Nasdaq is negative by 30 points. Our focus today on apple you see it on the right. Was in the green now its in the red. Pete, is apple vulnerable. Down 6 this week. Down 12 month to date yes its had great year. Is it now vulnerable like anything, theres so many different variables that everybody is look at as they decide to exit so many of the high flyers and obviously apple is one of those names. Thst no doubt it could be pressure on it i still believe in the company in terms of all the things i bring up they are defieping why they are still bearish on it. Anybody who is looking at apple is only the phone company is looking at it wrong. I disagree with that call. That doesnt mean it cant do gown further img t i think the pressure is on people are getting out of certain positions because they had such a great run to the upside were seeing a lot of that a lot of that has been indications we have seen for the long time that were very bullish and now we hit a bit of pause. All right you mentioned goldman. They reiterate their sell rating they got 80 a price target. We believe investors should follow the numbers theyd be aggressive buyers if the stock got down to 100. This is a big question many the market about the most loved stock in the market. What happens now we would expect to see this sell off of a replacement cycle. We havent seen the full brunt of the replacement cycle from the device perspective i know we dont want the talk about handsets for apple waen we want to be focused on services this upcoming replacement cycle and the growth for services and you think about the name that apple is, i think weakness is a buying opportunity maybe not for the next six months but over the next five years its hard to think of a Consumer Brand that youd want to have exposure to and especially given that i think this sell off is a little early given the cyclicality of their business its interesting. You talk about the next six m s months, are you expecting a decline in the next short to medium term period of time given how the stock has run up i think its less about this particular stock and more about the broader Technology Conversation i know well have that here. This is such the bellwether of the faangs i do think there might be some selling pressure as investors find other opportunities in the market if a valuation perspective. Ive grown weary that the tech valuations are so out sized. The faangs are not that expensive if you look at where they could be given the fundamental tail wind they have enjoyed during covid i think there might be some weakness but to petes point, we might have another opportunity over the next couple of months to add to a position you look at valuations among these large Megacap Technology growth stock facebook is 30 times alphabet is 30 times microsoft, 32 times. Amazon has come down a bit. Lets not forget we have been talking a lot about multiple expansion. The reason the stocks rose to begin with wasnt necessarily on their great fundamentals it was on multiple expansion, for example, at the march low a apples p e was around six times. Today its around 30 times does it justify the expansion to that de. We agree with that the valuations, if you use those types of valuations it does loo out sides. Many of the megatech names are actually fairly value. Maybe a slightly over valued with this, it gives you an opportunity to buy into the Business Case. We see the faang stock, many of them the Business Case still exist to own these stocks as we have the pull backs. You have to look at each individual stock and their Business Model to make that decision people dont want to think that apple could have a more meaningful correction than maybe its already had its such a loved stock. What do you think when you look at a stock down 12 in a single month. Theres so many cross fundamentally. You now have an attack on the app store thats been the engine of growth versus the other faang stocks, apple has had no growth. They have been flat to top and bottom line two years. Despite great growth in the app store. Then you have issues with china where were waiting for the retaliati retaliation. Yes theres some weakness. I think short term its given to the volatility of the market thats probably the most well known name among the robinhooders and other day traders. They dont get the instant gratification they got over the last few months. Theyre not used to booking the losses now they are taking them i think under any time period youll do okay in apple despite the elevated multiple because they are very few Growth Stocks to buy im looking at the launch of the 5g phones. The reports coming out of asia are they are telling their suppliers to gear up for 75 million phones thats not a lot more than they typically do usually its around 70 to 72 the margins will be a lot greater. They will be more expensive phones i think theres a thirst for 5g thats been pulled forward in this tenyear cycle thats whats going to take off also, the news coming out of asia talking to those companies, staying on top of the press is there is still crushing it in terms of being putting in production on lap tops, on wearables, on ipads. That business continues to do quite well i think youll see another good quarter. Im staying there. I think the split trades over and done with. Yeah, could do down a little further but im comfortable still owning it. Im comfortable buying more at certain levels ill wait for analysts to come basic and raise the target another 20 without any fundamental reason to do so. She does say we dont expect apple to announce new phones its going to be around new products some are speculating you get the 5g announcement. Katy says maybe not so fast. Its to relevant to your current perspective on the market. Valuations to where they are in relation to 1999 and 2000. Lets listen to tony and then ill get your take, joe. These are the highest valuations we have seen since the Technology Bubble in 2000 in the subsequent bursting of the bubble we have had tech out perform for eight straight years its out performed by over 30 this year. We do have very high valuations. Tesla is among the poster children for what has happened in