Hedge Funder Who Tried to Stop Mandami On The Future of New York City & Where He's Putting His Money
Summary
Market Outlook: He views stocks at highs but not in a bubble, advocating staying invested in the S&P 500 with modest 5% forward returns and holding some cash due to elevated valuations.
New York City: Bullish on New York City long term as employers build multi-billion-dollar HQs and the city’s vibrancy returns, while expecting the new mayor to govern pragmatically to retain the tax base.
Core Longs: Likes BRK.B at an ~11% discount to intrinsic value, AMZN for margin expansion aided by robotics scale, and GPN as a deeply undervalued payments processor; JOBY is his top speculation.
Payments Infrastructure: He highlights the profitability of the Visa/Mastercard ecosystem and sees Global Payments (GPN) benefiting from scale, cash flow and a re-rating from very low multiples.
eVTOL Opportunity: JOBY could start Abu Dhabi–Dubai service soon, with strong engineering talent and potential strategic value; he sees room for retail enthusiasm and upside if commercialization progresses.
Stocks to Avoid: Warns on PLTR for extreme valuation risk, APP for overvaluation and questionable practices, SIG due to lab-grown diamond disruption, and HIMS for regulatory risks and promotional tactics.
Fraud Risk: Urges avoiding message-board promoted China frauds after examples of pumped, near-nonexistent companies facing SEC suspensions.
Berkshire Context: Notes BRK.B’s record cash pile and ongoing net selling as patient positioning for future bargains, with leadership transition to Greg Abel and Buffett remaining on the board.
Transcript
to your other question about, you know, my bullishness on New York City. New York City has survived a lot of stuff over the years and some pretty bad mayors and uh, you know, an incompetent Delasio, a corrupt and incompetent mayor Adams, our current mayor. Yet, the city's booming. It's thriving. It's incredibly vibrant, entrepreneurial. Hey everyone, welcome to a very special in-person episode of the Julia Lar Ro Show where we are joined today by Whitney Tilson. He is a well-known value investor, a former mayoral candidate here in New York City for the Democratic Party and a well-known Buffett Munger follower, an editor at Stanbury Research and someone I've known for a long time, friend for well over a decade at this point. Great to see you as always, Whitney. It's been way too long. >> Thanks for having me. >> So great to have you. Um, so we are recording on Wednesday morning, the day after election day here in New York City. Normally I would start with like markets and the economy, but I kind of feel like we should just start with the mayoral election. Your reaction, especially someone who ran. >> Yeah. Well, I had uh mixed feelings last night when all the results came in. I'm a lifelong Democrat. Have been trying to drag my party back to the center uh through for most of my career. And generally speaking, as a Democrat, it was a great night. Huge wins uh far larger margins than expected in the guminatorial races in Virginia. uh and New Jersey, Prop 50 passing in California. Uh down ballot races in those states as well as down in Georgia. Um big turnout here in New York. Um and five of the six ballot initiatives that I supported. All of them passed in New York. The great night except for one big thing. Uh Zoron Mdani, Democratic Socialist, was elected. And I dedicated the last really couple months of my campaign to warning New Yorkers about the dangers of electing a guy I saw as unqualified, inexperienced. Um, he's was 33 at the time, just turned 34, um, with a lot of pretty radical ideas. And I was even more afraid of his radical comrades at the DSA. So, uh, it was too little too late. And frankly, Andrew Cuomo didn't even campaign really in the primary thinking he had it locked up. Uh so uh to no one's surprise, I've known for months that Mandani was likely to be elected. So um I was um I guess I would say so mixed feelings overall last night. Um disappointed but not surprised by the outcome of the mayoral election. U but as a New Yorker, I'm still bullish on New York. Um I think Mom Donnie is going to be smart enough to, you know, govern somewhat moderately, not as an extremist. And when I say moderately, I mean a moderate but very liberal. Uh mayor more like Delasio, who I didn't think was much of a mayor. Got universal prek done, but and otherwise not much, but didn't sink the city. Um I will say, um having run for mayor and spending 7 months all over this city and diving into all the issues and opportunities and all, I'm bullish on New York. I'm much more optimistic about New York than I was when I entered the mayoral race a year ago. >> Okay. But what do you think it says that the city I'm not a city resident any longer, but elected a effectively a socialist as mayor? Like what do you think it says? Like how do we get here? >> Well, I think part of it is in in the Democratic party, and keep in mind twothirds of registered voters in New York are registered Democrats. So, this is a very liberal city. And there was a there's a very strong uh reaction against Trump and Trumpism, not just here in New York, but across the country. And generally speaking, that's something I share and support. Um uh I also think frankly um Andrew Cuomo came in with so much baggage uh that you know had their I I was hoping to present myself as a fresh outsider alternative uh but you know couldn't self-fund uh didn't have any name recognition and so you know my campaign didn't take off but uh so I wouldn't read too much into it. the fact that mom Donnie in a very liberal city only won by eight points and in blue states but not nearly as blue as New York City in New Jersey and Virginia the gubernatorial candidates won by 13 and 16 points you know shows that you know I I would not read a Mani election here into you know the entire Democratic party nationwide has gone super lefty um you know I think that would be a mistake Mhm. Okay. So, as someone who tried to stop him when you were running in the primary, why was it why like what was it about? I didn't pay attention back then. It was only once he became the candidate that was like, "Okay, what was it that he was doing differently that >> right uh to his credit, he was the only candidate in the field who articulate who identified the number one issue, affordability. New York is just wildly expensive and for all but you know the 1enters or the top 10enters it's just become increasingly unaffordable. So he nailed the big issue and then developed a set of very clear slogans/policy proposals fast free buses freeze the rent free universal child care um that captivated people. It was very simple, very clear. Um, and you know, one of the things I realized running for office for the first time, if you want to win a political race, promise the maximum number of people the maximum amount of free stuff and tell them they don't have to pay for it. >> The the economics of that actually don't work. >> I I was on the debate stage. I ran ads. I tried to point this out. There's no way that he will be able to raise taxes. That requires going through Albany. Therefore, he won't be able to pay for the universal child care that he's promising to everybody, which I think would be a great thing, but it's not affordable. Uh I don't think we can afford free buses uh for the whole city, etc. But in the same way that nobody really believed Trump was going to build a wall and Mexico was going to pay for it, but he captured the issue among Republicans and it was more of a slogan for what he stood for, even if practically speaking, I don't think any but the most hardcore supporters actually believed it, but it didn't matter to them. So, and so I would say Mam Donnie nailed the key issue, the key uh policy proposals that grab people. And then lastly, he's a gifted politician. I sat on the stage with him as close as we are right now multiple times. And I never heard a flub. He doesn't even he doesn't even say um he's a brilliant public speaker. He stayed on message. And so that's he's really really good as a politician. And that's one of the reasons why I I I think he's very dangerous because he's very young and naive and has a lot of bad ideas, but he's a brilliant salesman for them. >> Yeah. I think that's what's scary for people, >> right? I I called him the Trojan horse for the DSA. They have been grooming him for at least 15 years since he was, you know, in his teens. He was out there knocking on doors. I know people who worked with him back then. When he was a teenager, he was a gifted canvaser, a gifted petitioner, going out and getting people to sign their name to get people on the ballot. He I've heard stories where he could get he would get 10 times the number of signatures as the average petitioner because he's just that charismatic, that smooth a talker, and really connects with people. He's good. >> Okay. But you're not worried about the direction of New York City. Oh, I well I'm ve I'm very worried about a the Mani mayorality because he's put out um he's been very hostile to Israel and I'm from New York's Jewish community. I've been a member of Central Synagogue for 25 years. So uh I'm very concerned about that. His previous rhetoric, in fact it's on his Twitter feed right now calls from 5 years ago to defund and dismantle the wicked police, for example. um you know there's been lots of rhetoric about you know seizing the government seizing uh private property you know businesses that kind of thing you know how much of that was youthful foolishness from 5 years ago uh versus how will he really govern you know to his credit since he won the primary he's very much tacked to the center he's pledged to keep police commissioner Jessica Tish who happens to be Jewish by the way uh for someone who's been accused of anti-semitism I think that's pretty clever of him uh to keep a keep a police commissioner who's done a great job bringing down crime. Uh so I'm again I I'm an optimist by nature. So I'm going to be optimistic and hopeful that mom Donnie exceeds my expectations. But to your other question about, you know, my bullishness on New York City, New York City has survived a lot of stuff over the years and some pretty bad mayors and uh, you know, an incompetent Delasio, a corrupt and incompetent mayor Adams, our current mayor. Yet, the city's booming. It's thriving. It's incredibly vibrant, entrepreneurial. Every young person wants to be here. Every immigrant wants to be here. That's what also worries me though, having lived in New York and then >> it took a while post pandemic to like feel like the vibe is finally back. And I think that's really worrisome. Is that going to go away? >> It's back and I don't think it's going away because the big employers are literally building multi-billion dollar buildings for their headquarters. JP Morgan um yeah, which was which of the big uh was it Deote the big consulting firm like bought an entire building. um you know and these are long-term multi-deade commitments. So the back to work uh is is back in a big way and just you know go down in any of the neighborhoods in in uh Brooklyn or Soho or whatever. My I have three daughters all in their 20s who live here and they wouldn't want to be anywhere else. I wouldn't want them anywhere else. This is very much where you want to be. If you're early in your career and you want mentorship and connections and networking, it's here like it is nowhere else in the world. >> You don't see a risk of it turning into like a San Francisco situation. >> Well, San Francisco is sort of an extreme example of what can happen under very lefty leadership or lack thereof. Um, I think that's a risk, but my base case scenario is the next four years under Mom Donnie are going to be Delasio 2.0 and New York was still pretty great under Delasio. >> Okay. Okay. So, you also don't buy the argument then like the you saw the memes on X, I'm sure, of like the real estate agents in um Miami, the phones blowing up, people moving out. You don't buy that. Um I think there are quite a few people in a wait and see mode right now. A lot of people who wanted to move, you know, move during COVID and there's definitely has been an outflow that's worrisome given that 1% of New Yorkers pay almost half of the personal income taxes in this city for example. Um, but I think so I think there are probably a lot of inquiries, a lot of people on the fence. And I think mom Donnie knows that and I think he can do math well enough to know that if he really does drive out all the rich people and all the big corporations and businesses and creates a hostile environment for everybody who's got money and resources, his tax base dries up and he won't be able to pay for everything that he needs. Keep in mind, under Mayor Bloomberg, taxes doubled, but that's because the economy doubled. He didn't raise the tax rate. He just he was just pro business and ran the city well and built on the city's incredible strengths to you know the economy doubled over 12 years and that doubles your tax base. Uh I I'm I don't know for sure. I don't say this with conviction but I know Zoramani has a high IQ. He is not dumb. I think he's naive and inexperienced but he's not dumb and he's proven to be a pretty clever politician. I think if he's, you know, if he keeps Jessica Katition and, you know, if crime goes up, everybody leaves and his whole agenda is dead. And I think he knows that. >> He can't do a recall here, though. >> Right. So, right. So, I think he's going to keep Jessica Tish. Um, keep I think crime and safety are going to keep improving under her leadership as they have since she came in about a year ago. And, um, you know, he's going to he's going to focus on the affordability issues that he campaigned on. And I I would like to see New York be more affordable as well. Like some some of his ideas are good. >> Like what? >> Uh I think universal child care in the same way Delasio got universal prek done. Uh universal childare would be a great thing. I think experimenting um with uh free buses certainly in low-income uh neighborhoods of New York um is is a reasonable idea. Uh I don't think freeze the rent is a good idea. I think that exacerbates our housing crisis. But I've been actually quite surprised his rhetoric around um what was called city of yes, which was legislation passed by the city council that eased the zoning restrictions. Um he's his rhetoric has almost mirrored mine in terms