Video Closed Captioning:
this meeting is being recorded
good morning good afternoon good evening
folks michael’s uber one rental at a
time back with taylor from life goal
investments how you doing buddy
doing great doing great thanks so much
for having me absolutely i don’t know if
you saw it hopefully you did uh uber’s
ceo was out parading around wall street
trying to see what’s going on the last
over the weekend and he put out a note
to his employees which quickly got
leaked
that basically said
investors risk risk appetite has changed
they are only going to pay for earnings
no longer revenue we have got to run a
tighter ship we are going to trade
hiring as a privilege we are going to
whack marketing spend
and this isn’t about uber per se to me
because living in the valley this is
about uber sending a signal to every
single public
and
private tech company that you better get
your ass in front of your burn rate
because the money is not there burn rate
burn rate burn rate and there’s going to
be a lot of companies that go bust
because they didn’t control it what do
you think
building suspenders like typing down the
belt right i mean
to your point of like you know the
difference between revenue and earnings
is what you’re spending there’s only two
sides to the equation in your household
budget and two sides of the quasi-any
businesses budget there’s your revenue
on one side and there’s your expenses on
the other side and if one is struggling
versus the other it’s got to be
corrected so their revenue is high
generally because they obviously are out
there and there’s a million uber cars
running around picking up people at the
end of the day but they’re not
controlling the other side of the
equation very well right now they’re
spending too much money for growth to
box out competition like lyft et cetera
and it’s a time where to your point it
and i hate doing this because i sound
like a broken record but it all falls
back on the fed
where if they can’t go out and finance
debt cheaply
their business operation doesn’t work so
as the fed raises rates the cost of
financing goes up and therefore their
profitability just gets squeezed and
squeezed and squeezed and if they’re not
profitable to begin with it just gets
more and more negative on the other side
yeah so again i don’t think this is
really an uber comment this is again a
comment for every non-profitable company
public or private there’s a lot of
companies in the valley uh that have
been focused on revenue and kind of grow
at any cost and
you know it um
it works when risk is zero it works when
you can finance anything
it’s not so i expect a lot of tech
companies and non-profitable companies
public and private
to do what uber said and frankly
facebook and others where where they’re
going to freeze hiring uh i i’ve told
people that a recession is coming for
months and the first thing they should
do is
get a part of mainline versus new
businesses right i worked in software
right there’s always these new software
ideas where they take a few people and
go hey go try that
that’s this is not that time to be there
go get part of core you want to be you
want to be close to revenue not some new
idea that you can just whack the entire
unit um
you sound a lot a lot like warren
buffett as you make these comments right
seriously i mean like the the more
boring right now is not the worst thing
in the world baron’s wrote an article
this weekend on them this is this is
gold this is the best warren buffett’s
that i’ve ever heard bar none bar none
if you go back to 1965 and look at when
he took over berkshire hathaway and you
look at the stock price till today
if the stock price berkshire a were to
lose
99.99 percent of its value today
he still would have outperformed after
that 99 drop the s p 500 since he
started in 1965.
wow i’ll reiterate that if that if that
because my mind was absolutely blown
when i heard that stat so again if
berkshire a
his his you know his company lost 99 of
its value today
he would still have outperformed the s p
500 per year since 1965 when he started
yeah and again
the beauty of warren buffett is he
doesn’t get emotional right i’ve now
seen him two or three times
be called an idiot in a [ __ ] by a fly
by night investor who got lucky on
timing
yeah
and uh
david portnoy get your ass handed to you
buddy
yeah because
you didn’t realize you got lucky
yeah yeah
to our point uh in one of the prior
episodes like growth stocks it didn’t
matter what you were buying in a growth
stock market and this is the same
conversation we’re having right now with
these companies ubers etc it doesn’t
matter what it was when the fed holds
rates at zero it gives all of these a
lifeline to say hey i can grow at any
cost and explode and at some point i’ll
become profitable and then people will
be willing to pay for i’ll catch the
i’ll get escape velocity and i i too
will be amazon or whatever right yeah
yeah one of the one of the few uh market
penetration strategies where you come in
and you actually lose money consistently
um but jeff bezos is also a wizard that
most folks aren’t exactly exactly yeah
this this is um risk is being repriced
recession
just again recessions are
self-fulfilling sometimes
i stand by my uh
idea that this summer is going to be the
last blowout right we’re going to
finally can travel the world masks
aren’t everywhere i think a lot of
people are going to go have one more
party and then the consumer retreats
um
which is it’s dude it’s i don’t have a
lot of rosy pictures about our economy
uh for the next 18 months i’m quicker
than you on the recession talk yeah
we’ve discussed this i think that the
fed is not able to raise rates as much
as what the market’s saying right now
and they’re going to have to be less
aggressive and they’re still going to
break it
you know they’re still gonna break the
economy what i’m getting at there is
they’re gonna raise rates yeah but the
economy is slowing enough to at this
point already that they’re gonna raise
rates and break it and break the economy
force us into recession more quickly you
agree you just think it’s gonna happen a
little bit later because you agree in
the strength of the labor market yeah
it’s it’s just that would argue yeah
it’s the again but that could turn on a
heartbeat right you get more ubers
that i don’t know what i mean i don’t
know what so again
company a
you know they were hiring 100 people a
month
and you know what suddenly they hire
five
and then you have all these other tech
companies cutting heads it it could get
