Transcription
All right, next one up here: Brad Gersner sells Uber. Boy, how bullish you've been on Uber! Yeah, you sold it. Listen, you know, let me say at the start, Dar has been an incredible CEO at Uber. He's dramatically increased the free cash flow; he's increased the competitive position of that company. They're the dominant leader now in global mobility. We love the company, and it's inexpensive. However, leading up to the election, right, we had been taking down our position size and we've been rotating into Tesla. Why? Because, as I said before, we had a ChatGPT moment around full self-driving in 2024. I think the year of 2025 is going to be about Robo-taxi. We were present at the Robo-taxi day, and we were impressed by the Robo-taxi. So for Uber, they have to get past this moment where they have a hugely disruptive force coming in the case of Tesla. Now we know that the Trump administration is going to push for a national regulatory change, so that will be good for WH and good for Tesla. Now, Uber has a solution to this; they have WH on their platform. But we just want to see it play out. We want to see a few more months of this playing out. So again, it comes back to portfolio management for us—the optics. Right after the election, we bought more Tesla and we rotated out of our remaining Uber because we think the optics are going to be really tough for Uber over the course of the next few months, and they're going to be really good for Tesla as we get closer and closer to the launch of Robo-taxi, which we think will be Q2 of next year.
This feels, to me, like the goal. So, one, I agree with him; one, I disagree with him. One, I definitely agree that, as far as Uber, the optics are tough short-term. Yeah, because everybody's worried about autonomous vehicles and what's going to happen there, right? And how is it going to disrupt Uber's business? While even though Uber could still make money—probably even more money off of that than what they currently make—there's no doubt there's going to be just a lot of question marks around that in the short term, and those aren't going away. Like, those are still going to be here in likely 3, 6, 9, 12 months from now. Right? You know, the thing I kind of disagree with is this notion that autonomous vehicles are just going to take off like crazy. It's going to be a build-out over like a 10-year span, man. And it's, you know, such small numbers as far as right now. Right? We have a few autonomous vehicles in Vegas here; it's not very many. Tesla still isn't even done with their software in terms of getting it perfect. As a Tesla driver, I can tell you it's not good enough yet. So we still got to get over that hurdle, and let's hope we finish this baby off in 2025, but it's no guarantee. So, like, maybe we push out to 2026. But once again, as somebody that experiences the technology when I drive a Tesla and I put it where the car can drive me, it's not perfect. It's not good enough yet to not have somebody in that driver's seat. And so to just be betting that, oh, you know, for sure it's going to be done in 2025, you can bet that, but you're going to be lucky if you get that correct, essentially. Right? And as a Tesla shareholder, I would love if Tesla gets that right in 2025, and I hope they do. But to bank on that and then think they're going to go from getting the technology perfected to then getting it launched in all these different markets, that's some real hopium in regards to that. Right? I got to calm everybody down in regards to that. So this can definitely play out over the next 3, 5, 7 years, but don't get excited over the next 12 months about it. I can tell you that.
Next 12 months, let's just hope we at least get to a point where the tech's good enough because it's not there yet. It's moved. Yeah, Musk's proximity to power—that dynamic has changed. It has become quite obvious he is becoming quite an influential voice in some of the policies that are going to happen, whether they are beneficial to him personally or beneficial to his companies, plural. Because I think you could make that argument. That's what this strikes me as: the goalpost moving in some respects to favor Tesla and, in some respects, hurt the competitors.
