Back from a quick trip to Ohio, Daniel shares his latest experience with the airports and traveling. [0:15]
We discuss the Virginia governor race… what it says about the current mood in the U.S… and how the results will impact spending bills being negotiated right now. [3:10]
We’ve seen some wild price action in Avis Budget and Bed Bath & Beyond this earnings season. I lay out the reasons behind these parabolic moves… and a critical lesson about shorting stocks. [8:05]
Zillow Group’s weak Q3 earnings were shortly followed by news that the company would be canceling its artificial intelligence (AI) house-flipping program. Daniel highlights some crazy stats around its real estate… and why you shouldn’t get caught up in the euphoria around the housing boom. [16:45]
Nike is set to report earnings next month. Daniel and I debate the pros and cons of buying the stock going into the report. [24:25]
And finally, we share our thoughts on JPMorgan limiting its clients’ ability to buy certain marijuana stocks… and explain why you should be paying attention to Meta—the company previously known as Facebook—now more than ever. [28:30]
- Daniel’s latest travel experience [0:15]
- What Virginia’s governor race says about the current mood in the U.S. [3:10]
- CAR and BBBY’s wild price action… and a critical lesson on shorting stocks [8:05]
- ZG’s weak Q3 earnings… and avoiding the housing boom euphoria [16:45]
- Should you buy NKE ahead of its earnings report? [24:25]
- Why JPM hates pot stocks… and you need to watch Meta [28:30]
Wall Street Unplugged | 815
Are the days of shorting stocks over?
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media, to bring you unscripted interviews and breaking commentary direct from Wall Street, right to you on main street.
Frank Curzio: How’s it going out there? It’s November 3rd. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break that headlines and tell you what’s really moving these markets. So, Daniel, fresh back from Ohio. I feel like you’re taking a trip every week nowadays, right? You’re going away. Your boss must pay you pretty well. But I feel like every time I talk to you, you’re going away.
Daniel Creech: He must. It’s a leverage opportunity I’ve got going here. Yeah, no. Yeah. Arizona a couple weeks ago, maybe a month, time flies. And then, quick trip up to Ohio to visit family. I surprised my nephew for his birthday. So, that was fun. I have a niece and a nephew and it was fantastic, because my nephew couldn’t have been more excited to see me, and my niece who’s three could care less, and I just love how genuine and funny kids are. They’re just straight forward. There’s no BS. She just waves. Hey, how are you?
Frank Curzio: No, that’s cool. That’s cool. How was the airlines? You didn’t fly American, did you? I know they canceled like a million flights, and flew Southwest, hopefully.
Daniel Creech: Well, no, I didn’t. I was on Allegiant discount airliner. So, a lot of people were probably going to take some shots on that, but it was amazing. I bought my ticket a little bit less than a week in advance, all in for 212 bucks. I’m pretty sure it was $212 on the penny, to the dot. And even paid an extra 20 some dollars for leg room for exit rows, since I’m about 6’6″ and airplanes are very uncomfortable for me, Frank. But I’ll tell you one quick thing. I’m in the security line. Well, and I said this when I had to fly during COVID, when COVID was new and the airliners really were tanking and slow. I don’t know when the last time you flew, Frank, but the security lines, everything is much easier because you obviously have less people.
Daniel Creech: I haven’t been to Atlanta a lot. I have some friends that are flying out Atlanta a lot. At times, it’s busier than normal, but I’m going through the switchbacks in the security line, and it was moving fine. And what do I see, Frank? I see it couple. And this guy comes at me and we kind of make eye contact, because we’re right next to each other. And he’s got this army green t-shirt with a huge American flag and it says, “Let’s go Brandon.” And even with my mask on, you could tell, and several people stopped him to just say, they liked his shirt, and all that kind of stuff. For all you listeners out there, Frank, are you familiar with this, “Let’s go Brandon,” thing?
Frank Curzio: Of course, I think, yeah, of course. I think most people are, yeah.
Daniel Creech: Well, hell, it was number one on iTunes with, a rap song came out about it.
Frank Curzio: Yeah, it is.
Daniel Creech: It went viral. I mean, just hilarious, but that’s a fun little segue into politics, and crazy thing. So, I get on the airplane. I have an exit row in an aisle seat and this guy in his wife go by. This shirt’s walking at me and he’s like, “Hey, funny seeing you again. I’m sitting in the window.” We didn’t talk a whole lot, but it was just hilarious. I mean, regardless of your beliefs in politics, like, I’m very strong willed and strong minded, and I don’t even wear shirts like that. So it, always have to give a tip of the hat with when I see stuff like that. But that made me laugh out loud. That was pretty good.
