What do you think . I dont think its that bad you have plenty of tech stocks up today that have in the green. I guess i dont see it as quite a tech wreck i feel like we have seen actual tech wrecks this year. These are stocks up 100 or more give or take from march giving back like 12 , 8 in some cases. Im not with you on the premise. These stocks are off their highs but theyve been making new highs relentlessly for months. Good point. Let me come back at you and say what about the premise being, stocks were up 100 in whatever they were since march. Was it normal they were up 100 or whatever since march. They were up on multiple expansion. If they were up on all of that and some of the air is coming out of it, doesnt that say they have a lot more room to fall i think its tough to generalize some of them have more air to come out than others and some will continue to report out standing fundamentals without playing any games and see even higher levels than what they are seeing today i think the real interesting question is whether or not this spreads to the rest of the market and we have an s p 500 wide correction which i dont think would be the worst thing on earth to be down 10 from a record high after going up 50 i dont think its that bad. If that ends up happening, i think thats the most interesting question we dont know yet, of course i would keep my eye out for that possibility. I do know a lot of people who would make the case thats what we need to move higher we need some of the excess speculative fervor to come out we need some of those surveys to calm down. Some of those investor polls maybe we need a bit of the robinhood activity to chill out. That could set the stage for a better fundamental advance for the whole market not just Consumer Discretionary and tech im okay with that outcome if thats what happens. Steph, where do we do from here does it spread into the Broader Market as josh was potentially talk about here . What do you think . September is always so volatile now especially so because of what you said. These stocks are up 100, 200, 300 from the march lows its not just all multiple expansion, scott numbers might higher after apple reported, nvidia reported, after amazon reported. There were some companies that had pure multiple expansions but these companies saw higher after they were reported i totally agree with josh and with what you were just saying they were up a lot theyre not down enough. Apple is only off 15 after it gained 132 from the march lows. Nvidia is only off 13 you get my point you said theyre not down enough are you building case for the stocks needing to come in a lot more than they are by vir which you of how much they ran up on the other side yeah. I would agree with that. I think you can see down 20, 25 in many of these names here are the names i want to be buying i want to be buying apple or adding to it its a large position to me. Amazon, we know about ecommerce i sold some of that stock about 50 points ago. If they were to pull back, i would add. Sales force. I think sass cloud is the most compelling to me they just put up a monster quarter. I know the stock rallied but its given back 15 . You have to keep an eye on some of these names if it broadens out, okay maybe it does. We had a nice run from the lows. I would still advocate for a barbell approach secular growth technology, cyclical cyclicals because the economy is gradually recovering including jobs last week which i thought its on the right path of seeing improvement. Still ways to go but theres certain pockets that are seeing a v recovery i want to have cyclical exposure bauds because of that. Which are the ones most at risk is it the faangs apple up 134 from the low microsoft, 70 facebook, 104. Are those the ones that are most at risk are we talking about the shopifys and the wayfair, cloud flairs, ones that are really getting hit over the last few days and the ones that were really up. Were talking 1, 2, 300 , if not more the latter. Just as you said, it is the spotifys it is the zoom video it is ive owned many of these stocks on that run up. I think those are much more likely to give it back and much more like loi to see stephanie stepping in there and buying those names. Just as stephanie said, shes looking the buy some apple and some of these others that do have, that did justify with their last Earnings Announcement scott. The others, many of those others, those moves were a little too extreme we never knew when it would end. From some of these reports, it ends with this fizzle over at soft bank. I have lots of say about that. Ill hold off. You dont have to hold off. You dont have to hold off because i wanted to ask you and go there if we think that a fairly substantial part, a meaningful part of the run up was due to this call buying activity in soft bank and counter parties having to buy the underlying stocks to hedge that risk, if we think that had a meaningful role to play in all of this and that unwinds to the degree it does, we just dont know doesnt that suggest you could have an air pocket going down to some degree . I think we saw that over the last couple of days. One of the key things when you were out last week when this story first broke on friday, i believe, was that people said it was soft bank that was purchasing these particular derivatives. They called it a gamma gambit. They with throwing a turbo onto those particular stocks. Notice i didnt say spotify. I didnt say z scaler or any of those others they had specific bets in amazon, microsoft, in most of the faang names. That boost provided and many of those people had to hedge that exposure because they get shorter and shorter from selling those calls. They get shorter and shorter as the market runs up its similar sort of thing that we have seen from this trader that we call 50 cent in the vxx. When you see that thing start to move, people need to actively hedge and they cant always do that what i would point out, scott, it could be those people that wr doing the hedging that were probably having to buy stock aggressively to cover their exposure to those derivatives they sold. Some of which may have been over the counter. A lot of them could have been over the counter derivatives those could be the folks that were getting flushed to the downside you lose a lot faster on stocks to the downside than you do on options. Obviously, you buy a 2. 