A (3:17)

So I want to put some numbers to that. The NASDAQ composite year to date is down 8.9%. As we're recording, the S&P 500 is down 6.1%. Is that part of that energy allocation that you're talking about? Right. The NASDAQ is not going to be allocated energy. Whereas if you look at one of the things I like to look at recently is the heat map of the S&P 500. If you do a year to date heat map of The S&P 500, the are huge segments of the market. A lot of the most popular stocks that we talk about all the time are down really big. And then you got these small little boxes like utilities, like, you know, oil producers, ExxonMobil that are up huge. Is that what you're talking about? Is that just that allocation has not kind of balanced out because of the weights of the index.

B (3:59)

Yeah, energy makes up 3 to 4% maybe of the index right around there compared to, you know, technology and financials. Financials also not having a good start to the year just because of the interest rate concerns. So yes, those parts of the market just aren't represented in the index. So you're starting to see those fall off. And of course, many fools out there, including myself, own a lot of tech technology stocks. So as we see those technology stocks underperform or those the Mag 7 or other parts of the tech stack underperform, that also weighs on some of that confidence. And just wondering, hey, where do I have to try to find some alpha into this market looking out over the next couple years, do I need to raise some cash? How do I start to position myself knowing that technology or thinking about technology is starting to shift a little bit and other parts of the market are looking a little bit more attractive considering some of the macro factors that we're seeing now? I mentioned financials. Financials have not done well this year mostly because the interest rate environment where we are expecting rate cuts throughout pretty much the year. If you look at a lot of the Expectations. And now the expectations are the rate cuts are not going to come, if at all. They come later in the year.

C (5:05)

Yeah, the six month treasuries have been jumping, which, you know, music to my ear, but not really what we'll see with the markets. I think Andy did a great job like breaking down kind of the market dynamics and why maybe things. If anything, I'm a little surprised the overall markets have held up as well as they have. I mean, you listen, you read reports, you listen to podcasts, energy experts talk about, like, wow, we are experiencing things that in the models we said, well, this is worst case scenario and we will never. And that's our reality. I think part of this too is market psychology. I'm worried, guys, because I do think that the damage done will take time to heal. And I think it's a question of quarters or if not years, how long it takes to ripple through the economy. And I think that as an investor, I might not change things on that because I'm trying to focus on the long term and I'm trying to be in companies that can get through down cycles. But it feels like this is the straw that might break the camel's back and, and cause recession. On the other hand, what's happened every time the stocks have gone down less since COVID there has been a pop. And I do think the markets are likely looking for a pop when we finally do have some resolution of what's going on the Middle East. And I think that's kind of rational if, especially if I'm a professional money manager and I'm graded quarter to quarter, if I think a pop is coming, I, I am not positioning for five years. So I do think there's these weird psychological dynamics that if anything, I think it's good to maybe understand or have a feel for, but for what I'm trying to do, I'm also trying to ignore, I'm trying to maybe use it to explain what I'm seeing and why things are moving. But I personally don't want to make decisions based on what could happen next week. But I do think the psychology of the market is that we do see whether it's FOMO or whether, you know, what's going on is influencing what's going on.

B (7:06)

You know, Lou and Travis, it's interesting, the individual investor Lou mentioned about the, you know, kind of the buy the dip mentality. Individual investors now represent a good chunk of the investing activity that's a lot different than it was five years ago. And we've seen them Be kind of a lot, in a lot of ways the buyer of last resort and, and institutional investors a little bit more on the short term panic hit the button, jump out of positions. So individual investor trade, that has been

A (7:35)

a fascinating shift over the past 10 or 20 years.

B (7:38)

Yeah. And it's really elevated since COVID If you look at since really since COVID when so many institutional or so many individual investors and hey, credit us, right, hey, win for the individual investor, that's awesome. Those individual investors have really in many ways supported the market, especially on the margin side. And I, I think you are starting to see, hey, it's been a great performance the last three years really since 2022 with after that bare market. The markets have done so well. So many positions have done so well, including technology, led by technology. And now I think individual investors saying, hey, is that, hey, I may be overweight in that area. Now I'm starting to pivot and looking at other spots of the market. I think that shift is going on and that's not necessarily, that doesn't get reflected in the index, as we mentioned before. And that's one reason why the index has underperformed this year.

