Momentum Stock Slaughterhouse

Summary

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The Compound and Friends – "Momentum Stock Slaughterhouse"

Date: February 6, 2026
Hosts: Josh Brown, Michael Batnick
Guest: John Mowry (CIO, NFJ Investment Group)
Main Theme: Navigating major rotations and volatility in equity markets, with a focus on recent collapses in momentum stocks (particularly software), factor investing, and where opportunities are arising.

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Episode Overview

This episode dives deep into the chaos and opportunity in today’s equity markets. The hosts, alongside first-time guest John Mowry, discuss the mass liquidation of popular momentum stocks, the broadening of market performance beyond tech, and lessons from market factor rotation. The conversation covers the causes of factor decay, the challenges of adapting investment strategies, and emerging bright spots in value sectors like energy, banks, and materials. Throughout, the trio delivers real-time takes on fund flows, ETF impacts, crypto's correlation with tech, and the ongoing bull market.

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Key Discussion Points & Insights

1. Personal Background & Investment Perspective

• Dallas chat: The episode opens with banter about Dallas, John’s background, homeschooling, and breaking into finance unconventionally.
  • John shares how being an outsider and dyslexic, homeschooled until 11th grade, shaped his willingness to challenge norms in investment management. (03:03)
  • "For the longest time, I was totally embarrassed about this... Now, I just don't care." – John Mowry (03:03)

2. The Value Trap & Factor Decay

• John discusses NFJ’s history as a value shop, thriving pre-2008, but struggling as factor investing became crowded and factor returns decayed post-crisis:
  • “There was factor decay … because of the proliferation of ETFs and passive money.” – John Mowry (16:13)
  • Value factors like low P/E or book-to-market stopped working after 2008, largely due to systematic factor investing and ETFs commoditizing what was previously “alpha.”
  • “All those back-tests look really good from 1980 up to about 2008 … from ‘08 forward, those factors began to go away.” – John Mowry (17:10)
• John rose to CIO by pushing for process and cultural changes, even as the youngest analyst – facing internal pushback from traditional value managers (19:14).

3. Seniority as Double-Edged Sword

• The panel debates whether team tenure is actually an “edge,” or a hindrance as market conditions change.
  • “Our success became our Achilles heel.” – John Mowry (20:30)
  • "Just the fact that you've been around might actually work against you … all the biases you build up over time." – Michael Batnick (20:50)
• They cite Peter Bernstein’s work on paradigm shifts where “experts at an earlier version of the world” fail to adapt (21:11).

4. Death of the Old Value/Growth Divide

• Modern classification is blurry; Amazon now sits in value indices, further eroding the usefulness of growth vs. value labels (29:07).
  • “I honestly hate classifying stocks as growth and value. It’s super annoying … Amazon is in the value index.” – John Mowry (29:07)
• The discussion highlights adaptive managers like Bill Nygren who found value in high-growth names (24:36).

5. Peer Group Analysis for Finding True Value

• John explains their approach: custom peer group analysis beyond GICS/classifications, needing a nuanced view for fair comps.
  • Example: “Sherwin Williams is a chemical stock, but it actually looks more like Home Depot.” – John Mowry (26:23)
• The goal is to improve probability of mean reversion by analyzing relative valuations within appropriate peer sets (27:14).

6. Software & Momentum Stocks: The Slaughterhouse

• The crew analyzes the recent crash in software/momentum stocks as “margin-related, indiscriminate” liquidation.
  • “Application software … it’s in a 30% drawdown. But that’s not the worst part. It’s fallen 18% in seven days. The only other two times were the financial crisis and Covid.” – Josh Brown (34:09)
  • Yet, the S&P remains near all-time highs; unprecedented divergence from historical broad selloffs (36:07).
• Rotational Dynamics: Money flows rapidly into materials, energy, staples; equal-weight indices and smaller sectors catch a bid (43:14).

7. Is the Rotation Bullish or Bearish?

• John is “concerned” about big cohorts under pressure; Michael sees it as “unbelievably bullish,” showing market resilience as leadership rotates rather than collapses (37:54).
  • "Because this was the number one risk ... And what we're learning right now is the band plays on, because there are other opportunities … you can’t disrupt mac and cheese." – Michael Batnick (38:09)
• The group reflects on contagion risk, referencing 2000, noting there were many stocks that held up fine even as tech melted down (41:14).

8. Momentum Factor & Other Rotations

• Momentum outperformed all factors post-2022, but reversal sparks opportunity in fundamental-driven names, especially refiners/banks (43:09, 44:00).
  • "Momentum ... will never get arbitraged away because it's too emotional." – John Mowry (42:05)

9. Valuations: Staples vs. Tech

• Fund flows into staples have supercharged their valuations—forward P/E now equals that of tech for the first time (59:57, 60:11).
  • “Staples forward PE and tech forward PE… are touching tips.” – Josh Brown (60:06)
  • Warnings that staples fundamentals are weak, and buyers are “paying for safety, not earnings” (60:57).

10. Value’s Next Champions: Financials and Energy

• If a five-year value outperformance emerges, dominance could accrue in financials and energy – not just a “SAG 7” of defensive names (54:46).
  • "The way that value is expressing itself… may be a few stocks, but maybe it'll be sectors... financials, energy, materials." – John Mowry (54:44)
• New bull markets may not be obvious until well into the rotation; small caps and cyclical value are quietly outperforming off recent lows (65:17).

11. Crypto’s Meltdown and Market Correlation

• Crypto’s crash is now highly correlated with tech risk, losing any uncorrelated asset status it once claimed (74:52).
  • “It used to not be. Everyone made this argument that it was an uncorrelated asset. And that drove me crazy." – John Mowry (74:52)
  • Discussion covers ETF flows (causal, not just correlated), and how bitcoin/ETH are now “part of the casino" (75:01).
• Gold stocks discussed as another “store of value” play—explaining leverage to gold price movements (77:32).

12. Bull Market Timing & Market Structure

• The trio debates when the secular US bull market started: 2009, 2013, or later (67:00). Context: “secular" cycles require more than just recovery from bear market lows.

  • “People act as if, if the world doesn’t end ... then it’s not a bear market. That’s just nonsense.” – Josh Brown (71:08)

• They note the resilience and breadth of the rally beneath the surface—especially in rate-sensitive stocks and small caps (65:32), and in groups like regional banks and refiners (49:04, 64:19).

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Notable Quotes & Memorable Moments

• Homeschooling, stigma, and the nontraditional path:
  • “Their experience... There’s a stigma with homeschooling... For the longest time, I was totally embarrassed... Now, I just don't care.” – John Mowry (03:09)
• Seniority and changing markets:
  • “Our success became our Achilles heel.” – John Mowry (20:30)
  • “Team experience... it’s held out as an edge, and I question it.” – John Mowry (20:50)
• Factor decay:
  • “With ETFs, it took diversified alpha and made it beta. It no longer was alpha.” – John Mowry (17:31)
• The uniqueness of stock rotations:
  • “There’s never been an instance where an S&P industry so large sold off so hard, and yet the market remained at highs.” – Josh Brown (36:07)
• AI and sector impact:
  • "Private equity companies are creating a bubble in capex for AI, which is then disrupting all these software companies that they're invested in." – (Joe Weisenthal via Michael) (30:14)
• Unprecedented staples/tech convergence:
  • “Staples forward PE and tech forward PE… are touching tips. They have converged.” – Josh Brown (60:06)
• Value rotation thesis:
  • “If we have a value run that lasts for five years ... we’ll have a Mag 7 of value stocks. Because herding is never going away.” – Michael Batnick (51:19)

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Timestamps for Key Segments

| Timestamp | Segment/Topic | |-----------|---------------------------------------------------------------------| | 00:00–04:40 | Banter, John’s background, homeschooling, and unconventional career start | | 15:16–19:39 | Value investing pre/post-2008, factor decay, and rise of ETFs | | 20:26–21:11 | Seniority vs. adaptability, industry edge | | 29:07–31:05 | Value vs. growth classifications, and changing index composition | | 34:09–37:54 | Magnitude of software/momentum crash; market divergence | | 43:09–44:00 | Momentum factor, rotation to fundamentals, refiners & banks | | 59:57–61:22 | Staples vs. Tech valuations; convergence | | 65:32–70:25 | Small cap outperformance, market structure, when did the bull begin| | 73:15–76:01 | Crypto: Market correlation, ETF influences, bitcoin/ETH crash | | 77:32–78:43 | Gold stocks as leveraged store of value | | 80:17–82:53 | Closing thoughts: John’s family trip philosophy & personal side |

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Closing: Life, Family, and Perspective

• John shares advice on the importance of travel and creating family memories, not just focusing on career (80:20).
  • “Trips are the key ingredient for marriage, and they're the key ingredient for family ... I'm a big believer in it.” – John Mowry (80:28)
  • Michael reflects on the impact trips have had with his now-grown children (81:47).

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Summary Table: Key Takeaways

| Theme | Bearish/Concern | Bullish/Opportunity | |----------------------------|------------------------|----------------------------------| | Software/Momentum Crash | Indiscriminate, big loss | S&P holds, rotation into value | | Value vs. Growth | Factor decay, crowding | Peer group analysis, material/energy uplift | | ETFs & Passive | Factor arbitrage gone | Broader opportunity, less herding | | Staples Valuations | Frothy, not fund. driven | - | | Financials/Energy | - | Low valuations, strong growth | | Crypto | Correlated, ETF-driven selloff | - |

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Where to Find Guest & Hosts

• John Mowry: NFJ Investment Group (via Virtus), LinkedIn.
• The Compound and Friends: Tuesdays & Fridays, all podcast platforms.

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This summary captures major themes, technical insights, and memorable dialogue—offering a comprehensive guide for those who missed the episode or want to revisit key investment ideas from this timely roundtable discussion.

Transcript

[Josh Brown]

Software stocks, am I right?

[John Mowry]

They are. Well, they're looking soft. They're looking really soft. You got a soft war. I don't know if it's software.

[Josh Brown]

Where are you based out of?

[John Mowry]

Dallas.

[Josh Brown]

Oh, okay. Very cool.

[John Mowry]

Let's see here.

[Josh Brown]

So I went to Dallas last year for the first time in my life, believe it or not.

[John Mowry]

Oh, really?

[Josh Brown]

I just like, I don't know, just missed it.

[John Mowry]

What'd you think?

[Josh Brown]

Is it the first time you go. I know. It's like a gigantic city. I did not go to the right part.

[Michael Batnick]

Ah.

[John Mowry]

So were you in uptown or downtown or Plano or.

[Josh Brown]

I was downtown.

[John Mowry]

I believe Downtown is, it's the craziest thing. Downtown is dying.

[Josh Brown]

Matter of fact, I was by. It was by where a county was shot.

[John Mowry]

Oh. Oh, yeah, sure. Yeah. That's not the best area, but like.

[Josh Brown]

Even sort of a little bit on. It was a five minute walk there.

[John Mowry]

Yes.

[Josh Brown]

But it was like sort of on the highway and I tried to like, go in and see a few places, but I was like, huh?

[John Mowry]

Yeah.

[Josh Brown]

And then I spoke to a few people that are like, from the area. They're like, this is like, not, not.

[John Mowry]

The area you stay.

[Michael Batnick]

Yeah, yeah.

[Josh Brown]

All right, I will. Because I'm a, I'm a, I, like almost every city I go to. I'm like, very easily impressed.

[John Mowry]

Where are you from?

[Josh Brown]

Here.

[John Mowry]

Oh, you're from New York. Okay.

[Josh Brown]

But I'm not one of those people that like, will go to like, I, I, I've been to Milwaukee three times and I love it. And it's a great city.

[John Mowry]

Yep.

[Josh Brown]

I was blown away by Pittsburgh.

[John Mowry]

Yep.

[Josh Brown]

Like, I, I can't. I'm sure there's been a city that I'm like, eh, but, but yeah, I just, I was like, this can't be Dallas.

[John Mowry]

Like, yeah, no. You unfortunately have to come back because it's got a lot more to offer than that part. You know, it's. Downtown is just dying and like Goldman Sachs is building their new tower.

[Josh Brown]

Oh, yeah.

[John Mowry]

In Dallas. It's gonna be their second headquarters. They were, they're actually cross street from us now, but they're gonna be moving out of downtown. And then there was another big kind of knife to the city because AT&T, which is in downtown Dallas currently just moving to Plano. So the downtown keeps getting gutted.

[Josh Brown]

I walked past the AT&T building.

[John Mowry]

Oh, you did? Yeah.

[Josh Brown]

So every time I go to a city, I wake up.

[John Mowry]

Great.

[Josh Brown]

I wake up super early and I just walk for a couple hours. Oh, really?

[John Mowry]

Okay. Just kind of Check it out. And.

[Josh Brown]

Yeah.

[John Mowry]

I kind of do that in New York, actually.

[Michael Batnick]

Is that my dinging or.

