Rising Risks for Tech Giants

Featuring Fred Hickey & Tom Thornton

Fred Hickey, editor of The High Tech Strategist, provides his unique take on the state of the technology sector, in this conversation with Tommy Thornton. Cutting through the valuations quandary, Fred questions the price people are paying for Apple, spells out the overseas regulatory threats for Facebook and Google, and offers a reminder that pioneers are the ones that can end up with arrows in their backs. Filmed December 21st, 2017 in New Hampshire.

Published on
12 January, 2018
Topic
Technology, Gold, Monetary policy
Duration
63 minutes
Asset class
Equities, Crypto-currencies, Commodities
Rating
45

Comments

  • KS

    Kathleen S.

    19 4 2018 12:45

    0       3

    Fred is giving misleading information about crypto currencies -- I suggest that if anyone here is interested in looking into crypto they should look into Andreas Antonopoulus, Tim Draper (one of the most successful VC investors in history), and Dan Larimer -- these are experts on the subject. His bias against it and his positions in precious metals make him unable to take a critical view of this new technology and what it has to offer. I hold both precious metals and some cryptos (yes there alot of crap coins out there, but there are some excellent ones too, must do research).

  • AP

    Andy P.

    20 2 2018 04:23

    2       1

    Subscriber 2010-2016. Hickey was a perpetual gold miner bull and was short tech various tech stocks that have had massive gains during this period. Smart guy but good luck trading with him.

  • RM

    Ryan M.

    11 2 2018 22:25

    2       0

    Just relistened to this interview. It does seem very prophetic.

  • Kv

    Kristian v.

    10 2 2018 09:06

    1       0

    Wow! This seems prophetic given recent developments.

  • JD

    Joseph D.

    7 2 2018 19:43

    0       0

    Does anyone know the best way to reach out to Fred in regards to his newsletter subscription?

  • ZS

    Ziriad S.

    1 2 2018 10:08

    0       0

    Samsung just publicly announced chips designed for cryptocurrency mining and other semi players ramping the AI/Crypto effort,
    I tend to agree on NVDA.

    Excellent interview!

  • AL

    Alex L.

    27 1 2018 22:05

    0       0

    This was a very interesting interview with some excellent perspective. However from a production standpoint - the audio was incredibly inconsistent. One minute, I can barely hear what Fred is saying, the next the audio is blasting through my speakers as if he is shouting. Please, please apply some kind of volume leveling process, or improve the way in which your guests are recorded!

  • TK

    Thomas K.

    25 1 2018 04:50

    4       0

    The one place where I disagree is Palo Alto. Particularly if you're a long term investor, I don't consider this a good time to pour money into a market sector as mature as next gen firewalls. Their business model is under threat from a combination of: 1) major cloud providers who want to provide network security as part of their own seamless interface, and 2) newcomers who are hoping to completely cut security boxes out of the middle of the network in favor of distributed security models.

    What I've been hearing on the ground is that the new cloud-based solutions from major next gen firewall vendors (Palo Alto included) are excruciatingly difficult to deploy. Cloud networking is a rather different paradigm; these companies are evidently struggling to pivot their engineering organizations into a world increasingly based on radically different network topologies, where, furthermore, solutions must be entirely in software (because the Amazons of the world will not open up their hardware stacks--if anything, they're in the process of building even deeper moats by growing in-house custom silicon design shops). And, in classic Innovator's Dilemma fashion, the dominant firewall players seem to be viewing cloud technologies as "checkbox" requirements coming from production management, rather than the manifestly important strategic initiatives they should be considered. While I absolutely expect there eventually to be a cyclical (and someday even a secular) trend reversal away from renting cloud resources, we aren't likely to see that first derivative zero crossing soon. This is seemingly a case of history rhyming: we're overbuilding cloud capacity in much the same sense that we overbuilt backhaul fiber around the dot com boom. Consequently, we're liable to see an extended period of deflation in the cloud space until the obsolescence cycle draws some insolvent firms too deep into ponzi territory.

