Everything else not having the best of days pete, i come to you first. You get the first crack at this. The bar was high and they got over it. They did. Youre obviously talking about apple. And amazon and facebook that was high for the whole entire group, pete theres no doubt about it facebook being probably one of the ones watched most closely, i think. When it comes down to apple, the reason that stands out is they had a record q3. You look across every part of their business model, their eco system and it phenomenal the growth is there. The double digit growth is there. I think the big surprise coming in iphone because people were looking at a number far less. The real key is service, not only the growth but look at that revenue. Add that with wearables and you get almost to 20 billion youre getting the other side of the equation and far better margins. Thats why i think apple still has plenty of room to the upper side because they have room in the wearables, the services. The services they can still spread and its a much bigger piece that they can get as they go around the rest of the globe. Steph, pete is focusing on apple. I want you to focus on amazon which has its own blow out number the stock not hitting a new all time high but the stock is having a great run in your notes, you say i dont know what to say about amazon. Yul ha youll have to come up with something. I nooeed you to tell me about i now. You trimmed the stock whichgret. Im regretting but nooimt going to be apologetic for taking a 70 gain in the stock the stock is up from the march lowed. Thats one of the reasons i was nervous about it its well liked. 90 had buys on it not everybody that owns this stockton buy side as well. This was out of control. The operating leverage, i did not see the operating leverage coming they really turned it on their backlog is up 65 . I cant poke holes in this thing. At least i have a small position im glad i do but it really was lights out ill tell you what, im looking at the price target bumps for apple. You have a number. I cant even go through all of them because theres too many. Theres street high of 480 well make the point there amazon same thing. It would take me too long to go through the price target bumps today for nearly everybody on wall street. Street high, though, 4200 bucks. You own apple. By the way you own alphabet which is okay. Not nearly as great as the other earnings were. What now thats interesting. I guess we could keep beating the drum about how things are so great. You mentioned alphabet but to be balanced we ought to discuss that the revenues did go down why did revenues go down because a lot of their advertising on the flagship google property is travel related and local meaning restaurants. You know, we talk a bit on the show about High Frequency data like tsa travel and open table restaurant reservations. Yes those are off the lows but they are still well below where they are at the beginning of the year theres a lot of ground to make up alphabet will feel it if the economy continues to reopen. It will feel it in a positive way. If we stall and go back into a staggered shutdown, alphabet will feel it there too let me also paint the positive picture on alphabet. Youtube which they are now breaking out, we know that, had nice growth rate there thats what you would expect in stay at home economy people are watching more videos and advertisers are advertising more there its a good thing that alphabet has become more than just google and its more than just google were not talking about wamo im not going to worry about one quarter except to the extent it reflects what the economy is it really one quarter . This stock is not performed i think so. This stock has not performed nearly as good as the others of the thats a true statement absolutely a true statement. I try and make true statements it is a true statement the stock is not performing as well as the others im glad you confirmed my statement. Judge if you have the money judge hold on if you jim, say you as an investor, not you specifically as an investor and you say i lag ownership in some of these names and you have some money you want to put to work, theres the gains since the intraday low alphabet is big laggard. Why would it be in alphabet relative to some of these other names based on their earnings, based on the stock performance, based on the other parts that theyre not so leveraged to alphabet is . I said im bringing more evidence and im reaching a conclusion based on that evidence im going to continue to do so, judge. Theres a lot of irons in the fire here. Some of them are tied to the new economy. You think about wamo and autonomous vehicles. Thats not really showing up in the numbers but when you look ot three years from now it will on the other hand you look at advertising revenues knowing how tight it is to the local market, thats more here and now if you think the economy is going to safely reopen, this is a relatively relative to the rest of the name, cheap way to play that. Michael, you hear everybody making their individual cases, right . I have a question on twitter that im looking at right now, which i think perfectly sets up the next stage of the conversation for us. Why would anyone invest their money elsewhere in faang isnt this just full speed ahead for growth thats what we said in the late 90s about the dot coms too. These are different though. Some of them are and some of them arent. These are real companies. Theyre sitting on mountains and mountains of cash. These are real Deal Companies here theyre real Deal Companies that have high valuations and maybe they are deserving of those. Youre looking at google for lagging a bit is arguing about which was the ugliest of the gabor sisters. There wasnt one they were all pretty for those of you not old enough to remember that. These are Fabulous Companies they are all executing and they have a safe place that are able to earn cash and have cash flow in a pandemic struggling global economy. It makes sense this is where you be you dont buy high with the expectation youll get rewarded by everything continuingto mov much higher. Sky high multiples. Tease are in in the 30s. 35 times earnings im when i grow up and in this business, 14 times earnings was what you would look for. Somehow we talked ourselves