Frank Curzio: Yeah. Yeah. I mean, a lot going on with politics, we saw a big election in Virginia and, again, I don’t want to go too much into politics here. But I think the biggest thing we’re realizing is, and I know the Democrats had to partner with the left, right in order to beat Trump. But now with the left, with the defund the police and especially critical race theory, I think this is a big shot where letting the parents speak. Where they always say, “If you’re a politician, the one thing you can’t do is F the intern,” right? So, you can do anything. You can lie, you could cheat, you can fall asleep, you can do whatever you want as president, but that’s the worst thing that you could do?
Frank Curzio: When it comes to everything else, I mean, you could deal with, and I guess people are dealing with a lot of shit going on in this country. And one thing they won’t deal with it is telling your kids, and how to teach them, and what you’re doing. And that’s big. There’s a lot of parents out there speaking about that. I’m firsthand knowledge of that. I went to the full extreme, and moved out of public school. I believe in public school systems… To one of the most expensive private schools. That’s how far away I wanted to be. Which, again, I’m paying for it right now, but teaching kids how to hate each other and things like that, and then seeing it firsthand where girls picking on my daughter and stuff for no reason, and a lot of this where, the guy had CNN on. Did I tell you that the guy had CNN on in the classroom? I don’t care if he had Fox on. How do you have that on a classroom, for seventh graders?
Daniel Creech: Yeah. You mean any news in general? Like why? That makes sense.
Frank Curzio: Any news in general, are you kidding me? And, especially the propaganda, all the garbage that’s being… They’re kids, teach them. Teach them English, history. Teach whatever. Don’t make it up. It’s crazy because there’s such an agenda out there, but man, there’s just a big calling out there when it comes to your kids. Again, I don’t want to get too political at the beginning of this, but for me, here, look at that election. It’s a clear sign. I don’t care if you’re Democrat or Republican, but critical race theory is shit. It’s garbage. It’s teaching kids how to hate each other. It’s disgusting. And, it needs to stop. I don’t know who put this agenda in there. You’re brainwashing kids. And that’s what kids do. They’re going to learn from whoever’s teaching them at the beginning, and carry that on rest of our lives.
Frank Curzio: But man, that stuff’s got to stop. And I think that was a big shot with, with the election where, hopefully, I don’t care if you’re a Democrat or Republican, but running on that kind of platform where that saying, “We should be able to teach your kids anything we want,” compared to no, no, no, no, no. Okay. We have you there. These are our kids. These are our kids. Okay. And you teach them certain values that we don’t agree with it, and that’s wrong. So anyway, probably get more emails off of what I just said there than anything. But go ahead.
Daniel Creech: The big takeaway from the elections for me was, obviously, if you’re a Republican, you’re happier than Democrats in Virginia, and it’s close in New Jersey.
Frank Curzio: It’s so close.
Daniel Creech: I don’t think that’s still been announced. The coolest thing I seen, did you see the picture of the Lieutenant? I think it’s the Lieutenant Governor in Virginia, and I don’t have her name in front of me, but she has a picture. You talk about just an awesome badass picture. If you have, it’s on the front page of Zero Hedge, if you can pull it up, but she’s in like a green coat and she’s holding this gun. I mean, and she is like, you look at it. It’s just like, “Wow, that’s a hell of a picture.” But, I listened to about a seven minute speech that she gave when she won that was pretty damn good.
Daniel Creech: The crazy thing for me is Biden won Virginia by I think 10 points during the presidential election. I think he won by even more in New Jersey, so that does shoot a warning shot across the bow for Democrats. The takeaway for investors here is, what does this do to the current bills being passed or negotiated, and kind of debated right now? You got the, call it one, two, 1.2 to two trillion stimulus or not stimulus, but bill going on right now, spending bill and then that’s kind of attached to this reconciliation thing. And you got this pushback between more progressives, more moderates, things like that. We’ve talked about that. So, little quick update here, Frank, I still think that Democrats should wait to pass these bills until we get closer to midterms, which is still a year away. Do you still think it benefits to pass them sooner than later? And now, with this-
Frank Curzio: I mean, you want to pass them sooner than later, it’s going to be a lot easier, right? I mean you’re coming into, especially what happened with this election. I think it makes sense, but there’s Democrats that are pushing back on the spending bill.
Daniel Creech: Why do you think it’d be easier now?
Frank Curzio: Because as we go further, you’re going to see much more inflation, and I think it’s going to be a problem. And also, Democrats have to be careful because some of them are going to be up for reelection, and people are going to be very what they’re voting on right now, which could be called out. Because as every bill is, whatever side’s passing, there’s so much bullshit in there. Most of it, 85% of it’s all bullshit, and what you’re voting for right now, it’s going to be called out during the midterm election. So, you’re probably better off passing it now, or trying to push it through now than later. But, a lot of this is inflationary. It’s going to cause… You think it’s bad now, inflation’s going to go through the roof with the infrastructure bill and all this stuff, it’s going to be insane. And I think that’s what some people see.
