Take a look at some of the individual nasdaq winners year to date. Align technology, taketwo interactive, vertex, wynn resorts, micron. You stick with whats working. For most of those names, yes. They show growth if they can continue to show that growth absolutely most of these names fundamentally, when you look at, for instance, micron, i dont know whether or not its certainly a buy or not today, this moment, but when you look at this after it broke through 32. 5 it went straight up towards 50 i mean almost every single day yet when you look at the valuation and the Growth Prospects of this company, theyre still very, very compelling so i think there are plenty of opportunities out there, even in some of these names. Now, wynn, i love that name, absolutely love that name. And you love steve wynn. I sure do, you know why, because he led the way he was buying his own stock at 53 all the way up to 100 but can it hold up at these valuations at 170 a share im not so sure. Well talk to the analyst that upgraded wynn at the beginning of the year. Where do you stand on the winners . I would take a little different view id say take some money off the table. These stocks have really run there is still opportunity out there. We Like Companies like oracle that really havent had that rush yet that the microsofts and adobes have but stick with some of the other good Balance Sheet winners that are going to do well given what we have now with the tax policy and if we get rising rates because Companies Like microsoft and intel, the Old School Tech that havent really gone up that much i think will have a good tailwind behind them. Its a challenge when you see a run Like Technology has because a lot of Fund Managers then inherently become overweight their Technology Position just because of the rise weve seen. Are we going to see just trimming of positions just because of Portfolio Management discipline i do think youll see some repositioning here if we let some of these stocks run, theyd be 15 , 20 of the portfolio. Yeah, youll have repositioning. But i do think the winners are on to something. Were very focused on s curves and were seeing a lot of these stocks and Companies Moving into the sweet spot of the s curve which is 10 to 20 share. Whether its mobile advertising, whether its Online Retail, whether its streaming video so i think were seeing scurve territory here thats an area where you shouldnt sell. Can you give us some specific names . Sure. Amazon, Online Retail is hitting 10 of retail in the u. S mobile advertising, facebook and google own that. 20 of total advertising streaming video, again depending on who measures it, 20 . So again, selling in that territory is usually not the best idea unless youre just trimming positions. I think the Investment Community really remembers 2016 january very well, and i think a lot of people are talking about the potential for january 2016 possibly does it happen again in january of 2018, wheres the place that you look at technology is probably one of the first places i dont know and i agree that you can take some names off. I sold out of my crm and my adobe just the other day im going to still hold microsoft and sap. I believe in them. I think the Software Services theme surrounding the cloud environment is going to be something thats going to be with us for much longer than we anticipated, but i do think you get a little bit of a market tremor possibly in technology in january. On the other side of that why technology specifically 24 24 sector weighting thats incredibly high versus the historical probably pms. Thats the first place theyll look to sell something but on the other side of that, i think thats an opportunity. Mr. Wonderful. Im in the camp to sell down a tech at below 20 allocation to portfolio heres my argument its going to be very, very hard to find a tech Company Growing by 20 next year but youre going to finding lots of companies that are 100 domestic revenues that are small, names that we never talk about, vail resorts, interdigital, names that ive been mining, trying to find companies on a screen basis, whos paying 36 tax bring them forward because theyre going to have a 20 bump in Free Cash Flow and i think theyre going to beat why dont you apply the same to technology . Facebooks tax is going to go to 7. 8 from 20 . Netflix will go to 10. 9 from 28 . Apple will go to 12. 3 from these are massive declines in the Corporate Tax rate exactly what you said for that stock youre talking about. Not as massive as youre going to get a california manufacturer thats paying almost 40 tax going down to 21 , their Free Cash Flow increases by 20 and theyre not trading as a crazy p. E. Right now. I believe that the russell 2000 or some subderivative of it are going to beat the major indices. This is the first time in my life ive got an allocation over 20 to midcap stocks it was a lot of work to find these names. Ive never heard of them i never heard have vail resorts. They make a ton of money, they pay a defensiividendividend. They sell lift tickets in july now. They dont care if you dont show up. Its fantastic you can find a ftse russell index that mines for those financials, im going to be on that hard, mel, because i think that space is just going to gear up in the 2018 i think services and some of the basic materials that have had a great run in the last two weeks or the last month, i think they take a pause at least in the first week, maybe the first two weeks of next year so obviously im not saying get out of them, but im saying if you had those, i think they would be prime candidates to be overwritten with calls, and i think banks are not the ones you want to overwrite because i think