[Josh Brown]

No, it's me. By the way, Brad just texted me.

[Michael Batnick]

Who.

[Josh Brown]

Who did this? Did you do this?

[Michael Batnick]

No, back.

[John Mowry]

It's amazing.

[Michael Batnick]

It's a DM on Instagram. But the person said, I don't know what. I don't know who made it. I think. I'm sure they did.

[Josh Brown]

Okay.

[John Mowry]

Yeah. I don't know if I want to.

[Michael Batnick]

It's a top. That's a top 10. Yeah, it's as good. Right?

[Josh Brown]

So I assume you're a Mavericks fan.

[John Mowry]

Yes, but I'm.

[Josh Brown]

Did you jump ship?

[John Mowry]

I'm a relatively. I'm a relatively. I have a relatively low IQ with sports, and I can explain why if you're ever curious, but I'm sure it's.

[Josh Brown]

Not that interesting, but I do enjoy.

[Michael Batnick]

Will you pick last for kickball?

[John Mowry]

I did not do kickball.

[Josh Brown]

But you are a swimmer.

[John Mowry]

I was a runner, but in all seriousness, I was homeschooled until 11th grade, so I, like, didn't do any sports. I was like. So I. Yeah, okay. So it's not that interesting.

[Josh Brown]

That's a nice breaker.

[John Mowry]

But it.

[Josh Brown]

But.

[John Mowry]

But yeah, it is.

[Josh Brown]

It is.

[John Mowry]

You know, I. For the longest time, in all seriousness, I was totally embarrassed about this my whole life. And the last few years, I'm just.

[Michael Batnick]

Like, why were you embarrassed by it? Because it's just so different from most of the people you meet. Their. Their experience.

[John Mowry]

Totally. And I feel like there's a stigma with homeschooling. You're like, oh, you know, knit your clothes and stay inside.

[Josh Brown]

And there definitely is. Why are you acting like, why is he embarrassed?

[John Mowry]

It's.

[Josh Brown]

It's understandable.

[John Mowry]

Yeah, I was.

[Michael Batnick]

It's not. Is it a negative stigma or it's.

[Josh Brown]

Just, oh, is there such thing as a positive stigma to those extent?

[John Mowry]

I don't think there's a positive stigma. I don't think there's a positive signal. And I chose to not go that route with my children.

[Michael Batnick]

But who did most of the educating? Your father, your mother?

[John Mowry]

My mom did all of it.

[Michael Batnick]

Okay.

[John Mowry]

Until 11th grade.

[Michael Batnick]

She must be very bright.

[John Mowry]

She's very bright.

[Michael Batnick]

The one happened in 11th grade.

[John Mowry]

In 11th grade. Well, I was. I was asking to get out puberty. I was like, I need to see girls. No offense, mom, but I graduated in a class of five, so I didn't really move much out of homeschooling. It was a tiny, tiny, tiny private school.

[Michael Batnick]

Okay.

[John Mowry]

So, yeah, that's. That's different. But it did kind of shape me in some ways because something that I'll also share, since I'm just sharing. Can I share embarrassing things?

[Michael Batnick]

We wanted all of it.

[John Mowry]

Because I thought about this and I was like, am I going to say this today? And I was like, I think I am.

[Josh Brown]

I've also crapped my pants, so go.

[John Mowry]

So I'm dyslexic and I was homeschooled.

[Michael Batnick]

Oh, wow.

[John Mowry]

That was a huge stigma I had my whole life and I was super embarrassed about it. I actually was worried. I was terrible. Testing. Got into college, took no math in college. I was a political science major. I thought I was going to go to law school. And then I got this internship at nfj, which is crazy. I didn't know anything about stocks. I'm not one of these guys that was like reading Warren Buffet in my underwear when I was a kid. I knew nothing about it.

[Michael Batnick]

What made you apply for it?

[John Mowry]

It's a little bit luck, to be quite candid. I was trying to go to law school, to be honest, and I did not do well in the LSATs. My father was an attorney. So I was like, okay, that's not gonna be my path.

[Michael Batnick]

You didn't wanna do it because you saw him?

[John Mowry]

Well, I just. He. He told me that based on my scores, I was going to beat a law firm that probably wouldn't make me super happy long term. So he was like, I don't know if you should pursue this right now.

[Michael Batnick]

Yeah.

[John Mowry]

So I didn't know what I was going to do. I moved home after college. I went to Rhodes in Memphis and I started looking for. I'm just meeting with people and just asking them what they did. I just tried to figure out kind of what people did, what they liked. And I met an individual that was at NFJ at the time and he was looking for an intern. And so they gave me a three month internship with a temp agency. So it's kind of like speed dating. Yeah, they liked me. I like them. And then one of the more senior guys said, hey, if we hire you, you just got to know you're like way behind. You got to get your mba, your cfa. Like yesterday, he was like, we only hire people that are credentialed. You have no credentials. So it really just happened for me, Josh, it was. I kind of stumbled into the industry.

[Michael Batnick]

Great story. I love it. I stumbled into the industry too.

[John Mowry]

Did you really?

[Michael Batnick]

It's the only industry I could get a white collar job in. Like, I.

[John Mowry]

How did you stumble into it.

[Michael Batnick]

My education was a joke. I didn't take school seriously.

[Josh Brown]

I went to Yale.

[Michael Batnick]

Michael. Michael's Ivy League.

[John Mowry]

Did you.

[Michael Batnick]

No, no, no. I fell in love with the stock market first. I didn't care. I didn't care about, like, financial services. I was just like, what do I have to do to be involved in the stock market? And it's 30 years ago. I still love the stock. I still wake up every day, and on Saturdays, I check the stock market. It's not even open. I just. That's like my. I don't know. I fell in love with stocks. It's like, oh, what. What do I do in the stock market? Well, started as a retail broker. Didn't want to do that. After 10 years, this is the best version of that that there is. I get to talk about stocks all day. So, I mean, it's people. A lot of people decide in seventh grade, like, I want to be on Wall Street. Most people I've met. That's not what happens.

[John Mowry]

That's not what happens.

[Michael Batnick]

Yeah, I agree.

[John Mowry]

It's super interesting because there's no industry like investing where you get to learn about all these different companies. And it's just fascinating.

[Michael Batnick]

It never gets old, because every year there's something new going on.

[John Mowry]

100%, and it's the peak. It's the spearhead of innovation.

[Michael Batnick]

That's right.

[John Mowry]

Every new thing is coming out, and it eventually goes public, and everyone learns about it. It's incredible.

[Michael Batnick]

Tell me if you have this. I have this. Michael, maybe you do, too. Most of my friends do not do what we do. I wouldn't say on purpose, but I definitely don't want to spend, like, all my free time with people that are, like, working in Wall Street.

[John Mowry]

Agreed.

[Michael Batnick]

I have friends who work on Wall street, but most of my friends, small business owners, like lawyers, accountants, they're not. I don't hang out with hedge fund managers on the weekend.

[John Mowry]

Same.

[Michael Batnick]

Not if there's anything wrong with that. It's just not where I live, and it's not what I'm about. Okay, but the. And it's great.

[Josh Brown]

No, it's not. I know what you're about to say.

[Michael Batnick]

No, but the negative is they, like, talk about things. They're like, oh, did you hear about. And I'm sitting there like, dude, we were talking about that three weeks ago. I feel like nobody around me is ever fully caught up on almost anything. Not that I know so much. It's just I've heard about things sooner.

[Josh Brown]

I thought you were gonna say people asking you for stocks?

[Michael Batnick]

No. They do that with you? Nobody asked me. I've shut everybody down. They. I know they do. I know they ask you, like people see you in public that you're friends.

[Josh Brown]

With or, you know, very annoying.

[Michael Batnick]

What stock should I buy?

[John Mowry]

Dude, I get that. And I, and I, I tell you.

[Josh Brown]

This every time you ask. I'm not, I don't.

[Michael Batnick]

It's like if you're a house painter, they're like, what, what shade should I paint my living room?

[John Mowry]

Yeah. I always say, like, if I knew which one stock to buy.

[Michael Batnick]

Yeah.

[John Mowry]

Like, then we wouldn't have to discuss. I wouldn't be working.

[Michael Batnick]

You come to buy the fund?

[John Mowry]

I do. Well, it depends, to be quite honest. Depends on the person I'm talking to.

[Josh Brown]

But when they're like, but come on, just one. I won't be mad at you.

[John Mowry]

Just give me one. I usually just say, have you heard of a stock called Apple? It's really interesting. They make this really cool product you probably have in your pocket.

[Josh Brown]

That's a good answer.

[John Mowry]

And you may have some AirPods.

[Josh Brown]

That's a good answer.

[Michael Batnick]

Well, people think that I like, am in the meetings where the cabal decides which stock is going to go up.

[John Mowry]

Yes.

[Michael Batnick]

They're like, come on.

[John Mowry]

Yes, yes, yes. I know, I know.

[Michael Batnick]

I'm like, guys, I hang out with Michael Batnik. I don't know. Like, we don't, we're not in, we're not in those meetings.

[John Mowry]

But in fairness, you are the person they want to ask those questions to because you are in the know with what's going on with the Fed. You know what's going on. Inflation, all those things. They, People hear about this stuff.

[Michael Batnick]

But you know what? People don't actually want anything explained to them. They want a ticker symbol.

[John Mowry]

Well, that's true.

[Michael Batnick]

You agree with that?

[Josh Brown]

100%.

[Michael Batnick]

Nobody wants to learn. Do you want. Nobody wants to learn.

[John Mowry]

Yeah, yeah, yeah.

[Josh Brown]

Which stock I want to learn.

[John Mowry]

You're right, you're right, you're right. People, people just want to make money. That's right.

[Michael Batnick]

So it's so interesting. And it's so. Again, I also think one of the interesting things about what we all do, it forces you to be a little bit of a generalist.

[John Mowry]

A hundred percent.

[Michael Batnick]

There's a lot of things that I have two sentences on. I can't get to a third sentence because I don't know enough, but at least I have the two sentences. And I think that ability to just converse on a lot of topics, I sort of think it's very useful in life.

[John Mowry]

A mile wide and an inch deep is a necessity in this business.

[Michael Batnick]

I have my things I can. I can go deep on. There's just not that many of them.

[Josh Brown]

Shake Shack.

[Michael Batnick]

Yeah, Shake Shack. I could go the distance.

[John Mowry]

Well, that's the other great part of the industry, and I love that. And I think the General's model is actually really good because it allows you to be more objective sometimes than getting honed in on one certain thing.

[Josh Brown]

Duncan's like, let's go already.

[Michael Batnick]

All right.

[John Mowry]

Come on.

[Michael Batnick]

Sorry. Duncan, we holding you up? We got a hot date.

[John Mowry]

Are we going yet? Or is it.

[Josh Brown]

Yeah, we're going.

[Michael Batnick]

We're going, we're going. Okay. Wow. 228.

[Josh Brown]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Today's episode is brought to you by WisdomTree. WisdomTree believes Japan is entering a new era. Corporate reforms and stronger shareholder policies are changing the game, and investors like Warren Buffett have taken notice. The Wisdom Tree Japan Opportunities Fund ticker, OP PJ is designed to invest in Japanese companies positioned to benefit from macroeconomic policies, industrial innovation, and shifts in trade and consumer behavior. Learn more about OPPJ and the broader suite of Geopolitical Opportunity [e-mail] Geopolitical Opportunities. This episode is sponsored by Clearbridge Investments. Earnings growth in the rest of the equity market is forecast to catch up with the Magnificent Seven in 2026. Position your investment portfolio for an expected broadening in performance and with fundamentally driven Clearbridge active equity strategies. Clearbridge, a Franklin Templeton company. Go to clearbridge.com to learn more.

[Michael Batnick]

Welcome to the Compound and Friends. All opinions expressed by Josh Brown, Michael.

[Josh Brown]

Batnick and their castmates are solely their.

[Michael Batnick]

Own opinions and do not reflect the opinion of Redholtz Wealth Management.

[Josh Brown]

This podcast is for informational purposes only.

[Michael Batnick]

And should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain.

[Josh Brown]

Positions in the securities discussed in this podcast.

[Michael Batnick]

Ladies and gentlemen, welcome to the best podcast in the world. Is that too much?

[Josh Brown]

Always slaps.

[Michael Batnick]

That's how I'm feeling about it, so I don't know what you want me to tell you. Longtime listeners, welcome back. We appreciate you new listeners, new viewers, the first time you're ever watching the content. Compound and Friends is a show about investing, the economy, asset management, wealth management, trading, investing and life. We have a brand new friend with us today. John Mowry is the Chief Investment officer, portfolio manager and equity strategist at NFJ Investment Group, where he leads a $5 billion value equity platform and serves as portfolio manager or co portfolio manager on the firm's flagship strategies. John, welcome.

[John Mowry]

Thank you, Josh. Very glad to be here.

