Boy, josh, you looking a the price target increases, every day. Monday you got a couple firms, wednesday two more and thursday three and friday today, two more the stock goes over 200 for the first time ever. Morgan stanley today, 225. Goldman goes to 235. Nobody should ever listen to my opinion on netflix. I bought it hat like 70 and sold it at 100. Thats 100 points ago. I i just look, its not that i disliked it i just never felt like i really understood how it would get as big as it now is, and to some extent i still dont i understand how powerful the content is i dont disagree i pay for it myself. I just ive always looked at this segment of the market as hypercompetitive, and you know what it was and still is, but netflix is an amazing competitor, and the content, goldmans note, the content is driving stocks and if you were slow to understand that you missed a lot of it and im in that camp. Im sure ill hear i cant own it, too expensive, too rich for me those arent the kind of stocks i buy. That sounds like a copout almost on a stock thats just run so far that people have missed. Jim, im not looking at you thinking youre going to tell me that. He shade okay. He can buy 50 shares of jc penney for less. Unless, of course, you want to admit it. Is he the guy at the concert that yells free bird, every day. Heres the answer. Heres the answer. Do you own netflix . I do not. Would you buy netflix i dont think valuation is is a consideration or a reason not to buy netflix here. If it has rising revenues, the earnings are going to catch up to it. Thats the point right there. This is a great point. And it does have rising revenue. The most interesting thing is the price increase they put through a couple of weeks ago. The share price or market cap has increased by roughly 8 million, 9 million and steve, our an oldtime security analysis, you have the subscribers, if all upgrade, 80 gross mar gyp on that, you actually get an increase in the value that should be around 15 billion so the question for all of us, and this is on the valuation thing, im saying it should increase 15 billion it only increased 8, 9 by theol in market bill was the extra 6 billion already in the stock price, and im saying yes, this is news that happened two weeks ago josh, youre right about s subscriber growth and that will continue and what everybody is upgrading on is the price increase, and im already saying thats in the stock. If youre making the argument, youre betting that the content delivery and their quality of content is not going to continue to improve. No, no, no, not at all. Thats why i gave an 80 gross margin to the number. It can improve. Narcos season three, better than groems. I dont thi better than game of thrones. They are making that show primarily in spanish and doing this in europe and asia. They are making native content shows all over the world in a way that arab bow couldnt even dream of right now its so powerful the international store to, and whats really fascinating about that is wall street hated it i was on the show the day they said were going to spend like 1 billion internationally the stock absolutely collapsed everyone said its execution risk they will have to do a secondary, et cetera very, very shortsighted, myself included, because, boy, have they pulled it o. International to me is so much more powerful than what they are doing to the u. S. Does this change the way, steve, that investors should look at highgrowth tech stocks. Some have changed the way they look at amazon and Value Investors have been willing to buy it for some of the very same reasons that have propelled netflix to where that stock currently is. Well, you know, its funny. Netflix, i sold the stock in the 170s, and made some really good money on it. But netflix has better valuation than amazon. You cant compare the two. No. They are different stories. But they are high valuation stocks. You still have to be a growth investor to invest in it and it goes back to discipline. If youre cheating your discipline a little bit and the worse thing that can happen youre successful at it. Youll cheat more, and youll wind up in a lot of trouble and if youre a professional investor youll lose your investors because thats not what they hired you for. Part of the reason is the price increase and the other reason the stock is moving higher is because we keep hearing back cord cutters yesterday from at t, hearing it from comcast guess where they are going they are going to netflix. Content is getting more expensive. They will do well. They are the step for it, more so than amazon because they let people work on their own dont bother them at all its a great reputation, and the momentum continues and they still have Pricing Power and we lose sight of that relative to what youre spending on cable or on satellite, this is this is this is not even a weekend tip can you talk about their price target because you always get another stock with this stock and it valuation and maybe that will be monday. Its a herd everybody has come out for the most mart. I hope they miss monday, hope they miss bad so i can get it. The question is how good do they need to both . Oh, they need to they need numbers. Do you think it gets in the stock, a big beat . They are going to say well spend a lot more money. You dont own it either but its a great company, but at the stock price, like weve talked about,ive missed it. Let me ask you this who owns yelp . I do. Started buying it. Thats a high piece. Thats a high pe stock. Why did you buy yelp . It has a lot more room to grow than netflix does in my view. Really . Yeah. Because its just starting actually, if you look at whole space that yelp is in, its not everywhere, its got International Growth and u. S. Growth, and i think the potential for them as more and more people get on. Im saying youre willing to buy potential. Yes. Thats what were depending on with all of these stocks, whether its tesla or amazon or netflix. But yelp is making real money, and i think they have the potential to really grab share, much