A (8:26)

One of the questions that I have about the market in the economy, one of the things you guys talked a lot about, market dynamics, we have not talked a lot about the economy. And the reality is oil prices are soaring. That's a huge expense for a lot of consumers. Year to date, Brent Crude is up 76%. WTI West Texas Intermediates up 70%. We're at 93 per barrel. That is going to ultimately hit people's pocketbooks. So, you know, Lou, does that worry you that the. Yes, I think Andy's totally right. The great thing that we've been trained as, as investors and as individual investors to have a longer term view and to buy these dips. But what's different now is it in the last 17 years we have not gone through a traditional recession where people are losing, you know, put Covid aside. There was a lot of weird things going on with COVID But where those buyers of last resort that Andy said were, you know, losing jobs, we're pulling money out of the market instead of putting money into the market. Are those two things energy prices going up and the risk of a recession, could that be kind of bad news squared for the market overall? Because those buyers are going to start going elsewhere. They're just going to cash.

C (9:48)

I'm definitely worried. I mean, look, we've talked about this a lot before. We like to talk about the consumer as if it's one person, but it really is just kind of all of the households out there. On an individual level, do you feel confident enough to keep spending at your average pace? Right. And it's always a mix between yes and no. If the nos hit a critical point, then that is when the consumer is having trouble. You can see how not just, you know, I mean, oil's one thing, but just the, you know, the refined products, what we actually consume. Hopefully not literally, but from whether it's oil, I mean, whether it's gas, whether it's jet fuel, whether it's, you know, what happens with plastics on, on all the chip making, the helium and the, and some of the acids that we get out of it. If everything is getting more expensive in does that shift the K shaped economy just slightly till we end up in a downturn? It wouldn't shock me. You know, Travis, you're right. We are now conditioned to kind of buy the dip. It wasn't too long ago that, I mean, look at after the dot com boom. The NASDAQ took what, a decade to recover. There was a whole kind of, I think market mentality tied to that before. I'm guessing this time around won't be either extreme. I don't think, knock on wood, it won't take 10 years to bounce back. But I think we might end up with enough headwinds that we find this a lot easier to just bounce back and move on. And yeah, I'm trying to think about that. I don't know if I can change my portfolio with that. But mentally I'm trying to prepare myself so I don't do anything panicked if and when that does happen.

B (11:25)

Yeah. The one slight bright side is just the dependence. The impact of increasing energy prices and oil prices, gasoline prices, is much less now than it was 30, 40 years ago. So that's some good sign. But Lou is absolutely right. It's just going to percolate through the economy. I think again, investors are kind of sensitive to this. Travis, you, you did, I think bring up a great point. When you just think about, you know, there, there's just this uncertainty around jobs. I think now that we're all feeling, whether it's just whether it's AI or just macro conditions. And that might be a weighing impact on investor appetite to put more capital to work into stocks. Now we might have some pretty big IPOs hitting the market this year, which would be very exciting. And I think individual investors especially would kind of gravitate towards that in the K Shaped economy. The wealthy are as, as well off now as ever before. So we have a little bit of that. But I do worry about the job impact having some negative consequences on the appetite for individual investors to be investing.

A (12:32)

Yeah, it does seem like there's multiple pieces of the market too. We talked about that a little bit. Like energy is doing very well. But if you just look at certain segments, we went through this in 2022 as well. There were certain segments down 70, 80, 90%. And then you look at the market overall and it was like, eh, you know, it was a down year, but it wasn't the end of the world. We didn't actually end up in a recession. The other thing that I wanted to note too is even going back to the Great Depression, these recessions, market corrections, any sort of downturn you want to talk about, they seem to be shorter than every single time we go through them. The Great Depression was, it was a decade, you know, even.com was two years. Covid was like five minutes. So maybe it may be the case again this time. When we come back, we're going to get an update on the AI trade. You're listening to Motley Cool Money.

