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tv   Barrons Roundtable  FOX Business  July 2, 2021 11:30pm-12:00am EDT

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reporting facts and truth. the rest of this can offer our thanks to those who worked so tirelessly in miami ambon. and above all we offer our prayers and deepest king condolence to those family who were tragically briefed in this tragic incident. i'll sn the wall street journal large, thank you for joining us and have a wonderful fourth of july weekend. >> "barron's roundtable" sponsored by invesco qqq. ♪. jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. i am jack otter, coming up catherine keating will deal into the rise of mean stocks in crypto, later the risks of having too much invested a big tech and how to make money even if the stocks take a hit, we begin with what we think the three most important things investors on a think about right
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now. the stock market on a winning streak despite reasons to be concerned there is a big week for ipos including krispy kreme returning to market and robinhood moving closer to a public offering. it's porsche verses for rory the battle of sports cars supremacy who will lead on electric vehicle, then lovington, carleton english and beverly goodman. then, you been county market winning streaks in it kept you pity because there are a lot right now. >> i don't think i've seen anything like this right now. the s&p 500 rose for fifth month that salonga since august 2020, not bad. but also finished at a record high from a seventh consecutive day and that's the longest since 1997, wait there is one more it rose for a fifth quarter in a row with an eight-point to percent gain during the quarter it was the fifth quarter with a 5% gain that is something that only happened once before no matter what's been thrown at the
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market we have the hawkish bed, mixed economic data and even the spread of the delta variance and nothing got this market to flinch the strangest thing, the market when it had the streaks usually signals more strength ahead. jack: why are investors so happy and why are there tails wagging so much right now. >> i think it has to do with people being happy right now. i consumer confidence is really high, people are getting out again in the last 15 months i think people are feeling really good and then you have the fed policy, the fiscal policy, all this money sloshing around, what else are you going to do, the market goes up. jack: we saw a bond yield that will make anybody happy if they're trying to borrow money, give us some bad news, through the wet blanket, what can in this party? >> i worry about the fed and inflation, no one seems to be worried about inflation in
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searches on goodwill to 80% from where they were to month ago and if these numbers start to come in hot again is not going to take much to get the fed to start worrying about the fed, i might've jumped the gun a couple weeks ago when i got worried about the hawkish tilt but that's the biggest risk that icy. jack: we know it's coming at some point but were just reminded when mohammed was on the show couple of weeks ago he quoted leon cooperman saying he was fully invested bear, that some like a right way to go, i guess. >> it really does. jack: speaking of happy investors, there's a robust reaction ipo coming down the pipe in the last few days. >> like you said the stage has been set krispy kreme into chinese companies a grocery delivery business and rideshare companies all did well especially which closed with a 60 billion-dollar evaluation on the first day and it struggled a little bit on friday after the
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chinese come under government crackdown. jack: setting aside dd and dingdong and donuts the big ipo story is robinhood on wednesday it gets hit by a record sign in on thursday and files in f1 which means it's ready to go public. >> exactly there is a lot to say but it gave us our first real look at the company and some of it is interesting revenues rising really fast but losses are mounting even faster revenue is 420 million for the first three months of this year, profitability is a long ways off in a $1.3 billion loss, also a good look at their customers they had 18 million accounts which sounds pretty good competitors like fidelity or swab but their account buys in their medium account is $260.
