Another record high. Kevin, i dont know what your superlative is, but which was most impress sniff. They are all impressive, a beautiful thing to see we can say coming into the end of 2017, that this year was the year of f. A. N. G. It was the f. A. N. G. Ology it was fantastic youre up 40 on these names or a collection of them will you make 40 in 2018, or is it time to start thinking about what the rotation will be, because f. A. N. G. Is a wonderful thing, but i dont think well get 40 next year. Development is up there, cash flows are beautiful. This is not like a tech bubble its an earnings orgasm, thats what it is. Weiss, the street is tripping over itself today to bump amazons price target up i mean, everybody from webbush, cowan, jeffreys, rbc what do you make of this result . Is it too hard to pick because of amazon, microsoft, intel, they were all so darn good they are and its too hard to pick the growth on the type of revenue base they already have is outstanding i dont think youve ever seen it in the history of the market. But amazon, right, so the street is expecting seven cents. They come in with 52 they are like you want profitability, okay . Well show you profitability. Thats a good point 30 top line growth. They can turn it on and off the 30 top line growth is unbelievable google also great growth look, heres how 33 goog. Too early to think about selling these and ill tell you why. Traditionally as you go into the end of the year, a positive market and not only that, youve got amazon with their own products which is helping drive revenues and drive profits, and youll get into the Christmas Season so analysts will be tripping over themselves to raiseprice targets, a happy consumer and great economy globally so they will keep going and the change in these companies is really amazing, so youve also got to look at other cloud plays because its the cloud thats driving this, like with microsoft, et cetera. And amazon. Exactly you said its too early to sell makes this very difficult to buy that may be a question they are asking themselves today. Every day in your portfolio, you make a decision, do i buy, it if im buying it, do i hold it am i going to sell, it let it go, so thats a little bit of hyperbole but i think you trade to the end of the year. Im in the in that camp and im happy owning what i do i bought Western Digital today the one name out there that was down 5 , so i think that will come back, but im more of a buyer on the dips. Kevin said something very interesting. You alluded to where earnings are, where prices are relative to earnings, and they are a little high if you look at the overall average, but, frankly, there are stocks out there that are darn cheap, even after they have run intel is one names that reported today. Yes, its up about 6 , but its still at about 14 times the Earnings Guidance for this year. You wouldnt call alphabet expensive, would you i would not call alphabet expensive. Now it is 24 times presumption of next years earnings. You know, for a value guy like me, thats the outside range of what i will buy. I own alphabet and im very happy with the price action. Its a little bit hard for me to put a full position to work in new money there, but intel or a Cisco Systems or qualcomm, other Technology Names that are frankly darn cheap, they are just not even in the same territory. But arguably google or alphabet is no more expensive today than it was yesterday given the pe thats matching the growth if you look at it on a peg ratio. Intel is better value though because everybody thought it was a commodity and now its showing that in the server cloud world you can have a lot of value, a lot of value and all of a sudden its not thought of as a commodity anymore. Its specific to the class. I dont know that google or alphabet has been thought of as a commodity for a while given their dominant position, you know, in Online Advertising with facebook they own the space others comes in only at their good graces, so im not so sure thats been are regarding xhod physical for a while its been a great call. You own intel i dont know what stands out. I own google, too, and actually in our tactical model we got fully invested in the qs which can go in and out and have less or more, but back in november, theres a clear as day breakout, and it hasnt even gotten near any any of the levels where we would say this is no longer breaking out, so weve been long the whole way up i own apple, and i just feel like this has not been very difficult. These are large wellrespected companies that continue to come out quarter after quarter with High Expectations and exceed them, and i dont know it doesnt have to be any more difficult than that. When do we get past the whole amazon value question . Three consecutive quarters of cash flow quarters, three consecutive profits. Bezos said the game is over and im going to start generating cash i now respect people who want to buy my stock for the profitability. Metrix generating cash flow. He knows that company now can turn the switch and generate billions is he going to do it thats when it gets the ultimate respect because right now heres a little teaserino and heres what i could do exactly. The point is the joke is on whoever doesnt only stock. I went back and looked at some articles from 2013 when really the cloud results started to become meaningful, and i was reading the same exact its four years later this month in 2013 people were saying when will they turn the key and when will they start to let it hit the bottom line and when will they slow down on the investing . That was like up 300 a share. Youve had drawdowns on the way to that. If youre a investor in a stock like amazon youre kid considering yourself if you dont think 30 drawdowns dont come with the territory. We have to decide i can accept that or i cant and a lot of investors cant, and i get that, so they have no business even being near an amazon. You know, the question that youre requesting and that youre correctly referring to and the point youre making is for people who dont own the stock, right the valuation is not my discipline guess what, when they start doing that, if