D (13:24)

If you're early in your career and looking for insight, inspiration and honest advice, listen to the Capital Ideas podcast. Hear from Capital Group professionals about leaning into the differences that make you unique. Making decisions that last you and what it means to lead with purpose. The Capital Ideas podcast from Capital Group, available wherever you listen. Published by Capital Client Group Inc.

A (13:48)

Y' all not there. All right, let's get this thing moving. Welcome back to Motley Fool Money. The question I have this week is has the AI trade lost its legs? Andy, We've got some big moves in some of the AI players over the past few years and this is what's really driven a lot of the market. Even GDP growth has been driven by AI investment. So Microsoft down 24% this year. Tesla down 17%. Nvidia is down 8%. Oracle down 27%. Some of these stocks are really taking it on the chin despite some phenomenal numbers. So what is going on with this AI trade?

B (14:35)

Yeah, they continue to put up great on, for the most part, great on the earnings side, the revenue side, even making impacts on a lot of their AI benefits. But certainly the market is just thinking about the return on all of these spending. It's going to be trillions of dollars. Trillion dollars. Close, give or take. You know, whatever year you're talking about,

A (14:50)

what's a few hundred billion dollars between friends?

B (14:52)

Yes, and we had just re recommended Amazon. Recently we had this conversation among the team. Amazon's going to spend billions, billion, hundreds of billions of dollars on capex this year. What happens if they came out and said, hey, we're not going to spend quite as much, how would the market react? Would they be positive because it's going to benefit their free cash flow or negative and say, gosh, they're not spending enough to be competitive in the AI race against the likes of OpenAI and Google and Microsoft and Meta who are spending equally, hundreds of billions total. So there is this thinking of the market and the market doesn't quite know what to make of these numbers, Travis. And it gets to our earlier conversation. They're saying, hey, great investors are, I think, thinking, hey, it was a great run, but now these dollars are getting so high. I made a lot of money in these stocks and I want to pivot and look at other parts of the market.

A (15:39)

So what is your answer? What do you think is gonna. If, let's say that Amazon this year or even next year says, hey, we are going to pull back, do you think that boosts the stock?

B (15:48)

I think the market would react positively to that.

A (15:50)

Yeah. It has changed. 180 in six months, it seems like.

B (15:54)

Yeah.

C (15:55)

Honestly, I'm not sure. Again, just kind of to play devil's advocate. But I think, yeah, the market long term may like it, but I think in the short term, the first company that says we're cutting back is sort of risking that it's going to be red. It's like ours isn't as good or we have failed and everybody else is still, you know, is still going. So that's fascinating to me. I mean, look, for long term, if that's what they're seeing, they need to pull the band aid. But I am not sure the market initially would cheer any one company alone, saying, oh, I'm not so sure.

A (16:27)

So they need to have like a joint press release. We're all pulling the.

C (16:30)

Yeah, good luck with that. Good luck with that.

A (16:33)

Right.

C (16:33)

You know, part of this too, I think is just, you know, the sheer excitement. The euphoria always degrades over time. So, you know, so many of these stocks are still up so big over say, five years. The fact that they're down for a few months, you know, maybe that is just kind of us normalizing. But there is, I mean, look, just look at OpenAI the last month they've introduced things, they've dropped things. They've. I think that as we are seeing that I Mean, it's good that these companies are trying to focus on where can we make money, especially the ones like OpenAI that are going from zero to try to do it. But I also think it is more, we are introduced into the conversation the idea of will this make money or how are you going to make money? Seeing things fail kind of makes that a big red underlined. It might not just work out. So maybe there is just a little more of like, like Andy said, the show me. Or maybe it's maybe we're just a little more grounded as we look at this instead of just anything and everything is good.