into a more normal multiple of saying i guess im okay with 16 times 30 times is not a normal market multiple you can look at it relative to a growth rate. On a facebook, facebook has the best growth rate which is why i say its the least expensive too. Perhaps forecast over the next five years price to earnings versus growth is a key metric ive looked at all my career. They are not cheap pete, you want to take on michael for my of that sure, i will. Michael, here is where i disagree with you. I would disagree with the growth rate of apple had slowed to the point where they werent something that they really are which is a company that continues to grow. I mean specifically in yes they have shrunk down in the iphone absolutely thats something we knew was going to happen. We already priced that in, i think. That end of the business is slowing. Theres no doubt about it and that percentage is a bit slower. If you start to look at the areas that i continue to want people to look at, the wearable, the services you look at the growth percent there and the cash they made another 16 billion in cash just this quarter i think theres a lot more to go into it right now than just saying oh, well, the p e level is 28 or 30 or whatever it might be right now i think theres far more to it they do pay a difr did he understand dividend they can do almost anything they want we havent even approached 5g. What does that mean for growth into the future . I think theres so many different areas where the growth rate is at a pace that i think a 30 multiple doesnt seem as expensive as it may have 10 or 50 years ago judge, let me just be really clear. I own these, apple and facebook and google im going to continue to own them when you see stuff making all time new highs, thats not the time to get excited for fred and ethel and say im going to put my Retirement Savings into the faang stocks youve got to stay diversified and have better values out there. Michael, you telling people the buy value stocks and cyclicals and things tied o the reopening in a market like this. Isnt this case study to why the markets have gone relative to the other names . In over a fourmonth period you havent made much money being anywhere else other than these stocks if your time horizon is longer than the fourmonth period, make four years or 14 years or 24 years then i think you want to diversify into some of those names that have been baeeaten up and have good Balance Sheets and will start to recover. Some of them are starting to recover. Its so uneven. They are the beneficiaries of all of this. Let me break away from the conversation for a second. Its related lets go to julia. Facebook announcing its launching music videos in the u. S. Facebook a launching a new designation in facebook watch. This is notable because youtube has been a destination for music videos for years and tiktok has benefitted from its deals with music labels enabling users to incorporate songs into their videos instagram is not included in this announcement. It benefits facebook to really have these new relationships with music labels. Appreciate that thank you. All right, tom youre really going to show up today and tell me i need to buy value in epi secenter stocks af i got blow out earnings and we got new highs in all of those areas and why should i stray to the value area that youve been pitching i want to sort of make clear those bond proxies and secular growth is 72 of the s p i dont think investors want to have zero exposure to that i heard your guest but keep in mind, the ten years at 180 p e faang is pretty cheap as a bond proxy. I think if cases are plateauing and the economy reopen, 60 of the Earnings Growth will come from four groups the epicenter sectors and these are under owned and historically really are the trade that you want to rotate into. Its clearly early to be talking about rotation thats not stopping you yes the Earnings Growth is why the epicenter stocks will likely be things that investor want to own. Today, you still dont want to not own faang. Its 20 of s p earnings its about 20 of market cap they are not expensive versus the market when i look at your note today and you say, im quoting here, based on our conversations, investors do not want to take the plunge and rotate into cyclical stocks. Momentum and Growth Stocks are working and earnings reports from amazon, apple, google and facebook only confirm they remain solid holdings. The people youre talking to are saying i dont want to hear it im going with the tried and true why do we keep pushing that are of the market if i with get better bang for my buck in growth in a period when we dont have economic visibility which this moment in time is where we are. Youre going to favor price momentum and secular growth. Thats why our clients want to sort of stick with those holdings in the next six months, i think the environments going to improve. It does look like cases in the u. S. Are plateauing. We could have another wave with flu season its going do allow the economy to reopen. Peoples fear to abate and just like in late march, early april during that period of time, there was a pretty notable rotation into cyclical stocks. Thats what were expecting. Michael i dont think its an either are. I think there are Growth Stocks and in the multinational big blue chip space with a falling dollar that are really going to benefit over the next couple of o months, i think, yes if you look at where the tenyear treasury is, its a great argument for stocks. Its great argument for almost all stock. To find those that are continuing to be able to earn money and have a recovery in here, on earlier shows i talked about fedex. We talked about disney some names like that i think as the economy recovers, the Balance Sheets are strong, going to continue to be in good shape. I dont think its an either or. Sdm y sdm. You make a good point im not trying to suggest there arent other stocks that are worth buying all im throwing out for the gang to discuss is its just too difficult to figure out which ones those are going to be, stephanie, because you dont know how uneven they will continue to be i understand. I think ive talked about owning a barbell for a long time. March was the hardest in the world to buy any stock growth or value. That said, those stocks are extremely