Jack welcome to barrons roundtable where we get behind the headlines and prepare you for the week ahead i am jack otter. Growing concerns about evaluations as a. I. Driven tech stocks lead the market to new heights. Is that another bubble the dean of evaluation is here with his insights. Highflying stocks could experience a pullback in the near future following the markets huge rally should you buy the dip in later trouble for tesla the ev maker could be taken a backseat as competition ramps up, on the barrons roundtable ben levisohn, andrew bary and Elizabeth Obrien we will talk about three things investors should be thinking about right now. Lets start with the jobs report, William Blair called it a ruhr set, whatever you think the market is doing right now you can see it in that report. The headline number was hot 275,000 jobs was supposed to be closer to 200,000 but if you look deeper in the report there was a lot of revisions over to january and february which made it much closer to the estimate and then the Unemployment Rate went up and wage growth slowed that you can take is a good thing because inflation must be less of a problem but an issue if the economy is slowing and thats was going on with the market right now its stuck between wanting the rate cuts but wanting growth to be strong and you saw that in the s p 500 which finished the week 0point to percent. Jack if you pullback the lens a little bit and look back, a lot of momentum behind the big rally but theres an interesting thing, you spotted the momentum etf had a very bad day on friday. Friday was a bad day for momentum they referring to something specific its a measure of how well stocks have been performing relative the other stocks these stocks are doing great everyone kept buying what had worked and on friday they were terrible, nvidia, intel, broad, this is a sign that the stocks have gone up and gotten so expensive it was time for a breather and this could mean there is a correction coming as there is a rotation going on in the market. The intel investors that have not been doing well. One bullish thing in interestrate in the treasury market youre getting a ten year treasury back to 4 speaking of which cpi number coming back next week would expect. The headline numbers can be 0. 4 because gas prices should be going up, they should worry about that goes up this time of the year. Core inflation is to go up 0. 3 which is down from the previous month 0. 4 relatively inline, great if its hot we can have a problem. I thought you give me a hot tip those were the actual numbers this is what expected. We saw an unusual thing happened this past week, bitcoin and gold hit a new high was in a funny coincidence, what do you think is going on the ancient store value gold is at a new high the new kid on the block bitcoin lets start with gold 2175 an ounce up 5 this year but theres not a lot of excitement about gold as it moved higher this year the biggest etfs outflows in the two biggest mining are very can bear markets right now not a lot of enthusiasm but if you get some, gold could go a considerably higher. Central banks have big buyers of gold that might be dryin drig it. Yet bitcoin approaching 70000 on friday which is a new high and its up 60 plus this year its had a big move all the worlds bitcoin is valued around 1. 4 trillion which is a lot right now, this is a lot of enthusiasm and headlines about it, this is the disparage atlas class, now is getting greater respectability right now we had investment firms and private Wealth Managers of recommending clients via in the scarcity issue which bitcoin goals are talking about. Its only going to be 21 million bitcoin and about 90 has already been mined, basically theres not much left to go, that could be an issue. Jack that having is coming up. Is coming up in april and that will be bitcoin created everyday from 902 maybe 500, the bullseye 500 is not nearly enough to meet all the new demand and bitcoin could be headed higher, the bear case has been made by Warren Buffett and others at Digital Asset and no Intrinsic Value and very few uses. Jack speaking of rat poison, exactly 50 of people were very unhappy with sec rules because they felt that they didnt go far enough in the other 50 were happy because they were far too onerous. The past week we saw the release of fcc controversial Climate Disclosure rules that require companies to disclose a host of factors about the Environmental Impact and the impact of the environment on them and Climate Change and whatnot and they were scaled back considerably in response to company pushback. Environmental activist said they did not go far enough so no one was pleased by these in Disclosure Rules are important for companies with big environmental risks and this past week xcel energy a utility provider said the facilities mightve been involved in igniting the big wildfire in texas the Smokehouse Creek fire which is the largest wildfire in texas history. These risks, call them esg or whatever you want but that the risks we need to think about if you are a utility you need to think and forget to start a fire because we see will happen before. Jack what is the bottom line for investors, is this useful . Be back if your investor interested in esg environmental social and governance then yes this is important information. I dont know how easy itll be to parse they will have to put in digestible form but if youre an average investor and company or an average mutual fund that most of americans in investments have retirement accounts, this is probably less utility. Jack although governance is always important. Supercharged tech stocks leading the markets to record highs. Have a. I. Stock evaluation reach unsustainable levels, the dean evaluation j an alternative to pills, voltaren is a clinically proven arthritis pain relief gel, which penetrates deep to target the source of pain with nonsteroidal antiinflammatory medicine directly at the source. Voltaren, the joy of movement. [ applause ] the