A (17:37)

Well, and a lot of things are cycles. So if you think about something like the Gartner hype cycle, you have this hype cycle with artificial intelligence started at the ChatGPT moment in November of 2022. You eventually end up at a point where you get to a trough of disillusionment where people go, ah, man, this, this isn't real. There is no payoff. You know, maybe, maybe the technology is real, but we went through this with the Internet. Where are these companies going to actually be able to make money? And that was in. That took years to get to that point. Is it possible, Indy, that we get to that point, you know, in the next year OR2 with AI and actually that's when you want to start buying some of these companies because that's when you're going to be able to find the next Amazon, the next Google, and they're going to already have kind of won the market. I think that's what, looking back historically, that would have been the time to buy.

B (18:26)

I think that's right, Travis. I mean, these are some of the greatest companies ever created in the world. So I think their chances of them making and doing well with these kinds of investments is spot on. Just that right now the market is just not rewarding that.

C (18:38)

Yeah, almost inevitably, and I agree, and it's hard to imagine any of these is really the quote, unquote losers. I mean, they are so good and some of these companies are in so many places, I don't think it's existential threat. But if everybody's a winner this time, it will be the first time, right? So I do think that like part of this is just kind of trying to think in those terms, like who is. Maybe again, I don't think Microsoft is going to go to zero if they happen to be a loser. But there will be relative winners and losers here. I don't think any of us know the answer to that. But I think maybe what we're seeing is just that these discussions start to happen instead of, yes, just go.

A (19:17)

When we come back, we're going to see how well Lou and Andy remember their market history. You're listening to Motley Fool Money. Have you been sleeping on your mattress a little too long, like I have? My back's getting sore more than it used to, and I feel like Homer Simpson with my body shape and printing on the mattress. But like you, I'm busy with a job and kids and who wants to go to the mattress store with the family, only to deal with a pushy salesperson? That's why I was excited to learn about Leesa and their premium mattresses that you can shop for from the comfort of your own home. We wanted stability and comfort, so we went with the Legend Hybrid. It has over a thousand individually wrapped split springs for extra support. But here's the great thing. It virtually eliminates motion transfer. Just in case one of us has a restless night. No matter how you sleep or your budget, Leesa has a mattress for you. They're made from premium materials right here in the US With a focus on using sustainable materials like recycled steel. Check out which mattress is right for you@leesa.com for 20% off plus get an extra 50 off with the promo code fool exclusive for our listeners. That's L E-E-S-A.com promo code fool for 20% off plus another 50 off. Support our show and let them know that we sent you after checkout. Lisa.com promo code fool. Foreign. Welcome back to Motley Fool Money. In this segment, we like to have a little bit of fun. So I wanted to see how well Lou and Andy remember their market history. These are all kind of tied to things that are going on in the market today. So we may have our first trillionaire if. If Elon Musk is able to take SpaceX public in the next month or so. So since 1983, nine men have held the title of richest person in the world. Can you name all of them or even. You know what I'm going to give you? If you can even name seven of them, I'm going to be pretty impressed.

C (21:33)

So we're going to start with Elon, right? We got one. Right.

A (21:36)

Let's start with Elon. Yep. There was somebody who held it for a number of years.

B (21:40)

Jeff Bezos.

A (21:42)

Yeah, only a couple of years for Bezos. Surprising one there only. Only three years, 2018 to 2022.

C (21:50)

Bill Gates.

A (21:50)

For a while, Bill Gates was. Yep. Held it for over a decade, I

B (21:54)

think Buffett for a while.

A (21:55)

Buffett for one year.

B (21:57)

Just one year. What year would that be?

A (21:59)

That is.

B (22:00)

Is it 2001?

A (22:02)

2008.

B (22:03)

2008. Fascinating.

A (22:05)

So. So the down year, you know, the one, one company who was able to come to the rescue. Warren Buffett. Yeah. All right, now you're getting to the harder territory.

C (22:13)

There was Carlos Slim. Brave.

A (22:16)

Hello, Slim. Yes, right, good one. I'm gonna give you a hint. Early 1980s, who would have been the richest person in the world? Sam Walton.

B (22:28)

Sam Walton.