of if you want to make housing more affordable, it's a supply problem. Uh it's a it's good to have a demand to have high demand. A lot of people want to live in New York. Lots of young people are moving here, right? The problem is is we've made it so difficult to build new housing that you've got a supply problem and that results supply demand mismatch and that results in super high prices. So um and rents he has um not only uh embraced city of yes wants to expand it and then there were four ballot initiatives that most people didn't pay attention to last night cuz everyone was focused on the mayoral race that all related to um um easing the approval process, zoning, etc., etc. for uh new construction of affordable housing and all types of housing. All four of those passed and MDI supported those. So he he may prove um you know that's an area where I totally agree with him >> but you also at the same time still think he's dangerous >> his ideas and it's hard to differentiate he is clearly a leader in the democratic socialist the DSA and if you look on their website there's some really crazy stuff over there for example to um open open the doors of all of our prisons and just let all prisoners out because incarceration is a tool of capitalism etc. Right? Um he directly has tweeted to defund and dismantle the police like those are super dangerous ideas. Um I I hope the fact that he has said he will keep Jessica as police commissioner I think is it was a very promising sign for me. The fact that he has embraced uh easing the zoning restrictions etc. There's so much nimiism, you know, on the city council and in certain neighborhoods that has pre prevented growth. New York is, you know, from running for mayor, New York is enormous. And >> running a small country. >> Oh, yeah. I mean, New York, New York, if it New York City, its budget would be the fourth largest state in the country. It has double the budget of any other city in the world. It's double Tokyo. And Tokyo has twice the population. It's four times London and London has 10% more population. It's it's New York is almost the budget and the city is almost mind-bogglingly large. Uh I knew it was super big spending 7 months on the campaign trail. I really got appreciation for it. >> It surprised you as someone you came from just running money being a hedge fun manager 25 years in investing in the value investing >> decided you want to run, >> right? What did what did you like what surprised you in the process? Gold keeps setting new all-time highs, but price appreciation isn't the only way to profit from owning gold. Monetary metals is redefining the future of precious metals investing. Instead of paying to store gold, imagine getting paid to own it. With Monetary Metals, you can earn up to 4% on your gold paid in physical gold. That's right. Your ounces grow each month, not just your paper balance. A yield on gold paid in gold means you're stacking more ounces every single [music] month. And you still benefit if gold's prices rise. You're earning more gold every month and enjoying potential price [music] appreciation at the same time. Go to monetary-medals.com/jullia to learn more and see how you can start earning [music] 4% on your gold paid in gold. >> I would say most of the surprises were to the upside. I got into the race because I thought my beloved city was going to hell in a bucket. You know, Mayor Adams under indictment. Uh crime was still much higher than pre- pandemic. Um and uh so what what has what were the positive surprises? Um crime the murder rates probably down 30% in the last year. Uh Jessica Tish came in right about totally coincidentally of course right about the time I declared my candidacy and she finally brought good leadership and stability to the top of what had been a corrupt and dysfunctional top leadership in the NYPD. So um the city has genuinely gotten a lot safer. A month after I got into the race, city council passed city of yes, which is unlocking a surge of new construction and all easing the uh which I think will in the next year or two start to ease the affordability crisis. Um and lastly, I was just wrong on I I didn't fully appreciate New York's strengths. I you know, you sort of read the headlines and you you see all the bad news. Uh but when I actually got out there um the immigrant communities particularly um around New York um you know I didn't know there was a little Yemen up by the Bronx Zoo and the Yemen immigrants now run 90% of the delies and bodeas you know around New York City and it's an incredible story of um you know group of people fleeing a very troubled country you know over the last 20 years could only afford to live in the most um um you know troubled um and dilapidated and dangerous corners and neighborhoods in New York, but they came in and you know bought burnt out brownstones for 200 grand that are today worth $5 million you know over the last 20 years you know and this is a story that's been repeated by immigrant groups. Um you know every immigrant in the world wants to come to New York City not anywhere else in New York uh in this country. Um, so, uh, you know, and to some extent, you know, I love mom Donny's story. I don't like his ideas, but, you know, came here at age seven. Um, hustled, you know, got himself into one of the elite specialized schools, went away to college up in Maine at an elite college, came back to New York, and, you know, dedicated himself to, you know, public service and all. And I don't I think many of his ideas are naive. hasn't had like a real job. >> Fair enough. Um, but you know, like I said, I love that immigrant story and you know, my ancestors did something similar uh a century ago and you know, my daughters uh were raised here or city kids and all went away far away to college and all of them have come back here and chosen to build their lives here. Um, so, uh, so I hope, uh, I just hope, you know, at age 34 being propelled into the second hardest job in the world after US president is what it's reputed to be. And I don't doubt that, uh, that he, uh, grows up very rapidly, discards a lot of stupid and naive ideas that have sunk San Francisco. that right now that guy Brandon Johnson, the mayor of Chicago, who is sort of a teacher union hack and is sinking that city. I think Mob Donnie, I hope he's smart enough to look at those cautionary tales and say, you know what, uh maybe I should keep Jessica Tish and you know, cuz if crime starts going up, my whole agenda goes out the window, right? Um it'll be very interesting to see who he appoints as school's chancellor. That's that is by far the biggest area of spending in New York City. Uh it's 37% of New York City's $115 billion budget. It's about $40 billion. Uh we spend more and relative to that spending get less in educational achievement than any major city in the country. Um it should be an embarrassment that New York spends 40,000 per child per year. Mhm. >> Mississippi, the poorest state in the country, spends $12,000 per child per year and has much worse, you know, demographics, uh, college completion rate of parents, things like that. Yet, Mississippi children are testing a year above grade level of New York City kids, better outcomes. So, so that's um I think he's nailed it to keep Jessica Tish. The second equally important by those two appointments, schools chancellor and police commissioner are by far the most important ones that any mayor of New York makes. um you know does he appoint someone who's a you know a someone the teacher union uh just puts up um who panders to the union just hires a lot more teachers where there no standards no accountability and you know nothing changes versus you know does he does he appoint someone like Mike Bloomberg appointing Joel Klene uh and you could see it in the 12 years under Bloomberg test scores went up graduation rates went up every Ever since Delasio and then Adams came in, it's all gone back down >> cuz um anti-charter schools I take it maybe for Delasio was >> Delasio. Someone was anti-charter schools if I >> Delasio for sure. Um and he tried to really make life miserable for us. We raised a few million dollars and ran ads of our parents, almost all low-income minority parents looking into the camera saying, "Mayor Delasio, why are you trying to take a good school away from my child?" and he backed off and he sort of became neutral. He didn't didn't help us but didn't hurt us. um uh after that uh Adams has been reasonable u but it's nothing like the good old days under Bloomberg and Klein where they were really focused on expanding highquality schools under most people don't know everyone's heard of sort of styosent Bronx Science Brooklyn Tech the uh the handful of specialized schools um under Bloomberg it grew from four to eight not counting Giuliard which is an arts school um I'm and mom Donnie himself went to Bronx science benefited from one of those schools. So, I'm again hopeful. This is an area he has not articulated super strong positions around the school system. Um, the most worrisome thing he said is is he wants to get rid of mayoral control, which is something that we fought for and got under Bloomberg. And that's critical to have the mayor accountable. Even if I don't like the mayor, I want the mayor to have control over the school system because the alternative was these community boards and all of that where there's basically no accountability and it was disastrous. >> Got it. The accountability bit. Okay. Bill Aman, longtime friend of yours. Yes. >> Were you guys roommates too at Harvard? >> We weren't roommates, but we were buddies from early days of college for almost 40 years now. >> Yeah. Long time. Um, obviously you follow him on X. He's been quite vocal. Um, but he >> he's famous for his long tweets. >> Yes. Um, he was he won the most verbose in high school was his like superlative or something like that. Um, so that kind of fits. And um, Bill's been on the show. I I know Bill as well, but you guys are friends. >> He put out a tweet congratulating mom Donnie. Some people are saying it's like more like an olive branch that it seems like >> congratulating him and saying uh I'm happy to be helpful and because I I care about New York City. >> Do you think mom Donnie would accept that? >> My guess is is that mom Donnie simply won't engage at all. >> Um is is my guess. >> Uh I think I mean they threw a lot of barbs at each other. It wasn't just Bill backing Mani and putting millions of dollars into a super PAC against mom Donnie. >> Uh but Manny used Bill as you know the billionaire donors who own the mayor who own Cuomo who own Adams and this is what we're fighting against. >> There's that selfie of him with not a selfie of him with Alex Soros. The picture that was going around today >> with with mom. >> Yeah. Mom Donnie and Alex Soros is I think that's right Matt. I'm pretty sure. Yeah. Yeah. >> Okay. I I didn't see. >> Yeah. Mam Donnie since he won the primary has been very cleverly going out and meeting with the business community and Kathy Wild head of the New York City partnership invited me he's met with the real estate titans and I'm telling you mom Donnie is charming. You meet him you will like him. Um it was you know I've been on a mayoral on the in a debate where I was kicking the crap out of him for a couple hours and then the cameras go off at all. He comes over he smiles, shakes my hand. Hey Winnie, let's go for a bike ride. We both ride our bikes in the city, right? He's he's good. Um, so I think he is clever enough that he will reach out to the business community and try and appoint some people from the business community. I suspect it won't be Bill. >> It won't be Bill. >> If he if he's super super clever, maybe. But you know what's sort of interesting is is I was hearing some speculation, I forget on what podcast I was listening to today, that if he were clever, oh, I know Scott Galloway and Cara Swisser, um, who were speculating that um, Mom Donnie should find some role for Curtis Leewa, >> interestingly enough. >> Interesting, huh? >> Yeah, I sort of uh, I was on the stage many times. >> Are you going to get a role? I don't know. You You seem kind of like nice and diplomatic here in this podcast. I mean, the comment section is going to go nuts, I feel like. Uh, I am not angling for any position in the Mammi administration. I am enjoying my life of well-deserved obscurity at this point. Um, but I'm still very much active as I have been for 25 years and as a Democratic party activist and and very focused on supporting Democratic House candidates in swing districts because I think the single most important thing we Democrats can do to stop Trump and Trumpism, which I view is a tremendous threat to our our country, our democracy, um, is flip the House. That's the most realistic. The Senate's probably a stretch, right? Uh so uh no I'm not looking for any governmental position. Um but I did say you know a month or two ago like I I am voting for Andrew Cuomo. I hope he wins. I recognize though that Mom Donnie is likely to win and if he does I will cheer for him. I will hope he is successful that he that my fears prove to be illfounded that he exceeds my expectations. um because I love this city and I I want the mayor to be successful. Uh that said, I won't hesitate to criticize him. If I, you know, if I think he appoints a a complete hack to be education chancellor or school, you know, school chancellor, uh, you know, I'll, uh, I'll say so, >> but I'm at this point, um, I'm going to hold my fire, let mom Donnie, see who he appoints, and, um, hope he's successful and hope he does smart things like keeping Jessica Tish on his police commissioner. Hope that's is a good omen. And um and then at this point I'm um I'm focused on stopping Trump and Trumpism and helping Democrats flip the House. >> I didn't mean for this to be a political episode per se, but >> I have lots of stock ideas. >> Well, we I do want to get into that real quick actually. Um because this is a financial podcast, but New York is the financial capital of the world. So I think it >> and I can't have you on here and not ask you about it as someone ran too. So, >> I mean, look, the summary is I think the good news is is I think it is very low likelihood that uh Mayor Mom Donnie is going to drive out the the business sector, the wealthy folks, the financial sector, the the uh and that he's somehow going to New York and that that could have investment implications or negative investment