50 option in mike crmicrosoft, for instance, two months ago and that starts running to the upside you have to keep hedging to protect yourself against that run. When the thing turns around like it did on thursday last week, dramatically, friday and today, the third day of this sell off, many of the folks that are getting clocked could be those same people who are getting clocked on the way up. They were scrambling the buy that protection. Many times in my career ive seen exactly that play out where those folks that then have to flush, have to sell those stocks as they are going down so quickly. That would seem to play out to more of what were seeing right now much more than that gamma gambit of buying upside calls and doing it over and over again since march which allegedly soft bank had been doing. Literately on a week ly, if not monthly basis. What does it mean from here i think the large cap mega, the faangs they come back to valuations i think they become attractive for us long term investors especially if you have new capital on the side. This is, i agree with josh that this is we need this. We were going up too fast. The market was up over 50 at the tech stocks were up 100 again, if one could know how much down we go, that would be much better. We dont i think when that happens, as long as the whole market does not go into bare market territory but we get a 10 correction, i think its really good for the market especially given the uncertainty coming ahead and then we can get some more opportunities to deploy new capital. Part of the problem i have is a lot of people didnt have any problem when we were on the way up they didnt have a problem in the wap that we were going up. Analysts just, as their price targets got blown through, what did they do . They just raised their price targets. People werent copping o icomint suggesting the market needed a correction joe suggested stocks could have a 10 correction and he wasnt adding any new positions that felt it was in the minority of views there werent a lot of alarm bells going off in places as the stock market continues to go up, were there no. I was in joes camp in the last month. I was not adding new capital to clients. I was trimming and waiting for an opportunity especially with clients that were fully invested it did look like we were fairly valued, if not over valued on a lot of the parts of the market i do think there were people out there, maybe in minority but this will give you an opportunity to buy some really High Quality Companies im still in the barbell strategy you have the covid stocks and the post covid stocks. I think were getting closer to that point i dont know when it will happen but cyclicals and the industrials and financials are some areas that i think one can add capital to because eventually money will flow to those areas and you should still say in the faangs. I like them. I just dont like them in the proportion they are in the s p what about the robinhood phenomenon youre well versed on that robinhood goes from four million users invested in the s p before the pandemic to 12 million in may. If they look at the market now and suggested it is a good time to take some profits even if they would have gotten hammered a bit in the tech names over the last three days, whats the role play there first, i think thats who is getting smoked right now its the property typical robin hood stock thats getting hit much harder than anything else in the market. Thats because the soft bank thing is very, very small. Whats really happening is retail kwacall buying has been explosive since march. It built into april and june 40 billion a month at last call was how many upside contracts robinhood traders were buying in small amounts but large numbers of people and on large numbers of mostly Technology Stocks and that is really a much bigger story than anything the nasdaq whale or whatever. We know that because a lot of whats happening is happening in weekly options trades as john would tell you and a lot of that is happening in contracts that are expiring in a week or two. Thats not what soft bank is alleged to have done soft bank is alleged to have been doing the types of trades that are looking out to next month, the month after and they are opening call strpreads which doesnt require quite as much hedging because of the nature of that set up. Its not quite the same as the robinhood folks saying tesla reports earnings in two days let me get long some options here thats worrisome. Youre making the case of why its i was on the show scott, scott i was on the show screaming about stock splits and how thats the wrong reason to be buying stock and the worst you and i debated this the worst possible catalyst for new highs was this stock split mania. All of the gains from before they announced these stock splits in apple an tesla that juiced the price, all of those gains are being washed out now people that bought after the split announcement and leading up to it, are absolutely dest y destroyed. That is what should happen this is how you learn. I did those stupid trades when i was 22 this is how you learn how the market works unfortunately, its the only way. I could tell you five books to read but if youre a kid that just made 300 on your money on an app over the last two months, youre not going to read any book you think youre george soros. I understand that. Ive been there. This wont be the last generation to learn this lesson the hard way here is the good news. Were getting close to the end of this wash out in some of the bigger tech stocks a lot of the boxes are starting to be checked. I saw David Rosenburg was on the air. Maybe you guys will do a markets in turmoil later this week steph, are there things that have come down too much . Not the spotifys and the other names that josh references but the faang names. If you believe in the reasons why they were up in the first place, in balance, why wouldnt you buy some in this moment of extreme pull back if you think thats the end of it nasdaq down about 10 or so or got close to it from the highs its hard to time i think you pick your spots. Jim cramer used to make me make a list and put a price of what i would buy the stock. We would ask me every single day. Whats the