Twelve Rules for Riding a Bubble With Jeff deGraaf, Micron and Sandisk (Finally) Pull Back, Housing Stocks Crash

22:18Michael Batnick:Meaning what? Like, like down to 600 is nothing?

22:21Downtown Josh Brown:I think a lot of people that missed these stocks would love for this to have been the top. And maybe it is a local top. But let's not act like their shareholder base in these names is not totally fine so far. I mean, it's - Keep going.

22:40Michael Batnick:Go through some more charts. Sandisk? Sandisk was 250 in January. It ran to 1 ,500.

22:47Downtown Josh Brown:It was 1 ,000 three weeks ago. It could go back to 1 ,000.

22:50Michael Batnick:And the long-term trend would still be ridiculously intact.

22:54Downtown Josh Brown:Agree. Western digital, nothing. There's nothing here. It could be the start of something.

23:01Michael Batnick:Yes. You definitely want to make that bet? No. Let's skip the heat map. Just show the Van X ETF. And so well off the lows, I was mentioning to Jeff. Next is Micron. Those are weekly candles? No, daily, dude. Daily. Daily. So it was down 9 % at the lows. Buyers came right back in. and throw up this graphic. So I forget who I stole this from. No, no, no, the bubble chart. So what we're looking at here is, this is from ChartFlow, F-L-E-A-U. And look at the red dots. So this is intraday on the S &P today by sector, okay? So you can see the red, the red dots on the bottom, that's micron, all right?

23:40Michael Batnick:And this is intraday. So it was down all the way down to 9%. And what you're gonna see is them coming back intraday. Were they moving or did I ingest peyote? One more time. One more time. Look at the red.

23:51Downtown Josh Brown:Why are they doing this? This is intraday.

23:54Michael Batnick:It's from 930 to 4.

23:55Downtown Josh Brown:Why are they undulating like that? It's almost sexual. I don't like this.

23:58Michael Batnick:Stop. It's from 930 to 4. So look at this. Look at the bounce off the lows. Look at that micron. It feels like a horse race. It was down over 9%. It closed down 4%. Give me a break. The buyers stepped in. So yeah, listen. This will be down 10 % tomorrow. I don't know if this was the top or not.

24:11Downtown Josh Brown:Which buyers stepped in? Some buyers did. Not people that are up 1 ,000 % already. Some buyers did. This has got to be people that missed it and are like, this is my chance? Some buyers did.

24:24Michael Batnick:Or short sellers covering? I don't know, dude. Last week, we were talking about what happens to stocks that beat versus stocks that miss. We tracked that every quarter. And is this a bubble? Isn't it a bubble? Earnings season doesn't say so. So today, this is from John Butters at Facts It. To date, the market is rewarding positive earnings surprises reported by the S &P for the first quarter, slightly more than average. So just barely. Next chart, please, John. On the other hand, the market is punishing negative earnings surprises reported by the S &P much more than average. So the average price change is 1 % basically in line.

25:05Michael Batnick:The average price decline when they lose is like double the average. It's like down 5 versus down 2.9 on average.

25:11Downtown Josh Brown:I'm so glad you brought this up because this is literally the way that I'm personally experiencing this market. I have companies that chart off companies that had outstanding quarters like Amazon and Uber, and they sort of went up. Right. But then I have companies that didn't even miss or maybe missed a little or whatever or gave like a bullish outlook, but it wasn't as bullish as expected and went down 20%, 30%. I've been murdered this quarter in two names, Shake Shack and Toast, and they both reported one day apart from each other. If you actually look at what these companies had to say, their outlooks for this year went up.

25:59Downtown Josh Brown:Shake Shack actually raised their store count growth estimate for a full year. They had a surprise loss because beef and paper costs and the stock felt – 28. It was 28%. 40 % all in. like it's i think it's like 38 over four days or something insane like that but there's a lot of stocks like that um toast is down toast fell 14 after reporting then four percent then another four percent because why not they literally they literally had nothing but bullish bullish things to say but if you miss one metric whisper number it's like so kramer said this kramer said this morning um i i forget who he was talking about but he was saying we love the stocks we love too much and we hate the stocks we hate way too much like like that was his comment and i think that's like anecdotally for me i think that's sort of right um there's a lot of reasons not anecdotally what

27:06Michael Batnick:do we say in the chat uh about momentum having the best what period over the last 30 years like the second best X day return period. Yeah. The winners are winning and everything. All right. So here it is. The S &P 500 momentum has a live history back to November, 2014 and a back test extended back to 1972 across both live and hypothetical history. The index has never closed a six weeks performance as large as the current 30.5%. Never, never, ever, ever. So it's not anecdotal. It's literally in the data. Yeah.