Frank Curzio: I mean, I see it. I don’t know why, we can’t get our goods any place, right? The ports are still blocked up. I’m tracking this stuff on a weekly basis, giving you guys updates. If you notice, some of the companies are now saying 2023. Remember, we’re supposed to be done? We’re supposed to be done with that last quarter. All those CEOs that lied about it. Now they’re saying, “Well, probably through 2023, we might see this.” So, it is a big issue, and we’ll see. We’ll see what happens with the spending bill. But for right now, we have earnings, and man, it’s pretty sick. Right? I mentioned this on yesterday’s podcasts, a separation called the Great Separation, where you just seeing companies in similar industries, some are reporting great numbers in some aren’t, right?
Frank Curzio: So, there is a separation where, when the market goes up and it’s a bull market. And again, we are hitting highs. I think the NASDAQ’s up, trying to go up today. It would be the ninth day in a row, I think, the NASDAQ’s up and 14 out of 15 for the S&P, or something. Remember, just two weeks ago, we were talking about a big crash and the world’s going to end, and how everything changes. We’re at all-time highs again. It’s kind of funny how quick sentiment changes, but some of the earnings that came out, I mean, you got to talk about Bed, Bath & Beyond and Avis, right? Those are two, Dan. Right? Right off the top.
Daniel Creech: Yeah. And this is, so Avis, we can take a victory lap or, Frank, you can. This was a solid pick for Avis Budget during the coronavirus pandemic. Sent out an alert yesterday to sell half of a position. Well, it’s a huge winner. What, 1500% or something ridiculous?
Frank Curzio: Yeah. We recommend one, Avis.
Daniel Creech: That’s amazing. I don’t mean to overlook that, but we got to talk about the price action because this is a good, life is good right now for investors. Markets are melting up. I think, all indices are near all-time highs. We’ll talk about the Fed upcoming in a minute. Bitcoin, cryptos are doing well. Bitcoin’s damn near an all-time high. That’s all well and good. And, I don’t want to rain on this parade, Frank, but I do want to call out something because the price action in CAR and Bed, Bath & Beyond, so at one point, CAR hit 500 and change.
Frank Curzio: 500, and it was, when it open, it was so at one-
Daniel Creech: It was up over 200% at one point during the day.
Frank Curzio: Yes.
Daniel Creech: During the day.
Frank Curzio: During the day, it was one, it was a hundred. Where did it open? 180? Where did it close the day before when they reported earnings? They reported blowout earnings. Right? And the stock was up what, seven to 10% after. And then, it opened up 20, and then it went from like 200, and low two hundreds to, I mean, what is it? 500 or something? Four, 500.
Daniel Creech: It went over 500.
Frank Curzio: It went over 500. And, you’re seeing it now, it’s down about 10, 15%. We sold half, higher yesterday because, a lot of this move was fake, and let’s talk about that move.
Daniel Creech: Exactly. And now, I’m not smart enough to pinpoint this exactly, Frank, but the idea that you just, you have to keep this in the back of your mind when investing, and you’re looking at either… Whether you’re looking at long-term or short-term, but with algorithms and most trading being automatic and no human beings at it, because if you stop and think, who was buying this stock at 300, 350, 400, 450? I would argue algorithms and computers and, quant systems or whatever. Your big hedge funds that we’ve talked about in the past that are holding for seconds or any kind of thing like that. But as an individual investor, if you’re in this name and you see these massive rips, do not be afraid to take some money off the table. Because just like we’re seeing a pullback, I mean, a pullback well off its highs yesterday. Now, it’s pulling back a little bit today.
Daniel Creech: And I don’t mean to badmouth the company or anything like that. It’s just, this just shows you how when you flood the system, Frank, with tons and tons of money and it’s just sloshing around, you’re going to get a lot of craziness. So, don’t feel like this is the new normal in the sense of, “Hey, this is going to go up and it’s going to keep going up forever.” Just, don’t be afraid to take some off the table as an investor.
Frank Curzio: Yes. And I want to show you something, if you’re on our YouTube page, I’ll show it you. If not, I’ll explain it to you, a lot of you guys listen to this through iTunes and stuff. But, go to our YouTube page because you could see us bring up everything. Unfortunately, you got to look at both of our ugly faces. Well, my ugly face at least, right? So, I’m bringing up a chart right now, and you see the Avis and what it is, is this is capital IQs, my system. Again, this is, we pay a lot of money for this. So, I like to bring up free sites, but this is important, because you won’t find this on a free site. But it’s showing data that, where you have the chart, the short interest.
Frank Curzio: So, this green line right here is a short interest, and you’re seeing it go down to around 10% in May. And all of a sudden, it starts going up, starting in September. So, September’s at 12%. And then, all of a sudden, you’re going up 15, 16, it’s above 20%, at roughly 20. So, you’re looking at 80% increase in the short interest leading up to this quarter, right? Somebody was really anticipating that these guys would come down, and rightly so. We watched this stock because we recommended it, in Curzio Venture Opportunities. And we were up 800% on it already, recommended it in the twenties, I believe. And, this thing just kept taking off. And for me like what you said, Dan, you want to take some off the table. You’re right. Take some off the table, but don’t take everything off the table because you don’t know where this thing could go. And, for us, we were like, “All right.” We knew it’ll come down today because you have algorithms.