they start doing that, i dont think they ever stop investing and so the government comes along theres no politician with any will power to say this is a monopoly nor should be it. Those same people, if you see threequarters of cash flow, youre not tepg in and buying it. Let me ask you this. Theres no chance. Im not sure about that if i saw threequarters of cash flow, it means the discipline at the board level and bezos decision to say this is a cash machine now and lets measure it that way the stock would continue to go up. I disagree. You would see a turnover in the Shareholder Base you mean, its bad to make money, are you kidding thats not my point. With certain stocks, its absolutely bad to make money. Are we not in america anymore, what happened they make plenty of money. Jeff bezos has made a ton of dough. Returning cash flow to shareholders eventually matters to everybody. Youre a cash flow investors, hold on, so you missed out on the 40 moves. What stocks in your portfolio what group of stocks have had the kind of movement i made tons of money in apple and microsoft. They pay me back in cash and return capital and they understand the game and have been great beformers bezos is in an efor, he pays no money, when does that end . It doesnt have to end. Wait, wait, wait. Scott asked a question, and are you dummy basically if you dont own amazon and your question to him was anything else performed as well as amazon . And the answer is there are a lot of things that have performed as well this year, General Motors, a Cisco Systems, a couple of names just to think about, and the point that im driving at is your point which is you can Pay Attention to the price you pay for earnings and still get returns in a stock. Heres my point since amazon came public its been straight up General Motors has had a great year. It hasnt been straight up. But its not back to where it was at the peek. Steve, the most dangerous words when youre looking apt your performance, sure, there are dips, theres volatility in the market. The most dangerous words ever uttered its different this time. You didnt hear me say that. Youre insinuating this is a new kind of company. Im not insinuating, im saying amazon is unique to itself in terms of its model it is different this time its different every single time. It will defy gravity forever. No one is suggesting that its always different. You had companies that had completely different Business Models in prior erars, ths, the survived and whats not different is investors overall should not every stock has the potential to defy everything like an amazon it is truly a unique company i put apple in that in that basket as well throw tesla in there, too, then. It doesnt mean we know the outcome. It just means this idea that graham and doddstyle investing applies in a world where everybody is thinking about total Addressable Market and complete dominance of industries where these companies didnt play, youre welcome to have that discipline. Youre not in the same world though that the rest of the world can have it. You can see the competition coming after tesla you can see bmw spend billions and billions and gm spending billions, ford everybody is coming after tesla. Okay. Teslas got finite production. Gravity will strike tesla before amazon, thats basically what youre saying. Im interpreting what everybody else is saying. Do you agree with that . I think tesla is a 35 correction waiting to happen when somebody says bmw and gm with just as advanced. Thats where i disagree with you. 35 wont be where it stops. Its going to go a lot lower. Youre saying amazon is going to eventually succumb to gravity as well . No, im saying in order for it to come back to reality, in other words, were giving this remarkable company, i agree with it, an incredible window now for over a decade where it doesnt have to make money or pay taxes and go out and crush everybody. It does pay tax it does make money. Kevin, if i were to focus on one point that youve made where we differ is that for amazon this is the reality. But saying its different this time. Grown men weep saying that. First of all, its different every single time. Its never not different. Ill put that statement in the category of now whoever wins the super bowl. I cant deny that this has been a fantastic stock to open i have had just as good returns dealing in the real world where Companies Make cash flow hand return it to their holders has there been a company in the last 50 years, maybe longer, thats been as disruptive . No. Look at the news today. Cvs and right. And aetna. 60 billion deal that they dont even want to do. You dont think amazon is looking at that . Jc penny is being flushed down the toilet as we speak. If you Want Companies focused on returning between 5 and 10 , you know, in terms of profits. Thats not true. The only way to get that kind of money. You can find 592week low list look at traditional advertising companies, for example, they are making new lows in this environment. Can you buy them they are a good value. They are getting cheaper, and the reason why is because there are Companies Like google and Companies Like facebook who have figured how the that those companies have a lunch thats sitting there to be eaten, and now those are managements that are focused on things like roe, today, what next quarters earnings will look like. By the way, you brought up a good point here. I dont know if youve noticed the subtle change in where cap x is going in lphabet. They are taking it away interest all the crazy stuff and giving it back to google where they are getting decent returns doing new phones, new hardware all of a sudden adult supervision at the cfo level must be say stop with the craziencing experiements. Are we going to be having this same sort of conversation next week after apple and facebook report their numbers . Facebook is kind of interesting. I believe we will. I mean, my daughter works 20 hours a day, got up at 3 00 a. M. To order the iphone x. Which apple tells us demand is off the charts. I did it the a 6 00. The word from apple after the charts. As expected i own apple and i own facebook and another one that i