level that you really have confidence in i still do that. Its been very helpful i cant time it. You can average cost into it especially if you believe in the total Addressable Market story last week i did sell a few things and bought a few things i sold paypal and brought more of broadcomm. Stock trades at a realistic valuation. Those two names i bought in the sale of paypal i sold home depot. These stocks have been the laggards i feel more comfortable with terninth earnings power as you see recovery, they should see operating leverage thooe these other names im holding. Im not selling. Probably my favorite of the faang and put in cloud names in there as well with salesforce. Com because they blew it away again on the quarter numbers are going higher its not just multiple expansion. I still think that stock is under appreciated. Really Good Management team. Great Free Cash Flow awesome margins too. Thats name i would put on the list but not just yet. They are only down 8 to 10 to 15 . Thats the thing. Mike wilson, morgan stanley, something we like hearing from says they think theres more downside over the next month but that it leads to further broad ping out of the bull market. Goldman today ten reasons why the bull market has further to run. Im not going to list you all reasons but theres the idea of a vaccine out there. Youre going to get a vaccine at some point what do you make of that as you think about where we could go . I do agree with that. When we were on the show six months ago or five months ago, we were talking about how far is the vaccine. Were not have any trials. Were getting closer and closer. If you can see a bit of clarity, maybe earnings start improving its the future cash flow a lot of these companies i think these, they are all on point in the the sense you need to be in the areas where earnings are lackluster. They have been hit hard. Companies that are very kind of been hit by covid. It does make sense to start getting out there. The question is when do you do it i think starting when you get a 10 correction is normal its healthy you can start putting money back into the market at that point. Sdp john, how much is tesla judge, real quick you know what looks worse than tech energy today destroyed. Look how bad the banks look. Its not a tech wreck. Look whats working. The itb, Home Builders the Mortgage Banks Association came out this morning and told us ta between april and june, the second quarter, 1. 1 trillion dollars worth of both new mortgages and refinancings a trillion one in mortgage activity in three months its no surprise why the itb is up. The money comes out of tech its not going in. People thought there would be rotation in two. On the day after that same Holiday Weekend. In other words, trillion of dollars that we see on the sidelines. It was 2. 8 trillion in february, scott at the market highs back then then as we sold off, then rallied back, now its 4. 6 trillion in cash to see some of that start to roll back into the markets wont surprise any of the four of us, i dont think. To see that committed on thursday, friday, into this Holiday Weekend or today, i would say it would be a fantasy to see it starting to come in after this three day sell off which is now carried many of those stocks as youve accurately said to 10 , 15 mr correction or more, i think thats where you want to go shopping i think most of that, scott, comes tuesday, rather wednesday, thursday friday rather than the tuesday right after that i wonder, i was going to steer the conversation this way towards the tesla conversation mike has been looking into sort of whats gone on with tesla and how the s p has judged it, not putting it into the 500 and whether its a moment of this sort of dont believe the hype, the s p didnt believe the hype about this incredible run that tesla had and what that says perhaps about the Way Investors need the view the market in their own right. The s p doesnt tell us why it didnt admit a company but we can surmise. When you have a 450 billion dollar market cap which tesla was, its a decision not to place it in the index when its shown the four quarters consecutively of positive everyonin earnings it would seem they were in position, do i defer to the market momentum here and its judgment these companies are for real and going to own the future in a huge way or do we feel like its a bit over heated an maybe not in the short term worth unsettling the rest of the index because thats what would be required probably to place it in there as one of the top dozen stocks we know it got completed in three days five billion dollar is less than 5 of the volume still, maybe coincidence but probably not, it was the top in the stock opinion clearly, if the stock can go down as much as it has on a noninclusion in the index and relatively incremental equity offer while good for the companys books, maybe it does tell you in a short term, super over extended. I think its an kpexaggerated version of whatever which is an over shoot which dates right to august 11th which is the day that tesla announced a split the nasdaq 100 is not back down to the level of august 11th. Tesla shares arent back down to that level yet we had this mean reversion move to the downside after we had this upside kind of over shoot i dont think you can necessarily say much more is going on there but when it comes to tesla, i think that maybe s p saying we can wait it out this time see if the fever breaks and lets sfee if this is a genuine profitable Business Model as opposed to this four quarter window steph, you take what mike said and i wonder how you process all of that in the way you think about other parts of market, if not other names that have had similar run ups like tesla did. I just never understood tesla and move it made its still up 370 from the march lows its down a quick 28 from its highs. Thats the volatile. If youre going to get into this fwam, you have to be prepared for it theres no way you can value this thing ive looked at it in many different ways is it a battery company, a car company. I couldnt get my hands around it let me jeapologize for interrutting you this isnt a tesla specific story, perhaps its not about the company or the stock. I think it is make its emblematic of the way certain stocks were judged by certain groups of people an