more the road map ahead for them is much larger than netflix. I dont agree with netflix we missed it, and i think it could be a good room to run, but at some point the law of large numbers come to affect netflix. Who owns salesforce anybody . Why not thats another high valuation stock. I dont think youre going to go through all 500 stocks. But let me im trying to make a point. So let me answer the question to the point i think youre making the stock that has the highest priced earningstomultiple that i own is google, and depending on what analyst numbers you use, somewhere between 22 and 25 times earnings, okay this was what steve was saying earlier. I know who i am. Im a Value Investor, okay the day that i start moving outside of that 20 to 25 multiple is the highest that i go is the day that i run the risk of making a very bad mistake, and my investors say to me saying i thought you were a Value Investor. We all own the stock because they are in the top 100 s p names in the index if you have a 401 k by default, you have exposure to everything here so the question is do you want to have above and beyond exposure to these names in the individual sense, and in some cases you do in some cases you dont. You cant kiss all the girls Charlie Munger says it bet our job is to get a few things right, not to understand every single thing in the universe i dont think its fair to say you own yelp but why wouldnt you own netflix . You might think you have an edge on one name and not the other. The point im trying to make is when as an investor do you make an exception for a very high valuation stock when your cop vicks level is very high. Youre guessing you know the story intimately, but at the end of the day most stocks are guessing. Of course youre guessing of course youre guessing. Guessing. Well, its an educated guess. Theres probabilistic thinking at the end of the day youre making a guess you have to be. I think that what these companies have done time and time again in the f. A. N. G. Stocks and amongst the high productivity stocks like amazon, like netflix has been that they consistently beat earnings and people have been proven wrong. People have been proven too conservative in terms of their earnings expectations so what you need to do when evaluating these stocks, use valuation as a metric in the background but whats more important is to look at the earnings trajectory and their ability to innovate and to be able to capitalize on that innovation. Okay. Lets go to another stock in the news today nvidia, hitting an alltime high as well. That stock is already up almost 200 in the last year and now needham thinks theres plenty of room for the stock to run. Another perfect example for the conversation that were having you love this name youve been in this way and this stock is 50 times forward pe. I bought it at 50. So youre not guessing. Well, of course. You feel like youre making an educated decision based on where the company will grow. Nvidia was easy, not hindsight and bias because a lot of things that weres turned out not to be. I think this one was easy and frank lit story here has been total Addressable Markets and if you talk to five stocks that dont own nvidia, why dont you own, it one says crypto currency, other says automotive, another ai and another augmented reality. The Data Center Business is a total Addressable Market over the next few years, somewhere between 21 and 35 billion according to the analysts and nvidia could tapiture like a lot of that, and they are saying that it could be a bigger market for the company than its gaining its video Gaming Business which is 57 of the companys total business so this is like yet another avenue of growth, data center for the company out of, action i said, seven, eight, nine, different opportunities that they have in front of them. Thats whats going on here. I dont think it was complicated to understand that when i first got into it. Its kept me involved with the stock. Ive seen analysts come on and say when the bitcoin bubble blows up its going to hurt nvidia. They are involved in so many other things. Take a look at the week that has been and wondering if things are starting to get a little hyperbolic amazon gets a 1350 price target along this week with another stock out of the f. A. N. G. Group and nvidia gets a big bump here. We talked about everybody and their brother coming out and giving a bigger price target to netflix. Okay. Whats happening here ill tell you one thing thats happening having run a Research Department in a major investment bank, go to analysts and they know youre coming to him and price target, either take it off the list or find a reason to raise your price target thats part of what happens with the big firms. Also, theres something called Institutional Investor which is a poll, if you want a client coming in with an institutional climb, have the highest estimate on the street or the lowest. Thats part of driving also and then, of course, the fundamentals that are underwriting all of this which they deserve in terms of nvidia in retrospect, it may not have been so difficult, but for me it was because i bought the stock, had it double in the calls that i bought, did well in the options, and i sold it below 100. Scott youre just not used to an nvidia doing this. This is very aberrational. Theres nothing easy about it. Were dancing around a point thats important to me which is there are very different ways to make money in the market and invidya is a great case. Josh, great call youve been all this and made good money a direct competitor, you and i have talked about it its intel. Competes with them in many of the areas. Barely, and i bought that one, foo. But the point that im driving at is a Value Investor can own intel as i have, up 20 in a couple of months. Not saying its an nvidia, but its making good money for me and i say at this multiple great prospects ahead. These guys are headtohead when you look at automotive and data center, not gaming, but they are headtohead on a bunch of different ways