No, I would disagree with that. I think the regulations that we see—sure, ending the EV tax credits, easing the self-driving regulations—those are undeniable. But if they change the regulations but FSD wasn't killing it the way 12.5 is and the way FSD 13 is going, where you have a significant improvement in full self-driving safety in one year alone versus the 10% per year we were getting up until 2020, because we've gone from these deterministic models to these imitation learning models, it's about the performance at Tesla that is driving us now. Sure, I think national regulation makes sense in a country of interstate commerce. Does it make sense that one state is going to allow me to drive my Tesla on full self-driving mode, then I get to the state intersection between Texas and Oklahoma, and I no longer can use full self-driving? I have to stop the car and change the mode of driving? That doesn't make any sense. Right? We drive cars across state borders, so having a national regulatory framework—not just for Tesla, for everybody, for GM, for Ford, for everybody—that's just the right policy. I don't think it's about favoring Musk or his companies, though. I think regulatory clarity is needed in this country. But I look at it; it's the improvements that are going on in Tesla. And I think, you know, 18 months ago, nobody would have said that this was win or take all or win or take most. They would have said everybody's going to have full self-driving capabilities. I will tell you right now, Tesla is running away with their full self-driving capabilities. The only other game in town really is Waymo.
So, Josh, I want your take on this because Uber's a large position for you, and I don't recall you being as bullish on the Tesla FSD event as Brad certainly seems to have been. What's your take on him selling the stock here?
I was just shocked, to be honest with you, when I heard about that move. Brad's made a lot of money in the stock, and I completely understand his point. We're right now in this kind of gray area moment where it's unclear how the onset of AVs is actually going to play out. I want to say Silicon Valley is probably one of the greatest resources—natural resources, I would call it—we have in America. The people who live there, the people who risk capital, the people who invent things there have just done incredible things for this country. But as an East Coaster, as a Wall Streeter, I also want to point out the blind spot. They very often think that things are going to happen tomorrow that may not happen for 10 years. They have to think that way; it's endemic to the species. And thank God somebody does. Here in New York, we think more immediate; we think more cash flows. We don't think so much about what's going to change; we think about what's not going to change, and that's a little bit more of a New York mentality. And I will tell you what won't change: most internet marketplaces are demand aggregators. That's how you win.
One side is like insanely crazy optimistic and just like everything's going to go perfect, and the other side's much more, let's call it, on the pessimistic side. In my view, the way this will all play out, Tesla's autonomous vehicles and cabs will be phenomenally successful, as will WH, as will probably two or three other large-scale providers, because there are apps that will aggregate demand between all of them. I find it very hard to believe that you're going to have 10,000 Tesla full self-driving cabs on the street, and that's going to upend a company that has over 100 million users on their platform. The more likely scenario from where I sit—and again, I could be wrong too—the more likely scenario is that Uber is going to aggregate demand amongst all of the various players that have different types of autonomous vehicles on the road. The consumer is going to want one-stop shopping, not, "Hey, this time I want a two-wheeler; that time I want maybe a moped." This app I'll go to because I want this. I don't think it's going to play out that way, and I think Uber is going to be the central demand aggregator, and that's the bet that I'm willing to make. Now, the stock might be volatile, and I likely agree with JB in regards to this. Yeah, that's likely how I see this game playing out over the next decade.
Look, right in the short term, as Elon consolidates power and convinces Trump to push for things that benefit FSD, I won't deny that. The thing is, I'm willing to sit through it because I think the bigger story here has yet to play out.
Yeah, real quickly, Josh, I love the way you framed that. I think it's brilliant framing. To be clear, we were the biggest defenders of this stock from $15 to $80. We sold the stock much higher than the stock is at today. Right? And I reserve the right; I may be buying this stock tomorrow or in a month or in two months. I just thought that the optics were going to be really challenging as we move into the launch of Robo-taxi, which I think will occur next year. And this is not about regulatory capture; this is about the full self-driving capabilities, about FSD 13 at Tesla. Without that, there would be no investment going on in Tesla. People are excited about what they see with Optimus, what they see with full self-driving, what they see with the inexpensive cars they're putting on the road.