implications, something like that. Um my my default scenario that I bet a fair amount of money on is is that New York's going to continue to thrive and it's really it's really booming right now. >> Okay, let's talk about the economy. Let's talk about the markets where we usually start. >> What is your take? What is your assessment on Let's do both. I know they're not they're separate, but let's start big picture. Your view of the economy and also just markets. We've seen markets at alltime highs. What do you make of it? >> Yeah. Well, I'll start with I mean you know this but your audience may not that I'm uh a Buffett munger value guy. I've been to 26 of the last 27 Bergkshire meetings. >> Documented them going way back to the early 90s. >> Absolutely. And so I'm a bottoms up stock picker and generally speaking so I'm not some big market prognosticator. That said, once every 10 years, I identify an enormous bubble and tell my readers and position my portfolio in a much more defensive way. So, I nailed the internet bubble, I nailed the housing bubble, uh, very publicly, you know, on 60 Minutes, etc. And so, um, but I'm I'm also cognizant of probably the biggest mistake I made in my I've made multiple times in my 25 year investing career is getting too bearish too early. And with the benefit of old age and wisdom and a lot of scars on my back, I've uh come to realize when you're in a bull market, you got to ride it. And you um bull markets tend to run a lot longer than I ever expect. And valuations can go up a lot higher than I would ever expect. And if you own the S&P 500 index fund, which is the default I think for most people, or if you own a andor a portfolio of good stocks, um, and you're not speculating in total idiocy, uh, as too many people do, um, that you should just stay the course, you know, 9 years out of 10. Um, and if you want to be clever, uh, and and figure out when enormous bubbles are about to burst, that can help enhance your long-term returns. So, the my summary of the big picture is is yes, stocks are at all-time highs. Yes, most valuation metrics are at or near all-time highs. That said, I do not think we are in bubble territory. This is nothing like the peak of the housing bubble uh when an enormous debt bubble built up um that you know through our economy, the world economy back on its heels. Nor is it anything like the internet bubble which I you know that was early in my investing career which uh uh you know today you know as a simple example the tech titan of its day back at the peak of the internet bubble was Cisco and it was trading at about 180 times earnings. Today's version of that is Nvidia trading at I don't know 30 times next year's earnings probably. There's an enormous difference between 180 times earnings and 30 times earnings, right? The tech titans of today, the top 10 uh stocks in the that account for 40% of the S&P 500 trade in an average multiple of 30 times. Like that's high. [snorts] I think you should have modest expectations uh for both those that collection of stocks as well as the S&P 500, but that's not bubble territory by any stretch of the imagination. So, I've told you know I got I was pretty bullish back in April when the market fell 18% in a matter of a week or two. Uh the stock market has rallied 40% since then. And so, you know, the 40% is 6 to 7 years of normal returns. I would say >> 8% of years. >> Yeah. I mean, long-term. Um, so today, you know, I would say if you own the S&P 500, you should expect 5% compounded returns for the next 5 years. And if you own bonds, you can get 4%. Uh, so there's no there's no shame in holding a bunch of cash. And I hold a fair amount of cash as well. Wait, do you think we'll see that that Okay, so do you think the returns that you'll expect going forward will just be a lot like they'll be like 5% a year? Not as not as much as you've seen like these big years. We've seen some big years. >> Yeah, we've we've gotten spoiled. I mean, basically with the exception of that dramatic 30 odd% decline in 6 weeks back in the in 2000 during the COVID crash. We've been in a 15 almost 16 and a half year bull market. It's a long bull market we've been in. So, you know, most you know, a lot of investors have seen nothing but um you know, a long bull market and anytime there's been a sharp the dip, it's been very sharp and you should just buy it. Uh so uh so I I'm finding it's not um I I think you'll do you should just have modest expectations and don't be tempted to speculate. >> You're still just riding the bull market. Then >> I am uh when when you're in if if if you're if you're in a great stock, you should ride it for a long time, often decades. And if you're just investing in the S&P 500, um ride it for, you know, decades ideally in your retirement account. Um, and I don't think we're at a batten down the hatches, you know, time to get defensive right now. >> Okay. >> And by the way, when when that happens, like the last time we had a big draw down was in ' 08, early09. >> It took 18 months. It was not sudden. All the indicators were there. I was shouting from the rooftops, you know, in February of '08 and again in late '08. There was plenty of time to get out. So, there's nothing that you see that concerns you right now. >> Oh, plenty of things. I mean, mainly just valuations are at a very high. Uh, so >> so you're not like jumping in. You're just riding what you have. >> No, I'm just sort of like this is not this is not a time to be piling in buying. >> Mhm. >> But it's not a time to be uh you know, it's not one of those once in 10 year times uh to be aggressively selling and getting defensive. This episode is brought to you by VANX, rare earth and strategic metals ETF, ticker symbol REMX. Rare Earths are the hidden backbone of modern technology and defense, powering everything from smartphones and electric vehicles to fighter jets and wind turbines. Van Ec recognized this early, launching the rare earth and strategic metals ETF, ticker symbol REMX, 15 years ago, well before supply chain security became a global priority. Today, China dominates the production and refining capacity of rare earths, creating real challenges for global supply chain security as these materials are essential for technological innovation, clean energy, and national security. That's why countries all around the world are racing to build their own supply chains and reduce reliance on China. As this global shift continues, investment in the rare earth ecosystem is growing rapidly. From mining to advanced manufacturing, investors can gain access to this powerful trend through REMX. Visit vanck.com/remx Julia to learn more. Well, we should also talk about ideas because I know that you've been writing to your 100,000 plus subscribers, your favorite longs, the stocks that you want to avoid. Okay. What are your ideas right now? Um well uh let me start with some simple ones. Um Bergkshire Hathaway has been one of my favorites for 30 plus years. But this is I view Bergkshire Hathway today as almost like a substitute or a proxy for just owning the S&P 500. And you'll do better than the S&P 500 if you can buy it at a 10% or greater discount to its intrinsic value. Uh Berkshire stock is actually after really being um uh doing well the first part of this year is actually down 10% well in a period of time the last 6 months when the market's up 20%. So Berkshire Hathaway is as of right after earnings earlier this week. My latest calculation is it's trading 11% discount to its intrinsic value. So I think Bergkshire will do a couple points better than the S&P 500. So, that's a good safe stock and I would say that would be over, let's say, a 5-year time period. If you're buying it today, it's moderately undervalued. Um, among the sort of big big cap tech companies, um, my favorite over the past year has been Google. Uh, they just reported great earnings. Stock ripped. It's gone from 17 times earnings to 27 times earnings. So, I'm substituting in my new favorite among the big uh, tech companies, which is Amazon. Um, if you want to read more about it, just Google Scott Galloway's le recent pitch for it. Um, it's his favorite stock for the next year and it's mine as well. Our thinking is very aligned. Um, the Amazon stock, interestingly enough, over the last 5 years has not only trailed every other one of the Magnificent 7, it hasn't even kept up with the S&P 500. And yet, the company, the business, the underlying business is booming. So, what's happened? Why has the stock trailed? And the answer is is it was trading at 60 times earnings and now it's trading at 30 times earnings. And so the multiple it was overvalued. The multiple is compressed. But now the business has caught up with the stock. And I think going forward the stock if anything you could see multiple expansion here. Amazon has now more than a million robots. Double that of every other company in the United States combined. Amazon has double that. More than any other country other than China. And I think robotics is going to result in uh distribution warehouse efficiencies that allow Amazon to continue to grow its business but without increasing its headscount. What does that mean? Expanding margins, exploding profits. So Amazon's my favorite among the big cap tech stocks. If you want a speculation, and it's definitely a speculation, my absolute favorite is Joby, the electric aircraft maker. I visited them two years ago and with my cousin who's a Stanford engineer out there and he confirmed my impression. They have the best collection of battery aviation electric motor engineers in the world and they are producing an incredibly innovative aircraft that's going to get FAA approval probably in the next year or two, but they're going to start flying commercially between Abu Dhabi and Dubai early next year. And the stock's already tripled since I got into it a couple years ago. I still think it's one of the most interesting speculations out there. It has a $15 billion market cap. And I always felt like, look, I'm not sure if the electric air taxi business proves to be a viable business, but someone will buy this company just for their engineers and their technology. Keep in mind, Tesla has a trillion5 market cap. This company has a $15 billion market cap. So let's imagine that they come up with some battery technology or electric motor technology that's 5% better than anything that's out there. Any Tesla or any other of the Tesla's competitors, any of the big automakers, aircraft makers, Boeings, etc. would buy Joby in a heartbeat just for that technology. So I think that's sort of your downside protection. Uh but in the meantime, uh I think the fact that they're going to start commercial service in Abu Dhabi and Dubai. I plan to fly over there to actually fly on on one of their first flights to check it out. It's the kind of stock that retail investors could go nuts for and you could get a you know quick double triple uh you know on the stock. So that's my favorite speculation. My last long idea I'll share with your audience is the cheapest the biggest disconnect between fundamentals and stock price and stock multiple I've seen in a long time. Companies called Global Payments. They're every time you use your credit card, they're part of the back-end infrastructure, the most profitable part of which is Visa and Mastercard. Two of the most profitable businesses in history. Global Payments uh is part of that back-end infrastructure. They mint money, generate a ton of free cash flow, growing like crazy. They've acquired, they're the number three player, they've acquired the number four player, World Pay, which combined will make them the largest player when the deal closes early next year. And in the meantime, the stock's down 60% in the last four years, and it trades at six times next year's earnings for a really good business that historically has traded at 18 to 20 times earnings. So, uh, I think the market's concerned about that they overpaid for the acquisition, integration issues, etc. I think those are short-term concerns. Stocks an easy triple in the next year or two. So, those are my long ideas. I've got some short ideas or stocks to avoid if you >> Let's maybe stocks to avoid. >> Yeah. By the way, I don't suggest I had a long career as a short seller and in hindsight I wish I'd never done it. Um short being short the economics of shortselling where your gains are capped and your losses are unlimited. It's mentally draining. It's financially difficult. So, it's mostly these days as I write my investing dailies, I more just tell my readers, these are stocks to avoid. I'm not suggesting you go out and short them. But, I came out um I've I've had I give names to basket of stocks. So, I had my meme stock, bubble basket, that was 25 stocks at the peak of the meme stock bubble that are down an average of 85%. Uh then I had my dirty dozen. Then I had my terrible 10. And just last week, I came out with my stinky six. So, My six my six stocks to avoid in order. Number one, Palunteer. Um it's the most over it's a legitimate company. I don't think it's a fraud or anything. I just think it's the most overvalued big cap stock I've ever seen in my career. North of a $400 billion market cap for a stock that has 4 billion in revenues and change. Uh so it's trading at over a 100 times revenues, over 200 times earnings. So I don't care how great the company is. and they just reported um uh you know very strong quarter, very strong growth and the stock was down 8% yesterday. Um because when you trade at that kind of valuation there's just nothing but downside. So related but not quite as extremely overvalued as a company called Apploven. It's a software maker and this company's got all sorts of you know all sorts of short seller reports are identifying all sorts of sleazy practices and so forth. So, um, it's quote only trading at 60 times earnings and the numbers look great, but uh, I'm really questioning, uh, you know, whether they're, um, they're doing a lot of sort of, I wouldn't say illegal or unethical, but sort of scammy things, you know, related to internet advertising and so forth. Um, and it's just wildly overvalued. It's north of a $200 billion market cap. So, it's very um it's very important to think about, you know, you don't want to be shorting, you know, high growth companies that have a $2 billion market cap or something, but 200 billion, 400 billion, you're probably not going to get destroyed to the upside because the market cap's so