[Michael Batnick]

This is John's first appearance here and his first. Your first podcast.

[John Mowry]

My first podcast. All right, I'm excited. All right, let's go.

[Michael Batnick]

Let's go. In the second half, there will be physical challenges.

[John Mowry]

Okay.

[Michael Batnick]

Okay.

[John Mowry]

I came. Ready?

[Michael Batnick]

Now you. You're in Dallas.

[John Mowry]

We're based in Dallas. That's right.

[Michael Batnick]

Okay. Do you know my friend in Texas, Landman, Billy Bob?

[John Mowry]

You know, he said Fort Worth was his favorite city in the U.S. could.

[Michael Batnick]

You explain the Dallas, slash, Fort Worth things? Sometimes they're grouped together. Sometimes people are extremely aggressive about explaining to you that they're very different.

[John Mowry]

It's very simple.

[Michael Batnick]

Why is it Dallas, Fort Worth? Because the airport.

[John Mowry]

Airport, that's it? Yeah, more or less, but it's really simple. People in Dallas don't really go to Fort Worth regularly.

[Josh Brown]

It's too far.

[John Mowry]

They're not going to deal with it. But whenever we talk about it, we like to get credit for having it. So it's like, oh, Fort Worth, Cowtown.

[Michael Batnick]

What is it? It's more like.

[John Mowry]

It's more country. It's got the. I mean, the rodeo. Okay, that's. That's the, you know, that's a big part of, you know, Fort Worth. But it's got, you know, the. With the rodeo, it just has more of a Texas, I would say, vibe.

[Michael Batnick]

In terms of less city, more country.

[John Mowry]

For sure. For sure.

[Michael Batnick]

Okay.

[John Mowry]

So if you go to Dallas, it's going to feel pretty big city. You go to Fort Worth, it's going to be. It's going to be Cowtown.

[Michael Batnick]

Oh, you know who my boy is in Fort Worth? You know, Kevin Thompson, the financial advisor.

[John Mowry]

I don't know if I know him.

[Michael Batnick]

I'm going to connect you to.

[John Mowry]

Okay.

[Michael Batnick]

He played for the Yankees. Oh. And then when. When he was done with Major League. When Major League Baseball was done with him, probably more likely he said, I. I'm going to do something different. And he got his cfp and he's an advisor based in Fort Worth.

[John Mowry]

Amazing.

[Michael Batnick]

Awesome.

[John Mowry]

I love Kevin. Amazing. Do you get down there much now?

[Michael Batnick]

Never. I'm going to. I'm going to connect you guys. Okay.

[John Mowry]

Okay. Come on down.

[Michael Batnick]

Let's talk about you. First of all, it's a big week in terms of volatility. I've. I'm seeing liquidations in some of the most popular stocks of the last three years. Seeing liquidations in bitcoin I'm seeing liquidations. Like, it's. Look, physically you can tell it's margin related. Selling. It's people being called out of stocks at any price, 100%. And Michael sees a little bit of panic too, which I see the volume spiking. It's not orderly.

[John Mowry]

Yep.

[Michael Batnick]

All right.

[John Mowry]

Yep. Heading for the doors.

[Michael Batnick]

So I want to talk about the seat that you sit in as you watch this play out on your screens. You're when you say it's a value platform, so you're not one of the people that's riding strategy up and down 2, 300 points. What are you doing in the equity markets for the portfolios that you manage?

[John Mowry]

So we have more of a value orientation. But if I can, I maybe can spend a minute on kind of the history of the firm, I would love that. It kind of parlays into my story. So I started at NFJ as an intern in 2006. You think about 2006. That was just before the equity markets peaked in the summer of 2007. And value had a huge run from March of 2000 all the way to the summer of 2007. Okay. So when I entered, value managers walked on water and money was just flooding in the doors. Nobody wanted the S and P. Nobody wanted growth. It was like, this is so easy.

[Michael Batnick]

Like Bruce Berkowitz era.

[John Mowry]

100%. Yeah, a hundred percent. And the firm was built on low PE and dividends. And that had worked wonderfully. And there was a bias toward that in the portfolios. But what happened post 2008 is challenges set in. And the one that I would identify as a major one was there was factor decay. Okay. And that occurred, I believe, because of the proliferation of ETFs and passive money. And I don't think value managers appreciated what was happening. In addition to. To a new cohort of companies that were growing to the top weights in the indexes. Value managers just excluded these from the universe for kind of arbitrary reasons. Maybe didn't pay a dividend. So they excluded these. And then the factor decay is a big deal because when I joined the firm, I actually joined doing back testing. Okay? And Bar Alphabet, or anyone knows that it's a back testing software to do like what variables have been the common denominators of excess return over time.

[Michael Batnick]

Low book to market, low price.

[John Mowry]

Exactly, Josh. And guess what? All those back tests look really good from 1980 up to about 2008. Now, if you extend it further, the way cumulative law graphs work, they still look okay, but it's like, start the back test from 08. Let me see it. From 08 forward, those factors began to go away because what a lot of.

[Michael Batnick]

The premiums associated with those factors, they're gone.

[John Mowry]

They're gone. And the reason, I believe, is because a lot of managers were getting alpha from factors unknowingly. And with the ETFs came out, it took diversified alpha and it made it beta. It no longer was alpha. So you couldn't just bias toward a factor and get the same alpha that you could have pre that.

[Josh Brown]

Why?

[Michael Batnick]

Because there was, there was too much money in those stocks and that's what took away the, the discounts.

[John Mowry]

Well, I just think that there became, I mean, for example, then you have these dividend funds coming out, right. WisdomTree Dividend Fund, smart.

[Michael Batnick]

So the smart beta wave, let's say, started in 09 and probably peaked in 1415. And then the cloud computing era starts and people don't care about smart beta anymore. But that seven year period, everybody's all in on factors.

[John Mowry]

Yes, right.

[Michael Batnick]

As factors cease to be a source of alpha.

[John Mowry]

Yes.

[Michael Batnick]

Okay.

[John Mowry]

Yes. And that was a real challenge. So when I got in the seat in 2017, performance was really bad and it was a big challenge and it was a real coup, to be quite candid, because I was the youngest person on the investment team, so they should not have done this. I should not have gotten a job. To be honest, I was mentioning you guys before the show started. My background was not finance. I did not have any of that in my, in my background. And I, you know, I'll say this on air, I'm happy to say this. I was homeschooled till 11th grade.

[Michael Batnick]

Oh, we heard all that. Don't worry.

[John Mowry]

Oh, you heard it?

[Michael Batnick]

Yeah. We start recording. We start recording the minute you get off the elevator.

[John Mowry]

Well, okay, then I say this because I should not have gotten that seat, but I believe I got it because I saw things that we needed to change culturally with people and with process. And I spoke freely about it to the founders of the company because I'd never thought that they would actually act on it.

[Michael Batnick]

Oh, they must have hated you.

[John Mowry]

No, they act. No. Well, there was one founder initially, like.

[Michael Batnick]

The other analysts who are like value guys. They must have been like.

[John Mowry]

They were not.

[Michael Batnick]

Who is this kid?

[John Mowry]

They were not happy. It was really tough. It was really tough. It was a really defining component for me.

[Michael Batnick]

Yeah.

[John Mowry]

But one thing that I would like to mention about managers, edges. Because every manager has to have an edge, right? Right. What is your edge? How are You. How do you beat the market?

[Michael Batnick]

Or else what are you. What are you doing?

[John Mowry]

Or else what are you doing? And I think that one of the challenges in the investment industry today, because, let's be honest, it's like nobody wants to say this. Two and a half trillion dollars has gone out of active funds the last 10 years. Two and a half trillion. That's a lot.

[Michael Batnick]

So much money.

[John Mowry]

That's so much money. It's two and a half trillion that's gone into passive. So it's literally just. That's what's happened. And so why is that? And I think one of the challenges is around actually team seniority and tenure as an asset and as a edge that people talk about. Because I believe actually that our success became our Achilles heel. Because it's difficult to reevaluate things. And particularly when you go to consultants in the industry and you say the first thing people say is, we have 120 years of experience. People sum total, right?

[Michael Batnick]

They add up all the people that work there. Yeah, yeah. We have centuries of experience.

[John Mowry]

We have centuries of experience. And in a world where information is being more commoditized, I don't know if that's as valuable. And nobody wants to talk about this. And so judgment and instinct are very important on how you act with data. But just by saying you have people that have been there for 20 years, it's held out as an edge. And I question it.

[Michael Batnick]

Well, you. I mean, you've been talking about this for so long. Like, just the fact that you've been around might actually work against you. Because think about all the biases you build up over time. Like, I've seen this movie before. Like, you sort of think, you know how everything's gonna go because you've seen it three times, and then the fourth time it doesn't go that way.

[Josh Brown]

So the reason. So I think I started writing about that, like, in 2014 or 15. And I was a very young man at the time. And so I was like, a little bit embarrassed to say that out loud. Cause I was very cognizant of the fact that I didn't know anything. And it's like, almost disrespectful to the people that have been in the industry and seen a lot. So I said it, like, out of the corner of my mouth. And over time, I got more comfortable saying it. But the reason why was because there was a book from Peter Bernstein where he described how the industry used to work back in the day. And Peter Bernstein is top three financial writers of all time. Jason Zweig, I don't know if he's Jason's hero, but like he's that, that level of author. And he described a period of time where the interest rate on bonds used to be lower than stocks because you had to be compensated for the risk. And anytime that level converged, it was a time to buy stock. Stocks got them too cheap. And then one time it switched. Bonds had a higher coupon than the dividend yields of stocks. And it never looked back. And there were gentlemen that had been in the industry for 30 years that said, just wait, just wait, it's gonna, it's never been this way and it never looked back. And so I was early in my career, thank God, open to the fact that what used to work is not necessarily always going to work. And there's a great quote, I don't know who said it, that there are certain people who are experts at an earlier version of the world and that's who's on TV every day.

[John Mowry]

Yep, I think that's fair. And it's really hard. It's a very fine line on how you evolve. Because in our industry the word change is a four letter word. Can't say change, but you can say evolve. And it's like, well, how much evolving is tolerated? It's like, well, we'll see.

[Michael Batnick]

We had Grantham sitting in the seat that you're in, Jeremy Grantham, two weeks ago, and we were talking about like nobody could have envisioned in the mid 20 teens decade. So let's say it's 2013, 2014. Right. We're five years removed from the financial crisis, but it's still raw. Nobody could have envisioned that there would be this crop of companies that could grow in an unlimited way and maintain 40% gross margins for like the next 10 years, like as far as the eye could see, would have no constraints whatsoever on revenue growth and would keep profit margins at what we used to think of as elevated levels. So if you're a value manager, you watch three years of that, you're sitting there saying, here comes the mean reversion. 100% has happened every decade, ever. And then it never comes and it's.

[Josh Brown]

Too late in 2017 or whenever. Scott Galloway wrote his book about the four, right. It was Apple, Amazon, Google and maybe Facebook, whatever. Maybe Microsoft was in there. It doesn't matter.

[Michael Batnick]

No, I think it's Facebook, it's meta.

[Josh Brown]

And then Jim Cramer coined them Fang. And you were like, ding, ding, ding, ding, ding. Oh really? Yeah, that was 20. And it just kept going. And Then it was like, all right, Mobile, cloud. All right, it's getting tired. Boom. AI. It's just been a never ending, relentless.

[John Mowry]

Yes. 100%. And you know, there's a couple things that I like to mention on this because, you know, Berkshire Hathaway, you're like, well, what does he own? It's like, well, he has 50% of the portfolio in Apple. It's like, well, that's a growth stock. It's like, well, why does the greatest value manager of all time have half his portfolio in Apple? And it's like, does he have Google? It's like, oh, he has Google too. Does he have Amazon? Oh, he has Amazon too. It's like, why is it okay for him to do it? But then if a value manager talks about it as a possible candidate for a value portfolio, it's not okay. And I think it's about opportunity set.

[Michael Batnick]

There are people that figured that out, though. Like, Bill Nygren was considered a value manager. What is his fund called? Oakmark.

[John Mowry]

Yes.

[Michael Batnick]

Okay.

[John Mowry]

Yes.

[Michael Batnick]

Nygren was a value manager riding Amazon.

[John Mowry]

Yes.

[Michael Batnick]

And, like, nailed it.

[John Mowry]

Yes.

[Michael Batnick]

And people would say he's not a value manager. No, he finds value in Amazon. He's just not looking at the PE ratio.

[John Mowry]

Yes.

[Michael Batnick]

Okay. Say more about that.