Frank Curzio: And here’s what happened, guys. You have short interest, some guys caught in the wrong side. So, what is he doing? He’s being forced to buy it as this thing goes higher. And as he’s purchasing, it’s going higher. Now algorithms, what they do is just, they front run the market. They see all these orders coming in. They get in a second before them, which is inflating on the buy side or even the sell side. If they’re going, if they’re shorting. So now, you’ve seen this massive move and these guys keep trying to get out, try to, I mean, somebody blew up in this mess, just like they blew up with Bed, Beth & Beyond, same thing.
Frank Curzio: Bed, Beth & Beyond is a joke. I mean, I looked at a quarter when they announced the buyback program and stuff like that. I mean, and you’re looking at, I don’t know where it is today. It was up 80%, and I saw 50%. I mean, I could bring it up. I know where it is. But getting back to this Avis, you’re looking at the short ratio increasing tremendously. When you see that, these shorts have to cover, right? So right now, they short the stock. They have to buy back the stock to close the position. So, when this goes higher, and higher, and higher, it’s forcing them to buy back at any price. They get the hell out of the position, because you have unlimited risk because they can go three, four, 9,000, 10,000, whatever, go up, and you’re done, right? So, these guys are running, running, running with the for selling and just seeing this move, it just… The point here, Daniel, which is the point we should be making is, be careful shorting stocks.
Frank Curzio: I mean, you can buy puts and stuff like that. That’s fine. But if you’re shorting stocks, look out. Because it doesn’t matter if it’s a shitty stock, it doesn’t the story. Doesn’t matter. Whatever. But it, the way the market is manipulated today, where you could see a lot of this stuff. And that’s what happened with GameStop. And that’s what happened with AMC, where the WallStreetBets crowd saw the short position. They saw the options on it, and the puts, and they just, they said, “Okay, once we start, once this thing starts going on, it’s going to keep going, and going, and going.” And then you have this whole entire circle, which, WallStreetBets, even Chamath said it, right? It’s one of the most powerful hedge funds really, with those guys. I mean, look what they could do to some of these stocks.
Frank Curzio: You just have to be careful because your thesis just, no matter what. And I learned that from Disney. I mean, none of the fundamentals make sense. This stock should not be trading where it is at 40 times forward earnings, when they’re seeing declining growth. Their growth model that they went all in on, it’s slowing tremendously. They have no pricing power. They don’t have money to compete content wise with the rest of the guys. But yet, it’s still holding up pretty well. You learn this lesson, you got to adapt to the market, right? It doesn’t matter. If you see something, the fundamentals don’t make sense. This is shitty stuff. You could get wrecked right away by shorting stocks. But these moves, Daniel, are insane. I’ve never seen this. I’ve never seen, stocks that are up 10, 15% go up 120%.
Frank Curzio: We saw this with Naked Wines. Hedge Shrunk came on TV last week and mentioned it. It was at nine. It went to like… It was eight, and it went to 19, I think, or nine, it went to 19. Within the five minutes the guy was talking, saying, “This is going to be a three X-er in three years from now, this is what we love.” And he explains, the CISO, or whatever. And just the stock just started going, and going, and going, and going. And, they were even saying like, “Wow, look at this thing.” It was the quickest double. I mean, Josh Brown says, “It’s the quickest double I’ve ever seen in my life.” It was three to four minutes. It doubled. Now, it’s back down to 10. Holy shit. I mean, we’re in a new age here, right?
Daniel Creech: Yes. For how long, remains to be seen. But this definitely gives the bears and your old school investors a lot of ammo to just point to how Fed policies, and different things make the markets into a giant casino. And it’s hard to argue. I mean, how do you argue that it’s not gamification like Robinhood and things like that, when you have those stocks making those moves? So, just take that, just keep that in mind as investors. It’s never a reason to be completely out of the game, like you said, Frank, but kind of try to keep things in perspective, as we continue down the Willie Wonka and Wizard of Oz-ville that we have. I’ve got to turn to something.
Frank Curzio: Just real quick before you turn, I just want to show the people these shots. This is Avis. So Avis, into the quarter, if you could see here, this is day put earnings. The stock closed at 171. Then it opened at 186, nice move, this 9:32. Then, it started going crazy. It hit 200 about 9:40, 9:45. And then, from 9:45 to what time is this? It looks like an hour later, 10:50, the stock went to 535. And then it came down. Now, it’s down to like 300 level, which is still a massive win from where it was, 170. But get an idea. I just want to show people how crazy that was. How insane it was.
Daniel Creech: No, just in the same theme of, “Hey, investors need to pay attention to some macro events when you’re making decisions and things like that.” Zillow reported rough earnings. Zillow, the home buyer, flipping market. Now, did you go through any of these numbers, Frank?