27:37Downtown Josh Brown:So if you're in that group of stocks that has the AI CapEx wind at your back and you have momentum, like the stocks have momentum, they're being way overly loved with the exception obviously today of the memory chips, which looks like so far it was a one-day event. And then other stocks, like, dude, you can't say even one iota of negativity on one of these calls or caution. They will rip your stock 20 % of the market cap ripped out overnight. Retail stocks are getting killed.

28:12Michael Batnick:I mean, within there is restaurants and home builders. Look what they did to Netflix.

28:17Downtown Josh Brown:Netflix traded 108 to 80 on an amazing quarter.

28:22Michael Batnick:Spotify. All right. So, shit, I don't know who I grabbed this from. I don't know which bank this is, so forgive me. But there's a research report, AI token costs are eating internet profits alive. So the author wrote, my title is a tad bombastic, but it's worth noting that several internet companies this quarter explicitly called out rising LLM token costs as part of their expense outlook. I have a very sneaking suspicion we are going to hear a lot more about rising AI costs as the year wears on. So I say all this because I bring that up because the demand for the picks and shovels, the AI trade, and the demand for the shares is fully warranted.

29:04Michael Batnick:It just is. Look at this next chart. Global semiconductor sales and Taiwan export orders are both seeing torrid growth rates. What would you expect the stock price to do in this example? So Anthropic CEO said, I hope that 80 times growth doesn't continue because that's just crazy and it's too hard to handle. I'm hoping for some more normal numbers. I pulled this from the transcript. Then Jensen said, the second big idea is that in order for AI to go through understanding, reasoning, planning, using tools to take action, the amount of computation necessary compared to generative AI is like a thousand times more.

29:45Michael Batnick:So I understand that people are probably like sort of sick of this, whatever, just the talk and the this. But it is justified. People have not completely lost their minds.

29:54Downtown Josh Brown:I have already solved this problem. You go on to the LLM and you prompt it, find a way to use less memory. Find a way to use less compute. Who? You tell the AI to figure it out. Figure it out. why are we using so much compute to employ you find a way find a way to uh to give me the stupid answers to what i'm asking you like when was james madison's birthday find a way to do it with less compute i don't know i feel like it's gonna it's got there's got to be a solution you're not you're not doing that no i'm me it's not gonna be me um there's got to be a solution it just can't be like high cost of compute and the levels of demand that exist and it just goes on and on and on forever.

30:46Downtown Josh Brown:The models have to get more efficient.

30:47Michael Batnick:I think what they're saying is the lowering costs are accelerating demand. We're able to do more of it and we're just running out faster. Like demand continues to outstrip supply. I've got four more things I want to go through. This is from ConsensusGurus. He posted the sales growth for Micron and Sandisk, 222 % for Micron, 283 % for Sandisk. And yet if you look at the, and the EPS growth, forget about it. It's a joke, 582 and 1728. So he's breaking down Micron, Sandus, Seagate, and Western Dig. And look at the PE ratio for these memory names. Micron is nine times 26 earnings, seven times 27 earnings.

31:25Michael Batnick:Sandus is 11 times and eight times. This is like not that far out. And you say to yourself, huh, maybe these stocks are cheap? No. They always traded those. I'm not done. Not done. I'm trying to educate. So why are these stocks so air quote cheap? Why are they only trading at eight times earnings? Well, the reason why is because these are the absolute most cyclical names on the planet and investors aren't dumb. Not going to get fooled for the 11th time. So I had Claude do some work for me. Look at the operating margins for these four names and look at Micron swinging all over the place. All over the place.

32:06Michael Batnick:Plus 40, negative 60. Next chart shows the revenue growth year over year. Investors aren't dumb. So names like this, especially at this size, they deserve a discount. So do not look at the PE and get it twisted that these stocks are cheap. But what is crazy is because they are statistically cheap, and I'm using air quotes again, Micron is now the largest stock in the Russell 1000 value index. Oh, that's great. Chart on.