a growth investor is going to make a ton of money in inindividual why and already has. God bless that investor but a Value Investor will make money in the same space than an intel. Very difficult to distinguish which fundamentals are driving it, what are etfs that are driving it and can i add one. Hold on. And one is pure momentum thats driving it and thats when it starts to get tough, okay theres no way these companies, if you do a valuation, as dcf models, im a Cash Flow Investor as you are, theres no way youre going to justify or see 50cent growth in perpetuity not going to happen. So youre 00 right, but thats why people who are actually actively managing momentum portfolios can use Technical Analysis and frequently do because you say to yourself, okay i really have no possible way of knowing, even if i got the earnings right, i cant tell you what investors a year from now will be willing to pay for those earnings thats the guesswork part. What you can do is say, okay, let me let price tell me that theres some sort of a sentiment shift rather than just randomly throw a dart, okay, this is where you sell it. So i think with a name like nvidia or a name like frankly netflix, you can have a trail. You can say, okay, im willing to take 10 risk here and how does that align with the moving average that maybe makes sense, and its not that youre going to nail it its that theres some rhyme or reason for why youre getting out other than feelings, and i think people have done well. I want to get back just before we take a break to the question i asked i mean, is this a week that we should tuck in our back pocket and remember again, google and amazon go to 1350 and nvidia goes to 250 and netflix 235, right around there. Nearly reminiscent of 99, and im not saying its like 99 but in the days when people came to me, i pay you a lot of money. Im going to work at garage. Com or work to work at toys. Com. Eerily similar to it. I would own all these stocks. Look at your portfolio and look at your allocation if you are so overallocated on the f. A. N. G. S and other techs and sem hiss and people are 30 , 40 , 50 , take some profits off the table. Not a bad thing to do. Record highs in the market for the dow, s p and nasdaq. And coming up next, tom lee has a new call on stocks hes going to join us right after the break and heres what else is coming up on halftime. The bank trade, mixed q3 Earnings Results coming up our desk debates the best way to play the sector. Plus, josh brown is keeping it real in a brand new trade school why he says one type of investing might not be your best heproach t Halftime Report with scott wapner and the traders is back in two minutes win an uncertain world . K predictable income pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over 120 billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Welcome back to the Halftime Report. Wells fargo lower on a revenue miss theres bank of america higher by 1. 5 and Pnc Financial is virtually flat what did we learn this week about the bank stocks . Now that weve gotten the earnings report, the stocks had run a lot into the numbers what do we do now . Where do we go from here you saw a lot between the haves and have knots between where they had exposure. One of the reasons bank of america did better is because they have a higher book or higher concentration in residential mortgages. Obviously the stocks that did worst has a higher concentration in consumer loans and credit cards and its a lot given where the valuations are, and given how much its run its become more of a stock pick pers market looking for the relative value opportunities. Picking up off of that, what are we going to pick so, im staying with where i am which is b of a and city. Still think that they are relative definitely to the rest of the market. I dont mean the pe necessarily, that youve seen expansion or multiples in the market very much and you still havent seen it here. They are below historic levels on price to book, some of them, so im still staying there and if they were a tech stock and beat by a penny, your stocks would be up 20 but here they are not so theres still some sanity in the market. I like those two. I also still like jpmorgan and i would go for next weeks, earnings are coming with Morgan Stanley and schwab and they will do well with both their Wealth Management and Interest Rates with deposits of increase. You think youve got a good read on any of those by virtue of what happened this week not on those two. Those two have very different businesses and good tailwinds behind them . Each if they pull back, i want to own them. Josh . Look, im in jpmorgan, but, you know, certainly not the kind of thing, oh, my god, when are these banks going to real already or they are up 10 , is a you look at mastercard the stock is up from 100 to 150 this year. This is a financial company. This is where the money is being made the charts are scare paypal, transaction processing, so much. Might not be big dividend payers but this is where theres a ton happening and i like nonbank financials better. They are trading at 25 times earnings so they are at their peak pe while all the other banks are trading at the lowest market multiple. More expensive than the banks in january and february. Always have been. Thats not a reason that was not a reason to say that is thats a classic example of owning really good company with different multiples. Owning companies so heavily regulated versus ones that are slightly regulated. I think that transactions, there are areas of finance that are better than money center banking, and i would rather focus elsewhere. Give you a reminder as well, the cfo of wells fargo john shrewksberry will be on cnbc later this afternoon. Lets now bring in tom lee of fundstrat, changing his view on the market and joins us on the phone. Tom, are you there im here. All right so youve gotten incrementally more positive. How would you characterize what you just did well, scott, you know you can weve summarized it in our Research Report today.