. SAYING WHAT AM I MISSING? WHAT ARE THEY MISSING?>>WELL OBVIOUSLY THEY’RE MISSING THE MARKET GOING UP BUT THERE IS KIND OF THIS ASSUMPTION THAT THE AVERAGE INVESTOR HAS BEEN OUT OF THE MARKET THREE YEARS, FOUR YEARS NOW AND NOW THEY’RE JUST KIND OF WAKING UP. THAT IS NOT THE CASE. MOST PEOPLE THAT ARE INVESTED –. MELISSA: YOU DON’T THINK SO?>>NO, IT IS NOT. IF YOU LOOK AT LOT OF DATA, ONLY 20% OF THE AMERICANS ARE ACTIVELY INVOLVED IN THE MARKET ANYWAY. THE BULK OF THOSE ARE INVEED FOR THE MOST PART. THEY’RE IN THE MARKETS. THEY’RE PARTICIPATING AND, YOU KNOW THE ISSUE REALLY BECOMES THOUGH WE HAVE TO LOOK AT RISK HERE. WE’VE OBVIOUSLY GOT THE FED INDUCING MARKETS. 85 BILLION A MONTH. MELISSA: RIGHT.>>DRIVING THESE MARKET PRICES HIGHER. THAT’S FINE. NO PROBLEM WITH THAT. MARGIN DEBT IS BACK AT LEVELS WE HAVEN’T SEEN SINCE 2007. MELISSA: YEAH.>>YOU HAVE HIGH YIELD CREDIT, HIGH YIELD CREDIT YIELDS ARE ATHE LOWEST LEVEL ON RECORD. WHICH BASICALLY MEANS THE YIELD CHASE AND RISK IS DEFINITELY THERE. SO YOU JUST WANT TO BE MORE CAUTIOUS WHERE YOU GO TOO FROM HERE. MELISSA: J JONATHAN, I’M THINKING ONE IN FOUR AMERICANS WHO TAPPED INTO THEIR 401(k) TO TRY TO PAY THEIR BILLS OVER THIS PERIOD OF TIME. I’M ALSO THINKING ABOUT THE PEOPLE WHO STOPPED CONTRIBUTING TO THE 401(k) WHEN THEY SAW THE MARKET TANK BECSE THEY GOT NERVOUS ABOUT IT. THEY’RE WAKING BACK UP TO WHAT IS GOING ON AND SEEING THEY MISSED TH RIDE UP. WHAT WOULD YOU TELL THE PEOPLE DO NOW?>>GET OUT OF THE HABIT MAKING INVESTING ALL OR NONE DECISION. YOUR POINT SPEAKS TO THAT EXACTLY. GO BACK TO 2009, 2010. INVESTORS OBOUSLY BECAME VERY SCARED AND A LOT OF THOSE INDIVIDUAL VESTORS UNFORTUNATELY PULLED ALL THEIR MONEY OUT OF THE MARKET. WE’RE AT ALL-TIME HIGHS ON THE DOW. WE’RE STARTING TO SEE THAT TRICKLE IN. I DISAGREE SLIGHTLY WITH OUR GUEST. WE HAVEE SEEN ESPECIALLY FOUR OR FIVE YEARS, COME OUT STOCKS GO INTO BOND AND INTO GOLD. MELISSA: I AGREE.>>MARKET HAS BEEN UP NINE DAYS IN A ROW. I THINK THE TREND STILL CONTINUES. I SEE HIGHER PRICES FOR STOCKS DESPITE THE RUN WE’VE HAD. MELISSA: SPENCER DO YOU THINK THE RETAIL INVESTOR IS ON THE SIDELINE AND WHAT SHOULD THEY BE DOING?>>I THINK WE SEE MORE RETAIL INVESTORS IN BONDS SIGNIFICANTLY. AND THERE IS CHU ON THE SIDELINES. WHAT PEOPLE NEED TO DO IS WAKE UP THE FACT THEY HAVE LOST A LOT O OF PURCHASING POWER LAST FIVEEARS. GASOLINE IS $4 A GALLON WHERE IT WAS AT TWO. GOLD WAS $750 AN OUNCE. NOW IT IS AT 1500. THEY NEED TO GET INTO REAL ASSETS. BUY THINGS LIKE REAL ESTATE. GET INVESTED INTO AGRICULTURE. GET INTO THINGS THAT WILL ESERVE THE PURCHASING POWER. DO NOT BUY THE MARKET ONCE IT IS UP NINE CONSECUTIVE DAYS THE LONGEST IN 16 YES. YOU WILL WAKE UP AND REGRET IT IN THE MORNING. PLEASE RUN AND DON’T MAKE THAT MISTAKE AGAIN HERE. MELISSA: LANCE, IS THAT GOOD ADVICE? THAT IS A GOOD POINT. YOU’VE LOST A LOT OF PURCHASINGNG P POWER. THE FED IS JUST GOING TO KEEPEP DOING WHAT THEY’RE DOING. SO ITEMS IS A LIKE THAT TREND COULD CONTINUE. DO YOU AGREE WITH THAT? WHAT ADVICE WOULD YOU GIVE IN LIGHT OF THAT?>>I THINK IT IS GREAT. ACTUALLY I AGREE WITH BOTH OF YOUR GUESTS OVER THE LAST TWO POINTS. I CALL THIS THE TAYLOR SWIFT MARKET BECAUSE THEY TREAT THIS LIKE A BAD RELATIONSHIP. WHEN IT DOESN’T WORK OUT BAIL O AT WORST TIME AND TRY TO GET BACK IN AT THE TOP. MELISSA: YES.>>BUT THE REALITY I AGREE WITH BOTHINGS LOOK THE MARKETS ARE VERY EXTENDED HERE. THERE IS RISK. YOU WANT TO BUY O ON CORRECTIONS. AGAIN, AGREE WITH JONATHAN, YOU DON’T WANT TO GO ALL OUT OF THE MARKET OR ALL-IN. IT IS NEVER GOOD. YOU CAN NOT TIME THE MARKETS. IN RESPECT TO YOUR SECOND GUEST, STEVE IS ABSOLUTELY RIGHT, IT IS ABOUT ASSET ALLOCATION. STOCKS ARE A FINE PLACE TO BE WHEN ALL THE FUNDAMENTALS ARE IN PLACE BUT EARNINGS ARE DETERIORATING. RISK IS HIGH. AND PEOPLE ARE CHASING STOCKS BECAUSE THEY’RE GOING UP. BUT LOOK, THERE IS SOME GREAT PLACES TO PUT MONEY. BOND PRICES HAVE ACTUALLY DECLINED OVER LAST COUPLE MONTHS WHICH HAVE GIVEN GOOD OPPORTUNITIES IN THE BBB RATED SPACE. THERE IS GREAT OPPORTUNITY, GOLD HAD A GREAT DECLINE OVER LAST FEW MONTHS. VERY, VERY OVERSOLD. THIS IS THE MOST OVERSOLD GOLD HAS BEEN IN LAST THREE YEARS. THIS IS GOOD OPPORTUNITY. MELISSA: I WANT TO ASK EACH OF YOU IN REALLY PLAIN LANGUAGE. IF PEOPLE HAVE MONEY SITTING ON THE SIDINES RIGHT NOW AND THEY’RE TCHING THIS RECORD DAY AFTER DAY AFTER DAY, WOULD YOU ADD MONEY TO STOCKS RIGHT HERE? I’M GOING THROUGH EVERYONE. JOJONATHAN, WOULD YOU START FIRST. WOULD YOADD MONEY TO START HERE?>>ABSOLUTELY, MELISSA. THE BEST INDICATOR OF THE MARKET IS THE MARKET. SO I DON’T BELIEVE AS THE OTHER GUESTAS SAID, I DON’T BELIEVE YOYOU BUYUY ON DIPS, BUY ON CORRECTIONS. YOU NEVER KNOW IF THE CORRECTION IS BEGINNING OF SOMETHING MORE SUBSTANTIAL, SOMETHING MORE SERIOUS. I BELIEVE IN BUYING STRENGTH. RIGHT NOW, LOOK AT STOCKS, BOND AND GOLD UNQUESTIONABLY, STOCKS IS THE BEST ASSET CLASS TO HAVE YOUR MONEY?>>DON’T BUY NOW. YOU WILL REGRET IT IF YOU BUY AT PEAKS, YOU BUYY ON CORRECTIONS. THAT IS WHAT DATA IN THE PAST SHOWN. BUY WHEN THINGS ARE CHEAP. DON’T BUY AT THE VERY TOP. MELISSA: I’M THOROUGHLY CONFUSED. LANCE YOU WILL BE THE DEAL BREAKER, THE TIEBAKER. WHAT DO YOU THINK?>>LOOK THE BOTTOM LNE IS, THAT MARKETS ARE VERY OVERBOUGHT. THEY ARE GOING TO PULL BACK AT SOME POINT. MAYBE THIS SUMMER. BUY ON CORRECTIONS. BUY ON WEAKNESS. THAT IS WHEN YOU MAKE THE BEST OPPORTUNITY. BUYING NOW, YOU’RE GUARANTEED IN THE NEXT THREE TO FOU MONTHS VALUES WILL BE LOWER THAN THEY ARE TODAY. MELISSA: JONATHAN, YOU’RE ODD MAN OUT NOW. I’LL LET YOU HAVE THE LAST WORD TO MAKE YOUR CASE.>>I MEAN, IDEA OF BUYING ON CORRECTIONS, MELISSA, YOU GO BACK TO 2007. YOU WOULD HAVE BOUGHT ALL THE WAY DOWN TO A 50% CORRECTION IN THE DOW. I IN FACT DON’T SEE THAT NOW. THE MARKET MOVES IN TRENDS. THAT IS THE BEST INDICATOR WE HAVE. RIGHT NOW YES, OF COURSE THE MARKET WILL GO DOWN ONE DAY IN THE FUTURE. IT WILL NOT GO UP FOREVER. I THINK IT IS BEST ASSET CLASS YOU CAN HAVE. STOCKS ARE LIKE SUSHI. YOU DON’T WANT A BARGAIN. DON’T WANT THEM ON SALE. BUY QUALITY, BUY STRENGTH. TREND TEND TO PERSIST. MELISSA: WHAT YOU LEARN IS SOMETHING WE LEARN EVERY TIME THERE IS BIG STOCK MARKET CRASH LIKE WHAT HAPPENED IN ’08. THAT IF YOU GET OUT AT HUGE CRASH YOU’RE ALWAYS SORRY LATER SO IT COMES BACK.