32:34Downtown Josh Brown:Oh, that's the best.

32:35Michael Batnick:Shout to Todd Sohn. Isn't that wild, Josh?

32:38Downtown Josh Brown:Yeah, that is the best. I love it. But I'm a value investor allocating to Micron because on my screen, it's the cheapest stock in the market.

32:47Michael Batnick:So it's not the screen's fault. That's just what it does. So Todd says, a fairly consistent list over the last 20 years. Exxon, GE, J.B. Morgan, Berkshire, like legit value stocks. And now we've got Micron. So Micron has gone. I had Chartkit do this. This is true. I can't. I love it. I asked Chartkit to map Micron's path in the S &P in terms of its ranking over the last 20, 15 years, whatever it is. And for the last five or 10 years, five years, it's averaged the 89th spot in the index. A year ago in April, it fell to 127. It skyrocketed at the open today. It was the 10th largest holding in the S &P freaking 500.

33:30Downtown Josh Brown:It's amazing. It's amazing. It's bigger than every company you've ever heard of with the exception of nine others bravo i mean it's was it bigger than jp morgan at 10 j and j it's got to be right there like bravo to micron all the dude all of it like every blue chip stock does that sound right to you that doesn't sound right to me that's that sounds that sounds like one of these

33:57Michael Batnick:things doesn't belong when you say sounds right does it make sense to me today yes do i think it will be like this in a year from now? Probably not. I can't imagine it. Probably not. I don't think so.

34:07Downtown Josh Brown:I don't think so. I literally can't imagine it.

34:11Michael Batnick:But today, for the moment that we're in, it makes sense.

34:16Downtown Josh Brown:Keeping on this theme, I want to point to a piece at the Wall Street Journal contemplating AI as an industrial bubble. We've been living in this reality for the last three years where more CapEx is better. And what they're pointing out in this piece is that historically, that's just not true. More CapEx spending is bearish, not bullish. For obvious reasons, it's less profit for shareholders. And oftentimes, if you think people are sloppy with buybacks or with M &A, you should see the history of CapEx bubbles, how bad corporate managers historically have been allocating resources. And the reason why is because it's hard.

35:04Downtown Josh Brown:Especially in tech, you're trying to predict the future in real time and put the right amount of money behind projects that you have no idea what the ROI is going to be in advance. So I want to just share a couple of quotes here. You know, one of the reasons why tech has done so well over the last 15 years or so is that we've always looked at them as high profit margin, low assets, like not capital intensive, not heavily industrialized. They were like these kind of software information technology businesses. And as a result, we gave them systematically higher multiples than many other areas of the market and deserved because they earned a ton of money from whatever their revenue was.

35:50Downtown Josh Brown:More of that became earnings than for most, if not all other sectors. Okay. This is this is the journal. It's a guy, Greg Fisher being quoted from Quint Capital. We know from this 100 years of data that CapEx is bad. The lesson has implications for the hottest stocks on the market right now. The Mag 7 became magnificent because they made huge returns on relatively modest capital expenditures. If Ford came out with a great car design or Boeing with a superb airliner, they needed to invest in factories to keep up with demand. Once Microsoft released Windows or Apple devised its Google search algorithm or Meta created Facebook, the cost of every additional user was tiny.

36:36Downtown Josh Brown:Even NVIDIA, which sells physical objects, outsources the actual manufacturing. That was then. This is now. We have this chart. This shows the assets of these companies at the end of each quarter. And nobody would mistake these for asset light companies anymore. These are AI industrials would be the way I would phrase it now. The light blue is showing Q126. And the dark blue is showing the corresponding quarter from five years ago. And what you can see here is that the capital assets that these companies are carrying on their balance sheets are in every case twice as high. Apple is not on this list, which is its own story.

37:24Downtown Josh Brown:So these are basically the hyperscalers plus meta, which thinks it's a hyperscaler. Jeff Bezos was calling AI an industrial bubble. Not in a bearish way. He said the winners will win big and society will benefit, LOL. But the overall return on all the money being spent today probably won't be great. What do you think about this idea? And do you think – oh, and then they did one more chart, low-asset firms versus high-asset firms. So they're showing the tech bubble from 96 to 2003. And what they're showing is the firms with high assets, actually the stock prices fell way more than the companies that kept their CapEx low and were considered low-asset firms.

