Conversation in just a minute. Ill take you to the wall. We are focused today on this big pullback for tech. Nasdaq remains under pressure by more than 1 farmer jim, are we witnessing a socalled transition trade right before our eyes, from growth to value and does it have staying power . I think we are, scott i know its dangerous to say this type its different with regards to the rotation, but lets also realize this rotation was occurring before the announcement of the vaccine. All had you to do was look at the industrials and material to give you that clue now theres a very fundamental reason to support the continuing rotation into the cyclicals, into the industrials, even into the financials, which have been left fordead but are coming back it ju its just as simple as there is a path to normalcy ahead of us heres the one qualification i want to make if youre looking at yesterdays rally and saying, shucks, i missed, it relax unfortunately there is terrible news coming on the virus scott, i know youve been all over it. I dont need to tell you that. The really bad numbers about deaths lag the case count by about a month, which means at the end of this year, its just going to be awful and thats going to depress the economy not depress as in depression, but its going to hurt Economic Growth and its going to give you an opportunity to get into this rotation, which is one you need to be playing for the next years plural youll have an economic recovery on the back of a vaccine and treatment, cyclicals are where you want to be microsoft, apple, amazon, facebook all lower, zoom, peloton, docusign all sharply lower today, many of those other socalled stayathome stocks are lower as well. Cramer, tiffany says prepare for a multiday selloff. They were right for profit taking, he says, yet i find is so interesting that you bought more peloton today why not wait for more of a pullback that cramer says is still to come . Well, lessen, with all due respect to cramer, i like to make my own determination of when to buy. But why peloton . First because beyonce, right just when i think just when i thought the great news from yesterday on this kind of glimmer of a vaccine and kind of like this path forward was a great thing, i wake up this morning and beyonce has struck a deal with peloton. So i love all those things this whole conversation about value and are we in this kind of like rotation, i think its really its been really hard to have a conversation around value this year because weve had so Many Companies emerging with these superstar performance. And so, you know, i really do think were still in a stock pickers environment and we have to be very careful about painting, you know, large sectors with a broad brush so i really do believe that, you know, you have to i find myself even with Companies Like apple, right, and peloton, asking myself not if i can afford to be in them, but if i can afford not to be yeah. Look, peloton was lower. It obviously has reversed and reversed sharply maybe for some of the reasons, tiffany, that you laid out pete, what about these names is this transition going to last is it time to get out, with all due respect to tiff and the nice move were seeing and the reversal were seeing in peloton today, pete, is it time to get out of some of these names you know, they certainly weve talked for a long time, scott, about how lofty some of these names are. When you look at zoom and peloton, the inkrcredible outp r outperforme outperformers, were talking about companies where you look at the multiples and its far more appeal. Then you look at the other ones and youve had sufficient an incredible run to the up side. If indeed we are at the point where we are now looking over across the montant mountaintopsl to see a little something, which i kind of think were getting to with the vaccines, i think some of those names will suffer that doesnt mean every single name in the nasdaq is a sell i do think there are quality nails out there that will continue to produce to the up side just a day or so ago we were talking about the nasdaq at 12,000 i know we pulled off of that but we were at 12,000. We have been on this unbelievable run to the up side. 11,000 was an area everyone was looking towards. We broke through that and got to 12,000 and now were pulling back of course i dont think this is the time to panic i think there are names that probably because of the pe levels are sells and its been a great ride for those who have actually caught it but i also think there are quality names out there that still have plenty of up side, apple, microsoft, a lot of those names facebook some of those names, pete, the ones that i mentioned were down earlier, look an apple, its important to note that stock has reversed apple is now in the green ahead of that event coming up later today that we just heard about from john fort, which he thinks is rather significant. So, yes, there is money going into these names thinking that those trends that were in place are not going to end any time soon so, michael farr, nice to see you again. What are you thinking about the market coming off this big day that we had yesterday, maybe not for the nasdaq but for the dow setting its first record since february and where stocks could go from here what are you telling your clients today . I guess you have to tell them to stay calm its wonderful to feel this euphoria, but when stock prices are going high, you can feel that euphoria. Ock i dont think ists a rotation but i see a broadening of the market i see the value stocks and a lot of the industrials catching a bid. Thats probably going to extend the financials at some point as this recovery continues, so there are opportunities out there. I think its a big mistake to expect that the faangs and tech stacks are over. Fundamentals for those companies, still very strong the faang stocks and microsoft picked up 385 billion in market cap in one day in the wednesday after the election so that doesnt sound like a group thats dead to me yet. I like tiffany being a bit opportunistic for some of the names, that makes sense to me. I think you have to be patient and know that as we get through this and get a reopening of the economy, we move back into what 2 gdp growth world and youre going to want to own these