You know, it's interesting, right? You kind of almost want to be a duct tape banana. Sells for $6.2 million. Oh my gosh, people have too much money. That's all I got to say. Sometimes you almost need to have your personality a little bit between kind of what JB was talking about there—that super optimistic—and then a little bit of that realism, pessimism maybe. You know, like he talks about that kind of East Coast mentality a little bit, right? So you can kind of keep yourself a little balanced because, yeah, one side sometimes thinks like everything's going to happen. These things take a long time. Like Jensen was talking about AI and GPUs and how everything was going to change. Dude, he was talking about this subject, you know, 12, 14 years ago. 12, 14 years ago, he was talking about this sort of stuff, right? I'm talking about Nvidia's CEO. And it actually became a massive, big, huge thing really in the past few years. Right? So a lot of times this stuff just takes a while. Like, you know, autonomous vehicles being everywhere, that's like 10 years out. Yeah, I think it's going to be massive. I think it's going to be—you’re going to see cars all over the place that, you know, it's going to be very commonplace. We’ll be like, "Oh, it's no big deal." Yeah, this car is not driving anywhere. It's not like today where, like, if you saw that, you'd be like, "Who? What the heck? There's no driver in there, and somebody's going in that car." Right?
But it takes a while to get there. It's not just like overnight and everybody's doing it. And this notion, you know, to stick up for Uber for a minute, once again, that, like, you know, they're just going to be eliminated out of this process—that's not super realistic either. Like, these other companies that are going to compete with the technology, right, they're going to likely want to use Uber as kind of a middleman. Maybe Tesla doesn't, and they just go all Tesla app, but that will limit Tesla's reach, right? Because not everybody's going to know, like, "Oh, you know, Tesla has this app, and you can order a ride from it." Like, a lot of people just won't know that. Right?
And so if—imagine you—and remember how Tesla wants to go about this. It's not like Tesla's just going to make a massive amount of vehicles and put them on the market because that would just cost ridiculous sums of money. It's an unrealistic financial expectation for the company to do that. So what the company is likely going to do is they're going to have everybody that owns a Tesla be able to put their cars out there, right, on the market. And so if you're somebody that owns a Tesla and you want to do that, would you want to limit yourself to just being on, let's say, some sort of Tesla ride-sharing app? Or would you want to be on the Tesla ride-sharing app and available on Uber or even Lyft if people use Lyft? Right? Like, you'd want to be as many places as you possibly can. It's no different than saying you're going to list your home for sale. Would you rather just list your home on Zillow and that's it, or just put it on the MLS in general so it's everywhere in case somebody comes across it? Right? You know, you'd rather put it everywhere so you're going to get a higher probability of selling your home or renting and those sorts of things. Right?
So just something to keep in mind there. But as a Tesla shareholder and somebody that doesn't own Uber stock right now, like, obviously, I would love it if just everybody used the Tesla app and they just can get a ride from that. Like, that'd be amazing. Right? But that's also not the most realistic probable scenario. So that's something we got to consider there.
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Very important, I start right here: what is going on? Why is every dip bought up? I'll tell you exactly why. Listen, check this out here. Okay, this is a one-month chart looking at the Russell 2000, the Qs—just think of that as a NASDAQ—and the S&P 500. We had a dip here; it was bought right up. Then we had another dip; it was bought right up. Right? And then we had a recent dip here, and look what happened again: they bought it right up. Right? So every time the sell seems to step in and take stocks for profits, buyers step right back in and say, "No, no, no, no, no, we're going higher here." Why is this? Well, there are several reasons here.
First, one reason: number one is we got $7 trillion—$7 trillion plus now—that's in money market funds, which is just a ridiculous number, and it just keeps growing bigger and bigger and bigger. And we don't know where the top is for this number. Maybe it's $7.5 trillion; maybe it's $8 trillion. But the bottom line is all this money in money market funds keeps collecting all this interest. Right? If you got money in a CD account, your cash—listen, I have money in CD accounts, okay? I have money in savings accounts, right? I'm getting 4 plus percent on my money. Right? So I think 4.2%, 4.4%, 4.6%, somewhere around there. Right? All that money I have in my CD accounts and savings accounts, guess what's happening? Every month, it's growing bigger and bigger and bigger, and the cash pile keeps growing bigger. Now that money is sitting over there chilling. I can just keep it over there chilling, right? Or maybe at some point in time, I'm going to deploy a portion of that into the stock market.