big. Um uh number three is there's all sorts of China frauds out there that are being uh promoted. These are outright frauds, virtually non-existent companies that are being promoted by Chinese scammers on WhatsApp message boards and so forth. Uh the company u the best example of this is QMM Holdings. The ticker is QMM. It's been suspended right now, but this thing was pumped from virtually zero to a $6.8 billion market cap before the SEC suspended trading. Uh and I'm not sure it'll ever trade again, but do not invest in any dicey China Chinese company. It is almost certainly a fraud and certainly if it's being pumped on message boards. Uh so um Signate Jewelers uh is the um is owns Zales and other jewelry stores etc. Um I think um lab grown diamonds, synthetic diamonds are now virtually indistinguishable from real diamonds. >> So many people are doing them. They're like people who are getting they're getting some big rocks. >> Yes. Uh and literally even jewelers now >> they're lab grown too. I'm like see how big they are. >> Yes. Yeah. That's true because the person probably couldn't afford a real one because the lab grown ones are 17th to one/10enth the price. >> And uh I think in particular I think it's now I mean it used to be you know if your boyfriend or your fiance or something bought you a a diamond ring and it was lab grown you know that that wasn't very wasn't cool. Well now it's sort of cool because you know now you're not supporting you know the mining of blood diamonds in Africa and so forth and you're saving 90% of of the cost. So I think that's going to be a big headwind uh for uh for Signit. Um and then uh Hims and Hers is um uh the ticker is HIMS that is basically selling uh basically any prescription drug you want. It's probably best known for the weight loss drugs. Um, but I think they're violating all sorts of FDA rules by, you know, any anyone who wants a hair loss drug, a weight loss drug that requires a prescription from a doctor, they just hire armies of people on the phone who will willy-nilly, you know, just give you a prescription and ship ship you drugs. Um, and so I don't think that's sustainable. And it also trades at 60some times earnings. Um, it's a very promotional company. Uh, so I don't think um uh I don't think that's likely sustainable uh either. So those are my uh stinky six. >> Birkshire recently had earnings. They reported a massive massive cash pile. We've talked about the cash pile for years. >> 382 billion. >> I remember when you and I were doing interviews >> five years ago was like $140 billion whatever. >> Right. >> Yeah. >> Yeah. It's a it's >> What do you think's going on there? What do you think he's doing? >> Well, uh Buffett has done this before. It's just the company has grown so much that the numbers are just a lot larger. But Buffett is very patient and if he can't find anything highly attractive, he's very disciplined. He just lets the cash pile up and Bergkshire generates massive amounts of cash. And in fact, in on top of that, he has been a net seller of Berkshire stock portfolio every quarter. Buffett and then Ted Wexler and Todd Combmes, the two investing guys. Um, uh, Greg Ael is taking over on January 1st, less than two months from now, as CEO, but he's not the stockpicking guy. So, it's sort of a triumvirate. Um, there's a CEO and then the two investing guys. Um, so the three investing guys uh buy and sell stocks every quarter, but they have been net sellers for 12 quarters in a row now, which means that that is in addition to Bergkshire's free cash flow, the cash pile just grows. It's now 37% of Berkshire's trillion dollar market cap. >> Waiting for an opportunity. >> Yeah. >> I have a question. Is is Buffett going to be speaking at the annual meeting? >> He will be there as a board member sitting in the front row, but he will not be stage. >> That's correct. Yeah, he made that clear. So, I think I think a lot of people aren't going to come because it's not going to be >> I think the contrarian move would be to go because maybe you get to see him. Well, I'm definitely gonna go just because it's a tradition for me and I know so many people there and and all and also I want to get a read on Greg Ael. I don't know him nearly as well. Um either personally or he hasn't been really a public figure like it's very easy just go on the internet you can read all of the Buffett partnership letters. I mean you can study Buffett going back 75. >> So I wonder if he's going to be able writing the letter this year then >> it it will be that's been that's been established. >> Okay. Okay. I haven't been as following as closely as I used to. >> I mean, look, I I think >> um certainly my bias is to give Buffett and Mer the benefit of the doubt given that they've been in not just incredible investors, but incredibly good judges of people over the years. They've had they've made very few mistakes. If you think about all the businesses they've acquired and the people they've acquired to who who are running them, they've had shockingly few scandals and mistakes. So the idea that at the end of Buffett's career, he's going to make some huge mistake and appoint some bum to succeed him, highly unlikely, right? But um it it'll you know I I want to get the measure of Greg Ael and I I think there's in the same way that I got the measure of Charlie Munger and Warren Buffett by sitting them and sitting there and watching them answer six hours worth of questions that they don't know what questions are coming at the annual meeting every year. I want to do the same with Greg Ael. Now you don't have to go to Omaha to do that. You can just watch the live stream now. It didn't used to be that way. >> Yahoo started that. Yahoo Finance started the live stream. >> Yeah. Well, I I made my name in the value investing community >> 25 plus years ago by going to the Bergkshire meeting and sitting there till my hand aches. you had the most >> writing notes and then I would go home on that Saturday night and I would spend all night typing up my notes and you know within 24 hours of the meeting publishing what became effectively you know the transcript of the meeting and so that's uh it I did it as a sort of a labor of love but it also helped me make my name in the value investing community and I did the same for Charlie Munger's West Coco meeting for many many years >> and thank goodness they started to live stream it because it was getting to such a job, big job. So many people were counting on me and now I don't have that pressure. >> I miss Charlie Munger. >> I do. He uh a great loss, a great great man. Um >> I do think he's like the Ben Franklin of this generation where people in a hundred years will quote Mungerisms. >> Oh yeah. >> Yeah. The the two of them other than my parents and my wife have uh had the biggest impact on my life. Uh I I initially, you know, went out to learn from them because I was had started a little hedge fund and I wanted to learn to become a better investor and they were going to help me become rich and be successful. Uh but then I I've kept going all after all these years because they've made probably an even bigger impact on my life outside of investing. >> The worldly wisdom. Before I let you go, Whitney, um two-part question for you. What's something that's keeping you up at night that worries you? And to counter that, what's something that's making you optimistic? >> I'm happy to say that nothing is keeping me up at night right now. I will say that during the seven months I ran for mayor, I took ambient every single night for seven months uh to knock me out so I could sleep because it was so stressful uh running for office. And so I'm not eager to run back into that. Uh I thought about running for uh Jerry Nadler's congressional seat, which is the upper east side and upper west side of New York. And partly just because I didn't want to go back into that incredibly stressful period. Uh I I decided not to run for that seat. And it's also a safe Democratic seat and I know some of the people running for that seat who I think would be great candidates. So I didn't think there was any need for me to run for it. Whereas, when I ran for mayor, I saw, you know, I didn't I didn't know Cuomo was going to run, and I saw a bunch of sort of no-name and career politicians, and I thought my city really needed another sort of Mike Bloomberg outsider business person to come in. Uh, so, um, I can't, uh, I mean, the obvious answer is is with Mam Donnie just being elected and how hard I ran, you know, to warn New Yorkers about him and try and stop his election, you know, that now that's going to keep me up at night. But uh but you know, honestly, because he's been the prohibitive favorite to win for months now, I guess it's not keeping me up at night cuz I expected him to win. He did win. Uh and the fact that he's kept Jessica Tish on some of the things I talked about earlier about, you know, supporting construction of more housing and uh etc. you know, I'm feeling a little slight I'm not sure whether optimistic is the worst is the right word or slightly less pessimistic. And uh so that's not keeping me up at night. >> Hopeful. I will I will say look as a lifelong Democrat um I almost every day Donald Trump or one of his uh people like Steven Miller or whatever um do something that just shocks me that would would have gotten any literally almost every day he is doing something that any prior president would have been impeached for. um you know is just flagrant violating violation of America's rights and you know masked ICE agents just rounding people up on our streets and putting the military uh using the military in our streets. um the the level of graft and corruption with all these Trump coins and so forth and giving out pardons to CZ the Binance guy who just you know handing out pardons to people who are lining his family's pocket with hundreds of millions if not billions of dollars the degree of corruption I think of the hypocrisy of you know Hunter Biden was just such a low-level little grifter pocketing a few hundred,000 in you know board fees or something and the Trump family according to the reports I've seen is profiting just in the nine months or whatever since he took office profiting to the tune of well into the billions of dollars right like that it's not I don't know whether it's keeping me up at night but it just fills me with outrage and real concern you know for the you know for our sort of democratic norms and so forth. Um so uh on the the second part of your question was like what am I optimistic about and all um look I I um I'm you know just generally speaking America over the last since co America I think has recovered more by any um economic measure etc. um you know the fact that inflation spiked around the world it wasn't just a US phenomenon um that inflation has come down without triggering a painful recession as the Fed took interest rates up and all like you know economically um you know while there are real income disparities and I know the average American is is is struggling you know we're doing a lot better than almost any other major country in the world um and you know the fact that I think um Americans are standing up. The uh uh the No Kings rally just a couple of weeks ago uh was probably the largest um according to the reports I've seen, 7 million people showed up um to march against Trump and Trumpism uh the election results from last night, etc. So, you know, make me optimistic that uh we're going to flip the House, maybe even the Senate uh in a year from now, and that this um uh you know, I hate to be so partisan, but I view this national nightmare under Trump uh will, you know, we will survive this and um and hopefully uh start putting a stop to it um within, you know, when we flip the House a year from now. I have a question for you. Yeah. Are you still able to be friends with people who are Republican? >> Oh, sure. Okay. I mean, Bill and I are still >> I was going to say because you talk all the time are really good friends and absolutely. >> Yeah. You have very different views from you. You know, I think it's it's very important to disagree without being disagreeable. >> And uh I absolutely understand why uh some people uh the many reasons why people would choose to support Trump and I understand why Bill supports him and um and he understands why I don't, why I feel the way I do. And that's okay. We're both fighting the good fight and uh you know we both love our country and people can respectfully disagree about you know what policies or what people are best for and so uh I'd like to think you know I I never in trying to stop mom Donnie I don't think I ever crossed the line into Islamophobia and racism and so forth and a lot of people you know there were a lot of attacks on him that that I called out publicly as you know beyond the pale there There was some meme going around on Twitter that had millions of views that showed a plane heading, you know, a 9/11, you know, plane headed toward the Twin Towers, you know, with Mam Donnie on it like he was a terrorist. And he's not a terrorist. He's not a jihadist. He's not a communist. He's a democratic socialist who um uh is uh is more sympathetic to the Palestinians than the Israelis. All right. So, so are a lot of Democrats, right? Like I don't hate him personally for it. I actually like him personally. He's very charming. Um, and so, you know, my I tried to keep my critiques of him very factual. Um, he's young, he's inexperienced, I think he's unqualified, I disagree with his ideas in the following areas, but I agree with some of his ideas over here. And we, you know, I fought the good fight to stop him. He was good. And Cuomo wasn't. he won. And so now I wish him the best. I hope he's successful. >> And um and so, you know, I do I do worry that as a country we're devolving into into you know, very almost like vicious hatred and you know, Janine Piro or whatever is calling Democrats demonrats and um and that's that's not healthy. That's not that's not good for our democracy. Whitney Tilson, it is so wonderful to see you. Great to see you as always. Editor at Stanferry Research, value investor, former mayoral candidate, and a twotime New York City marathon finisher. You just finished the marathon in record time. >> 10 years apart. I It wasn't wasn't any record other than my own record. At age 59, I ran faster than I did at age 49. I'm pleased to say. >> Impressive. Really appreciate you taking the time, Whitney.