A (22:28)

Oh, okay. And then there's three that you're missing. One of them, this was just in the last four years. Bernard Arnault.

B (22:36)

Okay.

A (22:37)

From lvmh.

B (22:38)

Yeah.

A (22:38)

And then there is two people. Actually, this is what, I didn't even remember this. In the early 90s.

C (22:45)

Early 90s, yeah.

A (22:47)

Two Japanese real estate investors. I'm not even gonna try to butch butcher their names, but everything ended up kind of going belly up. And he ended up not being a billionaire, was richest person in the world in. In 1991, and then was no longer a billionaire a little over 10 years later. So just crazy how fast things can. Can go down.

C (23:09)

I mean, relatable, right, Andy?

B (23:11)

Well, you know, I'm just. Yeah, it's just like they're just thinking about those oil barons.

A (23:15)

Yeah.

B (23:16)

You know, just like the wildcatters that just, they, they live and breathe and they go through these cycles and it's just T. Boom Pickens. I had fascinating chance to interview him or talk to him. And just even at the, at the elevated age that he was when, when we spoke to him, and he was just so sharp when it comes to energy and his fields. But I think he had gone bankrupt something like three times before and just made it all back.

A (23:39)

Yeah, that is one of the wild things is, is some of these people who are well known investors, you look back on their history and they have these periods of. Of bust in them. You know, Benjamin Graham as well, I think either went bankrupt or was effectively broke. All right, we talked a little bit about oil earlier in the show. Do you guys remember what year US oil consumption peaked? I'll give you a hint. It was not last year. But what year did oil consumption peak

B (24:07)

in the U.S. i'm guessing 2008. 2007. 2007.

C (24:13)

That's close. Yeah, I was going to say sometime that decade. I'll go under. I'll say 2004 just to be different. But yeah, I think Andy's probably right.

A (24:21)

The answer is 2005. I've got this right in between. I've got this EIA table that I go back to every once in a while that has oil consumption. It's just always fascinating to see because then you think about the impacts, right? Like we're not driving less.

C (24:34)

Yeah.

A (24:34)

But vehicles are much more efficient and there's just a lot of efficiency that's gone through the market. Overall, it's electric vehicles is a small piece of it, but it's. It's not most of it when you look at oil.

B (24:43)

And also just the impact changing diesel engines. And is that like, how does that all play into the refinery capacity and all that kind of stuff too?

A (24:51)

Exactly. Speaking of refineries, what percentage of oil in 2005 did the US import on a net basis? So the US imports some oil and then exports refined products or oil, but on a net basis, what percentage of oil did the US import in 2005 at that peak consumption?

C (25:10)

More than half.

B (25:11)

Yeah, fracking was just taking off. Fracking had just started taking off at that point. So.

A (25:16)

Yep.

C (25:16)

Yeah, more than half. I don't know. Pick a number, Andy.

B (25:19)

I'll go a little bit higher. I'll say 65%.

A (25:21)

Okay, 60%. Wow, that is a good memory. What percentage of oil over the last. I think. I think we're on the, what, the first four months of the year or the first eight? The last eight months that they reported. What percentage of oil does the US import on a net basis today?

C (25:38)

Closer to 20 or so.

B (25:39)

Maybe I would say even lower.

A (25:42)

Negative 10%.

C (25:44)

Oh, oh. On the net exporter of oil. Yeah. Okay, gotcha.

A (25:49)

So the fascinating thing there is, you know, we talked about oil prices and the rise in oil prices in the US that is not going to be just a complete sink of money. That's just going to, you know, a lot of that. That oil came from the Persian Gulf in 2005. That will just kind of be recirculating through the US economy in one way, shape or form. And maybe we have another boom, you know, in Texas and in North Dakota. Again, if we get oil going to $150 a barrel.

C (26:14)

Well, yeah, well, just the other big thing too is where it's coming from. I would bet that the vast majority of the imports, you know, it's just kind of. We need that. The heavy crude from Canada. So it's, you know, it's a North American story. I think Fortress North America looks even more impressive. Still a global price, unfortunately, but, you know, the world has changed.