Frank Curzio: You know what? I’m reading the story everywhere. It’s one of the things I didn’t cover because we had Avis. I looked at Bed, Beth & Beyond. We taped the CCI video yesterday. So, for me, I just read a couple of headlines that you would talk about and said, “Hey, you know what? The algorithm obviously, right? Everybody at the algorithm didn’t work and the losses,” but you have the numbers behind it. I’m like, “Yeah, we got to do this.”
Daniel Creech: Well, there’s stories everywhere, like you were pointing out. And, they missed. I mean, I think they missed estimates on earnings per share by over a dollar, they missed on revenue. But the big takeaway is, I don’t know if you have this chart pulled up there, look over the last several months, because that thing was just skyrocketing. As home prices continue to go higher, they’ve tapered off a little bit. Mortgages, interest rates, things like that are moving higher. So that’s all, every investor’s going to have to kind of take all this with a grain of salt. But listen to this stat. So, how quickly things can change, is what you need to take away from this. Their artificial intelligence, AI powered, housing flipping operation is over, Frank. They’re done with it. They’re trying to unload 7,000 homes for $2.8 billion. They’ve lost over $300 million on this program alone.
Daniel Creech: Now, it’s easy to play Monday morning quarterback. So, Daniel Creech isn’t sitting here and telling you how stupid Zillow is and how a dumb the executives are. I don’t really blame them for trying to take advantage of the market they were in. But this just shows you how you don’t want to get over your skis and things, because Phoenix, Arizona, Frank, which is where it’s been the hottest, ah, and I don’t want to exaggerate, but it’s been the leading housing market for a good while. Several, however they report quarter-over-quarter or anything. But why would you get rid of a program, Frank? Well, what if 93% of the homes listed in the Phoenix area portfolio are underwater? Do you think that’s a good idea to scrap a portfolio idea?
Frank Curzio: And what, repeat that again?
Daniel Creech: Frank, 93% of homes listed in their Phoenix area portfolio are underwater.
Frank Curzio: How is that possible?
Daniel Creech: Well, because you have these algorithms just buying things like crazy and you’re trying to resell them, you’re flipping them.
Frank Curzio: But, even with their algorithms, with the data that that company has, which is more data than probably almost everyone else in the real estate industry. I mean, everything, the prices, what’s being sold, what’s… I mean, if you ever look at Zillow, it’s an amazing site, right? It is an amazing site for homes. You can find out with the price of your home, every price around you. Just the data that they have in real time, and what’s going on, how you could find out immediately once people close on loans and how much houses are selling for immediately, how the hell don’t they get that algorithm, right? How do they get it that freaking wrong? I mean, I don’t get it. I mean, they have more data than everybody. I would think that in that industry, I don’t know, man. It just, that’s why it’s getting hit, but real quick, before you go any further, because you told me to bring up the chart.
Frank Curzio: I didn’t know this about Zillow. It’s a stock I haven’t really followed, but this thing was trading at 200 in February. 200, and it’s been in a massive down trend since. And then, it’s kind of like, last month or so, it popped. It popped from 85 to 105. And I guess this is why you’re seeing now it’s 70, it’s down 20%. But when you see this move higher on a technicals, where people saying, “Hey, this thing’s starting to break out. It’s starting to come out here.” You’re getting a lot of those traders coming in. And then all of a sudden out of nowhere, it just switches gears, and you report a terrible quarter. What happens is, you see a massive, just everyone exiting from the stock and the thing falling 19%. But this is on news that’s serious. But again, again, I know you know more about the story than I do.
Daniel Creech: Well, I’m just reading off a few, yeah. I was just going through kind of the Cliff Notes. So, they lost over $380 million on the program, which is called Zillow Offers, and Bloomberg reports that it might increase to around $560 million in losses. So, what’s the big takeaway here because we didn’t recommend this. We didn’t say to buy puts on it. We didn’t say to buy, and get any of the run up. We missed this or at least I missed it on this front. My point is, is staying with this macro theme when you’re looking at the price action in Avis, and Bed, Bath & Beyond, this doesn’t mean that the real estate market is over. This doesn’t mean that. The big takeaway here is, buy right. If you’re looking at property or housing, buy right. Make sure that your risk-reward is in your favor. Whatever you believe, nobody has a crystal ball, but don’t just get caught up in the euphoria like this company did. Zillow bought 3,800 homes in the second quarter, Frank. That was towards their stated goal of acquiring 5,000 homes per month by 2024.
Frank Curzio: Do you guys… Is everybody down? I mean…
Daniel Creech: I mean, well, yeah, because what are you going to do after that?
Frank Curzio: There’s a fundamental-
Daniel Creech: What choice do you have after that, if you’re an analyst?