[John Mowry]

I think, well, the way that I tried to tackle this challenge with Factor Decay because I still believed in wanting to focus on low valuation and our whole client base, that's what we've done. And we also had a income focus. One of the ways that I tackled that was peer groups and creating customized peer groups, because I believe that the peer groups are what allow you to see when something is attractive or not. Less so than a arbitrary rubric of is it cheap to itself or is it cheap to the market? Some stocks always trade a premium to the market. Some stocks are not going to, you know, maybe when they're getting cheaper themselves. Bad thing. Businesses change. So think about real estate. I use a real estate analogy. You've got property in Florida, right. You've got Palm Springs and you've got Greenwich, Connecticut. You got Highland park in Dallas. It's like, should those all be compared? Are they in a peer group? And I was like, yeah, they are.

[Michael Batnick]

It's the same buyers. Yeah, yeah.

[John Mowry]

And what's crazy about the stock market is you can do this, but it's global. Right. You can partition it by us and international. You can split it up. But getting those peer groups right, I think is a big deal. And I'll give you an example. So within chemicals, we were always going Back and saying Leyndell Dow. These are the cheap ones, right? Low P, high yield. You know the story. It's like we're, it's like, what's commodity chemicals? It's like, what about Sherwin Williams? Sherwin Williams is a chemical stock. It's like, well, that always trades at a premium. Why does that trade at premium? It's like, well, it trades at a premium because it actually looks more like Home Depot and Lowe's in the Home Improvement. It's like, well, that's a consumer discretionary. That's a different group. So gics. Has it, has it separated?

[Michael Batnick]

We could. Don't get me started on Gix.

[John Mowry]

But, but, but this is, but this is what I believe at a core level that you have to get the peer group right to get the valuation right.

[Michael Batnick]

So what are you looking at? The best earnings growth story in a peer group versus the GICS classification, PE ratios.

[John Mowry]

So we, we look at five different metrics. Great question. We'll look at enterprise value, sales price to book, dividend yield, PE and momentum. But we are getting to your point, Josh. You have to get the growth rates accurate to form those peer groups. And then what we're doing, it's not a correlation analysis. We're actually looking for a distribution of valuation relationships. And you can actually see the bell curve in the relationships. And that allows for a greater, I would argue, probability of mean reversion if the distribution shows normality, if that makes sense. So I'll give you another example.

[Michael Batnick]

I mean, I'm with you. I don't know if he is.

[John Mowry]

Okay.

[Michael Batnick]

Okay, go on.

[John Mowry]

Well, Union Pacific Prologis totally different. Right. But they're similar. Okay. Because if you think about it, what goes on the truck, what goes on.

[Michael Batnick]

The car has to be stored.

[John Mowry]

Has to be stored. So the market knows this. So it's like, are those peers? It's like, well, they're not peers in the traditional sense. It's like, but are they peers in terms of how you should think about valuation and risk in the portfolio? I would argue yes, because the market sees them in a symbiotic relationship even though they do different things. So it's a different way of tackling the problem that factors were decaying. And again, if you, if you look at a backtest from 2009 to present for a lot of these factors, they stopped working. And I think a lot of managers had a really hard time figuring out how to deal with this. And I think on the value side, what's so difficult is all these value managers Got rewarded for not making any adaptations and changes.

[Michael Batnick]

You think being an outsider is why you were able to arrive at an idea like this?

[John Mowry]

Yes, I guess I haven't ever really thought about it like that.

[Michael Batnick]

It's a positive. Like there's a book called Outliers.

[John Mowry]

Yeah, I like that.

[Michael Batnick]

And it's about 12 CEOs who did things very differently than any of the other companies in their space. And as a result, those are like some of the top compounders in the history of the stock market.

[Josh Brown]

You didn't go to University of Chicago.

[John Mowry]

I did not.

[Michael Batnick]

You're not like schooled in the Wharton.

[John Mowry]

No, I'm not a Walton.

[Josh Brown]

I think Josh's earlier point is very important to hit on again. It was to your point, the factor decay. Right. A lot of money coming to these strategies. Maybe close the discount on some of these attractive multiples. And there was just less. The arbitrage closed. This wasn't arbitrage, but. And then here come the fangs. And so you had that earlier period coupled with investor preference. The value stocks look horrible and these companies look and perform amazing for the next decade. So it's been a hell of a run.

[John Mowry]

It has. And I honestly hate classifying stocks as growth in value. It's super annoying because too bad now Amazon is in the value index. It's one of the top weights. And it's like, well, now it's eligible for value.

[Michael Batnick]

Nobody will ever call it a value stock.

[John Mowry]

They'll never. Yeah. And maybe pays a dividend, goes eight times.

[Josh Brown]

Can we talk about today? Yeah, I think, I think this week, software, this week in particular has been one of the most exciting times to watch what's happening in the market. The stories is changing and it's changing fast. And it's not just software. It is the. I don't want the Mag 7. I spoke about this earlier on Tuesday with Josh. I think we have an anti bubble going on. I think within the Mag 7. Oracle down 55%. Microsoft goes down every day. It's down 26%. Worse than the Liberation Day sell off. Nobody wants to own the AI winners. So that's like the anti bubble. And then the stocks, the companies that are being displaced by anti. By the, by the bubble, by the AI names, they're also getting destroyed. So it's like the. What was supposed to be the bubble, which is not a bubble, is destroying the other names. It's a really fast.

[Michael Batnick]

Joe Weisenthal had a great smartass tweet. He said like, he said like. I think he's talking about like Blackstone and all. He's like the private equity companies are creating a bubble in capex for AI which is then disrupting all these software companies that they're invested in.

[Josh Brown]

Correct.

[Michael Batnick]

Right. It's basically like they're disrupting their own.

[John Mowry]

Portfolio companies, they're disrupting their own siblings.

[Michael Batnick]

Yeah.

[John Mowry]

It's bizarre. I don't think anyone expected it to play out the way it is because it's been such a tight group. I mean a couple things on software. I'll say though. The valuations got to all time highs during COVID Same with biotech. So you start at the peak multiple. I think that shapes sometimes when the market starts to get worried and resets and re rates these companies. The same thing was true in 2007 with the bank stocks. A lot of people forget that price to books of banks were all time highs.

[Michael Batnick]

Oh, that's a great point. They didn't crash from a discount.

[Josh Brown]

Correct.

[Michael Batnick]

They were at huge premiums.

[John Mowry]

Yeah. So you start up here and then the market says hey, you used to be a disruptor but now you're turning into a customer. And that may whittle away some of the pricing power you had.

[Michael Batnick]

Yeah.

[John Mowry]

The market trying to reset it. So to be honest, it is exciting. No one really knows where the multiples can settle out. I mean if you look at what happened, I mean Nvidia was down 67% in 2022 and I didn't remember anyone in 22 saying hey, they're going to come out with the most amazing chips. You should be putting your whole net worth. And I didn't hear any of that. And so I just bring that up because these things could get to lower multiples quickly if the fears and concerns stay there. We're seeing, it's very violent.

[Michael Batnick]

So one of the people that I do halftime report with said something really smart this week. Stephanie Link. So Stephanie. And she's invested a bunch of software stocks like everybody else.

[John Mowry]

Yeah.

[Michael Batnick]

And she was saying like the problem with bottom fishing in these names. Well, obviously the obvious problem is we don't know what's the bottom. But the real problem is there's no proof point. Meaning if they hammer, let's say, let's say they hammer a biotech stock. But we know that in three months there's an FDA decision due. That's a point at which we prove either they have the science or they don't. Same thing with an earnings call. If they're, if they're like beating the crap out of a company. But we know they report earnings in 10 days. There's like an end in sight where either you'll be proven wrong or right. How the quarter went.

[John Mowry]

Yes.

[Michael Batnick]

With something like this, there is no proof point where you can definitively say, on this date, we're going to once and for all put it to rest. Whether or not these companies are about to be disrupted out of business or this whole thing is ridiculous. There's just no point at which anyone can look at and say, all right, if we can just hang on for a month, everything will be resolved, good or bad. In this situation, it's like, all right, this is a multiple rerate. Yeah. Now, there also are some bad fundamentals in the space, but for the most part, these companies report earnings. The earnings are good.

[John Mowry]

Yeah.

[Michael Batnick]

Maybe the guidance is soft because there's AI uncertainty, but we're not talking about a situation where companies are missing by $0.30 per share and then getting annihilated. That would be easy.

[John Mowry]

It's just trying to sell. It's just trying to figure out what the new multiple should be.

[Michael Batnick]

What are these worth?

[Josh Brown]

We do some charts. I've got some charts. Okay, John, let's run through some. All right, so the first shot I want to show you is application software. This is Adobe applovin salesforce Datadog workday. All of the names that are just. It's in a 30% drawdown. But that's not the worst part. John, shove the previous one, please. It fell. It's fallen 18% in seven days. The only other two times this has happened is during the financial crisis when the world was in question. The financial world was in question. And Covid. All right, so there is, there is uncertainty. Is, is here.

[John Mowry]

Is this relative or no?

[Josh Brown]

Absolute.

[John Mowry]

So can I make one observation right off the bat I can. Sorry to interrupt. You go, you mentioned 08 and you mentioned 22. And it's like, oh, well, the market was down, peaked trough in 22, 25%. So the whole market was barfing on itself.

[Michael Batnick]

Not today.

[John Mowry]

No way. Not today.

[Josh Brown]

I've got them.

[John Mowry]

Wait till you see this chart. A concern. Cause you've got the RTY at all time highs. You've got the S and P hanging in there. I kind of picture a crew team where a lot of people are rowing in the back.

[Michael Batnick]

The equal weight looks fine.

[John Mowry]

Yeah. So if the market was, you know, cracking hard, then it's like, well, everything's down. Some things are down more.

[Michael Batnick]

Yeah.

[John Mowry]

This is concerning.

[Josh Brown]

John, throw up chart. I'm going to skip ahead because John is hitting it throw up chart 13. All right, so I said to chart goat the other day. I said, this is yesterday. I said, this is really weird. We have stocks that are crashing.

[Michael Batnick]

Like who's chart code?

[Josh Brown]

Don't worry about.

[Michael Batnick]

We have a guy working here, Matt Sermon Arrow, who does I think the best charts in the, in the industry.

[Josh Brown]

So I said, matt, amazing. I got, we, I got, we got to look at this. There are so many stocks that are down 5% today and down 5% yesterday. In this case, we used 4%. All right, so here's what we're looking at. I said to Matt, I bet you that when we've seen a surge in these type of days, you're in a bear market, right? So we said, okay, yesterday, in the past two days, we've had 109 stocks that fell 4% in a single day. And we said, how many times? Like, when does that happen? On average?

[John Mowry]

Interesting.

[Josh Brown]

On average, the stock market, the S and P since 2000 is in a 28% drawdown when these days happen.

[Michael Batnick]

Unbelievable.

[Josh Brown]

Right now we're 1% from the all time high.

[Michael Batnick]

That's unbelievable.

[John Mowry]

Yeah, it's a super different dynamic.

[Josh Brown]

It's very different dynamic.

[John Mowry]

The market is taking out a rifle and it's saying, you're, you're out because. Because the whole market's sitting up.

[Michael Batnick]

You're an AI destroyer.

[Josh Brown]

It's not a shotgun. It's. You're dead.

[John Mowry]

No, you're dead.

[Josh Brown]

So here's. We've never seen this before. Remember on Tuesday we said, have we ever seen this like where we've seen like cold names get killed, but who cares? There was like one or two of them.

[Michael Batnick]

Tiny.

[Josh Brown]

They were, we were talking about like a big group like this when the rest of the market is sort of nothing to see here. So our friend Warren Pies answered this in a chart. He said, until the current software debacle, John, this is chart two. Okay. Until the current software debacle, there has never been an instance where AN S&P 500 industry that was so large, more than 8% of total market cap has sold off so hard, down 25%. And yet the market remained at highs within 3% of all time highs. Okay, is this super bearish or super bullish?

[John Mowry]

Super weird is what it is.

[Josh Brown]

Super weird.

[John Mowry]

Super weird. Because to your point, it's a big group. I've been shocked that the S and P has been so resilient with all the volatility under the surface because you've got a lot of names that are pulling a Lot of weight that are smaller to your point of the equal weight. All these equal weighted names are kind of waking up. The money is rotating out of these. So that, that's part of it. But I, I'd be cautious on it.

[Josh Brown]

Because now you tell me I bought IGV today.

[Michael Batnick]

I mean, cautious on the overall market.

[John Mowry]

I'd be cautious on the software trade.

[Michael Batnick]

Oh, well, too late for that, John.

[John Mowry]

Yeah, I mean, I don't know why you need to chase that. I mean, there's so, there are so many things I think that look really good in the market today. So it's just. And again, as a value manager, software is not a massive component.

[Michael Batnick]

Gun to your head though, knowing that this has never happened before. A group this big and important to the index being nuked with the market holding up. If I asked you, is this positive or negative for the rest of the market, like in the short term or the intermediate term, what would you guess? Because I. A very strong opinion, but I don't want to say it until I hear yours.

[John Mowry]

I think you're going to say, well, I'm not going to predict what you're going to say. You're going to have a strong opinion.