Hedge Funder Who Tried to Stop Mandami On The Future of New York City & Where He's Putting His Money
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Transcript
to your other question about, you know, my bullishness on New York City. New York City has survived a lot of stuff over the years and some pretty bad mayors and uh, you know, an incompetent Delasio, a corrupt and incompetent mayor Adams, our current mayor. Yet, the city's booming. It's thriving. It's incredibly vibrant, entrepreneurial. Hey everyone, welcome to a very special in-person episode of the Julia Lar Ro Show where we are joined today by Whitney Tilson. He is a well-known value investor, a former mayoral candidate here in New York City for the Democratic Party and a well-known Buffett Munger follower, an editor at Stanbury Research and someone I've known for a long time, friend for well over a decade at this point. Great to see you as always, Whitney. It's been way too long. >> Thanks for having me. >> So great to have you. Um, so we are recording on Wednesday morning, the day after election day here in New York City. Normally I would start with like markets and the economy, but I kind of feel like we should just start with the mayoral election. Your reaction, especially someone who ran. >> Yeah. Well, I had uh mixed feelings last night when all the results came in. I'm a lifelong Democrat. Have been trying to drag my party back to the center uh through for most of my career. And generally speaking, as a Democrat, it was a great night. Huge wins uh far larger margins than expected in the guminatorial races in Virginia. uh and New Jersey, Prop 50 passing in California. Uh down ballot races in those states as well as down in Georgia. Um big turnout here in New York. Um and five of the six ballot initiatives that I supported. All of them passed in New York. The great night except for one big thing. Uh Zoron Mdani, Democratic Socialist, was elected. And I dedicated the last really couple months of my campaign to warning New Yorkers about the dangers of electing a guy I saw as unqualified, inexperienced. Um, he's was 33 at the time, just turned 34, um, with a lot of pretty radical ideas. And I was even more afraid of his radical comrades at the DSA. So, uh, it was too little too late. And frankly, Andrew Cuomo didn't even campaign really in the primary thinking he had it locked up. Uh so uh to no one's surprise, I've known for months that Mandani was likely to be elected. So um I was um I guess I would say so mixed feelings overall last night. Um disappointed but not surprised by the outcome of the mayoral election. U but as a New Yorker, I'm still bullish on New York. Um I think Mom Donnie is going to be smart enough to, you know, govern somewhat moderately, not as an extremist. And when I say moderately, I mean a moderate but very liberal. Uh mayor more like Delasio, who I didn't think was much of a mayor. Got universal prek done, but and otherwise not much, but didn't sink the city. Um I will say, um having run for mayor and spending 7 months all over this city and diving into all the issues and opportunities and all, I'm bullish on New York. I'm much more optimistic about New York than I was when I entered the mayoral race a year ago. >> Okay. But what do you think it says that the city I'm not a city resident any longer, but elected a effectively a socialist as mayor? Like what do you think it says? Like how do we get here? >> Well, I think part of it is in in the Democratic party, and keep in mind twothirds of registered voters in New York are registered Democrats. So, this is a very liberal city. And there was a there's a very strong uh reaction against Trump and Trumpism, not just here in New York, but across the country. And generally speaking, that's something I share and support. Um uh I also think frankly um Andrew Cuomo came in with so much baggage uh that you know had their I I was hoping to present myself as a fresh outsider alternative uh but you know couldn't self-fund uh didn't have any name recognition and so you know my campaign didn't take off but uh so I wouldn't read too much into it. the fact that mom Donnie in a very liberal city only won by eight points and in blue states but not nearly as blue as New York City in New Jersey and Virginia the gubernatorial candidates won by 13 and 16 points you know shows that you know I I would not read a Mani election here into you know the entire Democratic party nationwide has gone super lefty um you know I think that would be a mistake Mhm. Okay. So, as someone who tried to stop him when you were running in the primary, why was it why like what was it about? I didn't pay attention back then. It was only once he became the candidate that was like, "Okay, what was it that he was doing differently that >> right uh to his credit, he was the only candidate in the field who articulate who identified the number one issue, affordability. New York is just wildly expensive and for all but you know the 1enters or the top 10enters it's just become increasingly unaffordable. So he nailed the big issue and then developed a set of very clear slogans/policy proposals fast free buses freeze the rent free universal child care um that captivated people. It was very simple, very clear. Um, and you know, one of the things I realized running for office for the first time, if you want to win a political race, promise the maximum number of people the maximum amount of free stuff and tell them they don't have to pay for it. >> The the economics of that actually don't work. >> I I was on the debate stage. I ran ads. I tried to point this out. There's no way that he will be able to raise taxes. That requires going through Albany. Therefore, he won't be able to pay for the universal child care that he's promising to everybody, which I think would be a great thing, but it's not affordable. Uh I don't think we can afford free buses uh for the whole city, etc. But in the same way that nobody really believed Trump was going to build a wall and Mexico was going to pay for it, but he captured the issue among Republicans and it was more of a slogan for what he stood for, even if practically speaking, I don't think any but the most hardcore supporters actually believed it, but it didn't matter to them. So, and so I would say Mam Donnie nailed the key issue, the key uh policy proposals that grab people. And then lastly, he's a gifted politician. I sat on the stage with him as close as we are right now multiple times. And I never heard a flub. He doesn't even he doesn't even say um he's a brilliant public speaker. He stayed on message. And so that's he's really really good as a politician. And that's one of the reasons why I I I think he's very dangerous because he's very young and naive and has a lot of bad ideas, but he's a brilliant salesman for them. >> Yeah. I think that's what's scary for people, >> right? I I called him the Trojan horse for the DSA. They have been grooming him for at least 15 years since he was, you know, in his teens. He was out there knocking on doors. I know people who worked with him back then. When he was a teenager, he was a gifted canvaser, a gifted petitioner, going out and getting people to sign their name to get people on the ballot. He I've heard stories where he could get he would get 10 times the number of signatures as the average petitioner because he's just that charismatic, that smooth a talker, and really connects with people. He's good. >> Okay. But you're not worried about the direction of New York City. Oh, I well I'm ve I'm very worried about a the Mani mayorality because he's put out um he's been very hostile to Israel and I'm from New York's Jewish community. I've been a member of Central Synagogue for 25 years. So uh I'm very concerned about that. His previous rhetoric, in fact it's on his Twitter feed right now calls from 5 years ago to defund and dismantle the wicked police, for example. um you know there's been lots of rhetoric about you know seizing the government seizing uh private property you know businesses that kind of thing you know how much of that was youthful foolishness from 5 years ago uh versus how will he really govern you know to his credit since he won the primary he's very much tacked to the center he's pledged to keep police commissioner Jessica Tish who happens to be Jewish by the way uh for someone who's been accused of anti-semitism I think that's pretty clever of him uh to keep a keep a police commissioner who's done a great job bringing down crime. Uh so I'm again I I'm an optimist by nature. So I'm going to be optimistic and hopeful that mom Donnie exceeds my expectations. But to your other question about, you know, my bullishness on New York City, New York City has survived a lot of stuff over the years and some pretty bad mayors and uh, you know, an incompetent Delasio, a corrupt and incompetent mayor Adams, our current mayor. Yet, the city's booming. It's thriving. It's incredibly vibrant, entrepreneurial. Every young person wants to be here. Every immigrant wants to be here. That's what also worries me though, having lived in New York and then >> it took a while post pandemic to like feel like the vibe is finally back. And I think that's really worrisome. Is that going to go away? >> It's back and I don't think it's going away because the big employers are literally building multi-billion dollar buildings for their headquarters. JP Morgan um yeah, which was which of the big uh was it Deote the big consulting firm like bought an entire building. um you know and these are long-term multi-deade commitments. So the back to work uh is is back in a big way and just you know go down in any of the neighborhoods in in uh Brooklyn or Soho or whatever. My I have three daughters all in their 20s who live here and they wouldn't want to be anywhere else. I wouldn't want them anywhere else. This is very much where you want to be. If you're early in your career and you want mentorship and connections and networking, it's here like it is nowhere else in the world. >> You don't see a risk of it turning into like a San Francisco situation. >> Well, San Francisco is sort of an extreme example of what can happen under very lefty leadership or lack thereof. Um, I think that's a risk, but my base case scenario is the next four years under Mom Donnie are going to be Delasio 2.0 and New York was still pretty great under Delasio. >> Okay. Okay. So, you also don't buy the argument then like the you saw the memes on X, I'm sure, of like the real estate agents in um Miami, the phones blowing up, people moving out. You don't buy that. Um I think there are quite a few people in a wait and see mode right now. A lot of people who wanted to move, you know, move during COVID and there's definitely has been an outflow that's worrisome given that 1% of New Yorkers pay almost half of the personal income taxes in this city for example. Um, but I think so I think there are probably a lot of inquiries, a lot of people on the fence. And I think mom Donnie knows that and I think he can do math well enough to know that if he really does drive out all the rich people and all the big corporations and businesses and creates a hostile environment for everybody who's got money and resources, his tax base dries up and he won't be able to pay for everything that he needs. Keep in mind, under Mayor Bloomberg, taxes doubled, but that's because the economy doubled. He didn't raise the tax rate. He just he was just pro business and ran the city well and built on the city's incredible strengths to you know the economy doubled over 12 years and that doubles your tax base. Uh I I'm I don't know for sure. I don't say this with conviction but I know Zoramani has a high IQ. He is not dumb. I think he's naive and inexperienced but he's not dumb and he's proven to be a pretty clever politician. I think if he's, you know, if he keeps Jessica Katition and, you know, if crime goes up, everybody leaves and his whole agenda is dead. And I think he knows that. >> He can't do a recall here, though. >> Right. So, right. So, I think he's going to keep Jessica Tish. Um, keep I think crime and safety are going to keep improving under her leadership as they have since she came in about a year ago. And, um, you know, he's going to he's going to focus on the affordability issues that he campaigned on. And I I would like to see New York be more affordable as well. Like some some of his ideas are good. >> Like what? >> Uh I think universal child care in the same way Delasio got universal prek done. Uh universal childare would be a great thing. I think experimenting um with uh free buses certainly in low-income uh neighborhoods of New York um is is a reasonable idea. Uh I don't think freeze the rent is a good idea. I think that exacerbates our housing crisis. But I've been actually quite surprised his rhetoric around um what was called city of yes, which was legislation passed by the city council that eased the zoning restrictions. Um he's his rhetoric has almost mirrored mine in terms of if you want to make housing more affordable, it's a supply problem. Uh it's a it's good to have a demand to have high demand. A lot of people want to live in New York. Lots of young people are moving here, right? The problem is is we've made it so difficult to build new housing that you've got a supply problem and that results supply demand mismatch and that results in super high prices. So um and rents he has um not only uh embraced city of yes wants to expand it and then there were four ballot initiatives that most people didn't pay attention to last night cuz everyone was focused on the mayoral race that all related to um um easing the approval process, zoning, etc., etc. for uh new construction of affordable housing and all types of housing. All four of those passed and MDI supported those. So he he may prove um you know that's an area where I totally agree with him >> but you also at the same time still think he's dangerous >> his ideas and it's hard to differentiate he is clearly a leader in the democratic socialist the DSA and if you look on their website there's some really crazy