Chatting with a 23-year-old Stock Trading Millionaire


Hey, I made her Hales welcome to another edition of chatting with I’m here with Umar. Hey, how you doing guys My name is omar ashraf and i’m a stock trader. Thank you so much for being here. Thank you for having me man Let’s see stock trader. Is that different from stock broker? Yeah, it’s a lot of people get that idea very confused. They Confuse me with the stock broker But there’s a huge difference between them a stock broker somebody that allows that kind of purchases shares for you You give them a call they purchase itself for you and stock traders somebody who does it themselves, you know for him or herself Yeah, you’re like buying and selling stocks like the same day, right? Ah, not not always I’m sometimes buying it and holding for two three weeks. Sometimes I’m buying it and Buying the same day selling it the same day. It’s just different strategy some days. I’m day trading some days I’m swing trading it just it all depends. How old are you? I’m 23. Oh Wow So this could be 23 year old. Are you a millionaire? Yeah Yeah, this would be the title then. So basically I started trading when I was 18 That’s when I first got into the market and when I first started I literally had no idea What I was doing was just like hey, I want to dabble into stocks I want to make money and I know so many people make money off stocks. Hmm So I was like, let me jump into it I had about 20 grand saved up at the time and the money I had saved up What I did was I put all of it into the market without having any knowledge. So I took all my monies rusty Yeah, but at the time, you know, you’re young you kind of wanna you think you know it all mmm So I’m like, oh, I know everything I know what I’m doing Let me just take all my money and dump it into the market Okay I dumped in too much was that how much is what how much did you have that you 2010? That was all the money. I had to put one every day exactly everything Wow. So now once I put everything into the market Next thing, you know is I made a few trades. I remember the first stock I bought was JCPenney So the first trade I made was around It was it was a January because that’s when my birthday is and I turned 18 I opened up a brokerage account and I bought JCPenney and I made 25 hundred on that trade so now After that, I kept taking all my money and dumping it into one stock. No risk management not okay. Hold on Why did you choose JCPenney? Absolutely, no reason I just saw the stock and I was like, oh, I think it’s a good buy and I bought you spam Why did you think it was a good buy? I I just looked at the charts and I had no idea what he was telling me but I just felt like it was a good Buy and I and I put money into it anyone else. Yeah, like with me not knowing anything I see like what it’s normally and if it’s low then I’m like, alright, it will probably go back up It was something like that because I know retail at that at the time was having a huge problem Retail was falling. So I was like aha JC Penney. They’re never gonna go down. Let me buy them So I bought them and next thing, you know They went up two days later and I made about twenty five hundred bucks and you sold it Yeah, and I sold that made twenty five hundred bucks now Oh you put 20k into one stock Wow and it went up I think interesting new percentage and As they went up it might might before you when I’m twenty-five hundred bucks is the the fee what were you doing etrade? what I Scottrade Scottrade Okay, that’s like one of the many yeah Scottrade They got bought out by teaching now, but at the time, you know, it’s like $15 per traders It was seven seven dollars of trades 7 2 by 7 to sell. Okay, no percentages or anything. No, no, no. No, okay There’s no just seven seven seven four. Yeah, that’s about us when you’re 18 Yeah, so I’m in high school right now. Cuz I like I said, I have a early birthday So I just made 2500 off one trade. Yeah, so now I’m like, wow, I’m in high school. I made 2500 Oh man. This is it This is what I’m gonna do for the rest of my life and it kept going well for me. It was all beginner’s luck So my account went from the 20 grand to 35. Okay a matter of two months Then you put 35 into one thing everything into one thing. I knew no risk management. I’d had no idea what I was doing So it was working for me right like every book I’ve read on it says don’t do that don’t Exactly, but I didn’t read anything. I just dumped my money into into that one stock over and over again The sun’s like too good to be true. Yeah, and then I mean obviously everything that’s too good to be true goes downhill Okay, so now once I built my count to thirty five thousand in two months What do you think happened? Next you the loss at all? I lost it. All everything went down everything everything went downhill in a matter of six months bad trade here bad trade there bad trade here bad trade there and Everything just went down and my account finally hit about 2000 bucks. Okay in a matter of four or five months Mm-hmm and now once that happened I took a step back and everyone around me was like stocks or risky stocks at gambling and don’t touch stock. Stay away from stocks So I’ve started you know, it kind of got to me. I’m like, ah man maybe stocks isn’t the right way to go It’s something I should stay away from. Mm-hmm. But uh, I was like, you know what? I know so many people that actually make money off stocks So let me actually keep focusing on this. I didn’t know what I was doing So now let me take a step back and actually try to learn the right way Because in the stock market, there’s always a winner and there’s a loser. So if I lose 2,000 you made two thousand So it’s like you’re kind of taking my two thousand from me and the broker just makes his or her Commission. Mm-hmm So I was like, okay. I lost it. Somebody beat me they beat me at the game. So I just need to get better Yeah, so now long story short. I for the next six seven months All I did was I was focused price Li just on the market. Okay, I just focus Directly in the stock market how it’s moving. I was watching youtube videos, whatever. I was watching. I would apply it with real money So yeah, you got down to two thousand. You’re like 19 or still 18 still 18. Okay. Um, did you ever have a job? Uh, yeah, I was doing delivery at the time. Okay, so starting from 2000 you worked way back Oh, yeah, so starting from 2000. I worked my way back up, but I Started my account in the next January when I was 19. Hmm. But now when I restarted my account I started with started with 5,000 okay, so I saved the money I had 5,000 and now when I had 5,000 I kept trading and he put it all into what Now I was a little little bit smarter. Okay. Now I knew what I was doing, huh? So instead of me putting all 5,000 into a trade, whatever what I was doing was I was taking smaller positions Hmm, the purpose of that was for me to learn I was like, okay You know instead of me putting 5,000 and losing five six percent Let me only put a thousand now if every five six percent on a thousand fifty sixty bucks But I’m getting the learning learning experience, okay? so now once I started doing that I gave that about two three months and I would learn so many new things on my own like, oh, wow when this line crosses that line the stock moves up Yeah, when this goes here the stock goes down So I started picking up all these things as I was reading books because I was reading and then I would apply it Wow Now as that started going more and more I was like I need more money Hmm. So the best one of the best things I ever did was I open up a credit card when I was 18, so When I opened up the credit card, they allowed you to have balance transfers. Mm-hmm So what I did was I took a cash advance check which it’s only a 3% fee. It’s not like 25% fee There’s a three percent fee. You don’t pay for 18 months. So I took that and I had a twenty thousand limit So I took fifteen thousand out of that and put it up my bumhole To put it into the market Okay, because I was like I was like I need more money. I five thousand is enough I need to diversify our map my account and things like that So once I took all of that amount, I just started training my first year wasn’t the greatest I made money But I think it was maybe I made around 20-some thousand. It wasn’t this is all short-term stuff all short-term Yeah, all short-term and now you’re a millionaire. Yeah, it took me Three years by twenty twelve million. Was there any big break like where like Yeah, I have you a good I had big breaks with gold last year gold Yeah in 2017. Ah gold this ETF for gold. Mmm. They were spiking up like crazy I remember it went from like 18 bucks to 80 dollars in a matter of a month So every day I would be trading it Wow It would go up and I was margining the whole trade margin is when you borrowed the brokers money Why was it going up? You thing? I it was going up at the time. I don’t remember I know the US dollar was taking a hit I don’t remember the exact reason it was I was going it was going up But I know the US dollar was taking a hit There’s a lot of stuff going on with the feds and and yelling and interest rates, which was so many factors There’s a lot of factors. Yeah, but it was just on a solid uptrend So I was like just buy buy buy buy it is always a gamble at the end of the day. Not really It’s not a gamble. That’s where a lot of people are wrong They think stocks are gambling but the way you have to look at it is you have to look at it from An aspect where how much you’re looking to lose and how much you’re looking to make? Right. So now think of it like this, let’s say you make 10 trades, right? You make the total 10 trades each trade. You have a ratio of three to one Meaning you make 3,000 you’re right and you lose $1 when you’re wrong Okay. So now then out of those 10 trades, even if you’re right only three times you make nine And usual if you’re wrong, I mean you lose seven you see what Wall Street. Yeah. Yeah. Yeah, that’s broken, right? Wolf of Wall Street is yeah. They’re brokers. And oh, yeah. Yeah, they just They don’t care whether it goes up or down there. They just get the Commission exactly like that That was how they made McConaughey part. Yeah. Yeah Yeah, but yeah, he so but he you know, he claims no one can knows whether it’s up or down It’s relatively impossible for you. Don’t know if it stocks when we go up or down Yeah, so the whole concept of it is to manage your trade. Yeah What do you think of Bitcoin I? Think personally, I think it has it has long-term potential. Mmm. I just think right now Crypto is being used more. So as a way to make money Yeah, and as a form of currency, of course, you know, so with that being said there’s too much fluctuation is going on but I do think crypto itself will be big and I think one of the biggest reasons is blotching. Blockchain is is enormous. Yeah. Yeah. Well Do you think Bitcoin will eventually replace the dollar? I don’t know if there will be Bitcoin cuz I don’t see anything special about Bitcoin, but I do believe Long run crypto will have a place in the market. I don’t know if it’s gonna replace it I think it should because the dollar just value just keeps going down So it’s it’s relatively that’s where the dollar keeps going dollars value keeps going down inflation If you look at what what the relic could have got gotten you a hundred years ago poster now again, it’s insane. Yeah, interesting Do you think the banks will regulate Bitcoin banks That’s the biggest problem banks don’t want Bitcoin or crypto to be a big thing. Right? But I Personally feel like it just eliminates so much stuff like paying fees it’s like you have to pay fees to take your own money out and Banks don’t have control which is the biggest thing that they’re facing which is why they will try to regulate Yeah, but it’s just tough to see how they’re gonna regulate it. Yeah. Yeah because it’s blocked chance. It’s like that’s the weight of the other way exactly the way they did I know change try to Regulated was they weren’t allowing any transactions to Cohen base go through them. Mm-hmm. So they have they have contact So if coinbase is one of the brokers to you know, buy bitcoin and stuff So if you made a transaction to put money into coinbase, they would block it. Hmm I don’t know if they’re doing that now, but I know they did that a few months ago. Hmm Do you own a Bitcoin? No, I have like coin I have ripple and I have you doing Bitcoin I don’t have any Bitcoin one week. I’m