[Michael Batnick]

What is my prediction? No, what's your. What do you, what would you like if somebody asked you and you had to come up with an answer?

[John Mowry]

If I had to come up with an answer, I'm concerned. I'm concerned that you have a large cohort of companies that are under this much pressure. So it's concerning to me, okay?

[Michael Batnick]

I'm the exact opposite. So I, I'm so bullish on this.

[John Mowry]

Oh, well, ok. I want to reframe something. Are you saying bullish on the market? Josh? Are you saying bullish on the market?

[Michael Batnick]

I think this is like unbelievable. First of all, it's poetic justice. All those assholes who told everybody else, learn to code. Yeah, how'd that go? Well, that's learn to code. How about learn to do something with actual atoms and molecules? Because nothing, all this code is now easily replicated and improved upon by robots while we sleep.

[Josh Brown]

Why is it super bullish?

[Michael Batnick]

Because this was the number one risk that people talked about that was going to bring down the market. When the tech bubble bursts, when the Mag 7 cave, everything's, everything's done. And what we're learning right now is that the ban plays on because there are other opportunities and people are just taking the money and they're saying, okay, I get it, that game's over. What's the next game? And they're buying things that cannot be disrupted. And I'm not suggesting people do that. Not saying, like, go run out and buy the consumer staples. They're historically expensive. But I get the mentality you can't disrupt Mac and cheese.

[John Mowry]

That's true.

[Michael Batnick]

Okay, so then, by the way, we're.

[John Mowry]

Overweight a lot of these areas, not state.

[Michael Batnick]

So you're enjoying this more than everyone else been.

[John Mowry]

Really? Yeah.

[Michael Batnick]

Okay. Health care stocks. Catch a bid.

[John Mowry]

Yep.

[Josh Brown]

It's so bullish.

[Michael Batnick]

I know people like, oh, historically that's defensive. Nah, you don't know what you're talking about. It's an area that's undisrupted and probably helped by AI. AI won't make its own drugs. AI will be used at these laboratories. Pfizer said they think they're going to save $500 million maybe in a year because of AI tools that are in there. So, like, this whole idea of the rsp, rsp, the equal weight being flat, while this sort of thing is only disrupting this one sector, why is the rest of the market flat? Because people, I think, are now drawing a distinction. Some companies are going to see cost savings from AI and a lot of beneficial innovation. And some companies are going to be looking for something new to do because the thing that they once did is no longer needed. And I feel like that's capitalism. I don't know.

[John Mowry]

That's true.

[Michael Batnick]

I like it.

[John Mowry]

That's true. I mean, I guess I have a few thoughts on that. I mean, not everything's flat, right? The 1000 value's up 5. I think the 2000 value's up.

[Michael Batnick]

Energy's up 15.

[John Mowry]

8. Yeah, energy's up 15.

[Michael Batnick]

AI doesn't make more natural gas transmission lines.

[John Mowry]

Digital banks are up, staples are up, materials are up. So there's a lot of stuff that's up.

[Josh Brown]

John Charton.

[John Mowry]

In 2000. Does anybody know how much the S.

[Josh Brown]

And P was down in 2000? 15.

[Michael Batnick]

Finished the year 15. I don't think it was down much. Maybe negative 10.

[John Mowry]

Whoa, that's spot on. It was down 10.

[Michael Batnick]

I was there, John.

[John Mowry]

Okay, well, I say that because when you hear 2000 while you were taking.

[Michael Batnick]

Sats in your kitchen, I was there.

[John Mowry]

Thank you.

[Michael Batnick]

There were a lot of stocks that held up. The problem is nobody owned them. Everybody owned Juniper Networks and Sienna and Cisco and Lucent Technology and Nortel. Nobody owned Mohawk Industries. Like nobody owned the things that were flat to up.

[Josh Brown]

But, John, check this out. To your point, this is a few days old. This Is s of 130. But Bespoke said 57% of stocks are outperforming the index. I mean, you have to love this.

[John Mowry]

Yeah, there's definitely a broadening. I mean, look, I mean everyone's tired of seeing, hey, small caps are cheap to the S&P 500. So I didn't put that in my. Because everyone knows, however, it is true, it is true that you've got some of the steepest discounts there going back to 2000. So I'm not surprised. And the other component which the software names got wrapped up in momentum as a factor, had had its biggest run for the last 24 months. And I would only point to momentum as a factor that I still think has efficacy because it's human behavior, because people buy what's going up.

[Michael Batnick]

I think it's the original. I think it's the original factor.

[John Mowry]

Yeah. And I don't think it'll ever get arbitraged away because it's too emotional, there's too much. There's people that are actually driving.

[Michael Batnick]

Before Cliff Asness proved that it's a factor, I think people innately knew it was a factor. And I think you look back at people writing about the stock market in the 20s, they were very aware of how momentum works. They couldn't put it into scientific terms.

[John Mowry]

Yes.

[Michael Batnick]

And they couldn't prove it with math because they were riding those old timey bicycles with the giant front wheel and twirling their mustaches. But they got it like RKO was the Nvidia of the 20s. I think it's the original factor, quite frankly.

[Josh Brown]

We had a crash yesterday. Yesterday? Yeah, the momentum factor divided By Value Worst 1 day return since, I guess what happened in 2020, late 2022, I don't know, whatever. But bad, bad, bad, bad.

[John Mowry]

Yeah. Again, you know, momentum was in the top percentile of performance going back historically. Been sitting right up there for the last two years. Okay, coming off that 22 low, all everything ripped in 23. But then it became really 24 and 25. Pure momentum.

[Michael Batnick]

That was beat growth, it beat dividend, it beat everything. It be low book. It be like every factor under the sun.

[John Mowry]

It crushed it.

[Michael Batnick]

Right.

[John Mowry]

It crushed it. So I'm not surprised given if you think back again, software multiples started at all time highs. After Covid you had this huge momentum run and now you've got a scare, so you've got the big dislocation going on. I'm not surprised by it, but I do think that it's an opportunity for other names to rewrite, but they have to have fundamentals. I think this argument that, hey, value is just going to come back drives me crazy because it's going to be about the fundamentals that are going to drive that. And I will say, if you look at oil, particularly refiners, not all oils and drillers have done well. But to be honest, the fundamentals are sketchy on some of these. Right now. Refiners are growing at 40%, refiners going faster than NASDAQ. It's like, well, how is that possible? It's like, because crack spreads. It's like, well, that's bullshit.

[Michael Batnick]

And that's been a momentum trade too, though.

[John Mowry]

Well, it's turning into one, but it's just starting. I mean, earnings just went from negative to positive territor 6 months ago for refiners. So if crack spreads expand, that's good. That's just fancy word for margins. So there's a lot of good fundamental underpinning. This is my point in energy, I don't think a lot of people appreciate that, particularly refiners. And then the banks, Josh, I mean, you'll curve. These things are printing money. You've got some regional banks that are growing earnings at 30%. So again, you could have a re rate because the fundamentals are really good, okay? And they're growing their earnings.

[Michael Batnick]

I think that's a really key point to pull it back, to bring it back to 2000. Because when people talk about 2000, they say dot com bubble. And that in people's minds becomes a shorthand for like a market crash. And it was. But it was a NASDAQ crash and a lot of stocks were just fine. They just weren't the stocks that people were talking about. But, like, this is more reminiscent of that than it is of any other tech. Any other market episode that I could call to mind. Like, stocks that nobody talks about, like Valero and Phillips in the refinery group. Just like, to name one group. They're doing really well.

[John Mowry]

They are.

[Josh Brown]

John, I got one year to love.

[Michael Batnick]

Let's do it.

[Josh Brown]

Year to love this chart 17. All right, so this is why we call him Chart Goat. So this is unbelievable work. And I'll, I'll explain what we're looking at, okay?

[John Mowry]

Okay.

[Michael Batnick]

Okay.

[John Mowry]

A lot of colors.

[Michael Batnick]

Put your right foot on green.

[Josh Brown]

Listen, boys. Listen, boys. Josh, you might understand this, John, you're a smart man, all right? We've, we've, we've break down the market into deciles, all right? There's 10 even buckets, okay? And on the left, we've got the worst Performers, Okay? And of course, all the way on the right, we have the best performers.

[John Mowry]

Okay?

[Josh Brown]

And within each decile, we break it down. How many stocks are in the top or whatever decile of return and what you'll see all the way on the right, 27% of companies in the materials sector are in the best decile of performance. 23% of energy stocks are in the best decile of performance. It's not tech. People are rotating into some of the things that you probably own, which has got to be fun. Yeah, that's a good chart.

[John Mowry]

It is a great chart. And I mean, look, I mean this was 2000, was when our firm was born because everyone was on one side of the trade and nobody wanted any of these areas. And as you guys know, materials and energy at the smallest weights in the S&P 500. So there's not a lot of money allocated there in broad, broad baskets. But again, what gets me excited as.

[Michael Batnick]

That three year track record around 05 must have been sick. Oh, it was like you don't even need a wholesaler.

[John Mowry]

Oh, I mean, you don't, you don't. It was wild.

[Josh Brown]

They're all working. So just look at the orange. That stands out. That's energy. There's none of them that are in decile 5, 4, 2 or 1. Like they're all working. They're all in the top half of performers.

[Michael Batnick]

This is better than a heat map.

[Josh Brown]

So good.

[Michael Batnick]

Like with the heat map they'll show you the ticker symbol of like, you know, the big ones, the 10 stocks that you found.

[Josh Brown]

Look at Staples.

[Michael Batnick]

But this is like, gives you, I mean it's unbelievable.

[John Mowry]

See what's so fascinating about kind of the value growth argument, it's like I don't like it because stocks are stocks. You know, it's like his Lilly growth stock is Lilly. A value stock is Pfizer. You know, go into that. But it is an asset allocation decision. And what I mean by that is the, the 1000 growth. It's like, what. How much is the sector allocation to tech? It's like it's 50. It's like, well, what about Google, which is comm service? What about Amazon, which is discretionary. What about Meta, which is common sec? Will you do that? And you're at 2/3.

[Michael Batnick]

Yeah.

[John Mowry]

So 2/3 of the entire opportunity set is in those groups. So value just looks totally different from a construction standpoint, if that makes sense. Because energy's 10%. You know, financials are, you know, 35%. You've got materials that are you know, 4 or 5%. REITs are 10%, depending on what index. If it's a smaller. Right. So it's totally different groups that are making up the value indexes today. And I think that's not discussed in a lot because it is an asset allocation decision. It's like you did well the last few days. If you had regional banks were up yesterday. It's like, oh, regional mix are up yesterday. It's like, why are they up yesterday? It's like, well, they have good fundamentals. They started from a really attractive point in 2023, which I don't think gets enough press either. And the discounts are still there, even though they're growing earnings.

[Josh Brown]

Steeper yield curve doesn't hurt.

[John Mowry]

Yeah. You know, can I make one more point about the regional banks? Not that this is the most exciting.

[Michael Batnick]

Topic, but Duncan will go out.

[John Mowry]

We're going to go out 2008. This is like I was cutting my teeth and like, these banks are just blowing up. You know, everyone's heading for the doors. Bear Stern drops, you know, 90% a day. The entire thing's coming unwound. Regional banks are going, you know, blown up. And that was a, that was a, a, an asset crisis that occurred. 2023 was not that. It was a liability crisis. And I think people miss this. It's like, why did First Republic and Silicon Valley fail? It's like, because the yields went up so fast. If they marked their Treasuries, which they have to hold to market, they'll be at big losses.

[Michael Batnick]

Yeah.

[John Mowry]

And this happened.

[Michael Batnick]

Paper losses.

[John Mowry]

Paper losses. And it's like, oh, wait a minute, that's that. We didn't expect that one. It's like, so the Fed fixes, the treasury fixes it. We're going to open the discount window. You can, you can exchange anything at par.

[Michael Batnick]

Well, the Fed caused it, in fairness.

[John Mowry]

They did.

[Michael Batnick]

Yeah, they did.

[John Mowry]

They telegraphed it. They said, they said we were going to raise rates.

[Josh Brown]

But the, and aggressive management caused those particular banks to fail because there's a lot of other banks that didn't play that game 100%.

[John Mowry]

But, you know, if I think about what happened with First Republic, that's kind of interesting. That's like saying, hey, you know, we're going to raise capital, and then telling your neighbors that you have termites and then saying, now I need to raise capital. So some poor decisions were made with how they, they could have, I think, avoided these, these issues. But I bring this up because the whole, the whole group got barfed because everyone Was like, I've seen this before.

[Michael Batnick]

It has to get worse.

[John Mowry]

It has to get worse. But it was different. It was different. And so now you're coming off that base again. Context, context, context. Like 07 all time high. 2023 got back to 2008 valuations for banks. Okay, so now you've got that yield curve steepening and they're printing money. And by the way, they're not even really lending that much right now. So if you get more lending that will continue to pull capital. So I think this dynamic that you're talking about with the momentum, you could see that continue because you've got fundamentals supporting it. It's not just a. They're cheap. Because to your point, Josh, the staples, a lot of these have terrible earnings. We'll see if they can turn them around. But they're high multiples.