You got to understand, I'm just one little teeny, teeny fish in a massive ocean of money that's out there. And so you got to understand there are people that have millions of dollars, tens of millions of dollars, hundreds of millions of dollars, or even billions of dollars that are just sitting over there in treasuries, sitting over there in CD accounts, savings accounts, with the money just growing bigger and bigger and bigger month after month after month. And just considering, like, what am I going to do with this money? Am I going to keep it over here? Am I going to deploy it into the market eventually? Am I going to buy real estate with it? Right? But that money is just over there, and that gives a huge amount of confidence in the market. I mean, a massive amount of confidence. And you know why? Because if there's any major drops, guess what's going to happen? People are going to, like, let's say, say, "What do you think I'm going to do if the S&P 500 goes down 15% over the next two months? I'm going to take a good portion of my money that's chilling in CD accounts, savings accounts, and all that and bring it into the market." Right? That's the same thing you could say for a vast amount of folks, and that makes it hard to get any substantial crash here in the short term or even, you know, like, let's even call it a 5 or 7% dip. I'm not even talking about a 20 or 30% crash in the market; I'm just talking about a 5% correction, a 7% correction. Even those, it's hard to get because people have so much money over there on the side that any little drop, they're going to deploy something in the market. Right?
Because, you know, somebody might say, "Oh, I want the market to go down 20% for me to take money out of treasuries and out of savings accounts and put it in the market." Right? Somebody else says, "I don't need that; I need 10%. Market goes down 10%, I'm going to do it." Somebody else says, "I don't need that; I need 5%." Somebody else says, "Dude, I don't care; 1%. Give me 1% down, and I put it in the market." Right? So that's what you got to understand. It gives a huge, huge level of confidence around the market.
Also, the top might be in. What do I mean by the top might be in? This is what I mean: when it comes to treasuries, the top is in in regards to what treasuries are likely going to yield in this particular cycle. It's very obvious that we are trending down, and we should continue to trend down over the next years in regards to how much treasury should be able to get you. Right? What's basically transpiring now at this point in time is lower highs and lower lows when it comes to the treasury cycle. So, like, recently, we probably set a more recent kind of top in regards to treasuries, and then when we go lower, we're likely going to even face a lower low when it comes to treasuries than we have faced in the past. Right? And so in regards to that, that matters significantly to the stock market because as treasuries go lower, as those yields go lower, as CD accounts go lower—which, as somebody that's collecting a lot of money in CDs and all those sorts of things and savings, like, you know, I wish they didn't go down. I would love them to stay four plus percent, if not 5%. But the reality is, if I look out a year from now, I'm likely getting lower returns on CD accounts, savings accounts, all those sorts of things, and treasuries a year out from now than I am right now. Right?
And so that's important to understand, is that money just has to end up going somewhere because, you know, especially once treasuries start yielding in the threes—woo! That's the moment a lot of people say, "Uh, you know, treasuries kind of suck now at this point in time; we got to move money elsewhere." And a lot of people start looking into the market. When treasuries yielding four or five percent, a lot of people say, "You know what? I'm okay over here." As soon as you get into the threes, that's when people begin to change their minds. And then never mind if treasuries ever go in the twos, then people are like, "Screw treasuries! You can't even keep up with inflation at that point in time."