    Against the dominant cloud vendors, the next gen vendors are at a competitive disadvantage. Amazon et al. will: 1) back their native solutions with custom silicon (simultaneously boosting throughput, reducing latency, and reducing power consumption relative to the outside competition, who are forced to run as software on rented general-purpose hardware); 2) provide a uniform experience vis a vis the rest of their cloud offerings; and 3) leverage the network effects attendant to hosting an ecosystem of niche offerings from hundreds of cloud startups (i.e., all the little cloud tools vendors will prioritize supporting the cloud vendor's in-house solution over those from third parties).

    Furthermore, I contend we are at the tail-end of what has been a great multi-decade run for hardware firewalls. We are approaching a phase transition similar to what has happened in the storage industry. The entrenched players are poised to be victims of an inexorable migration from hardware to software. The barriers to entry for pure-software solutions are falling--partly as a consequence of Moore's law, and partly as a consequence of the ability to stand on the shoulders of giants (by leveraging the explosion of open source software libraries as an effective foundation). Furthermore, a pure-software security solution can provide at least an order of magnitude more functionality than hardware boxes in the core of the network: enforcing policies closer to the communicating applications permits writing richer, more nuanced policies; and, it gives richer, higher fidelity insight into the behavior of the system than can be discerned from a box sitting at a distance from the computers running applications. Beyond sales narrative, the economics are acting as a wedge pushing this market towards software because: 1) the economies of software R&D give it a cost structure advantage, 2) the cloud's inherent preference for software-only solutions is a forcing function, and 3) with greater visibility into behavior, and vast burst processing power via the cloud, come opportunities to apply machine learning to the problem of policy construction and maintenance (thereby reducing labor costs). While the entrenched players could step up to the plate and build software-only solutions, my experience says that's unlikely to work well. The skill sets required will prove an impedance mismatch with the DNA of a formerly hardware appliance-centric software engineering team.

    Full disclosure: I'm affiliated with a disruptor in this space, so feel free to take my perspective with a suitable grain of salt :)

  • TP

    Tom P.

    25 1 2018 00:02

    2       0

    Too many wise grandads losing money on RV. I'd suggest interviewing more 26 year old long-only disciples: "bull market dude".

  • RM

    Russell M.

    18 1 2018 14:18

    2       0

    Crypto currencies are not currencies because the transaction costs are too high as is the volatility. Crypto currencies also have the energy consumption problem which is being worked on. I believe Etherium is working on converting to a less energy consumptive security model called stake holder verification. I am not a technology guy.

    Like gold, individual crypto currencies cannot be created in unlimited amounts out of thin air like fiat currencies (e.g. the dollar) can. While there can be proliferation crypto currencies through creation of new ones, there is a network effect that favors the first movers. So the major crypto currencies that solve the energy problem could wind up being a popular store of value like gold except that is more easily held and transferred than gold. That possibility attracts speculators and traders which will make for a bumpy ride. When the crypto market matures and volatility calms down, crypto transaction costs will come down just like credit cards (and probably lower). In that event, crypto currencies could just as easily act as a currency as the dollar except it will have the added advantage to holders that governments will not be able to inflate the value away. That is the value proposition as I see it.

  • SS

    Swagotom S.

    18 1 2018 02:45

    4       0

    After watching this insightful conversation betn Fred Hickey & Tommy Thornton, all on a sudden, it seemed, probably I should re-listen to the conversation betn David Zervos and Raoul Pal (link below) esp. for what is going on in the DJI every week and with the impact of deregulation / repatriation. I think Raoul Pal should bring another conversation with David Zervos, even as a short form. Looks like many of us are missing a big picture of deregulation.
    https://www.realvision.com/rv/channel/realvision/videos/cc107eae3c294b9194af1213e2be57fb

  • vp

    vasilis p.

    17 1 2018 18:12

    4       0

    Literally, every single word was important. Top quality interview.

  • JR

    Jon R.