B (26:32)

Well, it's interesting, the pricing Differentiation too between WTI and Brent and the global price, especially traded over in the physical asset. Right. Like traded overseas after the Iran conflict. And how that has really changed. And, and a lot of that is at least part of it is because of that, the fact that we are a net exporter of, of our own crude.

A (26:55)

Yeah, let's put some numbers to that because I've got this in front of me. So as we're recording WTI West Texas Intermediate, which technically needs to be delivered in. Is it, is it Cushing, Oklahoma? Yeah, I believe 97 per barrel.

C (27:07)

Yeah.

A (27:08)

Brent crude, which is the more international crude price is 110, almost $111 per barrel. So that's that differential. Usually they're pretty similar, but that's that differential you're talking about where, you know, the internal dynamics in the US not quite as impacted as you see internationally. All right, the next question. What is the biggest I. We're going to potentially have the biggest IPO ever next month, maybe in the next couple of months. What is the biggest IPO so far? How much was raised and what was the value of the company?

C (27:44)

It was Saudi Aramco, right? Correct. How much they raised? I don't know.

B (27:50)

I think they only issued like 4 or 5% of the company or something like that.

A (27:53)

Right.

C (27:53)

Like 20 billion. I don't know.

A (27:55)

But yeah, I mean, ultimately $29 billion.

C (27:58)

Okay.

A (27:59)

But that was a $1.7 trillion valuation at the time. So yeah, these IPOs have gotten just bigger and bigger.

B (28:07)

If you back out that if you, if you don't, if you go X Saudi Aramco, which is its kind of own unique beast, I wonder what the next one would be at like a 50 billion valuation, I think. Right.

C (28:18)

Most of them are international. I mean, I think, I don't know what the list would be. But Softbank. Alibaba. Alibaba. A lot of the biggest ones have been these massive, you know, headline grabbing international companies kind of. You have to be bigger arguably to if you're an international company listing in the US but yeah, I can't think of what the biggest US IPO would have been.

A (28:44)

Well, does Alibaba count? So Alibaba raised $22 billion, had a valuation of approximately 230 billion at IPO.

B (28:50)

Okay.

A (28:50)

Does it, does that count? I mean, it's those structures of those companies is very strange.

C (28:55)

Yeah. I don't know if that counts or not.

B (28:57)

Will we get three big IPOs this year? There seems to be a little bit of a race to see who can kind of Come it sounds like SpaceX is, is the first one kind of out of the gate. But OpenAI anthropic databricks has always been in there.

C (29:09)

Yeah.

A (29:10)

Well, what do you think? So if those of those four, Andy, do you think we're going to get two, three, four of those hitting, hitting the markets this year?

B (29:16)

If Anthropic goes or OpenAI goes, I think the other one has to go.

A (29:21)

So that's like a warning sign. If, if anthropic go public, OpenAI can't, then that's real trouble.

B (29:27)

Well, OpenAI I think is going to be a little bit more difficult. I think they just need so much capital, more capital than Anthropic does right now. And they're as we've seen over the past couple of weeks, they're really trying to find what kind of company they are going to be and where they going to focus on and how do they drive their enterprise subscription. Which you know, a year or two years ago was all talk about OpenAI and anthropic was this little kind of like interesting bubbling upstart that's kind of mixing things up. And now the narrative has completely changed and the world has really started to focus much more on the enterprise licensing and business model of anthropic and how OpenAI can, can compete with that.

A (30:05)

Yeah, it's gonna be fascinating. I mean obviously gonna get a lot of attention no matter when they do go public. All right, let's turn to some historical market numbers. The S&P 500 and NASDAQ. We've talked a little bit of a, kind of, kind of a history of recessions, potential oil's impact. The last major recession before the financial crisis was, was the tech bubble. Maybe some parallels to where we are today with AI the market peaked in March of 2000. So both the S&P 500 and the NASDAQ, how long did it take for both of those to regain their all time highs?