Point number two: we got through earning season. We got through, and not only did we get through, we thrived. If you look at the MAG 7—the stocks that matter the most in the stock market as far as weighting, as far as commentary, as far as the sentiment goes—the earnings were good from pretty much all those companies. Look at the revenue beats from these companies. Look at the earnings per share beats of these companies. Look at the margins. Look at the outlooks of these companies. It's phenomenal, and they all set up great into 2025. Like, there's not one of those stocks that I'm looking at right there that I believe their earnings per share will be down in 2025. Not one of them. All of them will have earnings per share up. It's a question of how much will those earnings per share be up, and it depends on which company we're talking about. Some of these companies might be more in the 10 to 20% earnings per share up next year; some of these companies I'm looking at right there will be more in the 30, 40% range; some of them will be 50% plus when it comes to earnings per share growth in 2025.
So we got through the earning season, and that look, it's going to be a very good 2025 for these companies as well. And that leads us to the boogeyman. You ready to talk about the boogeyman? The boogeyman is NVIDIA. Every quarter, it's the boogeyman in the market. What's going to happen with NVIDIA? Maybe growth rates are going to slow. Maybe the commentary is going to be bad. Maybe no one is going to order chips anymore. Oh my gosh, there's always like this big concern. Oh, NVIDIA, NVIDIA, NVIDIA! What's going to happen? The boogeyman is out. They reported a banger. It was an A+ quarter. I posted this on my X page; it was unbelievable. By the way, if you ever want to follow me on X or follow me on Instagram, I always have that linked in the description area of all my videos, just so you guys are aware. Right? I know, you know, obviously not as many people follow me on those platforms as follow me on YouTube, but if you ever want to, I'm on those platforms as well.
Okay, but yeah, A+ banger quarter. The guidance was phenomenal; the conference call was phenomenal. You got nothing you could poke holes at when it comes to NVIDIA for this next year, two years out. Maybe that's a different situation when we talk about 2026 or 2027, but as of right now, you got nothing. You got nothing on this company to poke holes at right now. It's just an absolute banger right now.
Check this out here. I thought this was very important. I show you guys this; this is very important. It's one thing to look at returns of the stock market; it's another thing to think about the returns of the stock market over a several-year span adjusted for inflation. Not something we talk about a lot on the channel, but it is important, especially when you've gone through a higher inflationary environment, which guess what? The last three years were definitely a higher inflationary environment. Inflation died in 2024, but there's no doubt 2023 we were elevated, and 2022 obviously inflation was out of control. Right?
So what are returns looking like for the Russell 2000, for the S&P 500, and the Qs if you don't factor in inflation versus if you do factor in inflation? And get ready to have your mind blown here. Okay? So this shows you the last three years. The stock market in the last three years, the Qs are up around 28%. The S&P 500's up around 27% in the past three years, and the Russell's actually negative in the past three years. Right? Now, we've had about 13% cumulative inflation roughly over the past three years. So if we factor that 13%, the reality is the Russell 2000 is actually down 13% over a three-year span. Now, when we talk about over a three-year span down 13% on a major index like the Russell 2000, that kind of smells like you went through a market crash. You went through a major recession because usually the Russell is not going to be negative on a three-year basis, especially when you're factoring inflation at a rate of roughly, you know, 13%. So it's a 13% return over three years. That's not normal, folks.
S&P 500, if you factor inflation, is only up 14% in the past three years. That's a horrible return for the S&P 500. The S&P 500 should usually get you 8 to 10% per year, and it's got you 14% over the past three years. If you adjust for inflation, that's awful, awful returns. And especially when you think about we've been going through, you know, all the exciting stuff in regards to AI, and the biggest tech stocks have done pretty well. That's incredible to think about.
Additionally, you look at the NASDAQ. The NASDAQ's up 15% in the past three years with all these great companies reporting all these great numbers—the Metas and the NVIDIAs and all these sorts of companies like Microsoft, Amazon—and that's what we have to show when you adjust for inflation. That's not actually good returns at all; that's actually poor returns. It actually looks like if you weren't to have any other context and I just ran you through those numbers, never mind if we went back before this kind of most recent run, right, you would kind of think like, "Well, we had a big recession the last few years." Like, that's what you would think. And no, no, four threes are up here. Right?