stuff over there for example to um open open the doors of all of our prisons and just let all prisoners out because incarceration is a tool of capitalism etc. Right? Um he directly has tweeted to defund and dismantle the police like those are super dangerous ideas. Um I I hope the fact that he has said he will keep Jessica as police commissioner I think is it was a very promising sign for me. The fact that he has embraced uh easing the zoning restrictions etc. There's so much nimiism, you know, on the city council and in certain neighborhoods that has pre prevented growth. New York is, you know, from running for mayor, New York is enormous. And >> running a small country. >> Oh, yeah. I mean, New York, New York, if it New York City, its budget would be the fourth largest state in the country. It has double the budget of any other city in the world. It's double Tokyo. And Tokyo has twice the population. It's four times London and London has 10% more population. It's it's New York is almost the budget and the city is almost mind-bogglingly large. Uh I knew it was super big spending 7 months on the campaign trail. I really got appreciation for it. >> It surprised you as someone you came from just running money being a hedge fun manager 25 years in investing in the value investing >> decided you want to run, >> right? What did what did you like what surprised you in the process? Gold keeps setting new all-time highs, but price appreciation isn't the only way to profit from owning gold. Monetary metals is redefining the future of precious metals investing. Instead of paying to store gold, imagine getting paid to own it. With Monetary Metals, you can earn up to 4% on your gold paid in physical gold. That's right. Your ounces grow each month, not just your paper balance. A yield on gold paid in gold means you're stacking more ounces every single [music] month. And you still benefit if gold's prices rise. You're earning more gold every month and enjoying potential price [music] appreciation at the same time. Go to monetary-medals.com/jullia to learn more and see how you can start earning [music] 4% on your gold paid in gold. >> I would say most of the surprises were to the upside. I got into the race because I thought my beloved city was going to hell in a bucket. You know, Mayor Adams under indictment. Uh crime was still much higher than pre- pandemic. Um and uh so what what has what were the positive surprises? Um crime the murder rates probably down 30% in the last year. Uh Jessica Tish came in right about totally coincidentally of course right about the time I declared my candidacy and she finally brought good leadership and stability to the top of what had been a corrupt and dysfunctional top leadership in the NYPD. So um the city has genuinely gotten a lot safer. A month after I got into the race, city council passed city of yes, which is unlocking a surge of new construction and all easing the uh which I think will in the next year or two start to ease the affordability crisis. Um and lastly, I was just wrong on I I didn't fully appreciate New York's strengths. I you know, you sort of read the headlines and you you see all the bad news. Uh but when I actually got out there um the immigrant communities particularly um around New York um you know I didn't know there was a little Yemen up by the Bronx Zoo and the Yemen immigrants now run 90% of the delies and bodeas you know around New York City and it's an incredible story of um you know group of people fleeing a very troubled country you know over the last 20 years could only afford to live in the most um um you know troubled um and dilapidated and dangerous corners and neighborhoods in New York, but they came in and you know bought burnt out brownstones for 200 grand that are today worth $5 million you know over the last 20 years you know and this is a story that's been repeated by immigrant groups. Um you know every immigrant in the world wants to come to New York City not anywhere else in New York uh in this country. Um, so, uh, you know, and to some extent, you know, I love mom Donny's story. I don't like his ideas, but, you know, came here at age seven. Um, hustled, you know, got himself into one of the elite specialized schools, went away to college up in Maine at an elite college, came back to New York, and, you know, dedicated himself to, you know, public service and all. And I don't I think many of his ideas are naive. hasn't had like a real job. >> Fair enough. Um, but you know, like I said, I love that immigrant story and you know, my ancestors did something similar uh a century ago and you know, my daughters uh were raised here or city kids and all went away far away to college and all of them have come back here and chosen to build their lives here. Um, so, uh, so I hope, uh, I just hope, you know, at age 34 being propelled into the second hardest job in the world after US president is what it's reputed to be. And I don't doubt that, uh, that he, uh, grows up very rapidly, discards a lot of stupid and naive ideas that have sunk San Francisco. that right now that guy Brandon Johnson, the mayor of Chicago, who is sort of a teacher union hack and is sinking that city. I think Mob Donnie, I hope he's smart enough to look at those cautionary tales and say, you know what, uh maybe I should keep Jessica Tish and you know, cuz if crime starts going up, my whole agenda goes out the window, right? Um it'll be very interesting to see who he appoints as school's chancellor. That's that is by far the biggest area of spending in New York City. Uh it's 37% of New York City's $115 billion budget. It's about $40 billion. Uh we spend more and relative to that spending get less in educational achievement than any major city in the country. Um it should be an embarrassment that New York spends 40,000 per child per year. Mhm. >> Mississippi, the poorest state in the country, spends $12,000 per child per year and has much worse, you know, demographics, uh, college completion rate of parents, things like that. Yet, Mississippi children are testing a year above grade level of New York City kids, better outcomes. So, so that's um I think he's nailed it to keep Jessica Tish. The second equally important by those two appointments, schools chancellor and police commissioner are by far the most important ones that any mayor of New York makes. um you know does he appoint someone who's a you know a someone the teacher union uh just puts up um who panders to the union just hires a lot more teachers where there no standards no accountability and you know nothing changes versus you know does he does he appoint someone like Mike Bloomberg appointing Joel Klene uh and you could see it in the 12 years under Bloomberg test scores went up graduation rates went up every Ever since Delasio and then Adams came in, it's all gone back down >> cuz um anti-charter schools I take it maybe for Delasio was >> Delasio. Someone was anti-charter schools if I >> Delasio for sure. Um and he tried to really make life miserable for us. We raised a few million dollars and ran ads of our parents, almost all low-income minority parents looking into the camera saying, "Mayor Delasio, why are you trying to take a good school away from my child?" and he backed off and he sort of became neutral. He didn't didn't help us but didn't hurt us. um uh after that uh Adams has been reasonable u but it's nothing like the good old days under Bloomberg and Klein where they were really focused on expanding highquality schools under most people don't know everyone's heard of sort of styosent Bronx Science Brooklyn Tech the uh the handful of specialized schools um under Bloomberg it grew from four to eight not counting Giuliard which is an arts school um I'm and mom Donnie himself went to Bronx science benefited from one of those schools. So, I'm again hopeful. This is an area he has not articulated super strong positions around the school system. Um, the most worrisome thing he said is is he wants to get rid of mayoral control, which is something that we fought for and got under Bloomberg. And that's critical to have the mayor accountable. Even if I don't like the mayor, I want the mayor to have control over the school system because the alternative was these community boards and all of that where there's basically no accountability and it was disastrous. >> Got it. The accountability bit. Okay. Bill Aman, longtime friend of yours. Yes. >> Were you guys roommates too at Harvard? >> We weren't roommates, but we were buddies from early days of college for almost 40 years now. >> Yeah. Long time. Um, obviously you follow him on X. He's been quite vocal. Um, but he >> he's famous for his long tweets. >> Yes. Um, he was he won the most verbose in high school was his like superlative or something like that. Um, so that kind of fits. And um, Bill's been on the show. I I know Bill as well, but you guys are friends. >> He put out a tweet congratulating mom Donnie. Some people are saying it's like more like an olive branch that it seems like >> congratulating him and saying uh I'm happy to be helpful and because I I care about New York City. >> Do you think mom Donnie would accept that? >> My guess is is that mom Donnie simply won't engage at all. >> Um is is my guess. >> Uh I think I mean they threw a lot of barbs at each other. It wasn't just Bill backing Mani and putting millions of dollars into a super PAC against mom Donnie. >> Uh but Manny used Bill as you know the billionaire donors who own the mayor who own Cuomo who own Adams and this is what we're fighting against. >> There's that selfie of him with not a selfie of him with Alex Soros. The picture that was going around today >> with with mom. >> Yeah. Mom Donnie and Alex Soros is I think that's right Matt. I'm pretty sure. Yeah. Yeah. >> Okay. I I didn't see. >> Yeah. Mam Donnie since he won the primary has been very cleverly going out and meeting with the business community and Kathy Wild head of the New York City partnership invited me he's met with the real estate titans and I'm telling you mom Donnie is charming. You meet him you will like him. Um it was you know I've been on a mayoral on the in a debate where I was kicking the crap out of him for a couple hours and then the cameras go off at all. He comes over he smiles, shakes my hand. Hey Winnie, let's go for a bike ride. We both ride our bikes in the city, right? He's he's good. Um, so I think he is clever enough that he will reach out to the business community and try and appoint some people from the business community. I suspect it won't be Bill. >> It won't be Bill. >> If he if he's super super clever, maybe. But you know what's sort of interesting is is I was hearing some speculation, I forget on what podcast I was listening to today, that if he were clever, oh, I know Scott Galloway and Cara Swisser, um, who were speculating that um, Mom Donnie should find some role for Curtis Leewa, >> interestingly enough. >> Interesting, huh? >> Yeah, I sort of uh, I was on the stage many times. >> Are you going to get a role? I don't know. You You seem kind of like nice and diplomatic here in this podcast. I mean, the comment section is going to go nuts, I feel like. Uh, I am not angling for any position in the Mammi administration. I am enjoying my life of well-deserved obscurity at this point. Um, but I'm still very much active as I have been for 25 years and as a Democratic party activist and and very focused on supporting Democratic House candidates in swing districts because I think the single most important thing we Democrats can do to stop Trump and Trumpism, which I view is a tremendous threat to our our country, our democracy, um, is flip the House. That's the most realistic. The Senate's probably a stretch, right? Uh so uh no I'm not looking for any governmental position. Um but I did say you know a month or two ago like I I am voting for Andrew Cuomo. I hope he wins. I recognize though that Mom Donnie is likely to win and if he does I will cheer for him. I will hope he is successful that he that my fears prove to be illfounded that he exceeds my expectations. um because I love this city and I I want the mayor to be successful. Uh that said, I won't hesitate to criticize him. If I, you know, if I think he appoints a a complete hack to be education chancellor or school, you know, school chancellor, uh, you know, I'll, uh, I'll say so, >> but I'm at this point, um, I'm going to hold my fire, let mom Donnie, see who he appoints, and, um, hope he's successful and hope he does smart things like keeping Jessica Tish on his police commissioner. Hope that's is a good omen. And um and then at this point I'm um I'm focused on stopping Trump and Trumpism and helping Democrats flip the House. >> I didn't mean for this to be a political episode per se, but >> I have lots of stock ideas. >> Well, we I do want to get into that real quick actually. Um because this is a financial podcast, but New York is the financial capital of the world. So I think it >> and I can't have you on here and not ask you about it as someone ran too. So, >> I mean, look, the summary is I think the good news is is I think it is very low likelihood that uh Mayor Mom Donnie is going to drive out the the business sector, the wealthy folks, the financial sector, the the uh and that he's somehow going to New York and that that could have investment implications or negative investment implications, something like that. Um my my default scenario that I bet a fair amount of money on is is that New York's going to continue to thrive and it's really it's really booming right now. >> Okay, let's talk about the economy. Let's talk about the markets where we usually start. >> What is your take? What is your assessment on Let's do both. I know they're not they're separate, but let's start big picture. Your view of the economy and also just markets. We've seen markets at alltime highs. What do you make of it? >> Yeah. Well, I'll start with I mean you know this but your audience may not that I'm uh a Buffett munger value guy. I've been to 26 of the last 27 Bergkshire meetings. >> Documented them going way back to the early 