Losing money is THE COOLEST, Larry Kudlow is not a scientist, trading your time for what you value, with Ben Carlson and Dasarte Yarnway

The Compound and Friends

Josh Brown

Investing, Business News, News, Business

4.7 • 2.2K Ratings

🗓️ 16 October 2020

⏱️ 74 minutes

🔗️ Recording | iTunes | RSS

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Summary

Josh talks to Ben Carlson about how it is that over 400 companies in the Russell 3000 have lost money this year but posted an average stock market return of +57%. Over 100 companies that lost money in 2020 have actually seen their share price double! WTF is going on? Dasarte Yarnway joins Josh to talk about his burgeoning financial advisory firm and the powerful message he's been sharing throughout the industry: Spend time doing the things you value and the rest will fall into place. Plus: The Fastly blow-up this week may be more meaningful than you think, BlackRock says $1.4 trillion is sitting in mutual funds with negative 3-year returns, and is it Larry Kudlow's responsibility to help you trade the pandemic? Nope! Be sure to leave us a rating and review, they go a long way! Thank you! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	All right I got so much to get to today. I want to start with this. This company
0:04.9	fastly blew up this week. The ticker is FSLY and it's only a 10 billion dollar
0:10.8	market cap, but it's not an important stock, okay?
0:13.4	The company itself, basically what they do is they speed up the delivery of online content
0:18.4	and their biggest customers, Tik-Tok.
0:21.2	And for whatever reason, coincidentally or not, Tik-Tok, I guess has not done as much business with
0:28.0	Fastly as they thought. Fastly comes out and they're like, yeah, third quarter, the original guidance we gave you
0:36.6	guys was 73 million in revenue, but we're only going to do 71 million dollars in revenue for this quarter.
0:46.2	So of course, Wall Street acted very maturely.
0:49.8	They beat the shit out of the stock to within an inch of its life. The stock is down as I'm talking
0:56.1	27% 34 points a share on that news. So it's not that it makes sense or doesn't make sense for a stock to lose a third
1:06.4	of its value because revenues will be 2 million light in one quarter, but that's what happens when you have a price to sales ratio of
1:15.8	48 times like there's no there's no margin of of safety in the stock price
1:22.0	so the slightest tick up and you get this outsized
1:26.0	reactions to the downside. All that is is a mirror image, you know, opposite version of what it looks like when the stock is going up
1:35.8	and the bears would sit back and say stock is there's no reason why this company traded at
1:42.4	48 times sales yeah of course there's no reason why this company traded at 48 times sales. Yeah, of course there's no reason, right?
1:46.2	So you can't, you can't do 71 million if the street's expecting 73 million and you're trading at almost 50 times sales.
1:55.6	So now the stock is down to a much more reasonable 35 times sales. It's only a 2,000 price earnings multiple on next year's I guess one or
2:08.9	two pennies that they're supposed to earn and this my view, probably has more room to the downside.
2:15.3	Because it's not that it's a bad company or that it's not a fast-growing company. It's that when
2:21.1	the illusion is shattered, like the illusion of these companies are perfect and they can do anything right
	...

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