Frank Curzio: This is amazing, right? Because I see this with Zillow, and they’re getting out of this market and this is their growth model. This is what they pitch as their growth model. “How do we monetize our services, and how can we do it? Here’s something, right. Let’s just go with these algorithms or whatever.” And now, you’re seeing this is briefing.com with all the downgrades and stuff, but downgraded from Truist, from Evercore, J&P Securities, Piper Sandler. When you take away that growth component, and now you really don’t know, where’s the growth coming from? And, you got to go back to your drawing board, it’s crazy.
Frank Curzio: That’s what amazes me, Dan, right now about, even when it comes to a company like Disney. With Disney, hey, they went all in on this growth model. And obviously, it’s not working out as planned. They’re seeing slower growth. They don’t have pricing power in it, which they’re seeing. And, now you’re like, “Okay, what are they going to do?” And, the fact that their best content is Marvel, and they cannot put that on streaming. They got to put it after it comes out to movies, because these things generate a billion, much more than a billion dollars. That’s a huge, huge sales driver and also an earning driver for the company. And, you can’t put that on streaming. That’s the greatest content that they have. So yeah, it’s just amazing that you wouldn’t see this for some stocks.
Frank Curzio: But this is what happens when a company just has a growth model, and then it’s almost like a biotech stock where you’re in phase two, and everything looks good, and that stock’s run apart. Because you went phase one and phase two looks good, and all of a sudden you’re like, “Hey, it didn’t meet our endpoint, and we’re getting rid of this, and we’re not focusing on it.” That biotech, if that’s the only drug in its pipeline, is going to go down to what the net cash is. And that could be 70, 80, 90%, you don’t know. But Zillow here coming down, it’s hard to even recommend and say it’s oversold, which it might be. But you need to have some kind of growth model of what you’re going to do. And, they didn’t say that. They’re not saying, “Hey, what’s the growth?” And that’s why analysts are like, “We don’t know what you’re going to do now. What’s the next step in growth?”
Daniel Creech: Yeah. And like you said, it’s in a big down trend. I think it’s down 15. It was down 15% when we started this. So, it’s getting hit today. And as it should. I mean, you report bad numbers, that’s okay. Things are going to go down. The takeaway here also is, I like this Great Separation theme you were on yesterday, Frank, because especially for us to be completely selfish as newsletter writers, and podcasters, and things like that. Man, how long have we been wanting the market and companies to trade on their own will? I mean, everything going up and everything going down is good in a sense, but as stock pickers and people that want to help individual investors navigate through this kind of stuff, you want to see good, news means good news, bad news means bad news. Do you want to quickly go into the Fed? Do you think they’re going to say anything that’s not expected today?
Frank Curzio: We’ll really quick here, because basically, they’re going to announce that they’re going to taper later today, and-
Daniel Creech: Well, they’re going to announce the program. They’re not starting today. They’re going to announce today that they’re going to start.
Frank Curzio: Yeah. They’re going to announce it. But the thing, it’s funny because they made it clear that tapering is not tightening. They actually said that, tapering is not. It’s almost like you’re so addicted to easy monetary policy that you don’t have the balls to come out and just say it. You just… Why is a Fed so afraid to tighten? It’s not a bad thing if you’re tightening. I mean, it shows that you have the economy underneath you to support something like that. You’ve seen inflation run wild. If this bill does pass through Congress, and gets approved, president signs it, you’re going to see inflation beyond belief. I mean, we can’t get products anywhere right now. And you’re seeing that, even with the holiday season.
Frank Curzio: But again, the separation. Mattel, I love and Mattel came out and said, “Hey, the things.” Under Armor. Under Armor came out. I mean, Nike last quarter, I think they still have yet to report Nike. But last quarter, they said, “China growed slow, and inventory concerns.” Under Armor came out and said, “Nope, our margins are going higher.” So, they have pricing power, no inventory concerns. No supply chain concerns that they worry about, and they raise guidance. And, it did re-rate and that stock popped. That’s one of the ones in our portfolio. That’s going to take off. There’s for them, because now, you’re seeing separation. We’ll see what Nike reports because that stock, and credit to Goldman. Goldman recommended it, and initiated coverage on them with a buy rating at 150, after they kind of bombed the quarter. And the stock has been coming up, coming up into its highs. Man, Nike’s a scary stock headed into quarter. I mean, they better report really good numbers because this stock is moving up on a terrible quarter where they had supply chain issues.
Frank Curzio: They better blow out the numbers, and they’re the best company in the world at manipulating their earnings. I’ve covered that for a while. They’re great in terms of tax rates, and little things. And again, they’re amazing at it. It’s legal. They do it better than anybody else. Everybody kind of does it, just promotes it the way our accounting systems, and you have to report every quarter, but it’s going to be interesting to see. Because, if they do not find a way to really beat earnings, that stock is going to get hit, because it’s running up to its all-time highs now on a very bad quarter where expectations are sky high, but Under Armor came out and said, “Hey, things are great.” Just like Intel was shitty, but if you look at-
Daniel Creech: B-grades, yeah.