C (30:38)

I mentioned this earlier. I think the NASDAQ was about a decade. The S and P was quicker. I, I mean I, I don't know, 10 years for the NASDAQ and two and a half years for the S and P. I don't know, I think

B (30:52)

that the, the peak, I think 3-9-2000 was the date because I just have that in my head. At least that's what I remember.

A (30:59)

That was the bottom of the Great Recession. But the market actually peaked in. Or was it, was it March 2008 was the peak?

B (31:04)

No, I'm saying March 9th. I think it Was like March, was it? Oh you know what? Yes, it's yes, maybe you're right. Yes. March, March 9, 2009.

A (31:13)

Yes.

B (31:14)

Was the bottom of the great, of the great financial crisis. And but what it was, March 2000 was also of the, was the high of the NASDAQ peak.

C (31:25)

Yeah.

A (31:26)

So March is a big year.

B (31:27)

Yeah, I'll say seven years for the, for the S and P and I'll say 12 years for the Nasdaq.

C (31:32)

That's probably better.

A (31:33)

Oh, Andy is good at this. Seven years is the correct answer for the S and P. Short lived though, it really took 13 years to get a sustainable gain over that 2000 high because then you had the great financial crisis shortly.

C (31:46)

2007, right?

A (31:47)

Yeah, yeah, 2007, 2008 and then 15 years for the NASDAQ to get back to the all time high. All right, one quick one to end us on this gets to everything that we talk about with the Motley fool being long term investors having that long term mindset. Even if you bought at the peak in March of 2000 and you bought four stocks, Netflix, Amazon, Microsoft and Apple, those are the four I'm going to give you how much if you put $10,000 in each of those stocks, how much would they have been worth? Let's start with Microsoft. I'll give you the, that's the laggard of the four. But if you put $10,000 in Microsoft, how much would you have today?

B (32:25)

Yeah, as a person who owned Microsoft through that dark, those dark days and then eventually sold it about a year before Sachin Adela took over and then the stock took off after that before and I finally bought back into it a few years later. Gosh, $10,000 in Microsoft in 2000 worth today.

C (32:45)

Man, I, I, I'm so bad at this.

B (32:48)

It took 14 years, I think it took 14 years for Microsoft to recover is my guess.

A (32:52)

Yeah, it's more than 10x since then. So you'd have $130,000. Okay, next up, Amazon. If you bought Amazon basically at its peak, so you had the worst market timing ever because I think it dropped 90% after this. If you put 10,000 in, how much would you have today?

C (33:10)

500,000. I don't know.

B (33:12)

It's gotta be a 50 bagger.

A (33:14)

Pretty close. 60 more than a 60 bagger. 618,000. Apple is next up.

C (33:22)

And that's all of that was, it's probably flat over the Last Apple Chase. 1.5. No, that's too much.

A (33:30)

Right.

C (33:31)

One definitely over a million. Andy, I don't know, maybe over 2 million.

A (33:35)

Yeah, $2.6 million. Incredible. Netflix. This is the fun one, the big one. If you had bought $10,000 worth of

B (33:44)

Netflix stock, I mean it was a penny a share because I know in stock advisor our cost basis is, David's cost basis is like pennies.

C (33:51)

So what was Apple, Travis? Apple?

A (33:53)

Apple was 2.6 million. Netflix, you would have 5 million $7.85 million by just doing nothing but holding Netflix stock and wait.

C (34:06)

And the real lesson there, and I know it doesn't work this way, but say you bought, you know, 10 companies and nine of them went bust and one of them was Netflix. You know, it's a weird game. Your batting average is terrible and you don't care.

A (34:20)

It's, it's these huge winners that really define your returns in the market.

B (34:24)

Yeah, I mean it's long term. It's a slugging percentage game really. Those, those across diversified portfolio lists like those mega winners drive the bulk of the return. Studies show this time and time again. And, but most investors I think are trying to much more focus at least in the short on batting average. They want, you know, they don't want to lose money. They want singles and doubles.

A (34:45)

I hadn't even looked this up. Nvidia, by the way, would be $14.2 million. So that's even better.