not a big fan of Bitcoin bitcoins the rock star, isn’t it? It is the rock star but a long term, I don’t see anything special in it. Hmm. I Feel like the biggest ones probably gonna make it. It’s like, oh not in the long run it’s it’s probably I personally feel like it’s probably gonna keep going up and then You know eventually once it does come become a form of quantity, I don’t see anything special in Bitcoin Well, what difference does it make it’s all electronic, right? Yeah, but some of them is some of them are quicker Some of them have more features more benefits things along along the lines of that. Mm-hmm. What’s the best book? For someone just getting in for them to start one of the dead folks I read was Trading for a living. I don’t remember the author’s name. Okay Trading for a living. Yeah, I think that’s that’s actually a very good book I’ll link that in the description is actually my very good book with my Amazon link Yeah, that’s that’s actually a very good book train : you have a million dollars in cash or assets or now stocks right now my brokerage account I have 600 in my brokerage account from building that up and I I constantly keep taking it out now I have other cash that I’m sitting on. Mm-hmm where I’m looking to invest but now this is my dilemma with investing right now I personally feel like the markets going to crash well within the next year or two Doing all right, and I feel like it’s very extended So what I want to do is I’m trying to accumulate a lot of cash. Yeah, and Save it purchased, you know a lot of stuff at that time How why do you think is gonna crash? I just feel like it’s very extended it’s it’s for extending yourself out like it’s it’s kind of like a Extent, what’s I mean? so we we we’ve went through we went through cycles in the market where You know when the market runs for a very long time it needs to pull back or come into recovery mode recession But not a session, but it needs it needs to come into mode for recovery mode that hasn’t happened but now the factors I think that’s going to drive us into hitting recession or – one is Student loans. Yeah student loans are it’s a very high and they’re not. Yeah, I don’t see them getting paid back There’s no jobs out there for them to get paid back Yeah, and second auto loans auto you can literally anyone can go buy any car without having any proof It’s the same thing that happened with the housing market in Oh seven, you know you don’t need to provide proof of income and proof of employment anything. So people are You know putting on more depth on them and they’re they’re purchasing these vehicles which is kind of out of their reach So I feel like that market is kind of Oversaturated so then we’re gonna need another bailout from the government. Uh, We got to see what’s gonna happen, I just feel like it’s everything is building up And as soon as one thing is pulled out anything’s gonna fall anything. That’s like I Ivan We’re so a year two years and this is a crazy part. I think the only reason it hasn’t happened sooner it’s because of Trump Wow, I think Trump has been doing a great job with the Like Peter car. Yeah. No, I don’t know agree with a lot of stuff he does but with the economy I think he has been bringing it up You know, if you look if you know this with the market and housing market, everything’s been going up. That’s a great office. Yeah Hmm. What are some I guess techniques So some techniques that I feel like a lot of people mess up on. Mm-hmm is people go right into indicators Such as the RSI MACD and they look at that to buy or sell stock I think you should gather as much as information as you can from the chart. Mm-hm and see the trend Stop see what direction the stock is going yet, like did a feeling so it’s kind of like this It’s kind of like this. Right and this is like the easiest to explain it So think about it as in you’re driving from here to New York Right, so if you’re driving from here to New York You’re gonna take breaks, right? You’re gonna you’re gonna because it takes for three days, I think Mm-hmm, right, so you’re gonna take gas stops. You’re gonna start to sleep and things of that nature. I Stock is very similar You have to understand where it’s headed. You have to know. Hey the stocks headed from here to Miami here to California I mean here to New York here to Philadelphia. Whatever. What is the trend? What is the direction the stocks going yet? How do you know where it’s hurting? All right, when you look at the chart it shows you if it’s going up or down so there’s really three directions There’s an uptrend meaning starts going up There’s a downtrend meaning the stock is on its way down and there’s a sideways trend and use trading between a range Okay. So once you understand the overall Trend of the stock. Mm-hmm. Now your job is to focus on when it’s gonna take a break. Yeah When is it gonna pull over for a gas stop when is again? Uh, but when is the person gonna sleep when is when it’s stopping to sleep for quite some time? Mmm That’s the next step. You have to look at What people do is they look at look at the RSI or MACD or technical indicators, but they don’t know the trend They don’t know where the car is going Yeah, if you know where the car is going It makes the whole process that much easier you think Tesla will keep going up Tesla’s very tricky Yeah, very tricky very tricky because um Elon was very tricky. Yeah. He just started some shit like a week ago Yeah, he made that he made the tweet. Yeah, the tweet is uh, He’s gonna get in trouble for that. I feel like he shouldn’t he can’t really make that tweet. He couldn’t put that tweet out I didn’t even see the tweet. I just saw like an article He just wants to go private private But you can’t announce it because now what if they really are going private let you say hmm It’s gonna boost up the stock price to four or fifteen or whatever. He’s taking in private at so now Anyone can literally buy the stock and make money off it if they go private Wow, which is why he shouldn’t have made that tweet Yeah, it goes against SEC rules for him to do so SCC SEC there, they’re like the cops of the stock market Wow What are some no nose for SEC like insider trading? I had biggest one insider trading, uh People get two people to do it people get away with it. Well, that’s a big no-no Yeah, you can go to like prison. Yeah, a lot of people have you done any shady shit. I Don’t know Yeah, great. Great place to ask that. Yeah a lot of ah No, I’ve gotten there’s actually a funny story about that There’s actually a funny story about about that thing with the company. I’ll talk about it right now. Mmm-hmm So, yeah, actually I didn’t do anything shady, but I did get into trouble for something. So this was two years ago and There’s a company called Sun works right there. They they work with solar solar panels and snoring so what I did was I was invested into a stock and the company was getting a project from Fresno a ten million dollar project Mm-hmm, but nobody knew about the project. How did you know, so now I knew that they’re bidding with the city They’re bidding with the state. So if you’re bidding with the state or city, it’s available to the residents Right, so I figured that out that it has to be somewhere out there So I kept digging digging digging I made accounts in this and that to you know Get access to the bidding portal and I finally got access Right and I saw that they actually benefit ten million and they had the job Where I messed up was I actually posted it on StockTwits so StockTwits is a Twitter for stocks, stock trade Yeah, so I posted it on StockTwits. Now what happened the people on StockTwits started calling him Fresno They started saying hey when we’re not there gonna win the job When are they gonna get the project bla bla bla and now they got fed up with it Because they’re dealing with the public company so they cancelled the contract Now as they cancel the contract the stock plummeted. Yeah, and now I get a call one day from this CEO of the company Right his name was Jim. He… and I remember I was driving and I get a call from like a California number and I’m like California and I pick up he’s like hey This is Jim. Is this Umar speaking? This is Jim from Sunworks Yeah. Hey Jim. He’s lke yeah how you doing? How’s everything? I just wanted to update you about Fresno You know, we’re still working with them, but you know, please stop posting stuff It’s like it’s really getting to them and they’re there. They’re probably not gonna give us the project if they keep getting bothered So, please stop putting information out there and please don’t tell anyone I even called you so That was really it but that that wasn’t anything with SEC but uh that that turned out to be a huge thing How did you first hear about some words? I was just trading it just popped up you scanned So you do something called scanning when you scan you’re looking for certain indicators certain stocks? So when I was scanning some Brooks popped up. Yeah as it popped up was it kind of like a penny stock? No it was This is thing with penny stocks lot. Uh The the actual term of penny stocks or any stocks under $5, right, right I look at penny stocks anything under a dollar. So it just depends on where you’re going And with the stop is priced around 250 280 at the time So technically yes, it was a penny stock. But in my book it wasn’t couldn’t you like post like, oh, I think So and so is going down on stock twits and be like not a better sell like people do that Try to get people people do that. That’s why if you’re somebody that gets influenced by others easily Yeah, stay away from stock – it’s okay. Because now if you’re going to stop – it’s you’re gonna see crazy comments Hey, the stocks can go to 10. The stock can go – ah, yeah, so anyone can say sure Yeah, so what’s the point of stock twists? There or there is that 10% Of stuff that that is valuable out of the hundred Yeah, there’s very few stuff that is value like somebody does research and they find something so they post it But it’s very little little stuff. So it sometimes what did you go through it with your knowledge. You can come. Yeah Yeah filter out all the bad stuff. You have any other investments? Uh I have stock market lab I am working on an app I do have money, you know into tech stuff that I don’t make no I really can’t speak about right now Okay, they are like I’m trying to get into tech industry. It’s related to investing know It’s it’s it’s yeah, it’s a game. Yeah I want to make it like it just a simple like yeah Yeah blowing up insane I have like a like eight youtuber friends that have their own like a little game app Yeah, there’s this that app call. What’s that? What’s that company called? Twitch. Twitch is blowing off Yeah, but just blown up. I’d still need to get into that which is it’s insane for unit. Twitch man. That’s that’s something else Hmm, you have some stalking twitch note Which is owned by I believe Twitter know Amazon Amazon owns him Amazon owns twitch, okay They the Amazon bought at twitch. So Amazon owns. And so if you own twitch you own Amazon. Yeah Amazon I heard took him like 10 years to be profitable No, they were profitable all the time. Only thing is they would take the profits and reinvest it right all in a research and development You have some stock in Amazon. I traded it, but I’m not really I don’t long-term I’m not I’m not even anything long time right now. How did you find me through just three? I actually yeah III was watching YouTube and and you came up and I saw you into because I remember I saw you and YouTube Three years ago. Yeah, ah, are you doing something completely different new pranks? Yeah pranks and stuff and then I I saw you on YouTube for you were doing interviews and then I saw with real estate and this and that and I was like, oh Let me reach out to you cool, right? That’s how I can cause you yeah, I appreciate it. No, I appreciate you man Thank you. Um, I need any last words anything you want. Shout out your Instagram uh, yeah if you guys have any questions about stocks or you know, I want to ask me anything you guys can my Instagram is Omar uh sure if you ma are a sh RAF or almost Yeah so you guys can DM me ask me any questions you guys have about stocks and I’ll To help you guys out as much as I can sweet Well, yeah, that was totally wraps it up. Yeah. Thank you so much Thanks for watching. Thanks for subscribing. Let us know what you think of everything we talked about here and I will see you next week