90s. >> Absolutely. And so I'm a bottoms up stock picker and generally speaking so I'm not some big market prognosticator. That said, once every 10 years, I identify an enormous bubble and tell my readers and position my portfolio in a much more defensive way. So, I nailed the internet bubble, I nailed the housing bubble, uh, very publicly, you know, on 60 Minutes, etc. And so, um, but I'm I'm also cognizant of probably the biggest mistake I made in my I've made multiple times in my 25 year investing career is getting too bearish too early. And with the benefit of old age and wisdom and a lot of scars on my back, I've uh come to realize when you're in a bull market, you got to ride it. And you um bull markets tend to run a lot longer than I ever expect. And valuations can go up a lot higher than I would ever expect. And if you own the S&P 500 index fund, which is the default I think for most people, or if you own a andor a portfolio of good stocks, um, and you're not speculating in total idiocy, uh, as too many people do, um, that you should just stay the course, you know, 9 years out of 10. Um, and if you want to be clever, uh, and and figure out when enormous bubbles are about to burst, that can help enhance your long-term returns. So, the my summary of the big picture is is yes, stocks are at all-time highs. Yes, most valuation metrics are at or near all-time highs. That said, I do not think we are in bubble territory. This is nothing like the peak of the housing bubble uh when an enormous debt bubble built up um that you know through our economy, the world economy back on its heels. Nor is it anything like the internet bubble which I you know that was early in my investing career which uh uh you know today you know as a simple example the tech titan of its day back at the peak of the internet bubble was Cisco and it was trading at about 180 times earnings. Today's version of that is Nvidia trading at I don't know 30 times next year's earnings probably. There's an enormous difference between 180 times earnings and 30 times earnings, right? The tech titans of today, the top 10 uh stocks in the that account for 40% of the S&P 500 trade in an average multiple of 30 times. Like that's high. [snorts] I think you should have modest expectations uh for both those that collection of stocks as well as the S&P 500, but that's not bubble territory by any stretch of the imagination. So, I've told you know I got I was pretty bullish back in April when the market fell 18% in a matter of a week or two. Uh the stock market has rallied 40% since then. And so, you know, the 40% is 6 to 7 years of normal returns. I would say >> 8% of years. >> Yeah. I mean, long-term. Um, so today, you know, I would say if you own the S&P 500, you should expect 5% compounded returns for the next 5 years. And if you own bonds, you can get 4%. Uh, so there's no there's no shame in holding a bunch of cash. And I hold a fair amount of cash as well. Wait, do you think we'll see that that Okay, so do you think the returns that you'll expect going forward will just be a lot like they'll be like 5% a year? Not as not as much as you've seen like these big years. We've seen some big years. >> Yeah, we've we've gotten spoiled. I mean, basically with the exception of that dramatic 30 odd% decline in 6 weeks back in the in 2000 during the COVID crash. We've been in a 15 almost 16 and a half year bull market. It's a long bull market we've been in. So, you know, most you know, a lot of investors have seen nothing but um you know, a long bull market and anytime there's been a sharp the dip, it's been very sharp and you should just buy it. Uh so uh so I I'm finding it's not um I I think you'll do you should just have modest expectations and don't be tempted to speculate. >> You're still just riding the bull market. Then >> I am uh when when you're in if if if you're if you're in a great stock, you should ride it for a long time, often decades. And if you're just investing in the S&P 500, um ride it for, you know, decades ideally in your retirement account. Um, and I don't think we're at a batten down the hatches, you know, time to get defensive right now. >> Okay. >> And by the way, when when that happens, like the last time we had a big draw down was in ' 08, early09. >> It took 18 months. It was not sudden. All the indicators were there. I was shouting from the rooftops, you know, in February of '08 and again in late '08. There was plenty of time to get out. So, there's nothing that you see that concerns you right now. >> Oh, plenty of things. I mean, mainly just valuations are at a very high. Uh, so >> so you're not like jumping in. You're just riding what you have. >> No, I'm just sort of like this is not this is not a time to be piling in buying. >> Mhm. >> But it's not a time to be uh you know, it's not one of those once in 10 year times uh to be aggressively selling and getting defensive. This episode is brought to you by VANX, rare earth and strategic metals ETF, ticker symbol REMX. Rare Earths are the hidden backbone of modern technology and defense, powering everything from smartphones and electric vehicles to fighter jets and wind turbines. Van Ec recognized this early, launching the rare earth and strategic metals ETF, ticker symbol REMX, 15 years ago, well before supply chain security became a global priority. Today, China dominates the production and refining capacity of rare earths, creating real challenges for global supply chain security as these materials are essential for technological innovation, clean energy, and national security. That's why countries all around the world are racing to build their own supply chains and reduce reliance on China. As this global shift continues, investment in the rare earth ecosystem is growing rapidly. From mining to advanced manufacturing, investors can gain access to this powerful trend through REMX. Visit vanck.com/remx Julia to learn more. Well, we should also talk about ideas because I know that you've been writing to your 100,000 plus subscribers, your favorite longs, the stocks that you want to avoid. Okay. What are your ideas right now? Um well uh let me start with some simple ones. Um Bergkshire Hathaway has been one of my favorites for 30 plus years. But this is I view Bergkshire Hathway today as almost like a substitute or a proxy for just owning the S&P 500. And you'll do better than the S&P 500 if you can buy it at a 10% or greater discount to its intrinsic value. Uh Berkshire stock is actually after really being um uh doing well the first part of this year is actually down 10% well in a period of time the last 6 months when the market's up 20%. So Berkshire Hathaway is as of right after earnings earlier this week. My latest calculation is it's trading 11% discount to its intrinsic value. So I think Bergkshire will do a couple points better than the S&P 500. So, that's a good safe stock and I would say that would be over, let's say, a 5-year time period. If you're buying it today, it's moderately undervalued. Um, among the sort of big big cap tech companies, um, my favorite over the past year has been Google. Uh, they just reported great earnings. Stock ripped. It's gone from 17 times earnings to 27 times earnings. So, I'm substituting in my new favorite among the big uh, tech companies, which is Amazon. Um, if you want to read more about it, just Google Scott Galloway's le recent pitch for it. Um, it's his favorite stock for the next year and it's mine as well. Our thinking is very aligned. Um, the Amazon stock, interestingly enough, over the last 5 years has not only trailed every other one of the Magnificent 7, it hasn't even kept up with the S&P 500. And yet, the company, the business, the underlying business is booming. So, what's happened? Why has the stock trailed? And the answer is is it was trading at 60 times earnings and now it's trading at 30 times earnings. And so the multiple it was overvalued. The multiple is compressed. But now the business has caught up with the stock. And I think going forward the stock if anything you could see multiple expansion here. Amazon has now more than a million robots. Double that of every other company in the United States combined. Amazon has double that. More than any other country other than China. And I think robotics is going to result in uh distribution warehouse efficiencies that allow Amazon to continue to grow its business but without increasing its headscount. What does that mean? Expanding margins, exploding profits. So Amazon's my favorite among the big cap tech stocks. If you want a speculation, and it's definitely a speculation, my absolute favorite is Joby, the electric aircraft maker. I visited them two years ago and with my cousin who's a Stanford engineer out there and he confirmed my impression. They have the best collection of battery aviation electric motor engineers in the world and they are producing an incredibly innovative aircraft that's going to get FAA approval probably in the next year or two, but they're going to start flying commercially between Abu Dhabi and Dubai early next year. And the stock's already tripled since I got into it a couple years ago. I still think it's one of the most interesting speculations out there. It has a $15 billion market cap. And I always felt like, look, I'm not sure if the electric air taxi business proves to be a viable business, but someone will buy this company just for their engineers and their technology. Keep in mind, Tesla has a trillion5 market cap. This company has a $15 billion market cap. So let's imagine that they come up with some battery technology or electric motor technology that's 5% better than anything that's out there. Any Tesla or any other of the Tesla's competitors, any of the big automakers, aircraft makers, Boeings, etc. would buy Joby in a heartbeat just for that technology. So I think that's sort of your downside protection. Uh but in the meantime, uh I think the fact that they're going to start commercial service in Abu Dhabi and Dubai. I plan to fly over there to actually fly on on one of their first flights to check it out. It's the kind of stock that retail investors could go nuts for and you could get a you know quick double triple uh you know on the stock. So that's my favorite speculation. My last long idea I'll share with your audience is the cheapest the biggest disconnect between fundamentals and stock price and stock multiple I've seen in a long time. Companies called Global Payments. They're every time you use your credit card, they're part of the back-end infrastructure, the most profitable part of which is Visa and Mastercard. Two of the most profitable businesses in history. Global Payments uh is part of that back-end infrastructure. They mint money, generate a ton of free cash flow, growing like crazy. They've acquired, they're the number three player, they've acquired the number four player, World Pay, which combined will make them the largest player when the deal closes early next year. And in the meantime, the stock's down 60% in the last four years, and it trades at six times next year's earnings for a really good business that historically has traded at 18 to 20 times earnings. So, uh, I think the market's concerned about that they overpaid for the acquisition, integration issues, etc. I think those are short-term concerns. Stocks an easy triple in the next year or two. So, those are my long ideas. I've got some short ideas or stocks to avoid if you >> Let's maybe stocks to avoid. >> Yeah. By the way, I don't suggest I had a long career as a short seller and in hindsight I wish I'd never done it. Um short being short the economics of shortselling where your gains are capped and your losses are unlimited. It's mentally draining. It's financially difficult. So, it's mostly these days as I write my investing dailies, I more just tell my readers, these are stocks to avoid. I'm not suggesting you go out and short them. But, I came out um I've I've had I give names to basket of stocks. So, I had my meme stock, bubble basket, that was 25 stocks at the peak of the meme stock bubble that are down an average of 85%. Uh then I had my dirty dozen. Then I had my terrible 10. And just last week, I came out with my stinky six. So, My six my six stocks to avoid in order. Number one, Palunteer. Um it's the most over it's a legitimate company. I don't think it's a fraud or anything. I just think it's the most overvalued big cap stock I've ever seen in my career. North of a $400 billion market cap for a stock that has 4 billion in revenues and change. Uh so it's trading at over a 100 times revenues, over 200 times earnings. So I don't care how great the company is. and they just reported um uh you know very strong quarter, very strong growth and the stock was down 8% yesterday. Um because when you trade at that kind of valuation there's just nothing but downside. So related but not quite as extremely overvalued as a company called Apploven. It's a software maker and this company's got all sorts of you know all sorts of short seller reports are identifying all sorts of sleazy practices and so forth. So, um, it's quote only trading at 60 times earnings and the numbers look great, but uh, I'm really questioning, uh, you know, whether they're, um, they're doing a lot of sort of, I wouldn't say illegal or unethical, but sort of scammy things, you know, related to internet advertising and so forth. Um, and it's just wildly overvalued. It's north of a $200 billion market cap. So, it's very um it's very important to think about, you know, you don't want to be shorting, you know, high growth companies that have a $2 billion market cap or something, but 200 billion, 400 billion, you're probably not going to get destroyed to the upside because the market cap's so big. Um uh number three is there's all sorts of China frauds out there that are being uh promoted. These are outright frauds, virtually non-existent companies that are being promoted by Chinese scammers on WhatsApp message boards and so forth. Uh the company u the best example of this is QMM Holdings. The ticker is QMM. It's been suspended right now, but this thing was