[Michael Batnick]

If we have now a value run that lasts more than a month because, you know, over the last 10 years we've had these mean reversions where it's like small caps are outperforming and then it just fades.

[John Mowry]

Fades.

[Michael Batnick]

But you remember, and I remember these periods of time where you could have a five year value outperformance. And that's like right around when everybody starts launching smart beta products again. But whatever, it could happen. People don't think it could happen. I wrote a blog post and deleted it. I. Yep. What now? Because you're right, you're way smarter than me and I thought this was going into a territory that I don't belong in. I try to stay in my lane. This is not. I should not be the one that writes this, but it was brilliant. If only. If only. If only I had the chops. Say what I was trying to say.

[John Mowry]

Now you got to say it.

[Michael Batnick]

Okay. The premise was in a rotation to value that lasts for five years. What will happen, given the way markets and people are these days, is we'll have a mag 7 of value stocks.

[John Mowry]

That's true.

[Michael Batnick]

Because hurting is never going away. So I called it the SAG 7 because all these stocks were doing was sagging. And I was going to make the case that in a value outperformance dominion, it would look like ExxonMobil, Procter and Gamble. Like those would be the champion stocks of a value move and they would cease to be value stocks eventually. And we're sort of seeing the early innings of that with Walmart hitting a trillion dollar market cap. I think people think it's like, oh, it's consumer staples, it's defensive, it's 40 times earnings.

[John Mowry]

Yeah, but I have a theory on that.

[Michael Batnick]

Well, I want to hear it. But like, so my, my take was human behavior. Whatever's working, we're going to take it too far and we will end up, maybe they don't get to 35% of the S and P, but we'll end up with seven value stocks that are 20% of the S and P. Like, and I don't know what's in that basketball, but like I, and I was going to write it, but I didn't have like the mathematical ability to prove it. I know somebody could prove it or I feel like somebody could show what that would look like if that were to happen. I'm just, again, I'm not the guy. I'm a big, I'm like, I'm an ideas guy. Michael's the, Michael's the analytical guy. But anyway, what do you think about that idea? Like if we have five year run for value, are we going to end up with seven giant value stocks?

[John Mowry]

Well, you should have written about it first of all because you did a great job explaining it and I loved it. Okay, a couple thoughts. Can I say one thing about Walmart? First of all because Walmart now is in the nasdaq, right?

[Michael Batnick]

They, they, they, well they, it's, they switched exchanges.

[John Mowry]

Yes, yes, yes. So I just say that because Costco did that, it's like, well that pretty helpful for that multiple. And Walmart's like, I'm going to do that too. So is it a value stock or it's like that kind of goes back to the Amazon question. It's like Walmart is a really high multiple.

[Michael Batnick]

Statistically neither of those are value stock.

[John Mowry]

Correct, Right, Correct, correct.

[Michael Batnick]

No, are they staples? Because historically when people were worried about the market, they would buy Walmart like it's a dollar store.

[John Mowry]

Yes.

[Michael Batnick]

Because it was like, it's like a supermarket. It'd say like, well, people need food. I don't know. That's not applicable anymore in today's market. It's not a defensive stock for value to work.

[John Mowry]

It's cyclical. Like this is the, this is the trade. Okay? So like staples to me is not the trade. Like they like, sure, Procter and Gamble may do fine, but the trade with long legs is going to be cyclicals. If you look at the 2000 value, which is I'll argue, kind of the tip of the spear, that is 40% financials, okay. 20% in regional banks, then 10 in energy, okay? So right there you've got 50% of the opportunity set in energy and financials. So my comment to you on. As I think about how this could play out, it may be a few stocks, but maybe it'll be sectors. Because if you think about financials, okay, financials were the largest sector in the S&P 500 back in 2007. Okay, they may not be as big as what technology is today. We'd have to check. But it was getting up there. So the way that value is expressing itself.

[Michael Batnick]

Citi and bank of America had big market caps relative to the rest of the market, huge.

[John Mowry]

So is oil part of that? For sure. But I think it's about financials because I think that's where you get the huge dislocate. Because it's such a big group, it has the ability, as it gets bigger, to compound and take over the other groups. Not unlike what's happened with technology at the highest weighting it's ever been in the S&P 500.

[Michael Batnick]

So. So you think that's the. That's the. If, if there's a value, if there's a value bent to the next leg of the bull market, you think it'll be harvested by investors who are in the financial stocks.

[John Mowry]

It has to be, because it's the largest group. It's kind of like when people were.

[Michael Batnick]

Getting bullish on, like, materials can never get big enough to fit that much bullishness.

[John Mowry]

I mean, you can overweight them. But I'm saying The group's like 3 or 4% of the S&P 500 is tiny, right? It's a little bit bigger in the.

[Michael Batnick]

You know, energy too.

[John Mowry]

It's so still, it's going to be hard. It's going to be hard because you're starting such a small place. It's going to be really tough. But financials, they can do that. Industrials as well. But, you know, I'll make another point. You know, emerging markets, people like, oh, do I like emerging markets? Do I not? And then, you know, a couple of.

[Michael Batnick]

Years ago, I like them when they go up.

[John Mowry]

You like them when they go up? Yeah, I. And then when they aren't working, everyone's like, I don't really diversify outside the US Because I like my money here. China is the second largest economy in the world. China is the largest weight in the emerging market index. So I found it funny when people were like, I like emerging markets, but I don't like China. It's like, well, that's like saying that you like the S&P 500, but you don't like technology. It's like, that doesn't make any sense. It's like this is the second largest economy in the world and they would liken it to Russia or some of these other countries.

[Michael Batnick]

Like, if you had that trade on, though, it's basically India versus China. And it's done pretty well.

[John Mowry]

Well, since the Halloween lows of October 22, China is outperforming the S&P 500.

[Michael Batnick]

Okay.

[John Mowry]

Not a lot of people know that, but it's actually performed very well off the October Halloween lows of 22 being the S and P. So India's done fine, but India's down, you know. Well, they're all down a little bit. China, you know, but in general, it's hard to get. My point is it's hard to get bullish on emerging markets, but have a problem with China because it's the biggest weight. And the same way that if you want to get bullish on value, it's like, well, what are the biggest. Because to your point, Josh, everything is run by ETFs.

[Michael Batnick]

Now you have to be bullish financials.

[John Mowry]

You have to be bullish financials.

[Michael Batnick]

I got it. I agree. Yeah. Just like on a pure market cap basis, Value x financials.

[John Mowry]

Yeah, it just.

[Michael Batnick]

So what do you own?

[John Mowry]

It makes. It makes material.

[Josh Brown]

Yeah. Real estate.

[Michael Batnick]

Well, it'd be 10x overweight, like a. Like a bunch of chemical companies and.

[John Mowry]

Well, here's the problem. For the most part, the other groups, like Staples. Right. Okay. They don't grow very quickly. So if they're going to do well, it's probably going to be because the market's not doing very well. Which goes back to your point, Josh. You're bullish on the market. It's hard to get super excited about. Like, hey, let's really overweight this group that grows at 3 or 4% a year. That's going to be tough to get super excited about. But if a group scoring at 30 and it's at a much lower valuation, that gets a lot more exciting.

[Josh Brown]

Yeah, I've got some staple stuff. So if I were to say so, on the one hand, I love that we're having a cleanse. I love that all of the garbage has been taken out, a lot of the quantum computing names and all the crap that people are speculating about. And I don't like watching anybody lose money. But that's over, right? That trade has gone there, blown up. Now it's Microsoft. Microsoft.

[John Mowry]

You like to cleanse?

[Josh Brown]

I like the cleanse.

[John Mowry]

You like the. Have you done the Juice cleanse. Have you done the, have you done.

[Josh Brown]

I, I have not.

[John Mowry]

Okay.

[Josh Brown]

All right. Oracle is down 59% from its high. Microsoft just closed the gap from last April. I think it's down 28%. I think this is healthy. I think this, this, this wall of W that we're setting up, it's necessary. Here's what I really don't like. I don't like that we're. That, that the market is still basically at an all time high. Like that concerns me. So I see both sides. Like well, it's great because now the 493 is taking the baton. Like it's all good. However, if I was concerned, here's the chart that I would be looking at. John, chart for please. We want to see a risk on environment obviously in a bull market. And the best proxy for me is discretionary divided by Staples. And John, being that you're annoyed with some of the, the valuation, the way that we like categorize things, you'll appreciate that XLY is 40%. Amazon, Tesla. Right?

[John Mowry]

Yes.

[Josh Brown]

So we have to =2. But they're both crashing the ratio of discretionary to staples. So Staples are breaking out relative to discretionary.

[Michael Batnick]

Which one of these is, is equal weight? Oh the light blue.

[Josh Brown]

So that. I don't like that.

[Michael Batnick]

Do the same thing anyway though.

[Josh Brown]

Yeah, well, yeah, okay. I, I don't like that. I don't like, I don't love that. US Staples are having their best January and February ever. There is a absolute rush into. So Staples are up top left corner 12% in January and February.

[Michael Batnick]

Yeah.

[Josh Brown]

Bank of America has this back to 1997. Never seen anything like this. We have fund flows going berserk. Next chart, John. We're looking at the four week average net flows as a percentage of market cap. Right. So it adjusts for the size of these companies.

[Michael Batnick]

This is crazy.

[Josh Brown]

And people are just absolutely diving in. And to your point about, well, Staples, like how much do you want to pay for these companies? You want to pay 40 times for Walmart and Costco and Coca Cola. I don't know, John. Let's skip one chart. Go to chart nine please. All right, next one. This is, this is some chef's kiss work right here. Here's what we're looking at. For people that are listening. I've got the Staples forward PE and I've got the tech forward pe.

[Michael Batnick]

Oh wow.

[Josh Brown]

And for the last convergence.

[John Mowry]

Crazy.

[Josh Brown]

As you would expect, the tech forward PE has been significantly higher. And now they are touching tips. But let me show you. One more. They are.

[Michael Batnick]

They are.

[Josh Brown]

They are. They have converged and they're trading at the same forward Pennsylvania. And so the next chart.

[Michael Batnick]

So wait, both. Both are trading at 23 times forward earnings.

[Josh Brown]

All right, so. So here's some. Here's some. We did. This is not a chart crime. Okay? I am normalizing the axes to only show this particular point. Most of the time, the blue line, the dark blue, light blue, they go to. They move together, right? Like, for the most part, they move in the same direction. And now you are seeing a hard. A hard break, which shows very clearly that tech is getting a hard rerating lower. Oracle done 60. Right. And Staples are getting a sharp re rating higher. And so this is not that bullish.

[John Mowry]

I think one thing I think about this, you look at the Ford estimates for a lot of the Staples companies. They've been negative. So you're getting super fast pe.

[Michael Batnick]

None of this is fundamentals.

[John Mowry]

Well, that's the thing. You're getting the PE expansion off of bad earnings. And so, and so, you know, it's much harder for something with good earnings to expand the PE quickly, as we know. But when you have bad earnings, you have earnings coming off. The multiple can pop quickly if Even you're up 10% because the earnings weren't there to support the move. So it's really strange. I don't know if people fully appreciate what they're paying for because the estimates have been really bad.

[Josh Brown]

They don't care. Safety.

[Michael Batnick]

They're paying for undisruptible companies. And it sounds stupid. And then you look at the charts.

[Josh Brown]

And, dude, they're paying for this.

[John Mowry]

But they're getting disrupted by Ozempic.

[Josh Brown]

John. They're paying for this. They don't want to own Microsoft. That's what they're paying for. They're puking this and they're buying Staples.

[John Mowry]

And you know what?

[Josh Brown]

I don't know shit about the fundamentals and what Satya is doing and whatever the sustainability.

[Michael Batnick]

This is a buy Microsoft.

[Josh Brown]

This is not workday.

[John Mowry]

We own Microsoft.

[Michael Batnick]

Microsoft, 15 times forward earnings versus Colgate.

[Josh Brown]

All debt, 30 times earnings.

[John Mowry]

100%. Okay? A hundred percent, Josh. I'm a thousand percent.

[Michael Batnick]

And whether it's not, I like that you guys are saying that definitively.

[Josh Brown]

Whether it's a buy or not, it is not a sell. If you are selling Microsoft today, take your hands off the keyboard.

[John Mowry]

100%. 100%. There's way more interesting things than piling into Staples. But again, I go back to these other areas because you've got You've got earnings supporting it. You got earnings supporting it. But yeah, I, I mean, the Microsoft sell off, you know, we'll, we'll see, I think.

[Michael Batnick]

Tell us, what are you. So what are you and what are your, what are your people doing in a week like this? Like, smiling? No, no, no. So you guys are in the right part. You guys are in the right part of the market, which is why I booked you for this three months ago. I had a premonition.