Why The US Has No High-Speed Rail


China has the fastest and largest
high-speed rail network in the world. The country has more than 19,000
miles of high-speed rail, the vast majority of which was built
in the last decade. Japan’s bullet trains can reach speeds
of almost 200 miles per hour. And date back to the 1960s. They’ve become a staple for domestic travel
and have moved more than 9 billion people without a
single passenger casualty. France began service of the high-speed TGV
train in 1981 and the rest of Europe quickly followed. And high-speed rail is quickly expanding all
over the world in places like India, Saudi Arabia, Russia
Iran and Morocco. And then there’s the U.S. The U.S. used to be one of the world’s global
leaders in rail but after World War II there was a massive shift. If you look at the United States prior
to 1945, we had a very extensive rail system everywhere. It all was working great except a number
of companies in the auto and oil industries decided that for them to
have a prosperous future they really needed to basically help phase out all the
rail and get us all into cars. The inflexible rails permanently embedded
in cobblestones were paved over to provide smooth, comfortable transportation
via diesel motor coach. General Motors, Firestone Tire, Standard Oil
and a few other companies that got together and they were able to
buy up all the nation’s streetcar systems and then quickly start
phasing out service and literally dismantling all the systems over
about a 10-year span. In the 1950s, President Dwight Eisenhower
signed a bill to create the National Interstate System. It allocated about $25 billion dollars
to build 41,000 miles of highways. The federal government paid for 90% of
that, the states covered the final 10 and rail fell by the wayside. Can’t you see that this highway means a
whole new way of life for the children? And a way of life that we have
a chance to help plan and, and to build. We dedicated a huge amount of
dollars to building automobile infrastructure in the middle of the 20th century and
we’re still kind of attached to that model of development. We went from a rail-served country to
a auto-dependent nation by the 1960s. We’ve become a car culture and it’s
hard to break out of that cycle. Not to mention the fact that in
our political system we have very powerful oil lobbies, car manufacturing lobbies,
aviation lobbies, all the entities that the high-speed rail would
have to compete with. This is the American dream
of freedom on wheels. We average some 850 cars per
thousand inhabitants in the U.S., in China it’s only 250. And we’ve never gone back. But according to some this
country’s transportation ecosystem is reaching a tipping point. When you look at what’s happening
with the corridor development, again states across the U.S. who are recognizing they are running out
of space to expand their highways or interstates. There are limits at airports, there
is aviation congestion, so what are the options? A better rail system is one
and could come with significant benefits. It’s largely an environmental good to
switch from air traffic and car traffic to electrified
high-speed rail. That’s a much lower
emission way of traveling. When the high-speed rail between Madrid
and Barcelona in Spain came into operation, I mean air travel just
plummeted between those cities and everyone switched over to high-speed
rail which was very convenient. People were happier. They weren’t forced to switch, they did
it because it was a nicer option to take high-speed rail. There’s a sort of a rule of thumb
for trips that are under three or four hours in trip length from city to city,
those usually end up with about 80 or 90 percent of the
travel market from aviation. Where rail exists and it’s convenient
and high-speed, it’s very popular. America I think is waking up to this
idea that rail is a good investment for transportation infrastructure. One survey showed 63% of Americans would
use high-speed rail if it was available to them. Younger people want it even more. Right now the main passenger
rail option in the U.S. is Amtrak. It’s operated as a for-profit company
but the federal government is its majority stakeholder. Train systems reaching top speeds of over
110 to 150 miles per hour are generally considered high-speed and only one
of Amtrak’s lines could be considered as such. That’s its Acela line in the
Northeast Corridor running between D.C., New York and Boston. One of the challenges we face is that
the Northeast Corridor has a lot of curvature, a lot of geometry. We really operate Acela Express on an
alignment that in some places was designed back in the nineteen hundreds and
so it really was never designed for high-speed rail. And while the Acela line can reach up
to 150 miles per hour, it only does so for 34 miles of its 457 mile span. Its average speed between New York and
Boston is about 65 miles per hour, which is in stark contrast to
China’s dedicated high-speed rail system which regularly travels at over
200 miles per hour. But some people are
trying to fix that. In 2008 California voted
yes on high-speed rail. Now, a decade later, construction is underway
in the Central Valley of the state. And right now it is the
only truly high-speed rail system under construction in the U.S. Ultimately high-speed rail is a 520
mile project that links San Francisco to Los Angeles and
Anaheim, that’s phase one. And it’s a project that’s
being built in building blocks. So the one behind me is the
largest building block that we’re starting with, this 119 mile segment. This segment will run
from Bakersfield to Merced. Eventually the plan is to build a
line from San Francisco to Anaheim, just south of L.A. But as it stands the state is almost
$50 billion short of what it needs to actually do that. The current project as planned would
cost too much and, respectfully, take too long. There’s been too little oversight
and not enough transparency. We do have the capacity to complete
a high-speed rail link between Merced and Bakersfield. After Gavin Newsom made that speech
President Trump threatened to pull federal funding for the project. We will continue to
seek other funding. We hope the federal government will
resume funding the, contributing new funds to the project. I think in the future, as
the federal government has funded major construction of infrastructure over time
they’ll again direct money to high-speed rail because in fact it’s
not just California but other states are also interested in
high-speed rail systems. To complete the entire line as planned,
the official estimate is now over $77 billion and it’s unclear where
the money will come from. So why is it so expensive? Part of the problem in California, the
big price tag is getting through the Tehachapi, very expensive tunneling, or over
the Pacheco Pass to get into San Jose from the Central Valley. You know, Eastern China, the flatlands
of Japan where they’ve built the Shinkansen, all of those are settings
where they have, didn’t incur the very high expense of boring and tunneling
that we face so the costs are different. And a lot of the money is
spent before construction can even begin. Just in this little segment here
alone we’re dealing with the private property owner, we’re dealing with a
rail company, we’re dealing with the state agency and so
just the whole coordination. Then we’re dealing with a utility
company, just in this very small section; we had to relocate two miles
of freeway and that was roughly $150 million per mile. So there’s a lot of moving pieces
to, you know, anywhere we start constructing. China is the place
that many folks compare. They have like 29,000 kilometers of high-speed
rail and 20 years ago they had none. So how have they been able
to do it so quickly? And part of it is that the state
owns the land, they don’t have private property rights like we
have in the U.S. You don’t have the regulations we have
in terms of labor laws and environmental regulations that
add to cost. It also delays the projects. For some reason and I’ve never really
quite seen an adequate explanation as to why costs to build transit or
many big infrastructure projects are just dramatically higher than in other parts
of the world, including in other advanced countries. But the bottom line is we’re really
bad at just building things cheaply and quickly in the U.S. in general. So it’s not just rail infrastructure
that is expensive, all transportation infrastructure is. Just the physical investment in the freeway usually
will be 5 to 8 to 10 million per mile but if you add
seismic issues and land acquisition and utilities and environmental mitigation and
remediation of soils and factors like that it can become as high
as 100 or 200 million a mile. The numbers for high-speed rail can vary
anywhere from 20 to 80 million per mile. The big reason why America is behind
on high-speed rail is primarily money. We don’t commit the dollars needed to
build these systems, it’s really as simple as that. And it’s largely a political issue. We don’t have political leaders who
really want to dedicate the dollars needed. There’s a lot of forces in America
that really don’t want to see rail become our major mode of transportation
especially because it will affect passenger numbers on airplanes, it’ll
affect the use of autos. So you have the politics, the
message shaping and then the straight advertising and all three of those
coordinate and work together to keep America kind of focused on cars
and not focused on rail. Some of the earliest support for
rail came from the Nixon administration. Some of the original capital subsidies
and operating subsidies for urban transit came from the Republican party, so
I think it’s only more recently that maybe this has shifted that more
liberal leaning folks who care about climate and a whole host of urban
issues have really argued for investing very heavily in rail. If you had Democratic leadership on the
Senate and a different president or potentially some leverage for a president to
sign a new budget bill with some dollars for high-speed rail,
that could override those objections from Republicans in Congress. But I think it’s mostly ideological. They’re big on highways. They’re big on things
like toll roads. They just, they don’t want the government
spending dollars on this kind of project and they see it as
something those socialist European countries do but not something that should be
done in, you know, car-loving America. In my judgment, it would take a
very strong federal commitment, almost sort of a post-Second World War interstate
highway kind of large scale national commitment. This is why some high-speed rail
projects are trying to avoid public funding altogether. One company, Texas Central, plans to build
a bullet train from Houston to Dallas without using a
dime of taxpayer money. We’re taking what is laborious, unreliable
four-hour drive if you’re lucky and turning that into a
reliable, safe 90 minutes. And when you look at that as a
business plan being driven by data, this is the right place to build the first
high-speed train in the United States. The Texas project is backed by investors
motivated to make a profit and will use proven
Japanese rail technology. Texas Central’s goal is to
complete the project by 2025. Another private company is even further
along with its rail system, in Florida. It’s expanding its higher-speed
train from Miami to Orlando. Orlando’s the most heavily visited
City the United States. Miami is the most heavily visit
international city in the United States. It’s too far to drive, it’s too short
to fly, we had the rail link and that was really the
genesis of the project. Wes Edens has invested heavily in Florida’s
rail project which used to be called Brightline. Brightline recently rebranded to Virgin
Trains as the company partnered with Richard Branson’s Virgin Group. The team at Brightline, which is now
called Virgin Trains, has proven that it can work. The people actually want to get out of
their cars and they’d love to be on trains. In order to reach profitability, the
company sacrificed speed to save money. If you want to really go
high-speed you have to grade separate. So you basically have to build a bridge
for 250 miles that you then put a train on. That sounds hard, and it sounds expensive
and it’s both of those things. So a huge difference in cost, a huge
difference in time to build and not that much of a reduction in service. And now tech companies are
getting involved with infrastructure projects. In the Pacific Northwest a high-speed
rail plan is underway to connect Portland, Seattle and Vancouver. Microsoft contributed $300,000 towards
research for the project. Our number one priority from Microsoft as
well it to really see and pursue this high-speed rail effort happen. If you look around the United States
and where all of the Fortune 500 companies are located they all are
in a similar situation to Microsoft. The housing is unaffordable,
traffic congestion is epic. It’s too hard to get
anywhere and to get employees. So high-speed rail can solve this
same exact problem in numerous regions around the United States. So is the private sector the answer
to bringing high-speed rail to the U.S.? If the private sector wants to invest
in transportation and as long as it’s not impinging on the public taxpayers I
don’t see a problem with private sector moving forward. And I think there is some truth that
the private sector is gonna have much more of an incentive to hurry up
on the construction and get things done more quickly, more cheaply. That said, the private sector still has
to operate with the oversight and regulatory responsibilities of
the public sector. So for example environmental review doesn’t
go away just because it’s a private sector project. Labor standards don’t go away. The difference is that they don’t have to
keep trying to sell a project to the public for a vote to
raise taxes or sell bonds. Some people remain optimistic
that the U.S. can catch up to the rest of the
world and have a robust, high-speed rail system. We’re building that right
now behind us. This 119 mile segment that we want
to expand with the money we already have to 170 miles, it’s going to serve
a population of 3 million people in the Central Valley. So it’s, not only do I
believe, but it’s under construction. A lot of activity is now taking
shape, state rail authorities have been shaped in four or five states, so
they’re actually taking these on now as a legitimate project
and moving forward. I think the future is very bright
for train travel in the United States. There’s broad consensus with our policy
leaders in industry that it’s time to move an infrastructure bill and
that will certainly help kickstart U.S. rail. Others are much less confident. I wish I were
a little more optimistic. It’s just very difficult to
make the economics work here. No one has embraced it as a
strong part of their political platform. There’s just too many other
tough pressing problems we’re facing. I don’t see us catching up
to where the world is. It would take such a massive infusion
of dollars for that to happen in California and probably waving a
number of environmental requirements and some other government regulations that
hinder the quick deployment of these projects in favor
of other values. My own instincts are that it’s going
to be decades and decades of decades before you’ll be able to go a
one-seat trip from San Diego to Sacramento or San Francisco. It’d be nice if there was just
one simple answer, it’s this litany of factors that collectively add up that make this
so hard to pull off in the United States.

Gold, Bitcoin surge in wake of economic uncertainty


STUART: THEY ARE SELLING STOCKS AND GETTING INTO REAL ESTATE AND KEEPING CASH.>>>LET’S CHECK THE PRICE OF GOLD. THAT IS A TRADITIONAL SAFE HAVEN. IT’S UP ANOTHER $8, $1484 ON GOLD. AT LEAST A SIX-YEAR HIGH.>>>BITCOIN, THAT SPIKED YESTERDAY WHEN WALL STREET, THE STOCK MARKET WAS SELLING OFF. RIGHT NOW IT’S AT $11,700 PER COIN. I WANT TO BRING IN RON PAUL, FORMER TEXAS CONGRESSMAN, FRIEND OF THE SHOW. SIR, I ALWAYS THINK OF GOLD AS THE GO-TO SAFE HAVEN. WOULD YOU ACCEPT BITCOIN AS THE NEW GOLD?>>I DOUBT THAT. I THINK THAT IT SHOULD BE MADE AVAILABLE AND WHAT I WORK ON IS MAKING SURE THAT IT IS LEGAL BUT I THINK ITS HISTORY IS SHORT-TERM SO YOU DON’T KNOW. GOLD HAS A LONGER HISTORY LIKE 4,000, 5,000, 6,000 YEARS PEOPLE HAVE DEPENDED ON IT TO MAINTAIN WEALTH. IT IS DIFFICULT. THE BIGGEST PROBLEM PEOPLE HAVE IN MAINTAINING THEIR WEALTH IS NOT WHETHER YOU HAVE GOLD OR STOCKS OR BONDS OR WHATEVER. IT’S WHETHER OR NOT YOU HAVE YOUR FREEDOM. BECAUSE JUST THINK OF IN THE DEPRESSION, PEOPLE THOUGHT GOLD MIGHT BE A GOOD THING TO HOLD SO THE GOVERNMENT TOOK IT AWAY FROM THEM AND MADE IT ILLEGAL. [ SPEAKING SIMULTANEOUSLY ] STUART: YOU DON’T THINK WE’RE FREE? I CAME TO AMERICA AND REVELED IN THE FREEDOM I FOUND HERE. YOU DON’T THINK WE’RE FREE?>>WELL, COMPARED TO OTHERS, YES, WE’RE DOING PRETTY WELL. BUT I DON’T CONSIDER US A CONSTITUTIONAL SYSTEM OF GOVERNMENT THAT WAS DESIGNED MANY YEARS AGO. I DON’T CONSIDER IT A LIBERTARIAN SYSTEM. THERE STILL IS RESPECT FOR PROPERTY BUT THERE IS WAY TOO MUCH GOVERNMENT INTERVENTION. MAYBE MOST OF OUR PROSPERITY IS DEPENDENT ON DEBT. HERE WE ARE LIVING IN A SYSTEM WHERE YOU CAN ENDLESSLY PRINT MONEY, TAKE INTEREST RATES BELOW ZERO, THEN BORROW MONEY AT TRILLION DOLLARS A YEAR. SOMEBODY HAS TO PAY. WHEN YOU ARE VERY MUCH IN DEBT YOU ARE REALLY NOT FREE. YOU SHOULD BE FREE FROM DEBT. THAT’S WHEN INDIVIDUALS FEEL BETTER WHEN THEY DON’T OWE A LOT OF MONEY. STUART: I’M GOING TO READ A TWEET THE PRESIDENT PUT OUT ABOUT THE FED WHICH OF COURSE, YOU ARE VERY INTERESTED IN. I’M SURE YOU HAVE SEEN THIS BUT I WILL READ IT FOR THE VIEWERS. CHINA DROPPED THE PRICE OF THEIR CURRENCY TO AN ALMOST HISTORIC LOW. IT’S CALLED CURRENCY MANIPULATION. ARE YOU LISTENING, FEDERAL RESERVE. THIS IS A MAJOR VIOLATION WHICH WILL GREATLY WEAKEN CHINA OVER TIME. YOU HAVE NO TIME FOR THE FEDERAL RESERVE AT ALL. DOES THE PRESIDENT HAVE A POINT?>>VERY WEAK ONE, BECAUSE YES, THE CHINESE ARE MANIPULATORS BUT WHAT ABOUT QE? DIDN’T WE MANIPULATE OUR CURRENCY? DON’T WE MANIPULATE WHEN WE BADGER THE FEDERAL RESERVE TO LOWER THE INTEREST RATE NO MATTER WHAT THEY REALLY THINK? THEN THEY COME ALONG AND LOWER IT A QUARTER OF A POINT AND EVERYBODY GETS HYSTERICAL AND THE MARKETS CRASH BECAUSE IT WASN’T A WHOLE HALF A POINT? YES, WE MANIPULATE JUST LIKE EVERYBODY BUT IT’S DIFFERENT BECAUSE WE AS THE RESERVE CURRENCY, WE ARE THE BIGGEST MANIPULATOR BECAUSE WE GET TO PRINT AS MUCH AS WE WANT AT WILL, AND LICENSE OUR CONGRESS TO RUN UP DEFICITS OF A TRILLION DOLLARS A YEAR. THERE’S TREMENDOUS MANIPULATION. YOU HAVE TO COMPARE SOMEBODY THAT’S RUNNING A RESERVE CURRENCY TO SOMEBODY THAT DOES NOT HAVE A RESERVE CURRENCY. I WOULD SAY THERE’S WAY TOO MUCH INTERFERENCE AND RIGHT NOW, WHEN YOU’RE DEMANDING THAT INTEREST RATES GO LOWER, WHICH IS WHAT OUR ADMINISTRATION IS DOING, YOU ARE MANIPULATING THE CURRENCY. YOU ARE SAYING LOAN THAT MONEY OUT VERY CHEAP. I WOULD QUESTION THIS WHOLE THING SO I WOULD SAY CHINA PROBABLY IS A MANIPULATOR, THEY PROBABLY ARTIFICIALLY KEPT THEIR YUAN TOO HIGH FOR A LONG TIME. NOW THEY ARE SORT OF MAKING UP FOR LOST TIME. STUART: RON PAUL, YOU JUST MADE