bad
how do you continue to hire at at a fast
rate when you see inflation the cost of
hiring that person going up and the
productivity of that person going down
so so workers right now are being less
productive i know than in 40 years and
they’re costing more how does a company
afford to do that well unless they’re
just passing through this exorbitant
cost to the end consumer and at some
point the end consumer can’t afford it
and this economic wheel flywheel stops
turning and that’s called a recession
yeah i can already hear all the bosses
right i was a second level guy when i
left and um
i can already hear the screaming forget
your ass back in the office
yeah what year are you talking here
do you mean i think it’s going to happen
i think right now they’re going to start
screaming get your ass back in the
office for a statement oh i i thought
you were talking about a realistic time
in your past when you were when you were
here and then i i’m talking about like
what year i got no no no no
yeah
if you’re a boss or a second line guy
and you’re running you know you have a
budget and all this and you see your
people being less productive one or two
things are going to happen
first you’re going to try to scream
everybody to get back because you you
lose that inertia of people being
productive together otherwise you’re
gonna say guys i’m gonna have to start
whacking people there’s not enough work
this is why better.com and all these
other people are whacking heads there’s
not enough work
do people get drawn back into the office
i think they do yeah again this is all
part of the process you so right now the
labor has all the power
right now you’ve got to have 17 flavors
of popcorn and 17 different things of
soda
and all that other freaking nonsense to
get people there
unions are growing apple amazon all
these other you know
laborers have the power
recession kicks on unemployment doubles
people get scared they suddenly run back
to the office because they don’t want to
be laid off
yeah that’s where we’re going
i totally agree and i think that you
know the the up for debate conversation
that everyone wants to have is whether
back in the office works better or
working at home is more productive and i
think this is getting called into
question right now and i think that
when things get tight
bosses want people they can see what
they’re doing absolutely and that this
is it i’ve had to make layoffs i’ve had
to make layoffs before i’ve had a
spreadsheet i was in the boardroom
uh a spreadsheet i think i had
50 people in my purview and i was told i
had to let 12 go
yikes 24 a quarter of your workforce
yeah
guess what i mean the people that got
let go or the people i didn’t see every
day
yeah yeah so
yeah and that’s the thing is like again
people can argue from productivity from
home and you’re not sitting in the car
going to and from but at the end of the
day if you’re not in the eye of someone
that’s making a decision and someone
else is and they can see that they are
working it’s it’s a tough argument to
make there
yeah it’s coming and again labor’s gonna
that’s why i think
this pushes to next year because i think
labor has enough power enough inertia
we’re still 3.6
unemployment i don’t think this gets
gnarly until it’s seven
i just don’t see it
i just think there’s so much momentum i
i don’t know at this point i hope i’m
wrong because the sooner we break this
goddamn thing the sooner we come back
together i mean really it’s gonna break
is it breaking q3 or is it breaking q2
next year i would rather break early
than later i just i still i don’t see it
i don’t see it
yeah yeah
we’ll see up for debate again i’m on the
side of it breaking earlier and then i
hope it does rates as high and and my
side also likely comes with a little bit
more of a mundane mild recession than
yours if it if it stays hot they crank
rates higher that’ll get uglier
it’s it’s weird to say that if things
are worse now then the recession might
not be as bad
absolutely it could be worse
welcome to economics 101. yeah that’s
funny because we both see it the same
way and i hope you’re right because i
would really like it to be not as bad i
just think by the way we neither one of
us have changed our tune either no since
we have any of our conversations we both
have been in the same camp it’s uh and
you know what will probably happen it’ll
probably land somewhere between me in
the middle yeah
hopefully both of us don’t just come out
looking like morons and we’re totally
wrong but yeah well actually you know
what that might be okay because we’re
calling for a recession yeah it’d be
okay yeah
yeah the fed gets lucky and lands this
thing softly more power to them so two
more questions as we round this up uh
do you think we get 50 bases in june and
july
or do you think they win july
yeah yes i do think they probably go 50
- i okay and i have i have moved on
that i have moved on that i i did not
think they were going to be able to get
as many as quickly um but i i do think
you probably get two more 50 50 and they
break
and then they break and then they pause
okay that’s my thought process yeah do
you think it we are in a recession today
meaning that the q2 gdp print will be
negative or do you think that was an
aberration in q1
i think it was an aberration but i think
you’re going to see
slowing gdp growth uh from trendline
last year if you want so but not
negative
now yeah i think we probably get a
positive gdp print correct yeah i think
yeah and me saying that we’re gonna see
slowing from last year like that’s
that’s a stupid comment on my part
obviously we’re gonna see slowing yeah
yeah genius good move
but i no i do think that that the
accounting mechanism that takes place
there you know with inventory restocking
is probably um you know
but but nonetheless it’s it’s coming i
think we get yeah it’s coming all right
taylor where can people find you because
you put out some amazing stuff folks if
you’re not following him he just put out
a ig post about kathy wood being the
antithesis and tith is this the opposite
a diversified investor i thought that
post was awesome well done
thanks so much yeah follow us at life
goal investments we put out something
on instagram we put out something daily
generally it’s broad market stuff it
doesn’t have anything to do with our
company it just talks about
economics and markets and and just rules
of thumb yeah
kathy wood up 157
down this down there
not good not good thanks taylor that’s
not diversification not diversification