Frank Curzio: AMD was great. So, you’re seeing the separation, which I like, and two things I wanted to talk about the Fed. I don’t think that’s that big of a deal, right? I mean, they’re going to come out, and taper, and announce it. But, it’s going to be very, very small. It’s not a big deal, but yeah, listen the Fed’s, Pendleton and Mellon, they’re going to keep it that way. They’re not going to change that. Right?
Daniel Creech: No, not at all. Real quick on Nike. I do think that they, it doesn’t surprise me that Goldman did that after a pull back. I do believe Nike gets the benefit of the doubt. Nike is like Facebook to me. I have some of their products because I get them at a discount here and there, and that’s okay. However, they do get the benefit of the doubt to turn the ship. I mean, Nike isn’t a poorly run company. They’re smart guys. Like you said, they can do all the legal accounting stuff to make their numbers look great. But I would for again, so I would buy it ahead of earnings. You would not buy it, right?
Frank Curzio: I would not buy ahead of earnings, because it’s running down now.
Daniel Creech: And I would go on blind like that, just because that’s, I give them the benefit of the doubt on the name brand and what they do. I mean, hell, just how brilliant is that?
Frank Curzio: I love, the biggest thing is that I love the fact that you call it Nike. Nike.
Daniel Creech: Or, Nike. Yeah.
Frank Curzio: Because I mispronounce everything and everybody calls me out on it, and I love it. So, once they call me out on it, it means I have to pronounce it wrong for the rest of my life, because I’m going to make sure it’s a purpose. I think I was calling the Bakkt, it’s Bakkt Exchange. It’s B-A-K-K-T and I was like, “Bached, the Bached Exchange.” They’re like, “No, it’s Bakkt.” Now, I got to call it Bached forever. Right? So, it’s got to stick with me. But when the… Guys, be careful, when you… It’s to me, this is classic with Nike, where it’s running up into the quarter, off of a bad quarter, off of bad numbers. Yes, there’s conservative guidance going in. They report next month. They report a month from now.
Frank Curzio: And the stock’s approaching all-time highs after reporting a bad quarter, meaning they better meet expectations. If they do, you’ll probably see the stock pop, three to 5%. If they don’t, you could see a 10, 12, 15% pullback. To me, the risk-reward of just buying that into the quarter doesn’t make sense. But then again, I would have said the same thing for Avis, and it went up 125, 200%, and we have it in the portfolio. But that’s why even when you’re up on stocks, guys, the best thing I could tell you, the biggest lesson is, I’ve sold stocks way, way too early. Take some off the table where you don’t care, where you just made a lot of… It could be a hundred percent where your cost base is zero, it could be your two, 300% and that thing’s running high.
Frank Curzio: Take a little bit off, and now you have money to put into a lot of your other ideas and just let it ride. Because think about the people who sold Amazon 10 years ago, or Microsoft seven years ago, thinking it’s expensive where, you don’t know, you really don’t know where some of these things could go and that’s how you make fortunes, right? That’s how you really, really make fortunes because most people sell out early and they take their profits, and gains, but let a little bit ride because you never know where these things go. And if it falls 10, 20, 30% from there, you don’t care because you’re cashed out already, and then you can decide to sell it or whatever. But now, you’re in a stock for the long-term that has a lot of potential. And, that’s the best advice I can give on that.
Frank Curzio: But coming to the end here, Dan, but I wanted to touch up on, on two things. And one of them real quick was the from JP Morgan, which I thought was a big deal, where they’re banning everything pot related, where clients can’t trade it through their banking system and everything. Right? I mean, I thought that was pretty significant, and news that’s kind of into the radar.
Daniel Creech: Well, this is out of Reuters. They’re banning select cannabis names. So, there was a couple. It says, “The move follows similar actions by other banks.” So, Credit Suisse. I’m not probably there. So, private fund, ARCOS Capital, and big banks took a lot of big hits off that. Huge losses. So, they’re going to restrict that. They keep saying, I was skimming through here. It didn’t say a lot of the names. I can’t imagine they’re going to take away like Canopy Growth, and some of the major ones, but they just said they’re limiting to some cannabis related names. And this highlights that, hey, you still have this overhang of, it’s still illegal at the federal level, even though they’re choosing not to enforce it. And JP Morgan put out a wonderful PR statement saying, “Hey, they’re doing everything according to US money laundering laws and regulations.”
Daniel Creech: Basically, this is all going to be in the idea or wrapped around the idea of doing good for you as the consumer, just like what we saw with GameStop and people increasing margin rates, and you’re not allowed to bet against it short. TD Ameritrade did that same thing. So, it just kind of a fun fact to see there. I haven’t seen marijuana stocks in the news at all. I haven’t been following them lately and it’s just, it’s kind of surprising to see this come across the desk.