own thats sort of lost in the shuffle here thats baba. Baba is up nicely today t. Sold off from its highs its got some of the same fundamentals going for it as amazon not as great a company. Accounting issues. Which is why theres a discount well aware of that how many issues come out from a chinese company, come on they can hide them forever. Lets just say alleged accounting issues. Thats what you would say. They would come back and say what are you talking about theres no proof of any accounting issues anywhere apple thursday and facebook wednesday. So were optimistic. Going to be a great week. These are going to be great numbers. Up today perhaps partly on the record that apple told lipton about demand. So i want to come back to one thing. All of the arguments about, you know, its different this time with amazon. Could you have made them every single year since 1997 and repeatedly it has in fact been different this time. Its always there are always different variables. There are Different Things that investors are looking for out of the companies that they invest in, new Business Models emerging, old Business Models dying. Its absolutely the case that every time is different. If there were a single unilateral law that we could apply across the board then the quants would all be millionaires how many people can raise billions of dollars from the investors and tell investors i wont make money for 50 years. Thats the reality of amazon. Its buy itself. Its a different universe. And they dont need nun mu more. If you give amazon an actual metric to value the company. Thats crazy. The ultimate get out of my face in bezos. You want me to make money. Wall street analysts do not have power over bezos. If the business falters, that will be on amazon. It wont be because a critic he looks at wall street firms like toys. He doesnt need money from them. He doesnt talk to them. He might appear at one or two conferences a year when he wants to talk, he can speak directly to the world. He doesnt require anything. He owns his own newspaper. How high is the bar i want to get back to where were going for next week before we move on to another stock thats in the news today the bar is high for facebook yes this is the second part of that. Tech had an amazing week this week all all the big names that is not whats going on around the entire market the bar has not been raised for other stocks quite the way it has been for these stocks so that brings a lot a new risk factor people in these names do expect this to continue every quarter from here on out and when you actually look at the equal weight s p down 1 has not been a great week for stocks that are not technology stocks, and i think thats a really important point to bring out. If youre sticking with these trades, and i dont have a problem with you doing that, understand expectations have absolutely been ratcheted up. If facebook were to miss the qs would get crushed maybe for a few hours. Exactly, and then youd see the buying come in. Thats such a metric of how the Digital Economy and the advertising and media and all of it if they miss it, hits all the f. A. N. G. S. Even given what you just got yesterday. Im not saying they are going to miss. I know, but you really think that the qs would get hammered. Yeah. As badly because if facebook missed when the day comes. It will look like a facebook thing and not a tech thing. It will crush the pes of all of them. Thats whats going to happen. I dont think so. Alphabet is taking share from facebook in ad space. I would agree if the selloff in amazon over the summer is and early fall had knocked the qs down meaningfully and it didnt. Amazon was down 10 from its high. But weve defined that as a different kind of company. Its its in the qs though hes talking about when one that makes money misses out of the f. A. N. G. S, an apple, a facebook, an alphabet. Its going to happen. Its going to happen. Maybe if facebook had come before alphabet and amazon and some of these other names. The fact that it comes after blowouts from all of these names, probably protects this space. Actually a media stock emerging and not under the Gravitational Force of court cuttings happen, people think facebook is winning. Maybe thats the new media story. Facebook up 4 ahead of earnings next wednesday. Lets talk about jc penney hitting a new record low today it is a revises its guidance jim, youre the guy on the stock, and youve been sitting there holding on and holding on and telling us why youve been holding on i dont think what youre thinking today. Ill tell you i was wrong. Im telling it today the results just havent been. There doesnt matter what i think my research has told me. The results havent been there, and basically Gross Margins are deteriorating again because they have to clear out inventory and i might have been willing to give a parks but ive been on the show and i think it was with the same lineup. I think it was you, kevin, who said what would get you, jimmy, to change your mind, and the answer was if the bond prices deteriorated the threeyear bond on jc penney have deteriorated 300 points thats all i need. Three stocks like this one, mattel, jc penney and ge is this the time to go look at the debt now on vc pen . In other words, youre talking about a really interesting story here of assets and the way to get at it, assuming the stock is worthless and go on the bonds. Is that a play yes, it is, because it now trades at about 75 of book value. Now im getting interested. And the book value, look, you can see some of the inventory. I happen to think its to the going to go bankrupt if it did and you had to liquidate the inventory it would be at a discount, you should still have enough residual value to pay off the bonds, but i think theres a bigger point to be made here im going to steer away from the bond question. There are 5,000 stocks out there, okay . Ive got a portfolio of 20 of them the other 19 are doing terrifically ive got this eyesore. This stock could double from here, and its not worth the risk to me there is a price to be paid for return its in risk i dont need this risk anymore. Ive got you. And im moving on. I thi