Is this is week that tech took the market back. Tech is up 2. 8 . New all time high is the russell 1000 growth. Tech is back and tech is working. Every time we get the story well roll out of tech into value, it works for three or four days and we go right back to whats really happening in the economy is tech platform driving dijtization. Not only domestically but globally these companies are empowering it that Investment Team will be strong right through 2021. The russell will be interesting. If you can find companies because the russell itself actually has no return on assets most of the companies dont make any money. If you can find a mid cap company and its revenue domestic it doesnt matter who wins the election were going the war with china its going to have an impact on certain s p companies. You can find refuge in the russell 2000 i think you have to do your stock picking there. Im looking for companies with companies that make money by distributions and having nothing to do with china is this the week were reminded of why were in growth in first place cyclicals are a little different than value it wasnt a good week for either of them. Im speechless how every single day tech goes up i cant explain tesla. I cant explain apple and e own that one tesla is up 25 this week alone. 25 this week alone and 40 in the month of august. Thank god its not in my benchmark yet. I would be getting hit really hard happen apple is im okay with that its a narrow market as youre talking about. Its the market we have. In order to keep up, you need to own some of these names especially if youre playing against a benchmark but the fundamentals are really, really good valuations aside the fundamentals are Excellent Market shares management team. All of that i get. A lot is priced in let me show you Something Interesting or mention Something Interesting. Off the lows, in march, it wasnt just tech that out performed. Tech was up. The xlk was up 64 the xme was up 71 for the lows. Xle up 56 from the lows. Xli, 58 my point is you have to find good quality stocks. Thats the first thing fundamentals matter the most you want to own tech because of the things i just mentioned. You also do want to pick through some of these other sectors and as ive mentioned you want to have a combination of both especially when we keep getting data, the Economic Data is actually really good the housing numbers are off the charts thats being selective. The housing data is good but is it reflective of the strength of the economy or just representative of the way people are now living and think about their lives for the the next many years in backdrop of low rates. To say blanket the data is really good is not the case. Okay. You didnt let me finish you didnt let me finish housing has been off the charts. Auto sales are recovering. You saw what home depot and lowearthqualo lowes posted this week. They invested for the last five years. They are seeing big time returns. Kohls not so much there are haves and have notes. The other idea is companies are choking, if you will, on debt thats the commentaryi read this morning in one article those businesses that have a lot of debt in this backdrop of you get on the other side of this and they will be spending money on Human Capital or Capital Improvement and things like that which we have been waiting for, maybe theyre not because they will be too busy paying down their debt load which they accumulated over the last many years and sitting on a pile of theres no doubt you do not want to go anywhere close to those kinds of companies you can own one or two as a speculation if you feel comfortable doing that i have always advocated from march lows you want to find the best Balance Sheets, Free Cash Flow generation well able to cover a dividend. Well able to raise increase your buy backs or staustain you buy backs. You dont need to buy the garbage and the companies that are saddled in debt. You have asked why i do not invest in the airlines as the reopening trade. Thats the perfect example delta is down is 5. You have businesses in a whole lot of trouble we have technology and growth and all these areas that have gotten us here in first place. They continue to perform they hit new highs and raises the question of why make it so difficult on yourself as an investor to look for these value cyclical, reopen epicenter, however you want to call that trade its hard. You have to be too selective why bother to kevins point, they work for a few days and they just kind of stop why would you get a different result until something significantly changes, scott its over loaded thats not so smart. Thats part of the point of the conversation im looking at a Goldman Hedge Fund trends opinion 8th consecutive quarter with the same top five stocks as the most popular positions in the market. Guess what they are. Amazon, microsoft, facebook, alibaba and alphabet im sure happen apple is not too far from that free as well, doc. Exactly people come on here to build brands those stocks you just described or brands. Whether its apple, whether its the searches that go on alphabet or call it google. Whether its facebook, all of those are brands, global brands. When youre trying to break into that against those brands you need some reason or catalyst theyve already started to rally back thats the yetis of the world. The camping world. I jumped back into these because i said i dont see a reason for that to stop i think people continue to spend in va sector on dip, ill get in there. They put it to itself. Im not listening to goldman on that. Theyve been chasers and followers for certain. How do you see things . You have taken everybodys opinion into perspective does it shape the way, in any way, what investors should be doing with their money right now. Investors should be thinking about their expectations for the next six months or so. I agree with steph on some of the improving Economic Data. Im a bit concerned about the stagnation and Consumer Confidence we have seen over the last few weeks i think that plays into the uncertainty as it relates to the next package we havent seen the evictions we expect to see. We dont need to just have a