    17 1 2018 16:39

    0       0

    High quality interview, on both sides. Hickey's clearly knowledgeable. The only area I may have pressed him further is when he referenced the high quality companies that "would be of extreme interest to me" on a pullback. 2017 saw virtually no vol, but we've seen plenty in 2014, 2015, 2016, etc. Maybe he was recommending purchases, but for as long as I can recall, he's pretty much recommended gold miners on the long side and not much else. Maybe the pullbacks weren't enough. Still found him to be a very good source of information.

  • PC

    Peter C.

    17 1 2018 00:58

    7       0

    RVTV needs to get Chamath Palihapitiya on; Fred Hickey's polar opposite. Both are genius'. Chamath is a huge believer in Elon, Bezos,.... and comes from poverty (btw he is a billionaire+ now). Ideally, Chamath would be interviewing Fred :)

  • MB

    Michael B.

    16 1 2018 11:37

    3       0

    A thoroughly brilliant interview which I enjoyed very much. It brings to mind the old proverb - Those who forget history are condemned to repeat it. This guy has seen it all and the young generation needs to learn more of the past to avoid its mistakes.

  • WP

    William P.

    16 1 2018 05:10

    2       0

    Great interview. Gold and Tesla insights spot on!

  • PB

    Pieter B.

    16 1 2018 02:16

    2       2

    This is an extremely valuable conversation! Massive thanks!

  • TT

    Thomas T.

    15 1 2018 20:53

    37       0

    Thanks everyone for the kind comments. I was very excited to meet with Fred and we got along very well. He's a genuine nice guy, disciplined, and smart. One of my primary goals for the interview was to find out what companies Fred liked regardless of price. What I discovered was very informative as he said he looks at software over hardware and he threw out a bunch of companies he liked on the long side - of course at the right price. Blackberry, Palo Alto Networks, Microsoft, Google etc and he even thought Twitter would eventually be acquired. I pressed him on his thoughts on Apple and the FANG stocks and his encyclopedia like memory recalled how there were 5 stocks in 1999 had similar attribution. I did the interview as a tech investor (like many of you) who wanted to get the most from a person with his knowledge and experience. His comments on Bitcoin were within two days of the top and on the day of the crazy Long Island Ice Tea Company changing to a block chain business and subsequent spike in the stock from $2-12. If you're a bull or bear on Bitcoin this type of insanity should give you some pause as it perhaps is ahead of itself as a mania. Lastly, I want to personally thank Raoul, Damian, Grant and the many RV people behind the scenes who gave me the opportunity to interview Fred.

  • SH

    Spalding H.

    15 1 2018 19:19

    1       0

    Please have him back if he will. Thanks!

  • SP

    Sat P.

    15 1 2018 13:31

    2       0

    A great interview from RV, I learnt a hell of a lot. My key take important aways:

    1) Gold - I love Harry Dent and agree with a lot of what he says in his books. However, I have never agreed with his view on Gold. In this interview, the comments on Gold Miners reflect much more accurately what I think will happen in a downturn i.e Gold will go up in value and so will the miners. I've never heard of the HUI Gold Miners index, that alone was worth watching this interview for!

    2) IT Security and Blackberry - I have been wondering for a while who are the successful companies in IT security and the many names he mentioned along with Palo Alto Networks I'd never heard of and I will do more research on them. Blackberry is the last name I would have thought of and when he mentioned the CEO's background I decided to dig deeper into their offerings and understand which kind of customers they have and the rate of take up. Fantastic insights

  • GD

    Gustavo D.

    15 1 2018 08:42

    0       0

    Bitcoin insight:

    Store of value and price volatility is relative. The question to ask in this era of hacking and political influence is: is bitcoin secure from hacks and political influence (political hacks)?

    What other assets are capable of this? an asset of this type has never existed before.

  • T~

    Tshort63 ~.

    15 1 2018 05:31

    3       1

    Even more wisdom accessible the second time viewing.

  • AW

    Agus W.

    15 1 2018 04:19

    1       0

    Anyone knows how and where to find out more about Fred's newsletter? He is a better trader for his gold calls than most people gives him credit for.

  • DR

    Daniel R.

    15 1 2018 03:33

    3       0

    Fantastic interview. One of the best. Bring him back again this year.

  • AS

    Alan S.

