Summary of "How To Tune Out Market Noise" - Motley Fool Money Podcast

Release Date: March 24, 2025

In this episode of Motley Fool Money, hosts Mary Long, Dylan Lewis, and Ricky Mulvey engage with investment analyst Asit Sharma to explore strategies for navigating market volatility amidst ongoing tariff developments and the overshadowing influence of Big Tech. The conversation also delves into corporate challenges faced by 23andMe and concludes with insights into MGM Resorts' ventures in online sports betting. Throughout the episode, actionable advice and thought-provoking analysis are provided to help investors maintain a long-term perspective.

1. Navigating the Tariff Landscape

Mary Long kicks off the discussion by addressing the evolving tariff situation, particularly focusing on the upcoming "Liberation Day" on April 2. This event marks the U.S. intent to impose reciprocal tariffs on a select group of countries, primarily affecting Canada and Mexico. The uncertainty surrounding these tariffs has contributed to a downward trend in the markets over the past weeks.

Mary Long [00:39]: "We got another tariff related development to kick off the week... Liberation Day has quite the ring to it. Are there any companies that are going to be celebrating this April 2nd when it hits?"

2. Sector-Specific Impacts of Tariffs

Asit Sharma highlights the specific industries that might benefit from the new tariffs, notably steel producers. He explains how these tariffs could shield domestic producers from cheaper foreign competition but also notes the ripple effects on related sectors like roofing and alternative materials.

Asit Sharma [01:26]: "Maybe the steel producers... these are companies that have been up against much lower cost competition in raw commodities."

3. Potential Narrowing of Tariffs

Mary brings attention to recent news suggesting a possible narrowing of the tariffs slated for April 2. Treasury Secretary Scott Bessend refers to the targeted countries as the "Dirty 15," focusing on those with persistent trade imbalances with the U.S. Additionally, sectoral tariffs may see delays, introducing a glimmer of hope for reduced market uncertainty.

Mary Long [02:08]: "There is this glimmer of hope that perhaps these fast approaching April 2nd tariffs won't be as wide-ranging as they were once assumed to be."

4. Market Downturn: Tariffs vs. Big Tech

Shifting focus, Mary introduces Nir Kasser's perspective from Bloomberg, arguing that the recent market downturn is more attributable to Big Tech than to the ongoing tariff debates. Asit Sharma provides historical context, comparing today's market concentration to that of the late 19th century, suggesting that such concentrations are not unprecedented.

Mary Long [04:33]: "Bloomberg opinion columnist Nir Kasser has another idea. He argues that, quote, the freakout was more about big tech than Trump's tariffs, end quote."

Asit Sharma [06:03]: "In 1880, the share of top 10 stocks in the S&P 500's market cap was 27%. Now it's 38% today and everyone is freaking out."

5. Evaluating Big Tech Valuations

Mary questions the sustainability of the high price-to-earnings (PE) ratios of the MAG7 stocks, noting that except for Tesla, these companies are trading between 20-40 times earnings. Asit responds by emphasizing the significant investments these companies are making in AI and other technologies, which may justify their premium valuations despite current high PE ratios.

Mary Long [09:58]: "Are those reasonable prices to pay for these companies right now?"

Asit Sharma [09:58]: "Companies like Apple or Microsoft engage in tremendous dividend payments and tremendous share buybacks... it's not that terribly overpriced."

6. The Downfall of 23andMe

The conversation turns to corporate struggles, with Mary highlighting 23andMe's Chapter 11 bankruptcy filing. She points out the drastic decline from a $6 billion valuation to approximately $50 million within a short period.

Mary Long [12:03]: "Today marks another chapter in that story... 23andMe was valued at $6 billion. Last week it was closer to 50 million."

Asit attributes 23andMe's failure to an unsustainable business model that relied on one-time revenue streams without establishing recurring income sources. Despite attempts to pivot into therapeutic divisions and drug discovery, the company couldn't generate consistent revenue.

Asit Sharma [13:05]: "Two words Mary. Business model... it never really could figure out a way to have recurring revenue streams."

7. Strategies to Mitigate Market Noise

Mary shares listener feedback from the 'Foolish Fun' section, where one respondent, CMF Boiler Pete, advises focusing on investment processes over outcomes to drown out market noise. The strategies include regular investments, journaling investment theses, maintaining an emergency fund, and diversifying portfolios.

Mary Long [14:35]: "Concentrate on process over outcome... it gives you comfort that you are doing things right."

Asit builds on this by introducing his own approach—achieving a "warm fuzzy" feeling through thorough research and understanding investments deeply, which helps in ignoring short-term market fluctuations.

Asit Sharma [15:33]: "Get that warm fuzzy and that market noise will be just something in the ambient background."

8. Listener Engagement and Challenge

To foster community interaction, Mary challenges listeners to share their personal strategies for tuning out market noise, encouraging them to engage via comments or by emailing the podcast team.

Mary Long [17:04]: "If you listeners have an answer or can improve upon CMF Boiler Pete's answer... tell us how you tune out market noise."

9. In-Depth Analysis: MGM Resorts and Online Sports Betting

The episode transitions to a detailed discussion with full contributor Travis Hoyam and Ricky Mulvey about MGM Resorts' foray into the online sports betting market through BetMGM. Key points include:

• BetMGM's Role and Financials:
  • BetMGM accounts for $2.1 billion in revenue but has yet to turn a profit.
  • The expectation is to break even by 2025.
  • MGM's global operations, including expansions in Japan and potential ventures in Dubai.

Travis Hoyam [18:57]: "BetMGM is kind of an extension of the MGM brand... it's expecting to be e e break even by the end of the year."

• Las Vegas Market Dynamics:
  • Recent softening in Las Vegas with declines in table game revenue.
  • Despite short-term volatility, long-term prospects remain strong due to MGM's strategic positioning and ownership of prime properties.

Travis Hoyam [20:58]: "The new normal... it's a volatile business. But... Las Vegas has got to be one of the top couple of places to meet in the US."

• International Expansion:
  • Significant investment in Japan with MGM's Osaka resort expected to generate over a billion dollars in cash flow.
  • Cautious optimism about ventures in Dubai without an immediate casino component.

Travis Hoyam [22:44]: "I think this could be a phenomenal property, potentially the most profitable in the world when it opens in 2030."

• Capital Allocation and Debt Considerations:
  • MGM Resorts has reduced its share count by 40% since 2021.
  • The company opts for buybacks over dividends, viewing stock as undervalued.
  • Debt ratings are below investment grade, common in the gaming industry, but MGM's strong cash flow mitigates concerns for equity investors.

Travis Hoyam [26:17]: "Management thinks the stock is really cheap and that... use your cash flow to buy back stock."

Travis Hoyam [28:08]: "Fitch rated MGM secured debt at BB plus, unsecured debt at BB minus... solid cash flow company."

10. Conclusion

Mary wraps up the episode by reiterating the importance of maintaining a disciplined investment process to navigate market noise. She emphasizes the value of listener engagement and encourages sharing personal strategies for financial resilience.

Mary Long [30:06]: "Thanks for listening. We'll see you tomorrow."

By addressing both macroeconomic factors like tariffs and sector-specific challenges, alongside practical investment strategies and corporate analyses, this episode of Motley Fool Money provides a comprehensive guide for investors aiming to tune out market noise and focus on long-term growth.