38:13Downtown Josh Brown:What do you think of this concept of an AI industrial bubble? And is this the kind of thing that ultimately a lot of people might start thinking, which could shift the psychology and the stocks that are actually working? It is an AI industrial bubble.

38:29Michael Batnick:I don't think, but in the same way that the fiber optic build out in the tech bubble was, it's the same thing. Well, that didn't end well. But it's that on steroids. Because the amount of money that we're spending is levels of magnitude bigger than that was. And we are doing that in anticipation of a completely different world, which the internet didn't turn out to be. So I don't think there's anything controversial in this idea that more spending is worse than less spending. Because the spending is guaranteed, the returns are not. However, I do think we need to be open-minded to the idea that perhaps data from the last 100 years is not set in stone and permanent forever.

39:25Michael Batnick:Adam Parker did a piece last week that I have opened up that I haven't had time to read yet. I'll do it. Maybe we'll do this next week. Adam has a post, a research report, 10 investment mantras that have changed since 2020. money. Sometimes things change and they change forever. Now, this idea of asset light being better, it sounds like it's a permanent type of thing. That's not like a sick, but I'm open to the idea that maybe it is different this time.

39:50Downtown Josh Brown:If you think the profits of all of this AI activity are going to accrue to the platforms themselves, then you have to own the platform. And if you want to own the platform, that requires millions of machines being plugged in in data centers all over the world. And that's what these companies are investing in. Now, that might turn out not to be true. It may turn out the platforms are not where the profitability of this accrues. It may not be about servers and GPUs and electricity. The profits may ultimately accrue to a software level that we can't yet imagine. We don't think they're going to accrue at the LLM level completely.

40:38Downtown Josh Brown:But there is a world in which all of these data centers and all this profitability gets driven down into a commoditized state. And the software layer becomes the most valuable part of AI. And if you believe that, you're probably calling people trying to get shares of open AI and Anthropic before they come public. But we just we don't we don't know for sure. Is it the platforms? Is it the models? Is it something else, a services business that we aren't sure about? Is it the transference and warehousing of data in the snowflake realm? like we can't know who's going to have the most profitable slice of the pie.

41:21Downtown Josh Brown:All we know is if you don't go for it right now, you remove yourself from being in the running. And that's what none of the hyperscalers are willing to do, including Meta. Let me ask you this.

41:32Michael Batnick:Over the next 10 years, how confident are you that the mega cap tech, unless you just use all of them and throw in the LLMs in there. How confident are you that those names, including the ones that are now asset-heavy, are going to underperform say the S &P 490? How confident am I that which

41:51Downtown Josh Brown:are going to underperform?

41:52Michael Batnick:Do you feel super strongly one way or the other that the mega cap tech, all of these asset-heavy names are going to outperform or underperform? Do you feel super strongly that because I really don't.

42:02Downtown Josh Brown:No, because I don't think anyone can say for sure. Verizon and AT &T and T-Mobile ended up being the only three mobile providers with any scale in the United States, right? If you look at their stock prices over the last 15, 20 years, for all the money that they've invested in their network, 2G, 3G, 5G, all the shit, all the infrastructure, all the cell towers that have been built, all the billions of miles of cables that have been run, all of that infrastructure and all of that expense into building out what is effectively a completely wireless map. There's really almost nowhere on the map without service that matters at this point.

42:46Downtown Josh Brown:What do the shareholders have to show for it? So they made the bet. They made the bet 25 years ago. I was here. They made the bet. They said, we need to have the best grid. We have to have literally the whole map covered. We need to invest all this money, billions and billions of dollars every year in infrastructure in order to cover the whole map. And they did it, and the f***ing stock prices are horrendous. Now, you can argue that they did too many side quests. They bought Yahoo. They bought AOL. One of them started buying cable companies. Another one bought Dish Network. You could argue that they made bad investments.

43:27Downtown Josh Brown:I would just say the bigger picture is they own wireless. They own it. And for what? To what end? Who did that help? Like what shareholder was rewarded for that race? So it's really hard for me to say that an industrial capex bubble, like what we're going through in AI, automatically equates to there even being any winners. There is a firm in Chicago, a prop trading firm, one of the most prominent commodities trading firms in the world, currently having discussions about trading compute as though it's oil or electricity, trading units of compute, allowing companies to make forward investments or hedge some of their CapEx spending just in case compute prices fall, whatever the case may be.