day you get your clearchoice dental implants changes your struggle with missing teeth forever. It changes how you eat, how you feel, and how you enjoy life. It changes your smile and how others smile at you. Clearchoice Network Doctors have changed over 100,000 lives with dental implants, and they can change yours, too. Because a clearchoice day changes every day. Schedule a free consultation. You always got your mind on the green. Not you. You your Business Bank account with quickbooks money now earns 5 apy. Thats how you business differently. Intuit quickbooks. relaxing music book in the hotels. Com app to find your perfect somewhere. A big tech valuation, experts have different opinions on whether or not were in a bubble my next guest says it might not be a bad thing if we are joining the nyu school of Business Finance professor in the dean of evaluation aswath damodaran, thank you for having me on, bubble or hearing it whispered a lot and you take issue with the word, can you explain. For two reasons, the last decade this word pops up over and over again this is not the first time in the word itself is the signal of the person using the word delivering i have the high ground and the people setting prices are shallow and cannot be trusted, want to say the word bubble the discussion and debate that cut off because this not taking debate and it might sound like im playing with words but he said a negative message. Jack is there evaluation or what valuation would you say bubble or not stocks are too expensive im going to cash. You are assuming that theyre selling most people talking about bubbles never bought the stock. I think its a most academic, you never bought the mag seven, what business do you have any lost any basis for doing it because you never own the stocks. If you own the stocks and you sold them i would love to know why you sold them. The debate should i sell becomes relevant only if you bought in the first place. Jack got it, lets talk about nvidia we just seen this chart you labeled that is overvalued at this point, can you give us your thoughts on where that stock is. Its a 2 trillion other company which will require to be able to move and get through trade its possible im not saying a fairytale but its a very narrow path i backed out on the market cap to generate as revenue in my estimate in the a. I. Business generated about 670 million and this is a market that most estimates is going to 400 billion then that leaves me wondering with extra revenues are going to come from. From that perspective i pay way too much given what you can get it its an Amazing Company with a great ceo im not taking any of those steps away but you can have a Great Company thats not a great investment and it can draw a line between those two judgments. Jack its an important distinction we saw a chart of your evaluations any unlawful but slightly undervalued can you give us that analysis. Alphabet and apple has been six weeks since i valued all seven stocks. At that time also been looked valued alphabet and apple were for 5 since i did the evaluation, they dropped enough in price that they become undervalued. I think that is the message today you have Value Companies and you value which entities but the prices are changing and what looks overpriced today could become undervalued tomorrow so dont give up on a company just because its not a goodbye today, if you love the company there will be a time at the right price you can buy the company. Jack speaking of giving up a lot of investors have given up on paypal that stock was over 300 now its around 60, you think it might be worth a look. Its been priced as a boring low growth bank and i think paypal is more than that. Im not saying its best days are ahead of them, the best growth days are behind them a lot more competition. But they deliver what people value and they should be given credit for far more than the price. Jack a lot cheaper than visa, mastercard and other competitors. Aswath damodaran thank you for coming on. We appreciate it. It is not just tech stocks. Even costco are trading a noseblee get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan wealth management. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . You can get two unlimited lines for just 30 each month. All in the most reliable 5g mobile Network Nationwide wireless that works for you. Switch to comcast business mobile and save big with up to 500 off an eligible samsung device with a qualifying tradein. Dont wait call, click or visit an xfinity store. Jack we heard some valuations are stretched but the market is attractive, lizzie and saunders say the tech stock is higher than the. Com bubble you are a value guy, what do you think. Im with liz the tech sector are very elevated and back where they were late 2021 before we had the big selloff in the nasdaq nvidia is trading for 20 times plus current year sales estimate which is the highest in the s p 500 and as he pointed out the company is just counting a lot of growth and they have to sell a lot of microprocessors to basically justify what the stock was right now and you saw a reversal today and the stock that hit a new high in reverse today about 5 lower itll be interesting to see a peak in nvidia right now. There are other areas that you might want to be wary of in the stock market even outside of the technology sector. Like costco it is a favorite stock a Great Company and extremely wellrun and a Customer Base but around 45 times on estimated burnings apple backup five or 6 on friday. The big tech stocks the apple enough about the bible alphabet is trading below market multiple, these earnings are concerned about the threat of a. I. And the surge business but a Great Company that will be paying a dividend later this year end about 20 times earnings and is looking pretty good right now, i think i get it right apple is another one down 10 the worst of the Major Technology companies and is trading for 25 times this years earnings they can get stuff right with