consumer recovery. We need to see corporations, to your point, many are heavily debt latent. Without the second edge of the ceo confidence, its off the charts now is that going to translate into greater capex . Is it going to translate into greater hiring, innovation thats what we need here the reasons why you think grow growth, how do you justify disney in a backdrop you made op this program the last time you were on in july and then in may. I said i had a target of 97 then something changed and i changed. Its gone through the theaters for four months that stupidity has finally ended. The amc break down, where now they are sharing revenues on streaming. Lets take a film like james bond theaters are dead. They are going to go to zero lets get over it. We can all hold hands but they are having an off day. They are going to zero all around the world, thats a big turnt and finally im seeing a crack in that marble Hollywood Studios have figured out were getting killed waiting for our Distribution Partners to reopen because they may never reopen the way they were thats the change that really got me back on the disney band wagon. Things are not looking as bad. They are walking dead zombies. We should bulldoze those and turn them into data centers but stop worrying about them let them die theyre begging to die thats the big change. We heard from dan the streaming opportunity is viewed as a biggest opportunity by some thats existed in an awfully long time. Shannon, you own the stock. I suppose you agree with everything kevin said. Its interesting that kevin has made this move after what his commentary has been of late. I think whats happening is streaming was the excitement in the last six months of last year if were going back to an environment that looks more similar to what that environment looks like and we potentially get some cash flow if disney can manage to continue to atrabltract investor capitale park revenue has been nonexistent and when sports has also been essentially nonexistent, now were starting to see improvement in those other two cash flow streams. Were back to why this was a growth stock in the second half of last year rather than what feels like an expensive value stock right now. I do think youll start sto see more enthusiasm for disney it will be fits and starts that we need to cash from a cash flow perspective. They are willing to churn money to grow streaming. I think that will be rewarded. In kevin, you bought disney, im sorry, visa. Its a bet this has to be a bet on the consumer yeah. I have an advantage, i guess. My asujs is we would start to see the consumer slow. I do not see it drying up. What i think is going to happen, maybe they be abandon ppe so theyre not supporting Small Businesses i agree with that because the market can do its own thing. Theres a mountain of private capital that wants to go to work i think it will be another stimulus package directly for unemployment i think thats the trade im looking for on visa. Its almost like a virus stock in the sense that therapeutics get announced and we also get a vacci vaccine. Youll see an up tick in consumers getting out there and doing what they need to do i dont see the consumer rolling over yet im selling stuff in prooifrt compa private companies. Maybe if you get your wish and they let every Small Business just go to hell then the consumer would roll over i dont know youre betting on the consumer i didnt say every small consumer yes you did in my own portfolio, im going to lose 20 of mine. Theres nothing you can do or the government can do because the consumers preference on how they purchase and what they purchase has changed theyre just not going to be the same and those businesses will buy. They are in travel, entertainment, Food Services i cant help them. They are dead. The last thing i want to do is have a conversation about this for the record, you just want to let every restaurant in this country die . Is that what you want . Is that going to be better for the consumer everybody will be great. Scott, do you want to sing kumbaya with me. The economy is changing. Lea let it change. We dont need restaurants anymore . We dont need any of these other Small Businesses and well let everybody fail and then the consumer will still have money to spend and the stock market will be fine scott, not everybody is going to fail. 20 are going to fail. Theyre going to die not because of just the pandemic get over that part there is a change in Consumer Preference everybody is still eating 2200 calories a day go support the way they are buying it. The digital delivery, the grocery guy that can deliver whatever it is youre not going to get what you had a year ago its going to be a different america 2. 0. Not everybody will make it let those things that will die, die. The employees will support them through the transition thats how capitalism works. To hell with every retailer except for walmart and target and costco and others. Thats what youre saying . Thats not really what hes saying that is, john, what hes saying no. Hes saying 20 . Its not every one. He said 20 will fail 20 im sorry. What are we supposed to do have a parade because he says 20 . Just 20 of all Small Businesses will fail. They are. Thats whats going to happen. None of us root for restaurants to fail, for airlines to fail like people have come on here and said we should just let them fail. But, its a recognition of, as kevin said, the way things are changing if 20 do fail, my heart goes out to these entrepreneurs that are going to be crushed by that the lockdowns are the major contributor to this. When we shutdown the economy, a lot of these folks are going to fail if its only 20 instead of a much larger number, ill be surprised, quiet frankly because i dont know where they are going to get funding to reopen some of the nail salon is a different story. You and i have been to some of these restaurants where people put in five million, ten Million Dollars to get these restaurants going. Are you telling me that youre going to see that happen again not for years, scott not for years and years. I hope its less than 20 but my gut tells me its more than that lets move on stephanie, the