companies that are absolutely able to execute, continue to expand market share and earn more to the bottom line. Some wondering why you would think the market has got i dont know gotten a little ahead of itself, in this euphoria dr. Gottlieb says on this network youre going to have an exploding number of virus cases. Who knows what kind of stayathome orders you might have the president still wont concede the leelection, could he a couple of messy months ahead we hope that the time frame for a virus remedy is coming the president has not conceded, we dont have a vaccine planned in terps ms of rolling one out s cramer talked about this morning. Is the market paying attention to the wrong thing i dont think so. It could get worse in terms of the administration with the department of justice taking an active role, but the good news is is that theres light at the end of the tunnel. So whether the current president concedes at any point in time or not, he will be out of the office and biden will be in and then youll have panacea, with the caveat that we dont know where the senate is going to be. Assume being iting its going th democratic majority, youre going to have a perfect investing background the reason i say that is because you still have all that stimulus equivalent to over 25 of gdp slashing around in the system pushing you into risk assets in terms of what cramer says about not being plan to roll out the vaccine, i dont think thats true. I spoke to one of the Vaccine Companies yesterday and they do have a plan. Which ever countries approve it will get the first al occasions of the vaccine moderna has 20 million theyll already been manufacturing, pfizers been manufacturing and theyve all been manufacturing it. I dont think his point was the companies dont have plan. Its that its going to be such a massive undertaking and the government has no plan on how to actually roll it out to all the people who need it when the Current Administration says its going to be available. Hes talking about the mechanism to deliver it to point a, b, c, d, and e i think there is. Front line workers get it first and then you get to the elderly. But the bottleneck is on the ability to deliver the vaccine its 140 degrees below zero, i believe, the Pfizer Vaccine. So youve got to have the trucks to do it i heard fedex saying theyre going to adapt to it thats going to be the real issues regardless, markets anticipate events whether its first quarter, which i dont think it will be, or the end of the year, youll get it there. And thats going to overshadow everything i think that tech and cyclical stocks, i dont view them as a value. Theres not a lot of value in a deere or honeywell at this level but i believe cyclicals can co exist with the money on the sidelines, which is massive. These are opportunities to buy tech on peloton, i respectfully disagree i think their best days are going to be behind it, maybe not this quarter by next quarter its still an expensive bike gyms will be reopening and people want to go out and work out in gyms and 30 billion is a lot for a company like this. Lets bring in our guest today, Brad Gerstner good to see you again. Good to see you thanks for having me on. Whats most interesting to me about the way you view the market, the end of march you said you reduced your total gross exposure, covered your shorts and were focused on your long book. What you now tell us is that youve been adding to i dont are short book with lower Quality Software names, you say, and internet names that appear overvalued are we talking about those stayathome stocks, high growth tech naimes that have had such a great run . Thanks for having me on were only 180 days since that conversation we had that was pretty scary and despondent at the end of march we said we went all in at that point and covered our shorts were 100 net long. The fed had gone all in with its balance sheet, rates went effectively to zero. Frankly, we thought that we would have the ability to get this under control a little bit faster than we have. We thought we would have antivirals fast are than weve had. Thats taken a little bit longer and what we saw during the intervening period of time was the support out of the fed that really propped up a lot of these technology stocks, the software and internet complex in particular, multiples expanded pretty dramatically with those lower rates. And as we sit here today, we think that, you know, its been a heck of a run for the market and i do believe, as jim pointed out, as scott was just references, half of the markets been largely uninvestable for this year. You werent buying airlines, you werent buying travel or hospitality companies. I dont think we can underestimate the significance of the news and the Pfizer Vaccine or lilly antiviral. Its extraordinary what this company has accomplished in a very short period of time. So for us we started looking at that rotation. We think dollars are going to move out of some of these really Terrific Software companies and Internet Companies well have a reversion to means as the 10 and 30years revert to the mean weve seen significant moves out of the long end of the curve were not making some big macro call were saying this is a normal normalization of multiples Tech Companies are still going to do fantastic. At the same time, we think the other half of the market, which most have not participated in over the course of the last four months will start to reflect a return to normalization, as you start to see it priced in to some of these stocks so you do, in fact, it sounds like think it is time to be selective but sell some of those stocks that have expanded their multiples a lot since the spring and take a look at some of those reopen, epicenter, cyclical, value, whatever you want to call them, the stocks that have a lot of potential up side because of the news of the vaccine and the ultimate distribution of it. Were in the business of portfolio and risk management, scott. If multiples expand by 40 and youre not making any announ announcements to your portfolio of the massive event of probably the best vaccine ever produced, that would be us failing to do our job. Were not changing the companies we love. Our top five have been generally the top five for over a year now but were managing