    14 1 2018 22:02

    12       0

    It is particularly nice that Mr. Thornton, unlike other hosts, asks his question and then allows time, without interruption, for a response.

  • ek

    eric k.

    14 1 2018 20:56

    1       2

    What it bitcoin is the new gold?

  • HM

    Hendrik M.

    14 1 2018 19:29

    0       0

    Excellent interview. I would like to subscribe to his newsletter but can not find the webpage to do so. RV please advise. Thanks HM

  • TJ

    Terry J.

    14 1 2018 16:08

    4       1

    One of the very best intereviews ever! I shall watch this a few more times as Fred has made me seriously reconsider my view of the markets! Top drawer!!

  • AK

    Anthony K.

    14 1 2018 15:54

    1       0

    Nice Job, Tom! Always enjoy Fred's views

  • CS

    C S.

    14 1 2018 12:54

    6       0

    Are we sure when stocks take a dive that gold goes up? Or is it gold goes down less? And I seem to remember gold stocks getting creamed in 2008.

  • JV

    Jens V.

    14 1 2018 10:53

    0       3

    Brilliant. Fully agree with Fred on bitcoin, but looks like many RV viewers don’t :)
    His previous calls on gold and silver miners have been great, so hoping for a repeat.
    Very interesting insights on tech. I’m buying put options on Nvidia. That stock is perfectly hyped at the moment.

  • FG

    Fred G.

    14 1 2018 09:46

    3       4

    "bitcoin is the cherry on top of the everything bubble"

    "this bitcoin mania is really a very small part of the world"

    I think Fred is hypocritical re: the cryptoasset space. He did not give any deeper analysis and arrogantly likened it to the dot.com bubble. I would enjoy an interview discussing the secondary economic effects of the rise of crypoassets. Otherwise an interesting interview, thank you.

  • KS

    Kathleen S.

    14 1 2018 04:22

    7       8

    Sad, completely ignorant about crypto - I hope real vision followers do their own due diligence. Fred bitcoin has never been hacked --

  • NZ

    Nicolas Z.

    14 1 2018 02:55

    1       0

    Very informative, thanks!

  • GF

    George F.

    13 1 2018 22:59

    1       1

    " There are no short sellers to cover anything anymore. "

    The ETFs can be shorted and are.

  • RM

    Ryan M.

    13 1 2018 22:59

    0       0

    Love this interview! Pleasantly surprised to get so much history on the gold market from the title of the episode.

  • MW

    M W.

    13 1 2018 21:09

    6       11

    He truly does not understand Bitcoin. Can this guy please do his research? Everything else is pretty spot on.

  • RR

    Raj R.

    13 1 2018 20:20

    2       2

    Wow fascinating stuff!! I heard from a CTO at a big tech company that blockchain is not viable at scale because the transaction costs will be high!

  • TB

    Tim B.

    13 1 2018 17:07

    7       0

    Classic wisdom, deep knowledge.

    Thanks Fred (from a subscriber).

  • ii

    ida i.

    13 1 2018 12:10

    2       0

    Does someone know the link or email to subscribe to Fred Hickey's newsletter? I cannot find it on internet and there is no link on his twitter account.....

  • MB

    Mike B.

    13 1 2018 11:43

    5       1

    Good interview. Freds conviction is high because he has seen this before but he did not account for the Central Bank influence. He alluded to it but did elaborate. Perhaps this is why he has the Gold

  • BF

    Bret F.

    13 1 2018 11:31

    1       0

    Buying December FOMC meeting has been money in the Bank for 5 years (wish i could post my chart)

  • IC

    Ibrahim C.

    13 1 2018 09:37

    9       1

    One of the best interviews I ever watched in RVTV, well done 👏🏻👌🏻

  • PS

    Paul S.

    13 1 2018 07:24

    10       0

    This market needs more commentators like this who can accept excellent companies are not good investments at stupid valuations

    Congrats Fred

  • KE

    Kathryn E.

    13 1 2018 05:02

    2       0

    Great interview! Keep it up RV, great job

  • JN

    Jill N.