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jack: schwab are not quaking in their boots, could robinhood never be a real competitor, what could bring robert and up to that level or does that not happen? >> it's hard to see it happening, fidelity, schwab even our active groupers have really long-established business and we take it release hearsay, money is serious business. it requires more than an app in a funny attitude. robert is a company that's been fined by two different regulatory agencies and their only six month apart for misleading customers on two different issues, has a ways to go to earn his credibility and i do think once customers get serious about their money in the trading that they want to do in the investing that they wanted you they will find better places to do it. jack: i noticed in the f1 nearly half of the transition revenue came from option, real quick let
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us go to porsche verses for rory tesla and porsche get all the when it comes to ed, interesting trip number when comes to the luxury market. >> you just know that, portion for rory you normally don't hear them but porsche may actually have some room to grow, now facing for hari. >> i hope electric it's so exciting that i can buy an iced used 9/11 with the combustion engine, who does barons like better porsche or for rory. >> porsche is the one pulling ahead, it gets a little complicated but porsche owns a large stake in volkswagen. ferrari has been talking about building a by 2025, volkswagen wants to be the leader by 2025, young one car versus the number one. that is the main difference between the two, ferrari has
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been better than porsche but you also notice that porch has a cheaper evaluation so that can certainly help provide an accelerant, also a lot of the analysts are really worried about whether or not ferrari will be able to pull this off, getting into the electric vehicle space, goldman sachs double downgraded for re shares, porsche, meanwhile announced really great second figure sales and they have much bigger momentum behind them at this point. jack: porsche selling at seven times versus 42 for four re, coming up next high stock valuation, low yield, inflation, valuation, low yield, inflation, they said it couldn't be done but you managed to pack a record 1.1 trillion transistors into this chip whoo! yeah! oh, hi i invested in invesco qqq
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jack: the economy is wearing back from the pandemic but we have real inflation concerns, how investigators navigate this
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like the ceo wealth management catherine keating, thank you for joining me. >> thank you, hello. >> let's start with the big picture of you in the economy and markets, we have high stock valuation, very low interest rates, surging economic growth for now, surging inflation at least for for now, put that together what is the house view of where the economy stands are now? >> it's been a remarkable recovery for the market and the economy and as you know as we step back and say what happened when you come out of a recession the market is the lead indicator in the lead first, that's exactly what happened in the economy followed and third and finally employment tends to follow our outlook, we actually think it's possible that main street outperforms wall street for the rest of the year because the market has done so well that does not mean we expect negative returns it could be flat and it
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means we expect the economy to continue to reopen and do quite well. jack: the market is already anticipated that tune a certain extent, given the main street possibly doing better, where does that leave investors, what are the best places to be and you could be worried this point in the cycle. >> we continue to like the reopening sector, we really do see them leaving as economy reopens and in particular, we like small-cap for two reason, small-cap companies have done very well and we think they will continue do well as economy reopens but the other reason that we like it, they tend to do well even inflationary environment and we think small-cap is a good place to be and we think the value stocks are good place to be obviously last year with the economy was closed down largely and there wasn't a lot of growth to be have, the growth stock did extremely well but now we see the earnings momentum, the value stocks and we think that my continue, we like both of those. jack: the much-anticipated value
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finally happened. i want to pivot away from investor management for a moment, in my day job i oversee barons effort with financial advisors and one of the things we talk a lot about, a certain extent investment management is becoming table stakes, you gotta do well but that's a given, i presume what your advisors are doing is spending a lot of time talking about the rest of their plans of their financial lives, what are the priorities and what problems you solve. >> it's a great question i would step back and take a look at the big picture, the big picture the way the american states retirement has fundamentally changed over the last decade or so and with the giver parents generation, they might've worked at the same company for their whole career and retired with a pension plan for the rest of their lives, that's not the way that we think about retirement in this country, most of the safer our retirement in a 401k
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and her own personal savings and maybe our company helps us along the way and we become responsible for our own financial futures and what that means for us there is five disciplines and we have to help our clients with the first one, you said it, investing and investing in a way that will achieve their goals and second is borrowing using their balance sheet prudently and strategically the third one is spending we often forget one thing that we control is how much we spend in the house and impacted how much wealth we accumulate over time. the fourth one managing costs and taxes are cost so managing taxes in the last one protecting what you have in everything from good insurance to good estate planning and good cyber habits. jack: i want to ask about another thing that's very different from my parents generation, that is the memes stocks in the crypto currency fab that were seen right now, the naysayers say oh boy this is going in badly and the fans say
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were fuddy-duddies for saying that and this is a great thing, how are you guys saying, the ny investigated and company that i believe helps on store crypto, but your corporation thinks there's something going on here. jack: there's two topics in your question, all about the retail investor in the retail investor in this country has more aspects of the institutional investor, that's the function and how this change and we save for retirement the retail investor is important to the market and if we look at the last 15, 16 months of the pandemic, what we seen is the share of trading that the retail investor is responsible for 20% or so to 35, and we seen that the most in the memes stocks, that's a separate question really and crypto currency in block chain, the way we think about that it's all similar to the internet in some sense if we go back to the 1990s and the early days of the