The Business Deception That Cost $60 Billion


An American worker named George had his sights
set on a comfortable retirement, perhaps some holidays in the sun, relaxing in the garden
with good novels and a gin and tonic by his side. And then when the company he worked
for, the energy giant called the Enron Corporation, collapsed in front of his eyes those plans
went up in smoke. Years later he was mowing pastures when he should have been living on
his retirement savings, which had been mostly tied up in Enron company stock. No one ever
thought such a behemoth of a company could just go belly-up. It was a story that shocked
the world, one involving mismanagement, corruption and greed. This is what happened. In its heyday Enron was one of the largest
companies in the USA. At its peak its shares reached $90.75, and when it declared bankruptcy
in 2001 they were worth $0.26. Few saw it coming, and to this day the downfall is a
reminder to us all that indeed giants can fall, and on top of that, giants aren’t
always what they seem. The story starts in 1985 when two companies
merged. They were Texas-based Houston Natural Gas Company and Omaha-based InterNorth Incorporated.
At the beginning the new Enron was simply a very big natural gas supplier, but then
in 1989 it turned a leaf in its book and began trading natural gas commodities. In 1994 it
also began trading electricity. These changes took place under its new CEO Kenneth Lay,
who had formerly been in the big chair at Houston Natural Gas. At the time Enron was
said to be one of the most innovative companies in the USA, but at the time of the downfall
the New York Times wrote, “Enron is a new-economy company, a thinking-outside-the-box, paradigm-shifting,
market-making company.” It added to the end of that paragraph, “It is also, at this
point in time, a bankrupt company.” As the story goes, before Enron got started
gas and electricity were produced and sold by state-regulated monopolies. But then there
was deregulation, and as the Times writes, “Enron used Wall Street magic to transform
energy supplies into financial instruments that could be traded online like stocks and
bonds.” Prior to this, those energy monopolies were always under government scrutiny, but
after deregulation Enron had more freedom and so started trading energy online, such
as stocks and bonds, and also placing bets on future energy prices. Enron started selling
contracts, called energy derivatives, to investors. Soon Enron was called “America’s Most Innovative
Company”, and it won that accolade for a number of years. At the time this looked good for
the consumer, because with supply and demand taking over fixed prices by monopiles, the
prices for customers seemed fair. It seemed like a dream story for capitalism. There was a problem, though, and something
didn’t quite add up. You see Enron thought that if it could trade
energy, then why not trade all kinds of other things, such as insurance or advertising and
then turn these into contracts and sell them as derivatives, too. The company poured billions
into these new trading ventures, but not everything turned into gold. It later turned out that
while Enron was winning on some levels, it was losing on others, but the problem was
it wasn’t always coming clean about where it was losing. It was kind of fixing its accounts
and reporting false trading revenues. As one person pointed out, “Some of the schemes
traders used included serving as a middleman on a contract trade, linking up a buyer and
a seller for a future contract, and then booking the entire sale as Enron revenue. Enron was
also using its partnerships to sell contracts back and forth to itself and booking revenue
each time.” It was in fact creating imaginary revenues. If that is confusing to you, The Wall Street
Journal gave an example of one such piece of Enron subterfuge. Enron got into a deal
with Blockbuster, those guys whose stores you’d go to in the past and rent out a movie.
The new deal with Blockbuster was to do this online. But it didn’t work out, and in eight
months the business was a total flop. While this was going on Enron had made a deal with
a Canadian bank. If the bank loaned Enron $115 million, Enron would then hand over its
video deal profits for the first ten years to the bank. As you know, Enron made no cash
from this online video renting business with Blockbuster, but it still wrote the $115 million
down as part of its revenue, not a massive loss. The Canadian bank was owed money, but
on paper things didn’t look bad for Enron. According to the New York Times, Enron did
a fair bit of shady accounting and still Wall Street bankers at J. P. Morgan, and others,
were gung-ho about the company and its stock. Some people, however, began to smell a rat. The thing was, Enron was also seen as a fairytale
winner in the years when deregulation and online trading, embodied by a get rich quick
culture, were admired by everyone. Leave the innovators alone, this is the future. But
things got out of hand, as they tend to do when in Hobbesian terms the “Leviathan”
goes missing and no one is watching over the people to ensure nothing terrible is happening.
Enron also invested heavily in high-speed broadband telecom networks, but the company
saw no profits from that, either. The most innovative company in America was on a losing
streak, but still those losses were not reported. It was hiding all its financial losses, using
something called mark-to-market accounting. Investopedia explains that like this, “This
technique measures the value of a security based on its current market value instead
of its book value. This can work well when trading securities, but it can be disastrous
for actual businesses.” Another example given of the Enron way of
hiding losses is this. If the company bought a power plant it would first put the projected
profit on its books. That’s a projected profit, meaning nothing has actually been
made. If then Enron actually didn’t make a profit but a loss, it would transfer the
loss to an off-the-books corporation somewhere no one would find it. This way Enron’s bottom
line didn’t look affected and everyone still thought the company was booming, when in fact
heavy losses were being incurred and then hidden like soiled underwear at the bottom
of a laundry basket. Enron used something called off-balance-sheet special purpose vehicles
(SPVs) to hide these failures, but all you need to know is that this is a technique that
can be used to fool investors and creditors. The experts tell us this is not illegal, but
it can be dangerous. At the same time, not everyone understands how they work, so it
could be said to be slightly unethical if companies are not completely transparent about
it. And then the bubble burst, as bubbles tend
to do. By April 2001 analysts were on to Enron, they saw what was happening, realizing that
accounting wizardry had been creating a company not unlike the fantasy city of Oz. Behind
the screen Enron was crumbling, and by summer 2001 the company was in freefall. Its stock
was downgraded, sinking like a stone into the abyss. By 2000 it was revealed that Enron
had losses of $591 million and $628 million in debt. In 2001 the company filed for bankruptcy,
and a lot of poor folks whose pensions were tied up in company stock were going to have
to cancel their dream vacation in the Caribbean. From 2004 to 2011 the company paid $21.7 billion
to its creditors. It’s said shareholders lost in total around $74 billion and employees
lost billions in pension benefits, with one such person being the guy we mentioned at
the beginning of this story. There were many, many more like him. Some of the executives were charged with conspiracy,
insider trading, and securities fraud. The CEO we mentioned died of a heart attack before
he could face any prison time. Others did time for facilitating corrupt business practices.
Another CEO, Jeffrey Skilling, was only just released from prison. Do you think government regulation of markets
is good or bad after watching this video? Let us know in the comments! Also, check out
our other video How Jeff Bezos Gets His Money From Amazon. Thanks for watching, and, as
always, don’t forget to like, share and subscribe. See you next time.

Why Dunkin’ Donuts Is Failing in India


Dunkin’ is synonymous with breakfast
pretty much everywhere you go. There are more than 12,600 restaurants in 46
countries from Kuwait to Aruba. But there is one market where the
company is failed to capture national attention, India. As of 2018, it closed
more than half of its stores in just over two years, citing a lack of
profitability and operational efficiency. So what went so wrong for Dunkin’ in
India? To answer that let’s go back to 2012, when Dunkin’ launched its first
location. Dunkin’ granted exclusive franchising rights to Jubilant FoodWorks, the same franchisee that brought Domino’s Pizza to India, one of the top
restaurant brands in the country. Dunkin’ entered with its typical breakfast first
strategy and it braced for heavy traffic at the start of the day. But it didn’t
take long to figure out that Indians weren’t all that interested in the
American morning routine. The majority of Indian consumers don’t prefer to
grab-and-go their breakfast. They’d rather have a sit-down meal. Yeah
basically when you look at doughnuts. So basically when Dunkin’ Donuts came to India it’s it’s regarded as a breakfast for all the Western countries or
wherever the Dunkin’ Donuts have their outlets. But in India, it’s the consumer
preferences are totally different. So here, people you know they generally
prefer their local cuisine for their breakfast. And it wasn’t just the timing
of the offering, it appeared to be the menu itself. To be fair, Dunkin’ tried to
localize its offerings. It had custom doughnuts catered to Indian tastebuds,
like the mango doughnut. It had Lychee coladas. And for a brand that rarely
ventures outside its core product, Dunkin’ even rolled out a spicy sandwich lineup.
In an effort to localize its menu, this coffee loving brand even downplayed its
beverage branch of business, which accounts for about 60% of Dunkin sales.
Instead, it marketed its food to a nation that’s not exactly crazy about coffee.
But it wasn’t enough to help Dunkin’ shake its doughnut first reputation.
Dunkin’ was seen as more of a pastry shop and Indians didn’t want to start their
day with sweet baked goods. Doughnut is basically considered as a desert right and a desert which is a lot of other assortment added onto it so it’s a high
calorie assortment. And therefore, it’s more like a
luxury. It’s more like impulse kind of a purchase. Which you make if you are
celebrating or is there a special occasion or you know once in a while
Indians having a switch tooth would like to indulge in that kind of a purchase.
So Dunkin’ pivoted. It pushed it’s operating hours later, it rolled out its
Diwali doughnut, which touted savory flavorings like chickpeas, saffron and
chilly. But key Dunkin’s tweaked image, was actually to downplay the doughnut. So it tried something it hadn’t done before, burgers. With burgers, Dunkin’ was able to
get more foot traffic in and the non beef lineup was designed to appeal to
the country’s vegetarians. But making burgers the anchor product of the brand,
just appeared to dilute Dunkin’s image rather than help it. Decided advertising
on burgers rather than doughnuts. I’m gonna need to go global brand wind
doughnut in your name. You cannot say that we are not doughnuts than here’s something else, right? So that’s really against the basic rule of marketing, which is focus.
In a statement to CNBC, Dunkin’ Brands said that it finds it important to
include core Dunkin’ products alongside more regional menu items to cater to
local tastes. But Dunkin’ didn’t comment on its store closures in India. Another
potential misstep had nothing to do with the menu. Dunkin’ expanded too fast, its
locations were too big and those huge retail spaces translated into higher
operational costs. So when Jubilant FoodWorks announced plans to pare back more Dunkin’ shops in 2018, it came as little surprised that its new plan was
to focus on small stores and kiosks. But keep in mind, Dunkin’ isn’t alone in its
struggle with the doughnut. Dunkin’s main doughnut rivals, Krispy
Kreme and Mad Over Donuts, entered the market within a few years of one
another and at first things were pretty great. Doughnuts were initially a hit
when they were first introduced into the Indian market. The young population which was more acceptable to American tastes and culture. And so for them it was the
issue of novelty and therefore, doughnut market saw a surge in the in
in the Indian, you know, subcontinent and we had Dunkin Donuts, which entered the
market at that point of time and we all know the drive, right? From 22 stores, they reached up to 77 stores in 2017. Which was the peak of Dunkin Donuts in India.
But Aggarwal said that the donuts popularity has started to stagnate and
now the doughnut chains of India are feeling the pressure. The doughnut is
struggling. It’s not just Dunkin’ and Krispy Kreme. There have been declining
sales across doughnuts for quite some time. Not just in India but if doughnuts
were working they would be Dunkin’ Donuts doughnuts but they’re now just
Dunkin’. And so that’s if it’s not working here, it’s it’s certainly not working in
India. That precipitous fall in the popularity of the doughnut is partly to
do with the more health-conscious India. India’s becoming a very health conscious
market, right? So people are moving away from sugar and salty food and looking
for more healthier options. So that’s one of the reasons why I feel that the sales
have kind of stagnated. But even though Indian consumers are
looking for healthier foods, some desert chains in the country aren’t struggling
like Dunkin’. In fact, one of Dunkin’ Brands other businesses, Baskin-Robbins, is
killing it in India. Baskin-Robbins which is franchised in India by Graviss Group,
has more than 725 stores in the country and claims to be the largest ice cream
chain in India. So if Baskin-Robbins and Dunkin’ are two fruits from the same tree, then why is one doing so much better than the other in India. Euromonitor says
it’s because Baskin-Robbins focused on its signature product, ice cream. And
according to a Mintel report, the ice cream industry is heating up in India.
Mintel estimates that in 2021 657.2 million litres of ice cream will be
purchased in India. But doughnuts well they’re just not a favorite for the
adult Indian consumer. So Dunkin’s big problem in India seems to have more to
do with the fact that it’s failing to give Indian consumers what they’re
looking for and less to do with any mistake made by either Dunkin brands or
Jubilant FoodWorks. Take Dunkin’ Brands, the company in the United States is by
no means failing. The company has seen a steady grow than revenues over recent years. The Indie market isn’t biased against
international companies, more specifically, Dunkin’ Brands because
Baskin-Robbins has seen such success in India. And Jubilant FoodWorks, which
franchises Dunkin’ in India, also franchises Domino’s Pizza, one of the
most popular brands in the country. It’s also not the first time an international
Dunkin franchise agreement has flopped either. Dunkin’ has tried and failed to
enter China twice. And in 2015 it decided to step back in a third time with a
better understanding of what Chinese consumers want and an ambitious goal to open 1,400 restaurants. So will Dunkin’ in India have the same story as Dunkin in
China? or will it be able to turn things around? Experts say it’s certainly worth
trying. With the population size second only to China, India is thought of as the
last great battleground for international fast food rivals. Only
about three percent of all food service establishments there are chained. In
Western markets, it’s over 50 percent. So if you’re looking to capture market
share in the U.S., you have to take it away from somebody else. But if you enter
India in the right way, with the right formula, there’s tremendous potential
upside. And reducing store sizes is part of that formula. For the U.S. store, they
have been reducing their sizes, store sizes, which which is the same strategy
which was being followed by Mad Over Donuts or Krispy Kreme. The brand
slashed unprofitable stores and instead started focusing on small kiosks to sell
their products. And remember how they basically ignored their beverage unit
when first entering the country, that’s not happening anymore. They’re planning
to introduce more teas to their menu to cater to Indian. Tastes they’re probably
better off on the hot beverage focused side of it than trying to localize
the menu to get away from it being donuts. So yeah, Dunkin’ in India has had to overcome a lot upon entering the market and it
still does. But by adding tea based beverages to their menu and offloading
unprofitable stores for kiosks, Dunkin’ may be able to save itself in India
after all.

