The Fear of FANG Stocks

Featuring Jesse Felder

Jesse Felder takes a scalpel to the FANG stocks, breaking down – one by one – exactly what investors need to be concerned about. From question marks over their digital advertising model to declining sales and cash flow, Jesse asks when price insensitivity in the tech sector will finally flip. Filmed on October 20, 2017, in Oregon.

Published on
30 October, 2017
Topic
Macro, US Economy, Technology
Duration
35 minutes
Asset class
Equities, Bonds/Rates/Credit
Rating
32

Comments

  • AW

    Anak W.

    25 12 2017 07:01

    2       0

    just want to point out something. according to jesse, he said monopoly definition is companies which profit from expenses of customers. well then, if amazon is a , as you said, "monopoly," but it does not profit from expense of customers. Why is it bad?
    regulation will occur, eventually, if its started to trend in the bad monopoly direction.

  • GF

    George F.

    5 11 2017 12:43

    0       0

    Apple claims iPhone 8 sales are great, including in China. iWatch might have a future as a business device for employee messaging and tracking. I noticed them in some medical uses like hospitals. Might not be true, but that is the claim. I have no comment on iPhone X, but why can't Apple sell 2 iPhones, one luxury X and one workhorse 8? Like cars.

    Amazon really is not a monopoly. They seem to be shooting for being one of the big three in every product area. You won't save JC Penny by stopping Amzn. You might keep JCP around an extra decade, but JC Penny's problem is the internet. I remember when the idea behind Sears was the great real estate and locations.

    I vaguely remember people claiming the internet could be saved by targeting microsoft. Something about bundling a browser into the operating system.

  • CG

    Chuck G.

    3 11 2017 20:27

    6       0

    UGH - You may be right at some point, but re FB/GOOG, ad dollars are moving online, period.
    Re insider selling, Marc Benioff has been selling CRM stock for years, hasn't seemed to matter.
    I'm a value investor, but RV is really becoming 'bear porn'.
    I tend to agree more on AMZN and perhaps NFLX, but still, it'd be better to see both sides, would make the argument more cogent.

  • JM

    John M.

    3 11 2017 13:47

    1       3

    How do you invest if both of the following statements could be true?
    1) In 10 years, none of the FANGs exist
    2) The FANGs triple in the next 36 months

  • PC

    Peter C.

    3 11 2017 06:11

    1       0

    RVTV - Great to finally see some specific stock coverage. Would love to see more eg BAM, RY, BRK,.... or some real depth into these Tech stocks

  • PC

    Peter C.

    3 11 2017 06:06

    2       5

    Jesse you are so so negative, you sound like you need psychological help .... Being long FB, GOOG, AAPL, I do appreciate hearing the other side. You trashed every stock covered which made it hard for me hear anything you said. And it wasn't in the context of your everything bubble. Plus everything said was very shallow and in a whiny format :(

  • JT

    JF T.

    2 11 2017 20:50

    1       7

    I stopped listening after his comment about Bitcoin. Clearly living in another decade

  • KP

    Krishna P.

    2 11 2017 16:55

    1       0

    Now listen to this for a complete different spin - https://www.bloomberg.com/news/audio/2017-10-27/scott-galloway-discusses-four-world-conquering-companies

  • JT

    Jayne T.

    2 11 2017 15:28

    1       0

    Amazon: About 84% of Q3 profits from Amazon came from the cloud which suggests profit margins on the rest of the business is very low.

  • B

    Bob .

    2 11 2017 08:26

    0       0

    Good interview.

    History will be repeating itself. FANG stocks plus a few close friends will likely be the poster children of the next downturn.

    Who knows about timing or the trigger for the next fall back to reality, but what we do know is that it WILL occur. Anyone who truly doesn't believe that? Enjoy, but also prepare. Deny at your own risk.

  • B

    Bob .

    2 11 2017 08:20

    3       0

    A 30-minute format is much too short. There is no chance to dig into any one topic. Please consider going back to the more in-depth format.

    Thanks.

  • SW

    Sebastian W.

    1 11 2017 13:39

    0       1

    Amazing interview !

  • IA

    Ibrahim A.

    1 11 2017 08:13

    4       2

    I feel Jesse is looking at the Google / Facebook angle based on the old advertising paradigm. Unilver and P&G benefited from a world where information was not democratised and consumer attention was attained through TV and traditional. Their products and brands are not well suited to a world where information has been democratised and niche brands can build direct connections with passionate consumers rather than the masses. I feel his bearish disposition means that he isn't being as critical of news that fits his narrative as he should be as an analyst.

  • M.

    Milton ..

    31 10 2017 19:58

    4       0

    Here's the link to the article Grant spoke of in the interview: https://www.theatlantic.com/magazine/archive/2017/09/has-the-smartphone-destroyed-a-generation/534198/

  • AB

    AJ B.