that scurve, to your point, i think is just in the sweet spot for financials right now. Wheres tesla on that scurve . Youre an owner of tesla and buyer on the dip without a doubt its our largest position with the exception of gbtc. Which i want to ask you about in just a moment but for tesla we think that the market is not pricing tesla efficiently. We consider ourselves if you give us a long enough time horizon, deep value investor, were the closest youll finding to a Venture Capital fund in the Public Markets tesla is an autonomous taxi network company, if you look out long enough. Thats long enough . Five to ten years weve got the modeling weve done extensive modeling on this, four years worth of it we think that it is going to shift from hardware manufacturing to software and Services Much higher multiple how does it fund itself in this five to tenyear time frame . It will keep coming back to the markets. If you have our point of view and think this is a 1 to 3 trillion opportunity globally, not just for tesla but for those who win these natural geographic monopolies, you buy it now. So you dont care about deliveries that theyre going to post over the weekend . It doesnt matter if model 3 comes in at 5,000. Were happy to take those opportunities when the focus is on model 3 and cash burn, we wait for those opportunities we wait for those selloffs. Disruptive innovation gives us opportunities all the time and we use those opportunities to move in. What if its just a car Company Trading at a crazy multiple. Its not. Its not. Its a Software Company, right thats last night we were talking about this exact topic. Its not a Software Company they want to be a Software Company but they absolutely are not. They are hardware all the way and thats why are valuations are different. I just bought a tesla two days ago for my wife, she wanted one. I looked at this and said to myself it looks like a car, it has four wheels. You drive it. You need a license. One day were all going to wake up, including everybody at this table, and say its a car and it should trade as the same so apple just made a phone. Im just throwing it back to you. No, no, my response to that is you are going to be delighted that you bought your wife that car because some fleet operator is going to come to you once these networks launch and offer you 100,000 for it. Then youll know were not talking about cars anymore why arent they all just utility its a cattle car box on a train why isnt all of this industry going to get crushed on marge ens. Four wheels and a box that arrives at your house to take you somewhere. Because these are software and Services Companies theyre a taxi Network Tesla has collected 8 billion miles worth of data. The miles is perhaps the most valuable thing and they have a jump start. Knowledge of the database gives them a proprietary position that they can drive theyll have the road to the best. Autonomous cars only get smarter when they drive miles. The automotive sector is under huge risk of total commodity. We totally agree with that. We totally agree with that so those companies that stay in the hardware space are shorts. I agree with you those who make the transformation, very hard to go from old dna you have to go electric and then you have to go from a hardware to a services and software model. Very hard for traditional auto manufacturers to do that you need to be a tesla or a google or you need to partner with them. And gm bought Cruise Automation, very interesting gm is in troublebut Cruise Automation is hes not convinced, i can tell the look on your face. Ive seen this movie before within 24 months you along with grown men will be weeping owning that. The markets will be the determiner of the winner of this fight. Weve been rejoicing and i believe well continue to rejoice. Where do you stand on tesla, surat . I dont own tesla, but i own gm. How do you feel about every single car company is a short . Weve had this disagreement before there are going to be winners out of this. I think gm will be one of the winners because they have the option value they also have cars on the road being driven right now as we go from where we are to the next 20 years, there are going to be a lot of bumps along the road but i want a company like gm with positive cash flow, yield trades at seven times earnings at the same time i can get a bump and option value to play, kind of a tesla type move. Thats true, but if youre talking about the transformation we see, youre not going to be investing in companies that pay these dividends and dependent on investors who are depending on those. Youve got to be very aggressive, very aggressive. I think what i would do is get some Downside Protection on gm and get the option value its a call option. Gm is a call option. Tesla is the real deal. The valuation that we talked about when you look at the rest of the market, this one is trading with a huge discount with positive tax rates that will help them as well. I want to move on to gbtc, thats your top performer i presume in your fund. Yes. You actually bought this back in 2015. Yes. Youre the first public manager to purchase gbtc. Were still the only etf holder, i believe, to own gbtc we bought it when bitcoin was below 250 today its about 14,000. Have you been trimming along the way, and do you own the actual crypto currencies we are not allowed to own them we are a registered Investment Company so we must own securities the way weve been trimming, and this is more for tax purposes, is weve been taking cash in lieu when weve gotten creates in our etfs and so that has kept the position size below 10 , which is absolutely where we have to stop there are some notable shorts