Why WeWork Is Considering An IPO Despite Losing $1.9B in 2018


The We Company, parent company of WeWork,
is the latest in a string of startup unicorns set to
go public this year. Its core business revolves around leasing
whole buildings or parts of buildings, transforming them into hip
coworking spaces, and then renting them out to everyone from startups
and freelancers to large enterprises. WeWork is now the single largest office
tenant in New York and SoftBank has valued it at 47 billion dollars. It was created just less than 10 years
ago with the premise of creating a new way to work. So these are coworking spaces where people can
rent a desk for a day, they can rent an office for a month, and
the whole idea is that there is a community behind it as well. So you’re not just buying desk or
office space but you’re buying into this new way of working. But just like other newly public companies
such as Lyft and Uber, Wework is not turning a profit. In fact, it’s hemorrhaging cash. Believe it or not, they lost more
money last year than even Uber did. They burned through 1.9 billion dollars in cash and that was
actually greater than the amount of money they brought in, their revenue. The only difference is, you know, for example,
if no one called for an Uber tomorrow, Uber wouldn’t have to
pay all those drivers. But if no new tenants showed up
at WeWork tomorrow, WeWork has, you know, however many hundreds of buildings now
that are ready for them. And so that occupancy would
be an expensive of WeWork. Despite its losses, the
company is growing quickly. Now, WeWork says it’s in 485 locations
and has 466,000 members, up from 186,000 at the end of 2017. How fast are you growing? Very. What kind of numbers
are we talking about? We’re talking about probably one of
the fastest physical expansions that has been seen for the past 10 years. Right. It’s the sort
of tech startup playbook. Growth at all costs. And at least in the private
markets, investors have been fairly receptive to this model. That’s why WeWork as well as Uber
and Lyft, Pinterest, many others have been able to raise so much money. But what we’re seeing right now as
these companies go public is that public investors may have a
different attitude towards this strategy. They may want to see a path
to profitability, which so far WeWork doesn’t really have. Basically, Lyft and Uber’s stumbles may
bode poorly for WeWork’s chances of a successful IPO, since all companies
are currently focusing on growth over profits. I think the market will be less receptive
to that story today than it would have been a month ago. It’s going to be very difficult for them
if they don’t have a very clear numbers-based narrative for how their loss
profile is going to improve significantly. Traditionally, WeWork has relied upon
funding from private investors, the largest being Softbank, which has poured
more than 10 billion into the company, including 2
billion this year. But once WeWork goes public, its
value may depend on whether investors view WeWork as a real estate
company or a tech company. Critics would say that it’s just
simply an overvalued real estate play. All it does is take out leases,
longer term leases, and then rent out these spaces in the shorter term, which
could be a recipe for disaster if we ever were to see a recession. We’re not a real estate company. We’re a community of creators, and what we
do is we take space and through dividing it up, through sharing it up,
we give creators all around the world the opportunity to change
the way they work. But The We Company actually did recently
set up its own real estate investment platform, called ARK, so it
can buy and develop properties around the world. The announcement came after Neumann
received criticism for buying buildings himself and leasing them
to WeWork, potentially posing a conflict of interest that could be
alleviated through ARK, since it will be run separately. ARK will still be under The
We Company’s umbrella though and Wallace cautions that with this new venture, the
company is taking on even more risk. It means that when things get bad
or when things change, it’s harder for them to be flexible. Because if you rent the building, I
mean at least theoretically there is a cost that you can pay to
get out of that lease. It’s harder if you actually own the
thing to get yourself out from under the costs associated with. The company has also expanded into housing
and education over the last few years. One division, WeLive, offers coliving
spaces in New York and D.C., basically flexible apartment rentals where
residents share amenities and can stay for days or months. Another division, WeGrow, recently opened
a for profit pre-K and elementary school in New York, billed
as a place that fosters conscious entrepreneurialism for its students. The company has even expressed interest
in branching out into banking. To better reflect all these various
offerings, WeWork rebranded as The We Company at the beginning of the year. With all of this, WeWork is aiming
to use its technology platform to capitalize on the idea of community
more broadly, whether that’s in the workplace, home or school. So if investors do buy into this
concept of WeWork as a diversified tech platform, its value proposition
makes much more sense. I think part of what gives them
that tech company vibe is the network effect. And I think that in growing
into other areas such as WeLive or WeBank simply helps them solidify that
network effect and that overall it’ll help drive value and
eventually profits for them. Right now though, WeWork’s main business
still is renting and leasing massive amounts of real estate in some
of the most expensive cities in the world. It has 59 offices in New York,
47 in London, and 25 in the San Francisco Bay Area. While it competes with other coworking
and office rental companies like Regus, Industrious and Impact Hub, We Work
is the only one valued like a major tech company. So this is the other thing about the
sort of Jedi mind trick that WeWork has presented to investors that are giving
it such a lofty valuation, is you know renting offices, you
know, isn’t really rocket science. Right? So the risk is that they
build WeWorks in a huge number of buildings at phenomenal expense and
don’t have enough tenants. And so if you have the full load
of costs of renting and building out all of these offices and furnishing, you know,
kegs of beer or new ping pong balls and you don’t have tenants, it’s
going to be very difficult for them to rationalize those costs. If it’s going to live up to
this valuation, a key driver of profitability could be the growing number of
WeWork enterprise members, that is big corporations that have longer rental
contracts than freelancers or startups. 40 percent of the business
are long term commitments. Okay. Longer than a year. And then another 20 percent are
longer than month to month. The likes of IBM even Amazon
are renting office space from them. So the idea is in the future you
got a lot of the subscription revenue from the bigger companies and that is
enough to eventually bring in money. For now, WeWork says its
losses are not a problem. Minson also urged me to look at
losses as investments because he said that coworking is a proven business model. And guys that may hint at the
narrative the company will sell to Wall Street as it heads towards its IPO. So why not just focus on
growth now and go public later? If you’re losing two billion dollars a year,
then you have a very big cash problem that you need to figure out
a solution to, and the public market is obviously one place
that can do that. Basically, given the rate at which WeWork
is spending, it may need more than what private
investors can offer. While the company recently raised another
2 billion from SoftBank, this was actually a disappointment, given that
SoftBank had been considering a 16 billion dollar investment. There are just very few private players
that can write those kinds of checks that they need in order to
grow at the pace they’d like to. In this climate though, WeWork may
find it hard to get underwriters onboard. One of the choke points that we see
is that there are only a few underwriters in the world that could
lead manage a deal this big. And so that is one of the things
that WeWork is going to have to overcome, is find a set of underwriters that
are willing to tackle this, given the rough sledding that both Lyft
and then Uber have seen. But assuming WeWork does go public soon,
it’s already amassed so much power that some believe failure
isn’t even an option. WeWork has now become one of the
biggest corporate landlords, so some might argue that the company is now too
big to fail, that the real estate developers which they rent from won’t
allow the company to fail because they have so much at stake. Of course WeWork’s ultimate vision is
far more ambitious than just being propped up by developers. WeWork wants to become a platform. They don’t want to just be coworking. They want to be in the education
space, the living space, potentially even the banking space. The idea is sort
of the Amazon playbook. You become so big, you invest so much
into the business, that one day you do turn a profit.

Why WeWork’s Business Model Is Risky | WSJ


– [Spencer] WeWork’s IPO is
coming as soon as next month. – Investors might rightly be wondering if it’s a bridge to nowhere. – This is, obviously,
an unprofitable company. We’ve seen a number of these companies come to market this year
with actually mixed results. – A lot of numbers are swirling around, but if you really wanna understand
WeWork’s business model, look at this one, $47 billion. That’s how much the
company is on the hook for in lease obligations leading
up to its public offering. It says a lot about how the company works and why some investors
are eyeing the risks. (pleasant piano and orchestral music) You probably know WeWork,
which recently changed its name to The We Company, as an office space with a specific aesthetic. You know what we’re talking about. The glass walls, plants, cafes, mid-century-style furniture. WeWork’s basic business model
is to lease large spaces, transform them to look like this, and then rent them out to
individuals and companies at a higher price. – [Spokesman] Our software
finds the best buildings in the best locations.
(dramatic orchestral music) Before we even begin construction, we build full 3D models to make sure we’re creating environments
that allow members to thrive. – [Spencer] As of 2018,
the company operated more than 35 million square
feet of space globally, and it currently occupies 528 locations in 29 countries around the world. (dramatic orchestral music) – [Spokesman] Speed is important, because on average, we
open two new locations every single day.
(dramatic orchestral music) – To cover the costs of
the renovations and leases, WeWork charges individuals and companies through four different membership options. For one of the cheaper plans, a member can bring their laptop and sit in a common area
if space is available, and for the most expensive plan, companies can rent out full offices, suites, or entire floors. WeWork also offers a service
called Powered by We, full custom build-outs
for larger companies. So why are some analysts
and investors skeptical? Well, some are concerned
with those lease obligations. When WeWork signs a lease
on a building in the U.S., they commit to an average of 15 years, but WeWork’s members only commit
to an average of 15 months. WeWork’s obligations top $47.2 billion, but its customers have only signed leases on $3.4 billion worth of space. Recently, the company has started signing more long-term clients, but still, with 528 locations, that’s a
lot of time and space to fill. It’s unclear how much
space WeWork needs to fill to break even, but the
company’s occupancy rate fell from 84% to about 80%
in the final quarter of 2018. The company said the drop
was caused by expansion. New offices traditionally
take up to 18 months to fill, but it’s unclear what would happen if suddenly fewer
start-ups and freelancers were looking for workspace, which could happen in
an economic downturn. It’s also unclear what would happen if existing tenants started to default. One place investors are
looking for precedent is International Workplace
Group, formerly known as Regus, a Swiss company with a similar
business model to WeWork. During the economic
downturn in the early 2000s, IWG’s U.S. unit filed for bankruptcy as its revenue fell but long-term
leases remained in place. WeWork has said it’s
flexible business model would help keep it safe in a downturn. The company’s rapid expansion has helped it stay out
in front of competitors, but some investors are
concerned that could change. That’s because WeWork’s business
model is easy to replicate. The company has filed for
some industrial design and furniture patent protections, but anyone with enough cash can lease out industrial office space
and flip it, and they have. A New York-based rival, Knotel, hit an estimated $1 billion valuation following a recent round of funding, and in 2017, Blackstone
acquired a majority share of The Office Group, a flexible workplace provider in the U.K. Investors will have to decide if WeWork’s size and
flexibility are enough to protect it in a period
of economic uncertainty. (pleasant mallet percussion music)