And so just keep in mind, like, the indexes are actually not super high. Like, they're talking about fourth reason every dip keeps getting bought up in the stock market is—listen, this is extremely important—everybody understands this: 2025 is going to be a massive profit recovery year for countless small-cap and dividend stocks. And I'm going to run you through kind of what's going on with those in just a moment to kind of illustrate this point that I'm talking about. Right? So that's going to be huge for these companies.
Additionally, when it comes to the MAG 7—the stocks everybody talks about, the biggest weights in the market—you’re looking at MAG 7 stocks that are likely going to have earnings per share growth of 10 to 70% in 2025, depending upon the company. Some will be more in that 10 to 15% range; some are going to push 50% plus earnings per share growth in 2025. So that basically gives you a whole host of the market that's looking very, very good for 2025, and the setup is phenomenal here.
Now, additionally, when it comes to dividend value stocks—listen, big tech did the huge cost-cutting measures in the second half of 2022 through the first half of 2023. Remember, big tech stocks got wrecked in 2022. You saw countless of those big tech companies down 30, 40, 50, 60, 70, even 80%. And I'm talking the biggest big techs in the world: Netflix, Shopify. Look where those stocks peaked at the end of 2021 and look where those stocks bottomed at in the second and third quarter of 2022, and somewhere actually in the fourth quarter of 2022, they dropped. Like, I'm talking like 70, 80%. Some of these stocks—Shopify, Netflix, Meta—I mean, the falls were incredible. Amazon, NVIDIA, AMD—you look at them all across the board; it was ridiculous.
So then those companies had to make some tough decisions. Guess what they had to do? They had to get their businesses more in line with what future growth rates were likely to be. So what they went ahead and did: major cost-cutting measures. Because many of those companies, you know, their business models just got bloated. There's no other way to put it. I mean, very, very bloated. And so they did these major cost-cutting measures at the end of 2022 going into 2023. And guess what then happened in 2023? This specifically in the second half of 2023 all the way through into 2024: earnings per share skyrocketed for these companies. You saw many of their earnings per share up 50%, 100%, some several hundred percent, some 400%, 1,000%. It was ridiculous on a year-over-year basis. It was like they completely changed their business models, but they really didn't. Right?
And as far as revenue goes, revenue was decent for these companies, but they really just got the cost-cutting measures through, and that caused their earnings per share to fly to the moon. Right? Now, these dividend value stocks, they didn't really do those big cost-cutting measures in 2022 and 2023. You know why? Their stock prices held up very well during that time. These stocks weren't really destroyed at that time; people actually were hiding out. So there was really no push to get the CEOs of these companies to really do major cost-cutting measures and the CFOs of these companies. Right? There was no pressure on the board of directors of many of these dividend value stocks because they held up very well in 2022 and going into 2023.
But that's all changed. Countless of these dividend value stocks are in a horrible place. They've lost and lost and lost for the last two years now at this point in time and lost massively to the market. Right? So now guess what's happened here in 2024? The board of directors of these companies have major pressure on them to fix what's going on, and CEOs are getting fired left and right from these companies. CFOs are getting fired left and right from these companies. You're seeing new CEOs coming in for 2025. So all these companies are now doing these major cost-cutting measures here in 2024. Right? And they're setting their business models up where their earnings per share are going to fly in 2025, even if they didn't have any revenue growth for their companies.
Now you compound that with a consumer that's in a better place in 2025, and what you're going to see play out is you're going to see revenue recovery for these stocks starting in 2025 and going into 2026, and then you're going to see the earnings per share go up at a substantially fast clip. I mean, you could be talking about 5% revenue growth, 50% earnings per share growth. It's going to knock your socks off in regards to what happens with that. Right? So that's something to kind of keep in mind here.