a. I. Or other things theyre working on the stock it had on from 170 200. Apple rarely drops its drop low the 50 Day Moving Average of the technical average that the referring to the stock being oversold it might be worth a look based on the technicals. We have technical indications of the trails with that said some people find it useful, what is the technical indicators tell you about the rest of the market it tells me that basically the same kind of thing that weve been hearing is the market went up a lot and its pretty extended and its well above the 50 and 200 a moving average and is looking a little bit exhausted receiving the stocks that lifted up so much rollover a bit and whats interesting of tech i use them to manage risk when you want to enter positions and exit but its really great when the technicals line up with the fundamental and we see the technicals are weakening in the same point with a high evaluations. What im interested in if you think were headed for a pullback when might that happen will happen by april 15 are not made my 2023 contribution to my ira and im kicking myself for not getting any getting the gains. Thats market timing you can never get it right all the time this is about Risk Management for me i would put some in now and wait a little bit and see what happens people have been predicting a correction for a while have been wrong and you can see the market go up a bit. If youre going and what areas of the market look attractive. You have to look down market cap they done so well and now we are seeing there is a come back in the rsp which is the equal weighted s p 500 etf, thats been doing pretty well and you also see it in mid and small caps they finished higher even though the s p had a tougher week thats where i would be looking. As much as we want to pull back on the individual timetables what matters is time in the market not timing the market get in and stay in. Thats not as much fun. It might not sell as many articles and magazines thats for sure. Im going to ask you before we sign off give us something that you like in the market. I think the Banking Sector is looking pretty good you see strength in the leading banks like j. P. Morgan, citigroup is a turnaround story, wells fargo has been trading better, even bank of america. I think of the economy holds up it could be a pretty good sector with reach dividends. Jack the big Financial Center banks are doing better than their smaller brother. Alliance is winning the theme from the Wells Fargo Bank analyst that has been the case. Tech is expensive. Youre talking about ten, 11, 12, 13 times earnings not all that expensive, these companies are basically from a Regional Bank peers right now. Citigroup and wells fargo have things that theyre working out, issues that theyre working out. City is a selfhelp, wells fargo has asset cap which is lifted in a positive for them in Morgan Stanley and Goldman Sachs are placed on merger and revival of the share probably get water. They need more investment idea [car tires screeching] whenever heartburn strikes. 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Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. [storms sound] whatever weather comes your way [wind and snow sounds] weathertech has you covered. [bird chirping] [laughing] with our laser measured cargoliners. No drill mud flaps and floorliners. To secure your phone dont forget the cupfone. Order yours today at weathertech. Com. You never know when its gonna be a weathertech day. Perfect weather today. vo sail through the heart of historic cities and unforgettable scenery with viking. Unpack once, and get closer to iconic landmarks, local life, and cultural treasures. Because when you experience europe on a viking longship, youll spend less time getting there and more time being there. Viking. Exploring the world in comfort. Jack we talked a lot about the mag seven but we havent mentioned tesla investors are not happy with what is going on. Tesla stock is down 29 and will they be part of the ificent seven but no longer with the big and s p 500 is very easy to say this is an eb problem but thats not it tesla has its own problems the sales are not what used to be in the margins have been shrinking you can have the balls on wall street like adam jonas at Morgan Stanley theyre starting to get nervous and pointing to the sloping car business, you cannot have the big gains off the autopilot and subscriptions and things like that unless the car business is doing well not use the other auto makers rivian, with two bottles and not many will buy these but its a sign that tesla needs the new car which is not expected until 2025 at the earliest i look around and see the cyber truck and if you like the road warrior thats a great card to buy by elon musks meeting with donald trump and i know our route for bearings one of the big things that tesla needs is to give it to republicans to buy evs in the meeting between trump and elon musk and solve the problem. Is the focus on the core business the lawsuit twitter is going down from 44 billion to 12 billion to fidelity, get back in your lane elon, lets get actionable ideas, what you have for us. Avoid micro strategy into bitcoin play in the stock has gone vertical as bitcoin has had a record but youre playing a high price for the bitcoin that this company owns 200,000 bitcoin the market cap is 25 billion which is almost double the value that holds if you like bitcoin urge investors to consider etfs like the blackrock etf. Jack doing the math, andrew. Boccardo libre is the return of the magnificent seven its amazon equivalent in Ecommerce Company that had earnings disappointment creating a buying opportunity, earnings are expected per share 80 this year is definitely worth a look. It sounds attractive, thank you guys, all great ideas, check out this addition the barrons. Com dont forget to follow us on x at barrons online, we will see you next week on barrons roundtable
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