Frank Curzio: Well, they’re cyclical during election times of what states are going to approve them. Right? I followed an issue for a while now. It’s kind of boring, but what this tells me, JP Morgan, I mean, Jamie Dimon’s well connected to anyone in the world, probably. And I mean, anyone in the world. I mean, when it comes to politicians, when it comes to the Fed, everything. For him to make this announcement, and stop letting clients invest in pot stocks, tells me this is never going to get approved on the federal level. It just won’t get approved. And a lot of people believe that, that will happen.
Daniel Creech: Never, Frank? Are you saying never?
Frank Curzio: A guy like this who runs the biggest bank of the world has the inside scoop, and it’s all about money. That’s why he is even getting into Bitcoin. It’s a two and a half, almost $3 trillion market. They have no choice. Right?
Daniel Creech: And plus, well, and what they’re doing, let me interrupt, I’m sorry. Is they’re limiting it to, it looks like outside US sales. So, they’re trying to-
Frank Curzio: Restriction, the restrictions.
Daniel Creech: They’re just trying to cut it down to say, “Hey, these are the people doing it right.” But to your point, it’s about money. It’s also risk on their end, but it’s about money and regulations in the United States.
Frank Curzio: Yeah. And even for us too, where again, it’s approved on the state level, but on the federal level, meaning that, the FBI could go into a state and even in Colorado and close a business down if they want. Even though because, that’s supersedes state laws. But to me, even Computershare, which we’re using as a transfer agent now, when we transfer over to tZERO for our token, a CEO token, Curzio Equity Owners token, which is going to be trading a couple weeks there, Computershare said that we had to sign a document saying like, “You have no pot-related,” not pot-related recommendations, that we’re not going to have a pot-related company or anything like that. So, there are all companies that are against it. I just, yeah, probably not good news for the pot industry. Again, you want momentum there, you might get momentum going into to when it’s election time, and some states are going to prove and, they have that adopted, that’s when you’ll see a pop in these things, but I’m surprised in that news.
Frank Curzio: And the last thing since we got a minute left here is, Metaverse, right? We’re seeing Facebook changed its name. You had some amazing points on Facebook. I’ve always said how this company’s incredible, but you have some stats on Facebook that were incredible. And, I just want to talk about that really quick, because there’s a company that we recommend in a Crypto Intelligence newsletter called Decentraland. I’ll give that away because it went up like three, 400%. Pulled back a little bit from that. But this is in a week, right? This is what because this, if you want to know more about the Meta, this company has it set up already. Go to that site. You can create a character. I did it live. I showed the video and stuff like that. This thing went up. But you’re going to get a better indication, because there’s more and more companies pouring into this. But also with Facebook, Facebook’s going to be a key player in this, obviously, changing the name to there. And just to show you how big Facebook is, Dan, I know you talk about some statistics when I just started laughing.
Daniel Creech: Yeah, this was in this morning’s Wall Street Journal. And, this is just huge. This is from the section, Heard On The Street. And so, I’m just going to highlight this one number and show you why you have to pay attention to this Metaverse thing. So, Wall Street forecast, total advertising revenue for the company formerly called Facebook, of course, will reach $114 billion this year. That’s 17% of the entire global market. And that’s 10 times the amount projected for social media competitors Twitter, Snap, and Pinterest combined. I knew they were the head and shoulders leader and above everybody else. I didn’t realize that it was that big when you combine that.
Daniel Creech: Now I say that, that stood out to me because they’re driving the force. We talked last week about how Zuckerberg wants to get hundreds of billions of dollars in digital revenue a day, going onto this platform. And one last thing on Nike, also in today’s Wall Street Journal is, Nike filed trademark to sell digital shoes, Frank. Now, they come out and say, Metaverse, with it. It’s more on the NFTs inside, but it’s not a long extension to say, just like when you were walking around in your little Metaverse world, when you were your character, you got Coca-Cola products, you can have Nike products, designers, everything. So again, just…
Frank Curzio: Start learning about it.
Daniel Creech: Start learning about it. Just buy a little bit of Facebook. You can blame Daniel Creech if you’re wrong, but buy, have some exposure to that. And if you own any kind of a fund, you have exposure to Facebook because they’re in everything, so…
Frank Curzio: Yeah, no, absolutely. Well, Daniel, listen, got a lot out, talked a lot about a lot of different stocks. Guys, earning season’s almost coming to an end, but we’re going to break it down every week. Small caps going to be reporting a lot more over the next two weeks, which is a lot of fun. So, we’ll be breaking that down. I see tremendous opportunity of that industry, which I said yesterday on this podcast. But Dan, thanks so much for coming on. I really appreciate it, Bud.
Daniel Creech: Cheers everyone.
Frank Curzio: All right. I’ll see you next week. Actually I’ll see you in five minutes, but in the rest of the week, but everyone else will see you next week. And guys, thanks so much. Thanks for tuning in. Really appreciate all the support, and I will see you guys tomorrow with the awesome, awesome interview. I’ll see you then. Take care.
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