C (34:51)

I wouldn't have guessed that much, I'll admit.

A (34:53)

When we come back, we are going to get to the stock center radar. You're listening to Motley Full Money.

D (35:03)

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A (36:06)

Sam. As always, people on the program may have interest in the stocks they talk about. And the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows the Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. We like to end the show with stocks on our radar. So Andy, you are the newcomer this week. What's on your radar?

B (37:08)

Well team, let's talk about a company that most people use and may know if you wear a uniform at your place of work and that is Cintas symbol ctas. Company has been around for years and years and years. It was family founded and family and a father son run combination. The stock's been absolutely outstanding. We put it into the Stock Advisor team Hidden Gems Tom put it on the Stock Advisor scorecard in 2008. It's up almost 40 times in value. Absolutely crushing the market the last 10 years, last five years and last three years it has beaten the market as well. They reported quarterly earnings. The numbers were continuing to be impressive. Revenue up 9%. But what's really impressive is their margin profile. They've just done a fantastic job managing that distribution network for office services, uniform rentals, first aid kits, all those kinds of things that offices need. Over the years their growth rates have been somewhere in the high single digits on average of the last five years. But they've been able to continue to get margin improvements. So their margin profile grows faster. They pay that nice little dividend, they buy back some stock, they make smart acquisitions. The big news is they're they now are looking to acquire Unit first which is another huge provider of uniform rentals. So I'm watching how that acquisition all works through because it will add a lot of goodwill to the balance sheet. But hey, if a company can get the value out of those assets, it is Cintas because they've done it time and time again. So CTAS is one I'm continuing to be impressed with and continue to watch especially with the Stock More than 20% off its all time highs.

A (38:48)

So I believe I don't know if it was Cintas but back in my 3m days I used to wear these lab smocks that were serviced by one of these companies. Andy, have you ever worn a Cintas uniform in any way, shape or form?

B (39:00)

I never have. I've only worn a lab smock back in my high school days so and I Don't think it was a Cintas one.

A (39:06)

Maybe we need to make you a user.

C (39:08)

Yes. All right, you cut it back at the Spectrum. Andy, you could have gotten a job at the Spectrum back in the day and done it there, right?

A (39:15)

All right, Lou, what are you looking at?

C (39:16)

So I'm focused on airlines and in particular, jet boats. Ticker J, B, L, U. And, guys, there's a lot of drama in this sector right now, right? Sky high fuel prices, chaos at the airports. This week, just to add to the drama, JetBlue has come in and said, we are looking for an exit. They've reportedly hired bankers to explore a sale. On paper, a deal makes sense. JetBlue is getting squeezed by the industry's big four. There's no clear path for growth, in part because they weren't allowed to buy someone. All the rumored buyers, United, Southwest, and Alaska, they all have reasons where this would make sense, but also they all have their kind of own internal drama or internal priorities other than this to deal with. And airline mergers are historically really difficult to integrate. It all just makes for a big mess. For now, I'm mostly just making popcorn and watching because I think it'd be fun to play out. But I will say the most interesting company out of all of this is one I haven't mentioned. Delta Airlines. Best mix of balance sheet and product. And if one of their competitors decides to do this, it could really, really benefit them in terms of just grabbing assets at airports and also just letting the chaos play out. Real interesting sector to watch right now. But JetBlue, with a little shout out to Delta. That's what I'm watching.

A (40:35)

Is this actually an investable space or is this just popcorn like you said?

C (40:39)

I think it's more investable now than it used to be. The Big Four are a lot healthier, but it is still highly cyclical. So, you know, keep your seat belt fast and expect turbulence. All of those puns.

A (40:49)

All right, well, I'm. I'm feeling a little bit sentimental, so I'm going to add Cintas to the watch list. Not a stock that I've looked at, but, man, you look at this stock chart, this is obviously in a very impressive company. For Lou, Andy, and Bart behind the glass, I'm Travis Hyam. Thanks for listening to Motley Fool Money. We'll see you here tomorrow. It.