the marketplace when stocks go up 25 because of a stock split, youre seeing several hundred thousand Retail Investors own a stock at one Brokerage Firm alone like robinhood, those are things we saw in 1999. Those are worrisome things all right the question is how worrisome, if at all. Maybe you disagree wholeheartedly with tony however, i will note that you sold square. Its one o f these huge winners with a large valuation you tell me. Concern is the right word fo have as we is sit here on september 11 what you experienced is certainly in names like tesla there is an extreme over valuation. I think stephen really nails it. I think a lot of this has nothing to do with fundamentals at all i think a lot has to do with positioning. You talk about apple, i heard every one discussing fundamentals i would offer with what youre experiencing right now with a 13 decline in the last five days for apple, has nothing to do with fundamentals were coming into the final weeks of Third Quarter apple is up 22 for this very quarter pm mike reso mic microsoft is up 1 i think were seeing a relaxation in the over concentration to growth and megacap growth names i think its been long over due. I think were in a position right now as we sit right above the 50day moving average for the s p and the nasdaq with a market is cautiously trying to figure out is there further downside coming or have we found our support. I suspect this is downside coming in terms of price, i dont think youll see the velocity and the extreme move we witnessed in nasdaq over the last five days i think much och tf the price de has been done. Theres a lot in there i want to drill down on number one, the comment you made about apples decline having nothing to do with fundamentals, i would agree with that. I think a lot of people would agree with that. Then you have to scrutinize the way up too and say how much of the rapid increase in the stock had to do with fundamentals. You can make a strong case about apples fundamentals maybe not enough though to justify what was a tremendous move to the upside number two, you use microsoft when you talk about comparisons to 1999. Im curious as to why and why youre not looking at some of the other mega not megacap but megagrowth names with massive valuations that have run up by tremendous amounts, if not parbolically and say those resemble 1999. Thats wh he talks about with speculation in names like tesla which you may love and investors may love, it still may not justify the kind of move we saw. How do you square both of those ideas . Great observations on both points number one, apple on the way up. What was the correlation to some form of improving fundamentals zero nothing to do with fundamentals. It had to do with speculative ferv fervor it has to do with positioning. It had to do with what stephen was defining why do i mention mie rcrosoft . Because it was that largest market Cap Technology company and were seeing right now the faangs in apple with 7 waiting in the s p in a similar position there are other hyper growth, i would call them names that are experiencing lofty valuations. I think we keep incorrectly talking about tesla and apple in the same conversation. I think its too uniquely different circumstances. I do think you have to give consideration to a very fantastic short squeeze that probably unfolded here in q3 for tesla. I think thats a much different circumstance than what youre experiencing in apple. Why youre iting you sold square. I would say names like square have more of a resemblance to the environment of 99 than an apple or microsoft or amazon my sell of square is Risk Management in purpose. It is because i purchased it after earnings at a 148 price. I just wanted to manage the risk i was afforded profitability after buying it. I didnt want to turn a winning trade into a losing trade. These names are uniquely different because they are the u. S. Economy and they do have strong fundamentals. I want to hear from you degas. Im not in any way, shape or form trying to compare square or any one of those stocks to say a pet stock com. I want to make that clear. How much value did you get from the intangible assets of a company . Back in 1975 it was only 15 of their market caps. Fast forward to today, its 85 intangible assets makes up over 85 of the valuation of a stock. Those things are difficult to measure financially are driving these prices these values brand value, protecting brand. It all focuses around that the discussion almost have to shift from the 1999, 2000 to where we are today and how value is being driven. What do you do then with a peleton . Everybody that says these are unsustainable, the stock shouldnt be up this much. Everything should be pulled forward. Peleton says this is legit theres a reason why the stock was up as much as it is and we have enough products in the pipe li pipeline that this is a real story for an awfully long time what do you say to that . Let me give you some statistics theres twice as many publicly traded stocks in 2000 as there were today indexing was just a vision then. Not a factor where they own 50 of the company when you take those two factors into account, youve got rough numbers. 25 less float in terms of shares that you could buy and Public Companies today than you did then like any other commodity, that will create a scarcity value ive actively traded it since i sold the position i had and been in and out i was in this week it has the same issues that are Going Forward which is that the market rewards momentum in execution and momentum in price. Equal measures the troubling times in the market, to me, are that i was able to short peleton calls. The 110s and 5 and change, i believe it was yesterday with the stock trading at 88 or maybe it was 3. Whos paying that for the stock. They are hoping the stock goes from 85 to 115 in order to recover just the premium the that was one day. The options expired. I sold my peleton position because it wasnt a full position you look at the numbers they are putting up you look at a Sustainable Business they are making money ahead of schedule so the market is rewarding them you look at lulu which is something i own. Same