[John Mowry]

That was good.

[Michael Batnick]

No, no, no. You guys are on the right side of this divergence. Okay, so what are you guys doing? How do you like, walk us through the mentality of the people who are now looking for opportunities? You guys are able to. You're on the right side, so you're not like, oh, no, what do we sell? You guys are like, what, what can we, what can we buy? So how do you guys talk about it?

[John Mowry]

Well, you know, it's interesting, you know, on a day to day basis, you know, moves in the market, they get a lot of press. But as you guys know, you know, the work's being continued constantly. So we're in the engine room just, you know, going through what we're looking for.

[Michael Batnick]

Extracting the alpha.

[John Mowry]

Yeah, we're the way we're. I mean, we're looking, you know, whenever you get dislocations. Whenever you get dislocations. Yeah, you know, the work picks up. But I'll be honest, you know, we got really bullish on refiners at the beginning of the year. We did not expect that, that to.

[Michael Batnick]

Re reading my CNBC column.

[John Mowry]

I actually did not see that one recently. Are you. I saw you talk about drillers.

[Michael Batnick]

I wrote about, I wrote about all three of them separately. Marathon, Valero and Phillips. Like, I pound as close as I get pounding my fist on the table because it's on technicals. I'm not, I'm not terribly worried about the fundamentals. These stocks obviously were being accumulated like crazy.

[John Mowry]

100%.

[Michael Batnick]

So it wasn't early, but I wasn't late.

[John Mowry]

100%. 100%. But in terms of, you know, what we've done, you know, this week, I mean, not a lot, Josh, because we're already positioned for this. You know, we were already positioned for it and it was not anything that we had to do special. The main thing that we did leading up to this, I think is positioned us well, is we're very overweight banks, we're very overweight energy and we're overweight materials. And that was all a fallout of where we're finding value in terms of fundamentals and dislocations and valuations. Industrials, well, but as well, but those areas.

[Michael Batnick]

Do you have to have an economic outlook that is more bullish than consensus to be that overweight such a, such cyclical areas of the market, or is that not let that work itself out?

[John Mowry]

It's a great question. We definitely think about that. But if I had to articulate what, why we would push an overweight, it would be a combination of the multiple you're getting with the fundamentals supporting it. It's harder, which is why, like staples. Somebody's like, hey, I love staples. Like, why do you like them? It's like, well, I saw some chart on price to book. They're the cheapest. And it's like, yeah, yeah, but how, how, how's the business doing? It's like the business isn't doing great. It's like, well, why are people buying it? Well, they want real things. It's like, I don't like that. I don't like. I don't like that. I don't like that answer. So I think that, you know, the areas that had the fundamental support.

[Michael Batnick]

Josh, delete where I said that.

[Josh Brown]

So.

[Michael Batnick]

Okay.

[John Mowry]

You know the other thing, I'll share too. The Russell 2000. Okay. That's the small cap index that is actually beating the S and P off the.

[Michael Batnick]

We got a new, we got a new high this year.

[John Mowry]

We did.

[Michael Batnick]

Okay.

[John Mowry]

It's beating by over 10% off the Liberation Day lows. I bring this up because sometimes rotations can happen below the surface, but you don't see it for a while. So your point that you made earlier, Josh, about, you know, five years value may have a run. Well, it may have already started. We may even be one year in.

[Michael Batnick]

But you don't know it yet, right?

[John Mowry]

You don't know it yet.

[Michael Batnick]

You have to be able to look back to be able to say it.

[Josh Brown]

Yeah, it's just another head fake. We've seen so many of them, right. There's. There's been one other piece of market information that I don't love. Now, this is like maybe short term stuff. I don't love that some of the companies that are beating in a real way are still getting sold. Palantir, yesterday, I know it's in the basket of shit nobody wants to own, but they had a monster earnings support. Eli Lilly and also palantir. Palantir was up 6% the day of reported earnings, down 12% the day after.

[John Mowry]

Right? Yep.

[Josh Brown]

Eli Lilly, great earnings, was up whatever it was. Getting rocked today.

[John Mowry]

Yep.

[Michael Batnick]

Google Alphabet.

[John Mowry]

Google came back. Google came back. We own Google.

[Josh Brown]

All right. Google's had a high day.

[Michael Batnick]

Look at, look at, look at.

[Josh Brown]

Highly glad to hear that. So it's flat. But when stocks sell off on good earnings, that's not great. But I would also say just like, listen, we've been in a bull market for so long. Expectations were obviously not low. We all know that. What was the S and p up in 25, in 24, in 23. I know nobody likes losing money, myself included. But if we have a little bit of doubt, it's okay. If you could think past just tomorrow, like, we need this.

[John Mowry]

Okay, I have a question. How long has the bull market been going? When did it start?

[Michael Batnick]

Ooh, I have a different definition than when I started.

[Josh Brown]

So this is rolling bull markets. It did not start in 2009.

[John Mowry]

Okay.

[Michael Batnick]

I think it's because 2013.

[Josh Brown]

Because in 2010 and 2011 and 12, people are like, this is bullshit. Double dip recession. This is not real. Yeah, it's fake.

[John Mowry]

The double dip recession. I love that. I remember that going around. That was.

[Josh Brown]

We can't get any inflation where we're, we're printing money. Where's the inflation? With anemic economic growth. And even in 2013, the market was being led by Staples. Nobody believed it. It was utilities and healthcare and real estate. Remember, we talked about this at the time, like it was, it was a defensive bull market in 2013.

[John Mowry]

10 year drop major in 13.

[Josh Brown]

So when we broke out of new highs in 2007, like from 2007, it was a defensive rally and there was a lot of doubt. And so I think that's when the bull market started or not started. I think that's, that's when I would date it to.

[Michael Batnick]

If you're, if we're being statistical and we say the 1982-2000 bull market, the reason we started in 82 is because that's when it takes out the 1975 high. Why wouldn't we symmetrically say the same thing about this bull market? In 2013, you take out the 07 high. Therefore, this secular bull market, the lows of the previous bear might have been an 09, but the beginning of this one is 13. And it was not just defensive. There was a birth of a new crop of growth stocks, which always happens. Netflix, Lululemon. People forget we're having fun again in 13.

[Josh Brown]

Netflix is 20 billion.

[Michael Batnick]

But the market was tiny at the time. And these were the stocks that captured our imaginations and Made you think, oh wow, there really are stocks that could go up a thousand percent. Chipotle. These were brand new growth stocks in 13. I know it's 15 years ago, but how long was it 13 years ago? It was a thing.

[Josh Brown]

It's not black or white. I understand the argument. Hey, listen, you measure the bear market from the top, right? Like peak to trough. So why would he measure the bull market from the bottom? Whatever. I don't buy that, but I understand there's different.

[Michael Batnick]

What do you think the bull market started?

[John Mowry]

Well, I've always wondered about 22 because we got 2. Negative GDP.

[Michael Batnick]

Cyclical bear market, not secular.

[John Mowry]

Everyone said it wasn't, but I was like, but we got two negative gdp Core is like. Well, they didn't count it.

[Michael Batnick]

And that's two. We're making two arguments. You're about recession. Yes, there was a recession in San Francisco.

[John Mowry]

Recessions don't bear markets reset. Don't reset.

[Michael Batnick]

There was no unemployment. It's not a recession.

[Josh Brown]

I think your point is you need on it.

[Michael Batnick]

You need like actual unemployment.

[Josh Brown]

Your point? We've had bear markets. And I think it drives me nuts that people say it's been a one way bull market since the bottom in 09 or whatever because it just hasn't. What do you. Where have you been? Where were you in 2022? That sucked.

[John Mowry]

Yeah.

[Josh Brown]

Did Covid not happen with. With the stock market not going down 13% a day?

[John Mowry]

Yeah.

[Josh Brown]

What about Liberation day?

[Michael Batnick]

The thing is that people. Wait, wait, wait. There's two things going on here. People discount bear markets that happen outside of recessions. Okay? In 22, nobody lost their job. In fact, the cause of the stock market selling off is the opposite. Stories were too valuable.

[John Mowry]

That's true.

[Michael Batnick]

Okay, so it's not a recession and people don't care about bear markets that didn't coincide with recession.

[John Mowry]

That's fair. Okay, that's fair.

[Michael Batnick]

So the real deal and the first 10 years of my career, I lived through two of them. The real deal is contracting GDP, crashing stocks and unemployment. And in 22 we had two of the three. And arguably the big one is a spike in unemployment. And absent that, it's a cyclical bear market inside of a secular bull market that began in 2013. 2020 didn't reset it. That was a 10 minute bear market.

[John Mowry]

That was 10 minutes.

[Michael Batnick]

Yeah, a terrifying 10 minutes. But 10 minutes and 22 didn't reset it.

[Josh Brown]

Oh shit. Bullshit. 2022 is not 10 minutes.

[Michael Batnick]

10 days.

[Josh Brown]

Dude, Amazon and Google, Amazon and Google got caught.

[Michael Batnick]

It was liberation Day. Esque.

[Josh Brown]

No, it wasn't.

[John Mowry]

It was scarier because we thought we could die.

[Josh Brown]

Amazon, Google got a half metal, lost three quarters of its value and if.

[Michael Batnick]

You didn't check your account for a week, you missed it.

[Josh Brown]

This is revisionist history. It just, it sucked. It was not fun. Bonds were down.

[Michael Batnick]

I was terrified. I'm not pretending that it wasn't severe. I was, I was scared.

[Josh Brown]

It sucked. Your point is, which is the right one? I think people act as if, if the world doesn't end, if we don't have a great financial crisis, then it's not a bear market and that's just nonsense.

[John Mowry]

Yes, I would agree, I would agree with that. I would agree with that. But I think that again, I'm bullish on rate sensitive stocks. So I think rate sensitive stocks are going to go a lot higher. I mean you're not going to get a rerating.

[Michael Batnick]

Do you like home builders?

[John Mowry]

We're not overweight home builders. We do not have home builders in the portfolio right now.

[Josh Brown]

So what else is rate sensitive?

[Michael Batnick]

So what's rate sensitive to you?

[John Mowry]

Well, again, I would go back to, you know, first financials. Right, okay. But then, you know, anything in materials like steel, anything with cyclicality, you know, those are obviously very rate sensitive names. And then you have real estate, you know, names like Prologis, you know these names, you know that name is, has done well the last few, few days. So I think that the rate sensitive trade goes on and you're not going to get a rotation into kind of the equal weight rs if RSP goes, that's more, that is more rate sensitive by definition because it's not heavier weighted to big tech software companies that we were just talking about.

[Josh Brown]

You know, it's so funny, you're looking at this chart of RSP and you're like, what?

[John Mowry]

Yeah, it's, it's, it's at an all time high. Yeah, it's at an all time high.

[Michael Batnick]

In financials though, there are some sectors that are being blown up as collateral damage to this like software Armageddon. Like, well, the alternative asset managers. Yeah, they're all in 30% drawdown.

[Josh Brown]

S& P. Global fact. They look like this. They're going straight down.

[Michael Batnick]

Right? Those are financials data providers.

[John Mowry]

Those are. Yeah.

[Michael Batnick]

So you have to, you have to actually pay attention. It's not just like xlf.

[Josh Brown]

Yeah. John, wake up.

[John Mowry]

Yeah, the brokers, the brokers are under pressure, right. So some of the insurance brokers haven't done as well. So the exchanges aren't doing as well. Like MSCI, S&P.

[Michael Batnick]

Private equity blue owls nuked like.

[John Mowry]

But those aren't. But those aren't. Those aren't. I would. Well, private equity. Yes, but those aren't credit sensitive like the other areas in financials.

[Michael Batnick]

They're financials, but they're not part of what you're describing.

[John Mowry]

Exactly.

[Josh Brown]

Do you follow? Do you cover cma?

[John Mowry]

We don't own it. Own it currently, but I.

[Josh Brown]

All time high.

[John Mowry]

Yeah.

[Josh Brown]

Today. Unbelievable.

[Michael Batnick]

That's a company that feasts on volatility.

[Josh Brown]

Yeah. That's the commodities. That's the junkie trade. That's like the degenerate trade.

[John Mowry]

Yes, yes. So that's benefiting from the. The run. And.

[Michael Batnick]

Yeah, we don't have a ton of time, but I do. We do have to talk crypto. We don't have to spend. We don't. We don't spend a million years on it. But like. Oh, my God. This is because this is part of this liquidation.

[John Mowry]

It is.

[Michael Batnick]

All right, put up the. You want to go in order.

[Josh Brown]

I bought. I bought Bitcoin at 66,000 today. I can't help it. I'm a glutton for punishment. We were talking on Tuesday that I'm not going to buy, like, falling knives, but to me, I have to buy panic, and maybe I'm wrong and I'll sell it.

[Michael Batnick]

He only buys falling knives in crypto.