attractive i was buying u. P. S. In march i was buying it a month ago and look they put up yesterday thats the kind of opportunity i was looking for back in march. The flip side, if i didnt have it over weighting in technology, i would be left high and dry its not just these four stocks in faang that you want to own. You do want to own semiconductors, which are cheaper. You want to own cloud, which everybody has turned against which i think is absurd. Theres so many names in the no Technology Space i think you still want to own a barbell. Its prundent to take some gain along the way. Its important to note as steph is making her case, shes still recommending other areas within tech. I dont hear an overwhelming number of calls to get behind the financials or get behind energy if you want to diversify away from the faang, i dont hear get away from technology. I hear just go into other areas of technology. You want us to buy discretionary and energy and financials. Yes one of the things hard to incorporate is theres binary events if we get a vaccine or cure and look at the theme parks and ka s casinos, they have defendable businesses. I think thats really important and for investors who dont want investors, they are ignoring a binary event that has a high probability. If i had to say, what should your epicenter exposure be, today its about 25 of the s p. One quarter of your holdings, if you own onefourth of your holdings in these names youre just at market weight. I think most people have very little exposure. Thats why i think you want to have some exposure did last question. Did what happened last night all be set the course now for your target year end for the s p of 34. 50. Youre not going to get there unless last night happened yes, thats right the s p is really cleared some key hurdles. 50 retrace. 62 , a 76 now that we have been hovering here the next real obstacle is an all time high we have leadership we have the faang which is 20 of the market cap. We have secular growth and tech posting good earnings. Now the economy will safely reopen theres enough visibility for Earnings Growth to improve thats how we get to all time highs. I believe were going to break all time highs in the next couple of months we shall see. 7 away. In this kind of mark thats not that much. Tom, we love to debate with you. Love the fact you continue to come on and make your case and have what i think is really good discussion about it. Well talk to you soon thanks. Pete, tom sets us up by talking about some of these value epicenter reopening area for the banks and by the way, buffet goes even bigger on bank of america its amazing how many hes been attracted to that for the stuff hes out of it now and not quite doing it you look at the misfires lets not forget, this guy owns, is he not the largest owner of apple as far as i know he is he has not missed on everything despite the fact everybody saying hes missing on everything i think the bank of america trade is interesting i know steph looks at the same stuff im looking at when youre looking at a stock trading about 3 underneath book i think that does make a little sense that i understand why hes buying it here is there huge upside do i think it will spring board to the upside . No i still own the stock because theres so many different pieces i think its expensive how will they make money in future thats still going to be an issue with rates where they are. If i with buy like this and collect the dividend of a close to 3 of whoever, thats not so bad. Meanwhile, i can wait and still bring in enough income to make sense. Ill be there with the oracle. I dont think hes wrong on this i think bank of america because of the name where it is relative to pricing, i think its probably one of the better buys. Steph, you own it the berkshire position is nearly 12 . Its 11. 8. They put nearly 2 billion worth of capital into that stock he has his sights set pretty high for where this stock can go two things. Buffet buying more and doing and taking action with bank of america and the pipeline a couple of weeks ago. Hes clearly seeing better and seeing more visibility in the 6 to 12 to 18 month time frame the second point id make is i dont know if hes making bet on rates going higher this is one of the most Interest Rate sensitive name of the Big Money Center banks their quarter was not so good because of the Interest Rates ansz pressure on net interest margins and net interest income. That said the company has done a great job in terms of this responsible growth, profitable growth strategy, philosophy. I think bryan has come a long way. This company, to petes point, great capital positioning. You get a 3 yield this is part of the barbell. I own a bit of bank of america and have some faang exposure and technology exposure. Its a goody versification strategy jim, you own a couple of the banks. Not bank of america. Isnt it hard to make the case for bank rates yesterday were talking about a pandemic low on the tenyear of 50 basis points or 50 whatever. Its easy to make the case but its hard to stay in the trade. I think thats what youre alluding to. Its hard to stay in citi or bank of america when youre seeing google and apple and facebook doing what theyre doing. Its got a 35 discount to book value. Thats the market saying we think theres huge losses yet to come because of whats going on in the economy here is the important but. The government is putting a lot of money into consumers hands. Some have said and ill echo it that amazon has benefits from that because people have money to spend i will say that bank of america, citi will benefit from people having the money from the government to be current on their auto loan, credit loans. At least more than the market is currently suspecting will be the case you made me think of something totally off topic of banks and you said about staying in the trade i want to do it now because if i dont do it now, im not going to get to it int intel. Are you still sitting in intel stephanie link who had a very similar perspective said she was going to get out im looking for the exit. I dont think this is the right price to exit. I am looking for the exit. By no means am i saying this is something that people how old go out and buy. I am looking for the exit. Youre still looking for the exit i think you sai