thing with the options. I sold the 355s at 19 with the stock at about 350 that are expiring this friday thats the lunacy in the market. Those are the troubling signs. Lulu put up a good quarter here is what i want you to do because youre rattling off a lot of numbers that may be hard for people to follow in certain options, trades and positions you have are putting on or taking off tweet those out for me youre active enough on twitter. Tweet out the moves you made get the numbers. Its hard the write everything down as youre rattling everything off shannon, you dont like peleton. No. I actually think this goes back to your point earlier about valuations and some of the gains being pulled forward like the faangs and microsoft, but with peleton if you look at what happened with that stock and think about product they are selling, its going to be an inability to scale at the current price to a significantly larger market. I think we go back to a more normalized Consumer Behavior in the back half of 2021. Youll be met with disappointment in first half of next year because i dont think they would grow into this multiple thats a bold statement considering what the company has in the pipeline. Albeit, some of the products may be at a lower price point. Its one of those rare brands that has this level of loyalty that even if somebody comes along with a less expensive bike or treadmill or whatever the next product is, that the customers will go to peleton i think youre right. Im not talking about another bike that you use in the home. Im talking about going out and working in a gym or fitness facility that your company sponsors those things arent going away entirely is this a six month story, probably not is it a two years story, i dont see it being able to grow into that multiple. I think they have a defined Consumer Base thats not as large as some of the other Consumer Brands that we talked about today. Anybody else want to scott go ahead. People too often that arent that familiar with peleton and i know shannon is, look at it as bike you have to look at it as a subscription model like a sass company. Their churn is negligible. I think people will continue to avoid gyms i get a much better work out on peleton and then you have the fitness classes. Jason is talking about i want has netflix potential for a lot of the same reasons dwroouyoure talking about. Agreed. Its a bike is it you cant carry it with you hold on scott, i was going to say that its more than bike if you think about happen l was a product, was the device. What happen l was able to do was move into the Services Within two more the Service Software side as peleton if they can make that transition to a software company, thats where the mull approxima multiples will come into play. They did at the beginning of march, they went virtual with their work out and started a subscription system for working out and so this could be a growth area and peleton has you indicated has the name, very similar to apple i love this conversation. I feel like this is emblematic of the way people are debating the whole market joe is saying its a bike. Stooe steve saying its a sass company. And it has netflix like potential. Theres a lot of other stocks you could have a similar battleground argument thats run up tremendously during the pandemic. Everything is great yes theres social distancing and all kinds of protocol you have to go through i think the return to the gym is something that will absolutely happen were a social society we really are. I think the reality is, people once they feel more comfortable will become social again and when they do, all these what i see in peleton is a company thats done a magnificent job. They have done everything right and pulled everything forward. At some point in time when people get comfortable to go back to lifetime or any time or 24 hour fitness or where ever they want to go, i think we will start to see that happen i think youll see a big slow down on a very expensive system. Youre paying anywhere from 2500 and 5,000 plus you have a subscription model if everybody is in big a trouble as we hear about each and every day and scott ive heard you talk about this as well. Mainstream Society People are struggling. How are people going to afford these peleton bikes and everything else. You must want everybody to sell zoom, teladoc, all these names that drived during the peak of the pandemic then no one will zoom anymore and everybody will see the doctor and do these things that have caused the pull forward. Absolutely not. Thats what you just said no, its not. What i said was if you think that people are going to continue to be not as social as they once were, i do believe that youre going to see the zooms of the world continue on not at the same pace they will not possibly grow at the same level they had. People will at some point start to return to normalcy in work. Doesnt mean its 100 zoom can still work. Teladoc can still work i think youll see more and more people that will say, this zoom is great but why dont i do a hybrid everybody said its all one or the other. Thats not the case. Theres going to be a hybrids society. I think youll see a hybrid model that will work thats why some of these absolute screaming numbers that were seeing, thats going to come down. I do think youll see a pull back in the zooms of the world and a lot ofpro prospered in an amazing way. People will change and go back to what they were. Let me grab a break real quick. Number one Semiconductor Analyst is with us the chip stock hes now named the top pick in the space. Its a bit of a change for him too. Ths up next in our call of e day. Were back in two minutes. Who is usaa made for . Its made for this guy a veteran who honorably served and its made for her shes serving now we made it for all branches and all ranks whether they served one tour or made a career of it. We also made usaa for military spouses and their kids usaa is easy to work with and can save you money on auto, home and renters insurance. Become a member today. Get an insurance quote at usaa. Com quote usaa. What youre made of were made for welcome back you saw a mixed picture for stock os on friday.