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internet it was creating a new information ecosystem we think the block chain has a potential to be a part of creating a new financial ecosystem so were very, very attuned to that very focused on that. jack: even if bitcoin turns out to be, there's really something here with this crypto stuff. >> there is definitely something here with digital assets. when we looked at crypto as an investor for our clients we really focus on three things, the security if you lose your private key, you washed your coin, and the second one is volatility, bitcoin had three or 480% downdrafts over the last decade which is quite significant in the third is invest ability, we look at the vehicles were available and there aren't many right now and they're fairly expensive and liquid and were watching all of those things very closely. jack: thank you so much for coming on the show, we
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jack: five biggest tech stocks have an outsize position investors portfolio, apple, microsoft, amazon, facebook and off about of 20% of the s&p 500 which poses big risks if they take a hit. the average investor future return are hitched to the performance of very few firms should viewers worry about this? >> yes, most investors understand the importance of a diversified portfolio that the big driver of the boom and index diversification, but when the
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index is not diversified in 22% of your money and five stocks is not diversified, it is a problem we asked goldman sachs to run the numbers and it's a big five fall, 10% for the s&p 500 to trade even or flat, the bottom 100 stocks would have to rise 75%. i don't know how likely you think it is, i think if the stocks fall index investors are going to get really hurt. jack: some people think how could they possibly fall were so reliant on amazon, google and the other firms in our everyday life go to classic investor mistake made over the decade per there's real risks and the companies. >> true and they don't need to crush for this to be a problem but we have a lot of risks that could erode some of their outlook we have rising inflation, raising interest rates that is making, paying 30 - 60 times earnings a little less appealing there is a risk
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off trade in the speculative areas of the market like crypto and it could easily move to more speculative and expensive tech stocks there is more regulation on the horizon, has a brand-new ceo starting next week and ultimately there is just diminishing returns for companies of the size, how many more times can apple were amazon double in size in one piece can they do that. >> that's a really important point. barron's found fund managers who managed to do pretty well but avoiding the stocks, tell us about that. >> we found five funds that own 0 or a tiny bit of the big five that's because the stocks don't meet their criteria. we found that managers that ignore the market biggest companies need a high level of conviction, that letter is to concentrated funds that own a few dozen stocks, acra focuses one they look for good businesses that have more runway
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to compound and they hold those companies were really, really long time, we also like jensen quality growth those folks will not look at a company unless it's had ten consecutive years of a 15% return on equity, their owning profit machine and can be your opportunity is also great, great stocks to purchase. jack: beverly some of these funds have not done so well over the past couple of years. >> that is true, they have underperformed but the returns have been very strong nonetheless but they haven't beaten the market. a lot of active management is risk management and having less of your money and the giants when they fall could be a good thing. if you look for outperformance from active management as most people are realistically you don't want to fund the index otherwise you would buy the index, you still want to look at the managers long-term record, how they performed over the
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years and by the ones that are picking stocks that can grow faster than these five, it's a tall order but not impossible and we think these funds can do it. >> i think the hedge idea is very important you're probably still have some exposure to the stocks but at least you have some that won't have a big hit. >> i'm just curious instantly makes sense why you want to want to be so concentrated with stocks but should investors sell their index funds, what is the appropriate play. >> i'm a fan of index, and certainly for a lot of people i would not say you should sell it as jack noted these can be a good hedge but it's smart to take a look at your overall portfolio if you have index funds in a few large actively management funds, chances are you are way way overexposed to the five companies and selling a little bit here or there could probably do you get in the future. jack: this is a great story, jack: this is a great story, think of assuring
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jack: just as it's important for investors to diversify outside of tech stock we should also ask international diversification which a lot of u.s. investors don't. >> it is true americans have a home country and frankly recently it's been hard to argue with that, u.s. stocks have been so strong for more than a decade and they languished in that time the rest of the world didn't expect. jack: if you look back a little bit further say 2000, 2009 when u.s. stocks went nowhere and he threw diversified went better, you actually chose europe, while europe over asia?
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>> evaluations are low which is a good start, they're about to get better in the near-term and there's a lot more happening in europe than there is in asia from an evaluation standpoint, vaccinations are picking up really quickly and as recovery takes hold, the economy is going to rebound very strongly. there is a lot of monitoring physical policymaking outlook particular good in europe and interest rates were low for long time and they have a big industry bidding the largest ever stimulus package, we think there's a lot of opportunity there. jack: been talked about were worrying about the fed hiking rates it seemed like the ecd is a long way away from that. >> a long way. >> let's go to actionable ideas. >> falling into the gap the benefit of the broader retail yet back-to-school on the return, the website is looking better in the european footprint which will help shares.
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jack: an interesting idea, what you have for us. >> general dynamics they make their defense company and also private jets so for the wealthy but not first-class and want their own plane stocks are looking pretty interesting. jack: grade ideas, check out barron' don't forget to follow us on twitter at barron's online ♪ ♪ ♪ >> welcome to "kudlow" i am brian brenberg and for larry kudlow our top story today the u.s. economy adds 850,000 jobs in june, the biggest gain in ten months, the unemployment rate rising to 5.9%, edward lawrence is live from the white house with details. >> 850,000 jobs and was very interesting you meant to the unemployment rate taking up to 5.9% that is because there's


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