Peter Schiff: The markets are going to collapse due to Fed raising rates


NOW IN DECEMBER. THAT WOULD BE THE FOURTH RATE HIKE THE FED HAS SAID IT WOULD GO FORWARD BUT AS WE JUST TEASED COMING INTO OUR FINAL COMMERCIAL BREAK THERE WERE TWO MYSTERY MAN WE SHOWED BEFORE WE TALK TO THE BREAK. LET US REVEAL THEIR FACES. PRESIDENT TRUMP OFTEN TAKES AIM AT THE FEDS TO ROME POWELL FOR THE MARKET’S RECENT DECLINE PETER SHIFT SAYS BOTH PARTIES WILL BE THE ONE TO BLAME WHEN THE RECESSION HE SAYS WE ARE ABOUT TO SEE TAKES FINANCIAL CRISIS OF 2008 LOOK LIKE THE ROARING 20s BY COMPARISON. HE IS HERE AND AUTHOR OF THE REAL CRASH HE JOINS US BUT IN THE SPIRIT OF FAIR AND BALANCED THE MAN IN CHARGE OF THE TRAINING GROUP AT TD AMERITRADE EXECUTIVE VICE PRESIDENT STEPHEN CORTES OCTOBER VOLATILITIES AND ESPECIALLY WILL BE SEEN OUT IN NO WAY SIGNALS THE END OF THE WORLD. PETER, TO YOU FIRST. WHY ARE YOU BLAMING BOTH PRESIDENT TRUMP AND JAY POWELL OF THE FED?>>I’M BLAMING BOTH CLINICAL PARTIES. THE REPUBLICANS WILL TAKE THE BLAME BECAUSE IT WILL BLOW UP ON THEIR WATCH BUT IF YOU WANT TO NAME NAMES GOT TO GO BACK TO ALAN GREENSPAN. HE’S WON THE ROAD THIS PLAYBOOK. EVERY TIME WE HAD A BEAR MARKET WHILE GREENSPAN WAS CHAIRMAN OF THE FEDS HE WOULD QUICKLY RESTART THE PARTY WITH CHEAP MONEY AND SO WE SET THIS PROCESS IN MOTION BUT IT WILL NOT WORK ANYMORE. LIZ: WHY IS PRESIDENT TRUMP TO BLAME? WHY IS JAY POWELL TO BLAKE?>>THEY WILL GET BLAMED BECAUSE THEY ARE THE ALL DIE. THE PROBLEM STARTED LONG BEFORE TRUMP WAS ELECTED. HE CALLED THIS A BIG FAT, UGLY BUBBLE WHEN HE WAS RUNNING. LIZ: BUT NOW HE’S THE ONE ASKING FOR GRACE TO STAY LOW. ARE YOU SAYING THE FEDERAL RESERVE SHOULD NOT RAISE IN DECEMBER, PETER? OR THEY THEIR CUT RATES?>>IT SHOULD RAISE RATES FOR THE MARKETS WILL COLLAPSE AS A RESULT. THEY HAVE NOT FIGURED THIS OUT BUT GIGANTIC – THIS BEAR MARKET IS NOT GOING TO END QUICKLY LIKE THE ONE IN 1987. THIS WILL BE A PROTRACTED BEAR LIKE THE ONE WE HAD FROM 1966 19661982, 16 YEARS WITHOUT A NEW HIGH IN MEANWHILE THE COST OF LIVING WENT UP DRAMATICALLY AND THE COST OF LIVING WILL RISE EVEN MORE DRAMATICALLY DURING THIS SECULAR BEAR MARKET IN LOOK, THERE’S NOTHING THAT CAN BE DONE TO STOP THIS BUT UNFORTUNATELY FOR AMERICA I THINK THE RHETORIC OF THE REPUBLICANS AND TRUMP TAX CUTS WILL GET BLAMED . LIZ: WERE HEADING TO – WE ARE NOW HEADING TO MORE SESSION LOWS. NOW DOWN ABOUT 411-POINT STEVE, YOU HAVE THE BENEFIT OF THE TD AMERICAN TRADE AND YOU CAN CHECK IN ON THAT HERD AND SEE WHAT THEY ARE OR NOT DOING? MASSIVE $1.3 TRILLION AND HOW IS THE HERD BEHAVING AND ARE YOU WORRIED ABOUT IS PETER’S?>>WHAT I WILL DO IS GIVE YOU A AFFECTION BECAUSE THANK YOU FOR HAVING ME. THE VALUE I BRING IS TELLING YOU WHAT ARE CLIENTS ARE DOING. LAST TIME I WAS ON, TWO WEEKS AGO, I TOLD YOU THERE QUITE CONTRARY AND AS A GROUP SO WHEN WE SEE SELLOFFS TYPICALLY WE SEE STRONGER BUYING AND WE NOTICED IN THE LAST FOUR MONTHS THAT THAT SENTIMENT HAS DONE BACK IN OTHER WORDS, THE BUYS AND SELLS ARE ALMOST EVENLY BALANCED AND WE ARE SEEING MORE ROTATION INTO WHAT WE WOULD CALL THE CYCLICALS, UTILITY, THINGS THEY THINK LOWER BETA STOCKS THAT WILL PROTECT THEM SHOULD THEY CONTINUE TO SEE THIS DOWN MOVE. I WOULD SAY THEY ARE NOT OPTIMISTICALLY SAYING THIS WILL BOUNCE RIGHT BACK BUT THEY ARE ALSO NOT SAYING IT’S THE END OF THE WORLD. LIZ: CORPORATE EARNINGS FOR THE S&P WE SAW THEM UPGRADED FOR THE THIRD QUARTER THAT THEY LOOK TO BE UP ABOUT 25.2% AND WE GOT A LOT OF BIG NAMES COMING OUT AND IS THERE AT THE CHANCE THAT SOME OF THESE NAMES COULD ENGENDER POSITIVE FEELINGS ABOUT AND FOR INVESTORS? I KNOW YOU WERE BEARISH ON THE US BUT NOT ELSEWHERE.>>THERE IS A LOT OF OPTIMISM ABOUT EARNINGS. UNFORTUNATELY THIS IS PRICED INTO THE STOCKS. A LOT OF THE EARNINGS CAME FROM LOWER TAXES AND A THIRD OF IT BUT A LOT OF THESE EARNINGS WILL GO AWAY DURING THIS RECESSION AND ESPECIALLY AS INTEREST RATES KEEP RISING BECAUSE COMPANIES TOOK OUT A LOT OF DEBT DURING THE BOOM AND NOW HAVE TO SERVICE THE DEBT OR IN THE BUST AND THE REVENUES WILL GO DOWN SO EARNINGS COULD COLLAPSE VERY QUICKLY AND AS STOCKS GO ALONG WAY TO FAULT THE MARKET IS OVERVALUED AND I THINK THERE IS SO MUCH COMPLACENCY OUT THERE. RECORD HIGHS, AND SENTIMENT IN CONSUMER INVESTMENT SENTIMENT AND SMALL BUSINESS SENTIMENT AND NO ONE EXPECTED THE RECESSION. BUT WHEN IT HITS, EVERYONE IS SURPRISED AND THIS TIME THEY WILL BE EVEN MORE SURPRISED AND I THINK IT WILL MAKE THE RECESSION THAT MUCH WORSE THAN IT STARTS AND HOW ILL-PREPARED PEOPLE ARE. LIZ: I NEED TO POINT OUT SOMETHING THAT TEN YEAR YIELD. I’VE BEEN KEEPING MY EYE ON IT FOR THE LAST 35 MINUTES WHEN WE CAME INTO THE SHOW WE WERE AT 3.09%, UP TWO BASIS POINTS TO 3.07%. I ARTICULATE THIS I KNOW IT’S ON THE LOWER TICKER FOR WE HAVE FOLKS IN THE CAR LISTENING ON XM113 OR ON FOXBUSINESS AND THAT MEANS THERE’S A FEAR IN THE MARKET AT THE MOMENT AND I’M PRETTY SURE IT IS MOVING HIGHER RIGHT NOW PRETTY MUCH SESSION-THE FEAR COMING IN SPURS A LIGHT TO QUALITY OR FLIGHT TO A SAFE HAVEN BUT TALK ABOUT THINGS THAT PETER MAYBE DOESN’T SEE. DECENT GDP NUMBER JUST BE SILLY FOR THE FIRST PRINT ON THE RECORDER AND ARE ON THE PLANET IS LOW AND PETER WAS A ON A PLANET WAS LOW AND 2007 BEFORE THE CRASH ->>YEAH, I WOULD SAY LOOK, I WILL GIVE YOU IT TO THE EYES OF OUR CLIENTS. THEY ARE SAYING EARNINGS ARE PRETTY GOOD AND HALF THE S&P 500 IS A QUARTER WILL REPORT THIS WEEK AND ECONOMY LOOKS PRETTY GOOD. OBVIOUSLY THERE ARE A LOT OF CONCERNS WITH TARIFFS AND SO MANY THINGS GOING ON BUT IF YOU LOOK AT THE VOLATILITY LEVELS TODAY IT IS 26, 27 – IF I GO BACK HISTORICALLY IT WOULD LOSE LIKE THIS WOULD BE IN THE 30s AND I’M NOT SAYING IT’S A PERFECT INDICATOR BUT WHAT OUR CLIENTS ARE TRAINED TO DO IS ASSESS WHETHER IT’S AN OPPORTUNITY FOR THEM TO DIP THEIR FEET BACK INTO THE WATER AND GET MORE EXPOSURE OR JUST TO SIT TIGHT. LIZ: PETER, WHAT ARE YOU BUYING OR PUTTING MONEY?>>EARNINGS ARE ALWAYS GOOD AT THE BEGINNING OF THEIR MARKETS. NUMBERS ALWAYS LOOK GOOD. LIZ: NOW MY QUESTION. ANSWER MY QUESTION.>>LOOK, YOU TALK ABOUT FEAR AND GOAL IS NOT UP-TO-DATE. GOLD STOCKS ARE ON SALE AND THAT IS WHERE THE SEALS ARE RIGHT NOW AND THE GOLD STOCKS ARE – A LOT OF THE INTERNATIONAL VALUE STOCKS I’VE BEEN BUYING MANY STOCKS ARE UP TEN, 20% LAST WEEK A LOT OF PEOPLE DID NOT NOTICE THAT BUT AS THIS BEAR MARKET IS STARTING PEOPLE ARE SHIFTING AND RELOCATING OUT OF THAT MOMENTUM TYPE STOCKS IN THE VALUE DEFENSE NAMES IN THAT BIG A SHIFT WILL BE OUT OF US STOCKS WHICH ARE THE BIGGEST BUBBLE INTO THESE UNDERVALUED FOREIGN STOCKS IN EMERGING MARKETS AND THAT IS WHERE THE REAL BUYING

Will Best Buy Survive Amazon?