pumped from virtually zero to a $6.8 billion market cap before the SEC suspended trading. Uh and I'm not sure it'll ever trade again, but do not invest in any dicey China Chinese company. It is almost certainly a fraud and certainly if it's being pumped on message boards. Uh so um Signate Jewelers uh is the um is owns Zales and other jewelry stores etc. Um I think um lab grown diamonds, synthetic diamonds are now virtually indistinguishable from real diamonds. >> So many people are doing them. They're like people who are getting they're getting some big rocks. >> Yes. Uh and literally even jewelers now >> they're lab grown too. I'm like see how big they are. >> Yes. Yeah. That's true because the person probably couldn't afford a real one because the lab grown ones are 17th to one/10enth the price. >> And uh I think in particular I think it's now I mean it used to be you know if your boyfriend or your fiance or something bought you a a diamond ring and it was lab grown you know that that wasn't very wasn't cool. Well now it's sort of cool because you know now you're not supporting you know the mining of blood diamonds in Africa and so forth and you're saving 90% of of the cost. So I think that's going to be a big headwind uh for uh for Signit. Um and then uh Hims and Hers is um uh the ticker is HIMS that is basically selling uh basically any prescription drug you want. It's probably best known for the weight loss drugs. Um, but I think they're violating all sorts of FDA rules by, you know, any anyone who wants a hair loss drug, a weight loss drug that requires a prescription from a doctor, they just hire armies of people on the phone who will willy-nilly, you know, just give you a prescription and ship ship you drugs. Um, and so I don't think that's sustainable. And it also trades at 60some times earnings. Um, it's a very promotional company. Uh, so I don't think um uh I don't think that's likely sustainable uh either. So those are my uh stinky six. >> Birkshire recently had earnings. They reported a massive massive cash pile. We've talked about the cash pile for years. >> 382 billion. >> I remember when you and I were doing interviews >> five years ago was like $140 billion whatever. >> Right. >> Yeah. >> Yeah. It's a it's >> What do you think's going on there? What do you think he's doing? >> Well, uh Buffett has done this before. It's just the company has grown so much that the numbers are just a lot larger. But Buffett is very patient and if he can't find anything highly attractive, he's very disciplined. He just lets the cash pile up and Bergkshire generates massive amounts of cash. And in fact, in on top of that, he has been a net seller of Berkshire stock portfolio every quarter. Buffett and then Ted Wexler and Todd Combmes, the two investing guys. Um, uh, Greg Ael is taking over on January 1st, less than two months from now, as CEO, but he's not the stockpicking guy. So, it's sort of a triumvirate. Um, there's a CEO and then the two investing guys. Um, so the three investing guys uh buy and sell stocks every quarter, but they have been net sellers for 12 quarters in a row now, which means that that is in addition to Bergkshire's free cash flow, the cash pile just grows. It's now 37% of Berkshire's trillion dollar market cap. >> Waiting for an opportunity. >> Yeah. >> I have a question. Is is Buffett going to be speaking at the annual meeting? >> He will be there as a board member sitting in the front row, but he will not be stage. >> That's correct. Yeah, he made that clear. So, I think I think a lot of people aren't going to come because it's not going to be >> I think the contrarian move would be to go because maybe you get to see him. Well, I'm definitely gonna go just because it's a tradition for me and I know so many people there and and all and also I want to get a read on Greg Ael. I don't know him nearly as well. Um either personally or he hasn't been really a public figure like it's very easy just go on the internet you can read all of the Buffett partnership letters. I mean you can study Buffett going back 75. >> So I wonder if he's going to be able writing the letter this year then >> it it will be that's been that's been established. >> Okay. Okay. I haven't been as following as closely as I used to. >> I mean, look, I I think >> um certainly my bias is to give Buffett and Mer the benefit of the doubt given that they've been in not just incredible investors, but incredibly good judges of people over the years. They've had they've made very few mistakes. If you think about all the businesses they've acquired and the people they've acquired to who who are running them, they've had shockingly few scandals and mistakes. So the idea that at the end of Buffett's career, he's going to make some huge mistake and appoint some bum to succeed him, highly unlikely, right? But um it it'll you know I I want to get the measure of Greg Ael and I I think there's in the same way that I got the measure of Charlie Munger and Warren Buffett by sitting them and sitting there and watching them answer six hours worth of questions that they don't know what questions are coming at the annual meeting every year. I want to do the same with Greg Ael. Now you don't have to go to Omaha to do that. You can just watch the live stream now. It didn't used to be that way. >> Yahoo started that. Yahoo Finance started the live stream. >> Yeah. Well, I I made my name in the value investing community >> 25 plus years ago by going to the Bergkshire meeting and sitting there till my hand aches. you had the most >> writing notes and then I would go home on that Saturday night and I would spend all night typing up my notes and you know within 24 hours of the meeting publishing what became effectively you know the transcript of the meeting and so that's uh it I did it as a sort of a labor of love but it also helped me make my name in the value investing community and I did the same for Charlie Munger's West Coco meeting for many many years >> and thank goodness they started to live stream it because it was getting to such a job, big job. So many people were counting on me and now I don't have that pressure. >> I miss Charlie Munger. >> I do. He uh a great loss, a great great man. Um >> I do think he's like the Ben Franklin of this generation where people in a hundred years will quote Mungerisms. >> Oh yeah. >> Yeah. The the two of them other than my parents and my wife have uh had the biggest impact on my life. Uh I I initially, you know, went out to learn from them because I was had started a little hedge fund and I wanted to learn to become a better investor and they were going to help me become rich and be successful. Uh but then I I've kept going all after all these years because they've made probably an even bigger impact on my life outside of investing. >> The worldly wisdom. Before I let you go, Whitney, um two-part question for you. What's something that's keeping you up at night that worries you? And to counter that, what's something that's making you optimistic? >> I'm happy to say that nothing is keeping me up at night right now. I will say that during the seven months I ran for mayor, I took ambient every single night for seven months uh to knock me out so I could sleep because it was so stressful uh running for office. And so I'm not eager to run back into that. Uh I thought about running for uh Jerry Nadler's congressional seat, which is the upper east side and upper west side of New York. And partly just because I didn't want to go back into that incredibly stressful period. Uh I I decided not to run for that seat. And it's also a safe Democratic seat and I know some of the people running for that seat who I think would be great candidates. So I didn't think there was any need for me to run for it. Whereas, when I ran for mayor, I saw, you know, I didn't I didn't know Cuomo was going to run, and I saw a bunch of sort of no-name and career politicians, and I thought my city really needed another sort of Mike Bloomberg outsider business person to come in. Uh, so, um, I can't, uh, I mean, the obvious answer is is with Mam Donnie just being elected and how hard I ran, you know, to warn New Yorkers about him and try and stop his election, you know, that now that's going to keep me up at night. But uh but you know, honestly, because he's been the prohibitive favorite to win for months now, I guess it's not keeping me up at night cuz I expected him to win. He did win. Uh and the fact that he's kept Jessica Tish on some of the things I talked about earlier about, you know, supporting construction of more housing and uh etc. you know, I'm feeling a little slight I'm not sure whether optimistic is the worst is the right word or slightly less pessimistic. And uh so that's not keeping me up at night. >> Hopeful. I will I will say look as a lifelong Democrat um I almost every day Donald Trump or one of his uh people like Steven Miller or whatever um do something that just shocks me that would would have gotten any literally almost every day he is doing something that any prior president would have been impeached for. um you know is just flagrant violating violation of America's rights and you know masked ICE agents just rounding people up on our streets and putting the military uh using the military in our streets. um the the level of graft and corruption with all these Trump coins and so forth and giving out pardons to CZ the Binance guy who just you know handing out pardons to people who are lining his family's pocket with hundreds of millions if not billions of dollars the degree of corruption I think of the hypocrisy of you know Hunter Biden was just such a low-level little grifter pocketing a few hundred,000 in you know board fees or something and the Trump family according to the reports I've seen is profiting just in the nine months or whatever since he took office profiting to the tune of well into the billions of dollars right like that it's not I don't know whether it's keeping me up at night but it just fills me with outrage and real concern you know for the you know for our sort of democratic norms and so forth. Um so uh on the the second part of your question was like what am I optimistic about and all um look I I um I'm you know just generally speaking America over the last since co America I think has recovered more by any um economic measure etc. um you know the fact that inflation spiked around the world it wasn't just a US phenomenon um that inflation has come down without triggering a painful recession as the Fed took interest rates up and all like you know economically um you know while there are real income disparities and I know the average American is is is struggling you know we're doing a lot better than almost any other major country in the world um and you know the fact that I think um Americans are standing up. The uh uh the No Kings rally just a couple of weeks ago uh was probably the largest um according to the reports I've seen, 7 million people showed up um to march against Trump and Trumpism uh the election results from last night, etc. So, you know, make me optimistic that uh we're going to flip the House, maybe even the Senate uh in a year from now, and that this um uh you know, I hate to be so partisan, but I view this national nightmare under Trump uh will, you know, we will survive this and um and hopefully uh start putting a stop to it um within, you know, when we flip the House a year from now. I have a question for you. Yeah. Are you still able to be friends with people who are Republican? >> Oh, sure. Okay. I mean, Bill and I are still >> I was going to say because you talk all the time are really good friends and absolutely. >> Yeah. You have very different views from you. You know, I think it's it's very important to disagree without being disagreeable. >> And uh I absolutely understand why uh some people uh the many reasons why people would choose to support Trump and I understand why Bill supports him and um and he understands why I don't, why I feel the way I do. And that's okay. We're both fighting the good fight and uh you know we both love our country and people can respectfully disagree about you know what policies or what people are best for and so uh I'd like to think you know I I never in trying to stop mom Donnie I don't think I ever crossed the line into Islamophobia and racism and so forth and a lot of people you know there were a lot of attacks on him that that I called out publicly as you know beyond the pale there There was some meme going around on Twitter that had millions of views that showed a plane heading, you know, a 9/11, you know, plane headed toward the Twin Towers, you know, with Mam Donnie on it like he was a terrorist. And he's not a terrorist. He's not a jihadist. He's not a communist. He's a democratic socialist who um uh is uh is more sympathetic to the Palestinians than the Israelis. All right. So, so are a lot of Democrats, right? Like I don't hate him personally for it. I actually like him personally. He's very charming. Um, and so, you know, my I tried to keep my critiques of him very factual. Um, he's young, he's inexperienced, I think he's unqualified, I disagree with his ideas in the following areas, but I agree with some of his ideas over here. And we, you know, I fought the good fight to stop him. He was good. And Cuomo wasn't. he won. And so now I wish him the best. I hope he's successful. >> And um and so, you know, I do I do worry that as a country we're devolving into into you know, very almost like vicious hatred and you know, Janine Piro or whatever is calling Democrats demonrats and um and that's that's not healthy. That's not that's not good for our democracy. Whitney Tilson, it is so wonderful to see you. Great to see you as always. Editor at Stanferry Research, value investor, former mayoral candidate, and a twotime New York City marathon finisher. You just finished the marathon in record time. >> 10 years apart. I It wasn't wasn't any record other than my own record. At age 59, I ran faster than I did at age 49. I'm pleased to say. >> Impressive. Really appreciate you taking the time, Whitney.