44:22Downtown Josh Brown:That sounds like it's gonna be an important innovation in financial markets that could ultimately bring down the cost of compute. If that happens, then I'm not worried about the profitability of all this investment, right? Because I know the usage will be there. That's the one part we all know. No one's going to put anything back into Pandora's box. AI is not like, ah, we're bored with it. Okay, so we know the usage will be explosive. We don't know what the cost is of that usage, to your point, but we also don't know the profitability for the companies that are making the investment to build it.

44:57We assume the profitability will be there,

45:01Downtown Josh Brown:but how can we be sure so what if right so so this is so you ask me am i sure one way or the other that the that the capital heavy companies now that are dominating the the data center biz will outperform or underperform the market no same can it how can anyone be yeah i hate to be

45:24Michael Batnick:so wishy-washy but like it's tough well how could you know right right right right okay um let's move on to an area of the market that we spend very little time talking about because it's an absolute barren wasteland.

45:37Downtown Josh Brown:This is not a bubble.

45:40Michael Batnick:Could you imagine a world where housing activity returns? The fact that the economy has been as resilient as it is, the fact that the stock market and spending has been what it is, despite the fact that one of the actual largest parts of the economy is in a depression, that's a stretch, is remarkable. So let's talk about the stocks of the housing stockpocalypse. Whirlpool reported last week. I meant to grab some of the quotes.

46:10Downtown Josh Brown:Holy shit.

46:11Michael Batnick:But this is durable goods like dishwashers and shit like that. Down 81 % in the last five years.

46:21Downtown Josh Brown:And weights have actually come down since this.

46:25Michael Batnick:This is drawdown. It's an 81 % drawdown. Pool, which is actually pools, is literally down. This is not a drawdown. It's down 55 % over the last five years.

46:36Downtown Josh Brown:Holy cow.

46:37Michael Batnick:Zillow just reported the stock was at 90 earlier last year or mid last year. It's now at 39. And they said, in terms of what we're looking for in the back half of the year and how we thought about it, we're planning for the housing market to continue to be effectively flat. You're right. Okay, whatever. We're expecting sales go through. Okay, not good. Not good. Not good. Home Depot, multi-year lows, and the stock just looks terrible, terrible. There was support, no longer support. And finally, Lenar was$185 in the -

47:06Downtown Josh Brown:Oh, my God.

47:07Michael Batnick:In the summer of 2024, the stock is$85. This is just really ugly.

47:11Downtown Josh Brown:There is nothing good happening. Nothing good happening in this group of stocks.

47:18Michael Batnick:So to me, this says a lot about the economy and the market, that we're able to just brush this off.

47:24Downtown Josh Brown:Yeah, and what's weird is you would think that there's some desperation to unload houses afoot, and there just isn't. There's no collapsing housing market anywhere in the country that's relevant. None of the 20 metropolitan areas have a collapsing housing market. They have stagnant markets, but I think what that goes to show is these companies that are suppliers to the housing market, they need turnover. over. They need more buying and selling.

47:56Michael Batnick:Existing home sales is just, it's basically as low as the problem.

48:01Downtown Josh Brown:It's not the price of the houses. No, there's no activity. There's no activity. Wow. What a shit show. All right, let's do this next one.

48:08Michael Batnick:All right. Yesterday, I asked ChartKid. I'm like, hey, you know what would be a cool idea? Let's talk about, show me how many$100 billion market caps there are by sector. I don't know if you could do that. It's a big project because you have to, if you just look at the index today, half of the names weren't there in 2010. And if you go by 2005, like a third of the names weren't there. It's a different world. All right, so Matt went inside the index. He unpacked it and he went year by year and he showed that we have 115 stocks that are$100 billion or more. We had 20 in 2005. I don't know, a handful.

48:46Michael Batnick:Is this more than you would have guessed?

48:47Downtown Josh Brown:Is this more than you would have guessed there were right now? It's like if you just called, somebody said, how many companies are worth over$100 billion in the S &P? Would you have said$115 ,000 or higher or lower?

48:58Michael Batnick:I think I would have said$100 ,000.

49:00Downtown Josh Brown:I probably would have guessed. I think I'm so out of it. I would have said like between$50 ,000 and$75 ,000. Okay. Well, I mean, listen, fair.