Once an online bookstore, Amazon now
sells just about anything you would find in a home or business,
and has developed a formidable formula. Meanwhile storied and
once dominant U.S. retail chains everywhere
are struggling. Faced with monumental shifts in
the way consumers shop. Once remarkably durable brands have shuttered
their stores, which sometimes number in the hundreds. The more than century-old retailer,
Sears, once the country’s largest chain, filed for Chapter
11 bankruptcy in 2018. Just one of the many victims
of the so-called retail apocalypse. There is no question, the world
is dramatically different than it was even a decade ago. So how do
traditional retailers survive? Some answers may lie with Best Buy. It might seem to be a
relic of a bygone era. Much of its business model is
based on large format physical stores. Pretty much the very definition of
what is failing across the industry. But Best Buy is killing it. Shares are hovering near an all
time high fueled by a transformation centered on in-store service and stocking
its shelves with new key products in health care
and smart homes. It is a rebirth many
in the industry consider miraculous. In 2012, Best Buy was in dire shape. Sales were plummeting, morale had
tanked, and executives were scrambling to save the company. Within the space of just a few
years, a retail giant that employed nearly 170,000 people and dominated
its industry, nearly died. Then, somehow, it didn’t. While retailers such as Toys R Us
bit the dust, Best Buy bucked the trend. Now the CEO who pulled off
this miraculous turnaround is stepping down, and the company’s CFO will now steer
the revived retailer and fend off still growing threats. So how did Best Buy
engineered such a renaissance? Is its massive recovery sustainable? And can it be replicated? Best Buy’s origins can be
traced back to St. Paul Minnesota in the late 1960s. Electronics salesman, Richard Schultz, founded
a store in the area called Sound of Music. It sold stereos, speakers, vinyl
records and other audio equipment. It grew into a chain but
the business found greater success after Schultz adopted the big box format. The Best Buy concept was born, and
Schultz renamed the store in 1983. Two years later it went public. Growth was slow at first in its
first decade as a public company. Its stock only peaked at a high of
five dollars and three cents in late 1994. But over the next 20 years,
Best Buy became the largest U.S. seller of electronics in the Golden
Age of America’s big box retailers. These big stores, modeled on warehouses,
really rose to dominance in the 1980s and 1990s and
they spread across segments. Home Depot and Lowe’s became
major home improvement stores. Petco and Petsmart ruled
the pets category. Stores such as Bed Bath and Beyond
and Linens and Things dominated home goods. Best Buy was considered a best in
class retailer and the growth was spectacular. Best Buy had 679 stores
at the end of 2003. By the end of 2009, it had 3,889. Sales climbed from roughly 21 billion
to 45 billion over the same period. Its stock jumped to above
50 dollars a share. But Amazon was starting to rise in the
late 1990s and it seemed to offer deals too good to refuse. It could sell a customer the same
exact products they could find in a store, but often at lower prices and
with free shipping due to the nature of e-commerce. Amazon often did not have to charge
sales tax which could make a huge difference in price on high
ticket items like televisions and appliances. Amazon’s first wave of success began
to shake out smaller competitors such as Comp USA and Twitter. But it took a bit longer and a
few other blows to dent bigger players like Circuit City, which during Best
Buy’s heyday, was its biggest competitor in 2008. Circuit City was fending off an active
investor who wanted to shake up its management. Then the financial crisis hit and
sparked a slowdown in consumer spending that culminated in the
Great Recession in November 2008. It filed for bankruptcy, and with the
lack of credit, was forced to liquidate. Circuit City closed its last
567 stores in 2009. At that point, the retailer had been
around for more than 60 years, and it had more than 700
stores in its heyday. Circuit City’s demise gave Best Buy
a bit of a tailwind. Industry sales were down about
10 percent that year. But as Circuit City began closing
up stores, shoppers shifted to Best Buy. The result: Best Buy’s
sales fell only five percent. It had gone from being the
biggest of several national electronics chains to the only one left. But, competing with fellow brick and
mortar stores like this was what Best Buy was used to, and the
rapidly ascending Amazon was a another beast entirely. Analysts who follow Best Buy say
the company might have underestimated the threat from the
Seattle based e-commerce giant. The Amazon threat, for years, had been
masked by the arrival of the flat screen television. Massive technological leaps to sleek
televisions with crystal clear pictures motivated people all over the country
to go out and buy new sets. Perhaps the best years for the
product cycle were 2005 and 2006. B ut retailers benefited for the better
part of the decade as e-commerce continued to quietly strengthen its
grip on the market. But by the time the Great Recession
began to hit, Best Buy started to suffer. A slowing housing market in
2007 hit sales of appliances and large home electronics. The following financial crisis dried up
credit and tightened consumer spending around the country. Finding the lowest prices possible on
what items a buyer could afford became even more of a priority. Best Buy same store sales fell 1.3 percent in 2008. Things turned around briefly in 2009,
but same store sales fell again every year from 2010 through 2013. Best Buy went from pulling in 1.2 billion dollars in net income in 2011,
to a one billion dollar loss in 2012, and another forty three
million dollar loss in 2013. Other things happening at the
company did not exactly inspire confidence among investors. Then CEO Brian Dunn a lifelong best
buy employee who had started as a blue shirt worker on the
store floor resigned in 2012. This came after news surfaced that he
may have had a relationship with a younger female employee. The fallout from the episode led Schultz
to resign as chairman in 2012 Best Buy’s board brought in Zubair
Joly a relative outsider who had previously worked at McKinsey and Vivendi
where approved the launch of successful video games such
as World of Warcraft. It is Jolie’s tenure that is
credited with turning the company around when he joined. It was a very tumultuous time at
Best Buy as a retail analyst with almost 20 years of experience. There are very few retailers that
have experienced going through such a period of hatred and
concern as Best Buy. I was going through in 2012 if
you looked at valuation metrics the stock was priced as if this was a
company that was going to go bankrupt within five years. And the initial reaction from the
Wall Street community and investors was who is who bear Jolie and how
is this man going to save Best Buy. The new CEO and his staff began
cutting costs and investing in parts of Best Buy’s business that gave it
advantages over its online competitors that started with service and
stores up to that point. Best Buy was one of many
retailers faced with a problem sometimes referred to as showroom where customers
would walk into a store to inspect and learn about products they wanted
only to go home and buy them online often via Amazon
and usually at cheaper prices. So Best Buy had to take the fight
to them and it did so by leveraging its large network of stores matching
Amazon’s prices and focusing on providing the customer service
and online retailer can’t. In 2012 Best Buy began matching any
price on an item anyone could find elsewhere. That meant a customer checking
out a stereo system computer or phone could walk out of one
of Best Buy stores with that product. On that day and pay the same price. The company also started shipping
online orders directly from stores turning every store into a small
warehouse which increased Best Buy’s available inventory and
shorten delivery times. They also put in place an easy
process for returning online products in stores saving customers the trouble of
packing something back up in a box. If you think about it all or
all of retail right now is working aggressively to become omni channel
and that’s their advantage versus the web. They have physical stores. Why not leverage that use those stores
as pickup points drop off points shipping points. The Web can’t really do that. The web that last mile is really where
the stores can come in and try to be more effective. And you’ve seen that you know
Wal-Mart Target Costco they’re going big time after the
omni channel consumer. Best Buy also begin working closely
with the store’s vendors which many say has been a crucial
step in the company’s turnaround. The company started giving electronics
makers their own dedicated sections at Best Buy stores. This store within-a-store concept was
mutually beneficial to both Best Buy and these tech firms. The first deal during Jolie’s tenure
was with Korean electronics maker Samsung in April of 2013. Then Microsoft followed. Best Buy also made a deal with
Apple to revamp its displays even worked with Amazon to be the exclusive
seller of smart TV’s embedded with Amazon’s fired TV technology. The retailer keeps the exact details of
these deals close to its chest, but essentially it shares the cost
of investments and the revenues with each manufacturer in turn. Device makers can exercise greater control
over how their products are presented to customers. They can set up their displays
and tailor the shopping experience much the way they want. They often bring their own staff
into the stores who obviously know their products best. Customers can learn about something
directly from its manufacturer and Best Buy employees can receive
training from the vendors. This arrangement gives sometimes fierce
competitors such as Google Apple and Amazon a kind of neutral ground
where each can sell their competing products side by side. The store within a store
concept deepened the symbiotic relationship between the retailer and suppliers and
kept them invested in Best Buy survival and success. Best Buy’s troubles had spelled danger
from any of these device makers who do not really have their
own physical retail networks and suppliers. That was a scary time for them. All of a sudden they
started to think about. What if we’re in a world
where there is no Best Buy. Suppliers realized that was
not a pleasant world. And I think that the
message was to suppliers from Best Buy was, “You need us as
much as we need you. So, you know, help to support us and we
will showcase and sell your products.” The company also bet on service both
inside and outside its stores Best Buy invested in training for its
floor employees commonly known as blue shirts for the polo
shirts they wear. The retailer figured that a store
can offer customers something online typically does not flesh and blood
authorities on products who can answer questions and
make recommendations. One of the pillars of Best Buy’s
approach to service is its Geek Squad division which it acquired
back in 2002. Geek Squad sends technicians to homes
to set up troubleshoot and repair electronics bought at Best
Buy or elsewhere. The group has a membership program
and aims to be a comprehensive in-home service that will set up
fix or troubleshoot anything that plugs into a wall from home
theaters to networking devices to appliances. Geek Squad has 23 years
of experience making house calls and currently employs 20000 people
who make 33 million total interactions with consumers a year
including one point eight million home visits according to Jefferies, Geek
Squad and other services make up a small but growing
portion of Best Buy’s revenues. The chain pulled in about five percent
of its sales from services in 2018 up from about four
percent the previous year. Best Buy is betting that as
our homes fill up with complex interconnected devices customers will
increasingly want one company that can tackle everything. It is also pushing a new product
areas it thinks offer potentially high margins such as smart home
technology and health care. In 2018 it acquired Great
Call for $800 million dollars. Great call makes smartphones and wearables
aimed at older adults and sells the service customers can use
to quickly access caregivers and first responders. The work has paid off. Best Buy shares have risen
from a high of $44.66 a share in 2013 to $75.95 cents a share in 2019. Same store sales have grown
every year since 2015. In the process the company is becoming
something of a model for other retailers showing how businesses can
steer through a competitive and rapidly changing technology
fueled retail market. Now that Best Buy has turned itself
around though the question is: Where does it go from here? Joly is stepping down, and Best
Buy has appointed its chief financial officer Corie Barry to the top job. Barry oversees the company’s service
division and its Health Division and was a key player in the
Great Call acquisition and she’s a veteran. She’s worked at the
company since 1999. Analysts say Barry is certainly qualified
to take the job and she’s well liked by Wall Street. But Joly’s shoes will not
be easy to fill. Corie Barry is a very strong
leader within their Best Buy organization and I think she’s going to
be great as the next CEO. She has big shoes to fill. Hubert Joly did a phenomenal job turning
Best Buy around and making it relevant again. But I think Corey Barry has
a very strong operating background and strategic thinking background that’s going to
help her to achieve great things in the future for Best Buy. For now the company
is focused on execution. It has put together some plans that give
it a solid chance at a future. But what about competitors. Amazon after all surprised the world
by buying Whole Foods and entering the grocery business. Best Buy is still the
largest seller of electronics. It sold 32.4 billion dollars in electronics in 2017,
a five percent increase over the previous year according
to industry publication twice. But Amazon was not
far behind, selling 30.1 billion dollars worth a four
percent increase over 2016. Could the online giant move
on to Best Buy’s turf? Once again this time
with its own stores. For now, Best Buy has found a way
to dig deep into what it knows: electronics. It is also leveraged its
strengths in stores and service while beefing up
its online presence. Analysts are optimistic but this is
an era of unprecedented disruption and there is a long list of
retailers that have gone out of business, in electronics alone. If Best Buy expects to stick around it
needs to keep a pretty wide moat between it and
rivals especially Amazon.