exposure what we think will be a rotation back into some of these stocks that have been uninvestable this move has been happening the bond market, the tenyear is 09 of its lows, the 30 years is 50 off of its lows. But theres a significant way to go to the inverse on those higher rates on the long end of the curve is lower multiples on these highgrowth stocks so thats a natural phenomenon we dont have any panic and these terrific companies zoom is a worldclass business, its going to be a World Class Technology platform for a long time but i this i prudent portfolio imagine andment would simply say that you manage out of some of that exposure into some of the companies which have failed to capture a bit for most of the yearof. What do you do with snowflake, which i know you like very much, you were in very early. Is that sort of one of these what did it go public, a hundred times sales . Is that one of the things were talking about in the space of software, which you and i have had a conversation about the better part of the last two, three years . Let me first say that the one thing i want to celebrate is you and i would have never predicted 180 days ago that the Internet Companies that power this economy would have kept us all connected and kept our shelves full, that they would have seamlessly kept our businesses running and the fed did its job in liquidity, we had the greatest election turnout in the history of this country in the middle of a pandemic and now our Biopharma Community has delivered a onetwo punch with more come being thating thats innovation the world has seen. Were certain that the digitization of Corporate America has been pulled forward. Were certain that the rate of growth over the next few years will be higher than it would have otherwise been. There is not a ceo in america now that doesnt understand the need to move their technology into the cloud and to be a dij at that digitally higher priced environment. When we look at snowflake, we think its going to be one of the most extraordinary, it already is, largest ipos in history and think its positioned to be one of the most impact fall and Iconic Industries in the coming years we think of it as the fourth cloud. We think most businesses will provide this and the connective tissue theyll provide to help companies derive insights out of that dayia wi data will be secoo none were huge believes in snowflake. I wouldnt pay that muff attention to the next 12 months. You and cramer like to talk about a hundred times sales but when you analyzing a company thats growing over 100 with such loaf pw penetration this company has, you need to look out over three years, compare the three years from now with the multiple of the rest of the software complex and it looks much less onerous. Only because it just speaks or at least it spoke at the time of its going public of a narrative that had gripped the market that people were willing to pay up for the kind of growth that a snowflake would deliver, not an indictment of snowflake or its ceo in any way, shape or form it was just sort of the psyche of the market at that particular time was the reason why i think those comments were relevant heres what i want to do one of the members of the investment committee, tiffany mcgee, because of of the comments you just had i think are very interesting she bought more tiff, you bought more service now. You bought more sales force. Since were talking about the cloud, you bought more docusign. You had bought more peloton. Can you explain the reasonings behind those moves and id like gotoget brads opinion on making the moves in names like that given what he just said tiff, the floor is yours ia, sure listen, at the end of the day i invest in innovation and strong management so we have these conversations around valuation and, again, i dont think that we can have that same conversation using the same metrics we have to consider the time that were in. And, you know, we were talking about earlier that these things are not going to go away you know, i find myself again asking not, you know, i want to get things for the best price but some of these things i just have to be in. So when i see the dips, im going to buy the dips. So im also not a trader, im an investors and i see all of those names that you mention, scott, as good opportunities for the long haul. And so these are not, you know, for the most part, these are not companies with like 20 and 30 competitors that are exactly the same these are companies that are really strong leaders in their markets and theyre dominating and they really kind kept us through during this entire year and i dont think thats going to change when we do have a vaccine that everyone has taken. Okay. Investing, professor gerstner, what grade do you give to the explanation of the thesis of why tiffany just bought the names, you know, despite some of the noise in the market that were seeing around them you mean like tiffany just demonstrated why shes a great investors. She looking at this like shes an owner, shes going to hold these for a long time. She doesnt have any idea, i dont have any idea what theyre going to do over the next 30 days but if you have the perspective of whether or not these are terrific companies, service now, do docusign, extraordinary businesses arent going anywhere if youre willing to tolerate some markettomarket loss on it because markets may continue to compre compress, then i have no problem buying it. What i worry about are robinhood traders who fail to understand that we have an event now that is likely to change the course of the long end of the market, right, is likely to cause the fed sometime in 2021 to teak a harder look at the liquidity situation and the short end of the curve and that does impact multiples. But if your time horizon is long enough, then all of those companies are terrific buys. Lets me just also say this correction has been occurring, scott, for several weeks now im just looking at our dashboard. Zoom peaked at 21. 6 times forward revenue. Today its already back to 14. 6 times and precovid, it was at 13. 6we 13. 6 were almost back to the precovid. Shopify peaked at 21, now its at 16. 7 times are and precovid it was at 13. 7 a lot of the correction has already occurred we believe that this rotati