    13 1 2018 03:55

    5       0

    Brilliant all round , great to see 'longtime' RV favourite Fred again
    Liked the finale chapter too on gold 👌

  • PC

    Peter C.

    13 1 2018 03:41

    13       0

    Great insights from Fred. Good to see it wasn't just bearish and negative comments. But bullish on Blackberry and with an adjustment in the valuation bullish on Google, Facebook, Pal Alto. Bring him back soon for follow up.

  • LA

    Linda A.

    13 1 2018 03:13

    5       2

    A++ Love, love this interview. Fred, u are one of the few sane people in an insane mkt. I admire your honest character, smarts & integrity. I am in the R Pal camp where the dollar will get stronger with repatriation, increased rates etc. so I feel commodities will temporarily head lower then higher. I have never seen a rigged mkt. like this caused by corrupt central banks: Greed is the inventor of injustice as well as the current enforcer. - Julian Casablancas; The man who has won millions at the cost of his conscience is a failure. - B.C. Forbes

  • SG

    Sherman G.

    13 1 2018 02:52

    0       0

    Thank you for this interview. I add my compliments for a conversation that is necessary for such a time as this.

  • DG

    Don G.

    13 1 2018 02:34

    11       0

    Holy crap! This is what what Real Vision is about. This is what I want. It's great. Tom, I subscribe to Hedge fund telemetry, thanks for all the money. Best investment I ever made. Paid for the subscription before I had to pay for it.

  • CP

    Chris P.

    13 1 2018 02:13

    5       0

    Wonderful interview. Might have been nice to have access to it-- especially gold commentary-- when actually filmed as the metal has been doing pretty much exactly what he said it would.

  • CM

    Chris M.

    13 1 2018 01:15

    2       0

    Excellent interview. Enjoy discussions that discuss specific stocks. Probably liked it because I agree with the appraisal on today's market and have also been looking at Blackberry. Good job.

  • FC

    FRED C.

    13 1 2018 00:17

    1       0

    tommy great job.......

  • FC

    FRED C.

    13 1 2018 00:17

    1       0

    tommy great job.......

  • KD

    Ken D.

    12 1 2018 22:11

    13       0

    Great interview. We need more interviews that focus on individual atocks.

  • DJ

    Dušan J.

    12 1 2018 21:56

    1       0

    gr8

  • MM

    Michael M.

    12 1 2018 21:40

    4       0

    absolutely superb

  • RM

    Robert M.

    12 1 2018 21:10

    7       3

    Hickey has been bearish and wrong AAPL for at least the last 2 years.
    And his point about AAPL running up before each gen release and then falling afterwards is sorely confounded by general market movements. There is only one case of about 7 major generations of iphone where his point holds and that is the Sep 12 iphone 5 release.

  • WM

    Will M.

    12 1 2018 20:05

    1       0

    Excellent.

  • GM

    Gerald M.

    12 1 2018 16:37

    3       0

    Great interview by both participants!

  • MG

    Mohamed G.

    12 1 2018 16:34

    5       0

    Excellent interview! Exciting to hear of Blackberry’s comeback 👍🏽 go team Canada

  • RM

    Richard M.

    12 1 2018 16:33

    10       1

    Wow! Fantastic interview Fred - you really covered a lot of interesting ground (tech, crypto, gold, Fed, etc). I gleaned a lot of very good information here and think it will hold me in good stead for 2018 - a lot of directions I can go with my investment money (short semi's, tech, crypto; long gold; and wait for the bottom to get back into tech). As I said, FANTASTIC interview!!! :-)

  • IH

    Iain H.

    12 1 2018 16:19

    1       0

    Great interview. Thanks you

  • JH

    John H.

    12 1 2018 15:18

    1       0

    Awesome.

  • RM

    Russell M.

    12 1 2018 11:41

    19       1

    Wake up slackers. Its a good one.

  • PU

    Peter U.

    12 1 2018 10:39

    4       1

    Could be useful if the date this was filmed was included in the description.. .

  • PU

    Peter U.

    12 1 2018 10:29

    9       1

    love the consistency on posting the videos early, thank you.