other issue i wanted to get to within the market is the so called bad brea breadth that we have been seeing a small number of stocks carrying the load. Jonathan will come on with us in just a second. He says there are 102 names in the nbx. The top six have as much weight as the bottom 96 faang plus, the amazing eight is the market its the whole market. Actually, i cited that. Those named accounted for 80 . I hear it. I see it i feel it add a portfolio manager. Why i said before, you have to embrace it you have to still pick stocks but you have to embrace it you cant fight it the s p 500, technology, in general, thats my benchmark its 26 waiting if i go underweight, that means im net short in technology. Im trying to find some names that will be off the beaten path but i want to own some of the names i believe in long term we talk about it all the time. Im trying to be prudent with what i own im trying to be aware this trend could continue for a while. You probably will do well over the long period of time. Is it going to out perform tech . Maybe in fits and starts, in points of time i do think you want to have diversification. That is intest vesting 101 shannon, the other amazing stat is the bottom 96 of which i mentioned, they could go down 1 each day and as long as the top six names go up 1. 1 ,the nasda would still go higher. It tells you everything about where we are im not suggesting that means the market has to go lower the market is voting it doesnt care about that until it dud i dont know when that will be thats the risk that youve been citing for a couple of months talking about theres a misstep in one of these names. It doesnt really matter what happens in the rest of the market i would say the best insulation to the concentrate were seeing at the top would be for proof of a cyclical recovery because right now those stocks just getting more expensive doesnt give anyone a catalyst or incentury tifr inse incentive to move to other parts of the market. You get a 3 or 4 or 5 pull back in one of these names. Without that catalyst, thats the true insulation. Its not continued phenomenal results from the companies although i do agree they are strong the insulation will come when there is an incentusecentive an catalyst to reallocate to other names. Were not even talking about the s p 500 here there are great names that are innovative and growing i think we need the see something other than these stocks are getting expensive as the catalyst the winners keep winning. Tesla goes for example over 2,000 a share the divergence between the amazing 8 and Everything Else grows wider. Now, is that healthy or not . Does it even matter thats the question i ask with no opinion put forth on the answer what do you think . Thats a really interesting question, scott. Take tesla you remember i bought that thing in the 200s a year ago july. Its in a mandate where im forced every 90 days to trim any position back to 5 . Driving me crazy. I have to do it every 48 hours its an incredible story it doesnt mean you have to let risk mitigate and grow inside your portfolio you can trim have i held that stock in its full weighting, it would be 20 . The position has to be no more than 5 . Its been a huge winner for me the discipline of being forced into the mandate rules has made this a tremendous ownership position and continued to be very powerful in generating returns. Concentration, if youre willing to let it happen and let four or five names be 80 of your holdings is a wonderful thing while its working i would tell investors be disciplined. Set a limit. They deserve to be winners because they imagine if we gone into this pandemic without the companies, the technology to work and deliver and provide sf services to people we would have been real trouble. Thats why they are being rewarded so well lets bring in jonathan, the technician with Bay Crest Partners joins us on the phone welcome back thanks, scott maybe you have the answer for us whether it matters at all for the stats that you laid out today which i already cited. The fact that 57 of the s p is still negative year to date. Does any of it matter for where stocks go from here . We have been talking about this breadth paradox and the more lopsided the internals get the less it matters. I think its important to note its not really that breadth is that bad if were talking about the nasdaq 100, theres still 70 above the 50 day almost 80 above the 200 day. Its bad relative to the six names you mentioned. Now, one other thing we have looked at, we is seen a lot of stats to compare this to what they were back in the peak many 2000 yesterdays internals were something we havent seen since march of 2000 the top six names is more extreme than it was in 2000. Now you can make the argument that fundamentals are better i think we can agree thats the case the dispersion is a concern. The big one to us is the 20day rate of change is now 32 . Thats the biggest 20day rate of change we have seen since march of 09 this is not typically what you see when a stock is at a high. You typically see that type of performance coming off a major low like we did in 09 well trade about 80 billion dollars. That will be more than even postearnings day. Theres really no news today theres a stock sflit coming up next week. It doesnt matter until it matters. If these stocks have no catalyst to turn downward then the dispersion and the divergence doesnt matter yeah. When things go parab olic, theres no one and set answer for when that ends something we also have never seen before. Yes, when youre talking about situations that are historically rare, its very difficult to know end the flip side is there is opportunity. Theres names, you mentioned visa thats a name we like. Its not extended like some of the faang names but its a high growth names that looks to be great. To be aware of whats going on in the index but just to look for some other opportunities that maybe arent so extended. Love the way you help us look inside the market. Well talk to you soon see you again. Thanks, scott the floor is yours, steph does it matter until it matters . I think it matters. You have to be diversified and really a