49:07Michael Batnick:It was between$50 ,000 and$75 ,000 not that long ago. So inside that$115 ,000, 31 of them are tech. And if you include comm services, it's another seven. So 38 are tech. and this is about what you would expect. No real surprises there. 19 financials. But Matt was like, there was zero financials in 2009. Next chart. None of them. There was no$100 billion financial stocks after the GFC.

49:33Downtown Josh Brown:Right. Now we have Berkshire and Morgan Stanley and Goldman Sachs and JP Morgan. I'm just trying to guess like off the top of my head.

49:42Michael Batnick:I bet like CME is probably close. I know S &P. CME is$103 billion. S &P is definitely$100 billion. I mean, there's a lot of Schwab.

49:50Downtown Josh Brown:There are two material stocks that are$100 billion. Can you guess either one? I can't.

49:58Michael Batnick:Newmont's not$100 billion. No way.

50:00Downtown Josh Brown:No way. No, it has to be a chemicals company. Dow or DuPont. It's got to be one of those, right?

50:07Michael Batnick:All right. Lastly, Matt charted the rise of the$100 billion for tech. This is sick.

50:15Downtown Josh Brown:Wow. Wow. So, all right. So to recap, in 20, like, I'm just trying to put this in context. In 2016,

50:24Michael Batnick:there were like six or seven stocks that were a hundred billion in the tech sector.

50:29Downtown Josh Brown:And we all know what they are. And it's the same ones that are now, but there's, the story is that there's 20 new ones or 25 new ones. And we know what those are. Those are Lamb Research and I don't know, Applied Materials, Micron. I don't know. Is Seagate or Western Digital? Are those now? It must be. Maybe Dell? Has Dell joined the$100 billion club? Oh, yeah.

50:56Michael Batnick:Western Dig is$1.68. Dell has got to be. Dell is$154. Yeah, I mean.

51:03Downtown Josh Brown:All right. Time out. From the chat, Sam Eby says, Josh, the Verizon and AT &T underperformance is a consequence of government regulation. The companies became regulated utilities with pricing needing approval. They did? Did I miss? I don't think that's the case. You might be, Sam, you might be saying like de facto they're having trouble raising prices. I think what actually happened is T-Mobile bought Sprint, got its shit together and became a third competitor that was willing to out-advertise the other two on lower prices while simultaneously somehow building a network that was comparable, which crushed pricing for, I don't know, the last seven years.

51:45Downtown Josh Brown:And I also think they did a lot of dumb stuff. All right. I'll make the case. Yeah. So we're going to do make the case. What did we skip? Oh, we're going to skip that. Okay, got it. All right. So I have this as one of my best stocks in the market. I actually think it's setting up for a breakout. It's okay as an investment here. I wouldn't say like there's like urgency until, but I want to show you guys, let's pop this chart up. so Goldman is making a lower high, but maybe it's not. So a pure technician would say, call me at a thousand, right? You agree with that? I'm so glad you said that.

52:24Michael Batnick:Yeah.

52:24Downtown Josh Brown:Okay. A pure technician would say, okay, I like the way it respected the 200 day twice in March and, and in early March and in late March, it had every opportunity to break down that that's that blue line, that rising 200-day, you see that the buyers came in exactly where they had to to keep this thing in a statistical uptrend. It also had a recent gap, which is earnings-related, and it's held that gap for the last couple of weeks. So it's sort of treading water. It has not broken out again. But part of me wants to say, I think this is almost like a market signal. if this thing takes out a thousand to the upside isn't that indicative of the investor crowd saying another six months a bull market yes like we're gonna get the ipos we're gonna get the sex we're gonna get the action we're gonna get capital formation and underwriting and trading and it's all happening and if it fails to break a thousand that has implications too that people might be thinking this is as good as it gets.

53:34Downtown Josh Brown:I think Goldman is the ultimate capital markets mood ring. What are your thoughts? I could not agree with you more. So what's it going to be? Break out or fail at that winter high?

53:50Michael Batnick:Well, it certainly might fail. Obviously, that's a possibility. But all of the evidence suggests to me that this is a bull market. And so I think 1 ,000 is more like than 800. But I would say, I don't know, 70, 30 that we get a thousand before 800.

54:06Downtown Josh Brown:Okay. So I'm looking at that 950 to 960 zone, which is sort of like the last top. Like for me, I want to see it break that level with conviction.