[Josh Brown]

No, no, I. So I don't. I've learned my lesson. I don't like buying falling knives when it's just relentless selling. Okay, but like IGV today, to me, this is a trade. I'm not. This is not a buying hold for me. When I see falling knives in, like, big groups that panic, indiscriminate liquidation. Yeah, I always buy liquidation. It's not always right. Doesn't mean we make money, might lose. I'm a big boy. It's okay. But I have to buy panic. If I'm not buying panic, what am I doing?

[Michael Batnick]

John, chart 18.

[John Mowry]

What percent of your net worth do you have in crypto?

[Josh Brown]

Nominal.

[John Mowry]

So why.

[Josh Brown]

What do we.

[Michael Batnick]

Believe?

[John Mowry]

You don't believe it, really?

[Josh Brown]

No. No. I'll tell you why. I had way too much in bitcoin and eth and thank God I sold a lot of it. So I sold enough so that if it got cut in half, and it did, I don't care.

[Michael Batnick]

He sold because the PE ratio got stretched. Can I show you this? Ethereum chart down 60% from 2021. But, like, this last leg down, straight down. This is, like, really since the fall?

[John Mowry]

Well, Didn't Tom Lee call the bottom on it? Like on Squawk?

[Josh Brown]

Tom was here last week and he said, great episode.

[Michael Batnick]

He was early.

[Josh Brown]

So when Tom was here last week, it was at 2,800 and he said it could go to 2400. Yeah, it went to 1800.

[Michael Batnick]

Yeah. I mean, this is like. What is that? This is liquidation. There's nothing because there's no fundamentals.

[John Mowry]

It's just correlated with the tech trade.

[Michael Batnick]

I think so too.

[John Mowry]

Like it's correlated with the tech. It used to not be. Everyone made this argument that it was an uncorrelated asset. And that drove me crazy.

[Michael Batnick]

It was. Until they got ETF'd.

[John Mowry]

Yes.

[Michael Batnick]

And now they're part of the whole casino.

[John Mowry]

Now it's part of the casino. So it's no longer giving 19.

[Michael Batnick]

Look at this thing. Total Bitcoin spot ETF flows.

[Josh Brown]

That doesn't look that bad. It is bad. That's not a great visual.

[Michael Batnick]

Well, is it? Here's a question. Is it correlated or is it causal? I think it's causal. I think the ETFs. If they're not putting money into the ETFs. Is there any. Who else could buy enough?

[John Mowry]

Josh, this is my point on the factor decay. The ETFs are causal.

[Michael Batnick]

Yes.

[John Mowry]

So they 100% are driving.

[Michael Batnick]

We're on the same page with that.

[John Mowry]

100%.

[Michael Batnick]

100% Robinhood 10 year performance. I mean, it's been a. Last year was best performing stock in the market. This is basically a de facto crypto trade where they make a lot of their money and it's what their users are doing. And their account values get nuked when Bitcoin is in a 50% drawdown, which it is right now. Show me Coinbase. 64% drawdown. Holy shit. This thing looks like they just got FDA approval for a new. A new type of flu.

[John Mowry]

Oh my God.

[Michael Batnick]

I've never seen a stock trade like this.

[John Mowry]

Well, coin brace is only growing at. At three at a.

[Michael Batnick]

You call it corn braids.

[John Mowry]

Coinbase is only growing at 3 or 4% now. Right. It was growing at a hundred.

[Michael Batnick]

Right.

[John Mowry]

So the market's right. The market's right. It's like now it's.

[Josh Brown]

The market's always right for the most part.

[John Mowry]

I mean, this is the challenge with Bitcoin. It's the same thing with gold. It's like, what's the right price for gold? You know, we can talk about whatever the price.

[Michael Batnick]

89, 80 900. I was told, dude, whatever.

[Josh Brown]

It's like whatever the price Is today.

[John Mowry]

What is the Mona Lisa gonna be worth in 100 years? I don't know. It's like, I don't like the argument that because it doesn't produce cash flow, it doesn't have value. Because there's tons of things that don't produce cash flow that have value, but.

[Michael Batnick]

They'Re harder to value.

[John Mowry]

They're way harder to value. And they're way harder to value because, for example, we own gold stocks and it's been a great trade, but the valuations look really good there. The fundamentals look really good there. But we know these are expensive on certain metrics. Okay. But these are growing at 130, 140% next year. Because where the gold price is. Because if you think about a gold. One time I met with the management of Buenaventura. I was young in my career. I was out in Laguna beach and I sat down with management and he was explaining how gold mining works. And he got a piece of paper and he drew a V and he said, we mine all the gold that's easy to get. And then if the gold price isn't high enough, we can't do anything. We just sit. And then if the gold price gets high enough, then we can mine a little bit more because it costs that much more to get it out. It's like, that's how it works. So it's super constrained. So when you get the price going like this, these things turn into money printing machines. They're growing faster than any stock in the stock market right now.

[Michael Batnick]

Right. Like if Newman's cost streamers, Newman's cost is sixteen hundred dollars and the price of gold goes from three thousand to five thousand, the stock should double. And that's literally what. What just happened.

[John Mowry]

That's what's happened. That's what happens. So it's. But it's hard. And I've, and I'm honest with investors about this. It's like, well, are, you know, you guys still like gold? It's like, yeah, we still like gold because the fundamentals look really good. And we were still bullish here. But I recognize that if the price of gold were to drop precipitously, it's going to completely change economics.

[Michael Batnick]

And it's unknowable. Right. The economics of the companies you're buying instantly change. And they could be the best managed companies in the world. It doesn't matter.

[Josh Brown]

Yeah.

[John Mowry]

And I want to have an honesty about that. But we liked it. We like these still. And though they've been caught up a little bit in the momentum sell off. But, you know, I think those are going to be a little bit more resilient.

[Michael Batnick]

Oh, that's so. That's so funny. Like, the gold and silver sell off was last week's story.

[John Mowry]

Oh, yeah.

[Michael Batnick]

And the software stocks blew up so badly this week that it's like I haven't even.

[John Mowry]

I haven't looked at no one's. Yeah, they've been a little bit caught up because they're part of, again, these, these ETFs, group the momentum together. So gold has gotten a little bit of attention as part of that, but it just goes back to bitcoin. It's like, what is the price of bitcoin? What's the price of gold?

[Josh Brown]

The price is what the price is.

[John Mowry]

But that's why Coinbase's earnings, that's why they don't have any earnings, because the price is low. So the same thing will happen to gold stocks. Same thing happened to oil stocks.

[Josh Brown]

Yeah. Let me ask you guys a question before we get out of here. Amazon just supported. Take a guess.

[John Mowry]

But the stock price, I know I would say down.

[Michael Batnick]

I would say up.

[Josh Brown]

How much? Any guess.

[Michael Batnick]

I would say it's up 7%. And I. Full disclosure, I own it.

[John Mowry]

I'll say it's down 3, down 10.

[Michael Batnick]

You all right, Tom. Maui, ladies and gentlemen. Hey, can I tell you a question? Do you know that you are one of the best first time guests we've ever had on the show? I mean, it's. You might be like a podcast. You might be a podcast.

[Josh Brown]

That's not an easy seat to sit in.

[John Mowry]

Well, I needed one.

[Michael Batnick]

You crushed the show. Jon, what do you think? Pretty good, right? Duncan, what do you. I know that. I know in your headphones you're listening to music, but I approve.

[John Mowry]

All right, can I say this?

[Michael Batnick]

Go ahead.

[John Mowry]

Super awesome to hang out and do this. I was really looking forward to it. I was so glad to. To get to come up and do it. I think super highly of the show. Josh, I've seen you a million times. I mean, sincerely, I really, I really was looking forward to this.

[Josh Brown]

What is that?

[John Mowry]

You guys are awesome.

[Michael Batnick]

That's my new job. Listen, listen.

[John Mowry]

It says downtown.

[Michael Batnick]

How tough is that? That's Marv. That's Marv. Albert. That's Marva, I think.

[John Mowry]

Right?

[Michael Batnick]

Is that Marvin? Is that one of his. Who cares? All right, John, before we get out of here, we always like to ask people something that they're looking forward to and it doesn't have to be professional like Amazon's Earnings call, which I'm now not looking forward to.

[John Mowry]

I'm so excited.

[Michael Batnick]

Could be anything in the world. What it like, what are you excited about?

[John Mowry]

Okay, so I've married 15 years.

[Michael Batnick]

All right.

[John Mowry]

Okay. I've got a nine year old and an 11 year old.

[Michael Batnick]

All right.

[John Mowry]

And I am a big, big, big, big fan of trips. I think trips are the key ingredient for marriage, and they're the key ingredient for family. So I'm like, big on this. Okay. So I've planned a trip to Croatia this summer, and I'm super excited about it. I got my kids all excited about it. So that's what I'm really looking forward to. Time in Croatia.

[Michael Batnick]

Is that the Adriatic?

[John Mowry]

It's the Adriatic Sea, so it's like.

[Michael Batnick]

It'S like being in Italy. It's across the Adriatic from Italy.

[John Mowry]

Yes, it's the backside. So if Italy's here, it's, it's that, is that, it's that water body. But it's, it's calmer waters than a lot of the other places in Europe. And I've always wanted to see Croatia. That's where they filmed, I think, Game of Thrones, so just so beautiful. Okay, so that's, that's what I'm looking forward to this summer. I'm taking my family over there. We're going to spend 10 days.

[Michael Batnick]

All right.

[John Mowry]

And that's going to be. But I'm a huge believer in this. I think it's the most. If I was ever. I don't know if I'll ever do this in another life, maybe I'll be counselor. It's like, you want to have good relationships, Spend time. How do you spend time? You go, because you're too busy. I'm too busy with work. I'm distracted. I'm in a bad mood when I get home, stocks are down. I'm like, I can't take it. I'm not a good dad, my good husband, a lot of times when I get home, but I'm way better when I'm away. And I carve out that time. So I'm super intentional about it, and I'm a big believer in it.

[Michael Batnick]

And I can't tell you how much I agree with that. And my kids, who are now grown, they still reference trips that I can't even believe they remember. Like they'll randomly, out of nowhere, talk about a night we spent in Philadelphia because they remember that the hotel gave them fuzzy slippers and robes and they thought that was the funniest thing ever. And we took pictures of them. And they'll still, like, just casually. It'll come up, and it's just unbelievable what they retain from those moments.

[John Mowry]

From those moments.

[Michael Batnick]

Because it's so different from the daily grind of. This one has to be at school, this one goes to work. So I'm 100% with you on that.

[John Mowry]

I had to go to Japan last year for work, and I took. I took out. I took the family to the kids, and my kids still, like, they're just.

[Michael Batnick]

For the rest of their lives. For the rest of their lives.

[John Mowry]

Yeah, they still are just like, Japan, Japan, Japan. They just thought it was the most. It was so clean, it was so techy. Everyone was so polite. They just. They're just obsessed.

[Michael Batnick]

Yeah, I love that. All right, well, John, you did great on the show. We love hanging with you. I want to tell people where they can. Can follow you or find out more about what you do. Give us some URLs that we could.

[John Mowry]

Send people to some URLs like, like.

[Michael Batnick]

Your website, your social media investment group, dot com. Let's say somebody listened to this and they're like, oh, that guy's. That guy knows what he's talking about. I want to learn more.

[John Mowry]

Okay, so Virtus is our parent company, and they own a bunch of affiliates. NFJ Investment Group is one of the boutique managers. You can find us through the Virtus website or NFJ Investment Group.

[Michael Batnick]

I'm going to tell them to call Joe Taranova's cell phone.

[John Mowry]

100%. You can call. I should call him right after the show. You're going to.

[Michael Batnick]

He will text you Prospectus. All right. All right, dude, that's awesome. And so. So it's nfj.

[John Mowry]

Yes.

[Michael Batnick]

Okay. And are you doing social media? Like, what are you on?

[John Mowry]

I'm on LinkedIn. I've got Twitter, but I've got a nascent following. I need to probably work on that a little bit. Yeah. Okay. LinkedIn's where it is.

[Michael Batnick]

LinkedIn is the only social network that matters professionally. Instagram is the only one that matters. To keep up with your friends and family.

[John Mowry]

Yes.

[Michael Batnick]

And you do not really need to go back to. Go back to the past.

[John Mowry]

My wife manages the Instagram. I manage the LinkedIn. Perfect.

[Michael Batnick]

You got it nailed. All right. Thank you so much, guys. Thank you for listening. Ratings and reviews, please. They go a long way. We love you for them. Great job this week. John, Duncan, Nicole, Graham, Rob, Keith. I mean, so many. Daniel, who else did I get? Nicole?

[Josh Brown]

I zoned out, guys.

[Michael Batnick]

Zoning out. All right. Here. Good night. We'll see you soon. Thank you. All right.

[Josh Brown]

Was that fun?

[John Mowry]

That was good.