andrew left was outlining his case against gbtc. Among the arguments, the bear case, it trades at an extreme multiple to its underlying asset, which is of course bitcoin. The custodian which holds the physical bitcoin, xapo, they have the bunker storage in the swiss alps, former military bunkers actually hold the physical bitcoin, they cant get insurance so those bitcoins are not insured itself does any of this concern you so weve been obviously studying this. We did incredible Due Diligence with gray scale before we entered the position so the premium, we believe that it will go to zero when there is an instrument that takes the friction out of buying bitcoin like whether its a closed end fund or a bitcoin etf. The bitcoin etf has been pushed back quite a ways since the s. E. C. Forced everyone to retract their filings. But lets say we do get one of these funds. The premium will go to zero, but the demand for bitcoin will come back in strongly now, we cant own anything but gbtc to gain exposure so we dont have a choice here. Arent you afraid that tomorrow or the next day or the next day or sometime soon that will happen and that premium will collapse and your position will decline i think the offset will be the demand for the underlying bitcoin. Weve seen this a few times already. As the futures have come in, as goldman has come in saying they may trade this, youve seen a natural floor. So were in a 10,000 to 20,000 they have tried, the s. E. C. Hasnt approved it yet. If its a security we could. Would you rather own that than this . It depends. Or in addition to maybe in addition to, but ill tell you there are more than 1,400 Crypto Assets out there. You know, there are a lot of governance issues out there so we would have to really do our homework on some of these. Now, the New York Stock Exchange has announced that theyre listing etfs on bitcoin. Theyre filing. They have filed and the cboe has filed for six of them. But it was rejected by th s. E. C. These are the most recent ones these are just a week old. And with Gemini Exchange so theirs is going to be coming. We dont know when, cathie, but my question to you is with six more of them filed for and the two that have been filed for i believe at the nyse, obviously the more of these that there are, the better access everybody ha has, including your fundi, correct . Sure, sure. 250 billion. 250 to 275 billion. You know, i know a lot of people say dont compare this to apple which is nearing a trillion. But this is so much bigger of an idea than even apple, which is a pretty big idea. To that point, i heard you fundamentally explain to kevin and all of us here why you own tesla. Fundamentally, why are you so heavily invested with bitcoin . The reason we moved in in the first place is art laffer, my mentor, we wrote a white paper about bitcoin. Could it serve the role of money. So we went through that and he ended up collaborating with us on that paper. He said, wow, finally its a rule, theyre bringing rulesbased Monetary Policy back and he said i think its the wrong rule, a quantity rule, 21 million units. I dont think thats okay for a store of value, so thats a massive role and if you think its going to take 10 of the gold market then its valued where it should be if you think its 20 , then its not. The right rule would be a price rule according to art and there are other Crypto Assets out there that are starting to think about price rules. Now, maybe bitcoin i think most Core Developers would rail about this but maybe it would have both a store of value role and a means of Exchange Role these are huge roles. You dont think bitcoin cash no. Its subject to the same rule which is a 21 million unit so, no. And its controlled and thats a big problem the fact that bitcoin cash is controlled, controlled by two individuals, that is a huge difference from bitcoin, which by its decentralized nature and the fact that shatoshi is gone or hiding, there is nobody in charge over at bitcoin thats the plus. The consensus versus bitcoin cash with veer and gahon vu, that is a big problem. One of them is an anarchist, maybe both of them. And just watching bitcoin cash trade relative to bitcoin core, its starting to lose share. For a while it had a burst, many people thinking this is chinas this is chinas go at bitcoin, but i dont think thats happened. Are you invested in any of the other gray scale products . Z cash Investment Trust . No, were not if they had if ether, not ether classic, we might consider it but not classic thank you for joining us. Cathie wood, coo of arc investment management. Heres whats coming up on the Halftime Report. South korea makes a big move against bitcoin. The crypto currency falling. Is this something to worry about, and will the attack carry over to other countries . Also ahead, the call of the year this analyst made a call almost one year ago that was dead on. Youll be amazed before the break, how the indices have fared in january since 2010 according to our data partners at kensho the nasdaq is flat the s p down 0. 3 . The dow and russell down about 0. 8 for more go tonbcokeho cc. M ns the Halftime Report is back in two minutes. Digital id cards, they can even pay their bill beep bill has joined the call. Hey bill, were just phone hi guys, bill here. Do we have julia on the line too . k, well well just phone hey sorry. I had you muted. Well yea lets just phone so what i was thinking ok well well phone yeah lets just go ahead phone oh alright the awardwinning geico app. Download it today. It can detect a threat using ai, and respond 60 times faster. It lets you know where your data lives, down to the very server. 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