54:19Michael Batnick:But I want to see it go tomorrow. Like it is at the upper end of its recent couple week trading range. I want to see it go tomorrow.

54:26Downtown Josh Brown:Yeah. I also don't love chart back on. I also don't love how the last time it was in the mid 900s. Look what RSI was doing. It was like 70 plus.

54:39Michael Batnick:Yeah.

54:39Downtown Josh Brown:And you're sort of getting a negative divergence here. You could barely get to 60 RSI with this stock within spitting distance of the old high. So I sort of don't like that either. But the case I'm making is not to buy the stock or not to buy the stock. The case I'm making is watch this stock for your signal that it's almost like the groundhog. I love it. It's party on for the next six months if this thing goes.

55:05Michael Batnick:I think that's a great call. The longer it takes to go, the more likely I think it is to fail.

55:10Downtown Josh Brown:This stock is up 70 % over a year. So taking a breath right now actually makes a lot of sense. Here's something else interesting. Over the last five years, 23 % annualized returns. Goldman has actually done better than both Morgan Stanley and JP Morgan over the last five years.

55:31Michael Batnick:Remember when they were ready to throw out DJ Solly head first? They were writing articles about him. People were pissed.

55:38Downtown Josh Brown:Yeah, there were some old line guys that didn't get the size bonus they wanted, and they looked at the way he was spending on fintech, and they were just like, get this guy out of here. I want my money. He was making bad decisions, and they fixed it. Can I tell you something? I gave a talk at Goldman Sachs today, not to brag. I crushed it. I spoke to their professional investor forum with Shinali as my moderator. And it was about the next generation of investors and the next generation of advisors. And the whole audience was RIAs. And Chart Kid Matt was there.

56:15Michael Batnick:Hell yeah.

56:16Downtown Josh Brown:So I brought Chart Kid as my plus one. Hell yeah. He was working the room like a pro.

56:23Downtown Josh Brown:anyway, that building is insane. All right, do your mystery chart, and then we'll get out of here.

56:28Michael Batnick:All right, we've done this bit before, but it persists. Is that the hint? Yes. These two stocks, this is three years. Zoom in. Those are the actual prices, 432 and 87? They just trade almost exactly the same. And even today, so you could see both of these stocks have been under pressure for the better part of the last year. And even today, they were both up 2 % or 3 % or 4%. I don't know. But it seems like they're trading in lockstep. And I mean, it's fair. They are not competitors, although they trade off the same fundamentals, basically. And we've shown this before.

57:09Downtown Josh Brown:So the only reason I have this is because I own the bottom one. and I actually think it's hammering out a higher low. Hope so. But some people in the chat got this. Finance Cobra said Spotify and Netflix. Great job. They're fans. MD Chaz said Suncoast Video and Blockbuster. Close. Levi Maitland got it right. Rabbler got it right. We have very smart live chatters. Thanks to the Pounders for showing up to him. I want to say one last thing on Netflix.

57:43Michael Batnick:It closed the gap.

57:44Downtown Josh Brown:So if it can't find anybody - The stock is fine.

57:46Michael Batnick:If it can't find buyers here, I'm not particularly concerned that there's a lot lower prices, but we'll see.

57:52Downtown Josh Brown:You know what? I actually think it's defensive. And I actually think as money comes out of some of the momentum stocks, this is the type of name that could catch a bid because people might not be excited about it, but they're not worried about it. Guess what? If this thing pukes, pukes, and like rolls over into the 70s, I'll buy more. I don't care. I'm staying with it. Well, for my sake, let's hope it doesn't. All right, guys, thank you so much for watching the show. We appreciate you. Thank you for stopping by. Please make sure, hit the like button, leave a rating, leave a review. Tell Michael how handsome he looks in his Knicks gear.

58:25Downtown Josh Brown:Tell me you like my suit, whatever. Engage. Tomorrow's Wednesday, all new Animal Spirits with Michael and Ben. We have a new Ask the Compound coming this week. And on a very special episode of The Compound and Friends, Ben Carlson will be joining us live in studio. He's in New York from Michigan for this big party we're throwing tomorrow night. And we will have Ben in the studio with us, plus another special guest. So lots of stuff coming your way. Keep it locked on the compound. We love you. We'll talk to you soon.

58:59Michael Batnick:Thank you.

59:29Downtown Josh Brown:security, or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.