    31 10 2017 18:41

    7       3

    I like Jesse, but to insinuate that Apple may be in trouble because smartphones "don't make us feel good" is an investment thesis that below par. First off, it's not true. The Atlantic is prone to writing gloried garbage. Second, people didn't stop driving cars in the early 1900's because a few car accidents.

    I understand it's a softball interview, but it would be nice to see Grant pushback somewhat. The notion is so absurd.

  • SA

    Sreenath A.

    31 10 2017 14:13

    2       0

    Interesting interview. It is always good to hear others' opinions as well. As Mauldin puts it, there are a lot of echo chambers out there that tend to reinforce our opinions, however wrong they are!

    This picture is worth a thousand words. See how many times Felder's name came up regarding perma bears warning of a market crash!

    http://realinvestmentadvice.com/wp-content/uploads/2017/10/bears-chart-Wall-St-Bean.png

  • MS

    Matt S.

    31 10 2017 12:36

    7       0

    RVTV back on track! That was the antidote needed to the anathema that is the ongoing CFR series.....

  • MS

    Matt S.

    31 10 2017 12:21

    1       0

    Do we have the link to the Atlantic article Grant mentioned he would put up?

  • MS

    Matt S.

    31 10 2017 11:30

    8       0

    So... silicon valley giants who spy on and manipulate the population hand-in-hand with the government, need to be regulated by... the government? Hmmm.

  • DP

    David P.

    31 10 2017 10:23

    3       1

    Yep, i see many libertarians being freaked out by government. Often for good reasons.
    Thing is, ex-US (maybe...), if you live in a western democratic society, those monopolistic data behemoths are way way more dangerous for your economic and psychological freedom than your own government.

  • KS

    Kathleen S.

    31 10 2017 09:55

    0       2

    Doesn't get bitcoin -- comparing bitcoin to another type of security is wrong analogy, - new techonology has been created and now is beginning to be discovered by the masses. It is a network effect and it will grow and grow and grow as more people come on board. Real Vision you need to get Andreas Antonopoulos on to educate your audience.

  • PB

    Pieter B.

    31 10 2017 07:55

    2       0

    Excellent interview! Thanks a lot!

  • RR

    Raj R.

    31 10 2017 06:30

    1       0

    I thought amazon was a bubble but capex has increased 16 fold since 2010. You watch out for this beast

  • RR

    Raj R.

    31 10 2017 06:29

    1       0

    Im not sure about amazon being in a bubble. There are atleast 5 new businesses like startups within amazon that could each easily be 100b in revenue in a decade. Only the feds can stop amazon. I thoug

  • GA

    Greg A.

    31 10 2017 03:28

    0       0

    I could listen to these two all day. Throw in Dave Floyd, Fleck, Raghee Horner and Brent Johnson all in one place discussing macro and I feel totally blessed. Well done!

  • MR

    Marten R.

    31 10 2017 02:18

    13       0

    This is great stuff, well done.
    It's either brave or stupid to get short whilst relentless price insensitive bid levitates these stocks.
    I think as a follow up or adjunct it would be very interesting for RVTV to analyse the liquidity 'supply chain'.
    Where is it originating? How is it being distributed? What are the key risks / signs to watch in relation to such liquidity either drying up, or changing direction?
    It's not enough to be independent and right. You also gotta be - on time (which is a part of being right, particularly if you're short or leveraged!)...
    So understanding liquidity will give you all the clues you need to be independent, right and - on time.
    MR

  • LK

    Linda K.

    31 10 2017 01:49

    3       0

    This is just brilliant !
    We were lucky enough to be at Bend with Jess, Grant, Bill etc and had an amzing time.

  • ns

    niall s.

    31 10 2017 01:21

    10       0

    Entertaining and informative , but the only money I have ever made from a RV inspired short was from the modest American Lady (China expert )about 4 months ago who said VIPS was a fraud and to get short , she has paid my subscription many times over .

    More like her please and BTW what happened to the trade ideas .?

  • SR

    Steve R.

    31 10 2017 01:02

    11       0

    Just brilliant! Jesse summed up what I've been thinking/saying for a very long time now.
    I'm convinced there will be a massive global backlash against social media and the privacy/intrusion issues in due course.
    IMHO so-called smart phones just make smart people dumb :-)

  • SD

    S D.

    31 10 2017 00:33

    4       0

    This was really great. This is the sort of stuff you just don't get elsewhere. Thanks.

  • JH

    Jesse H.

    30 10 2017 22:59

    2       0

    Fascinating interview - thoroughly enjoyed it. While the FAANGs are clearly in a bubble, when you look at the massive bid from the large macro bubbles out there, it is hard to see when/how this will unravel.

  • RA

    Robert A.

    30 10 2017 22:46

    11       0

    Just what RV TV needed after the, shall we say “controversial” World on the Brink....a great classic vintage RV interview featuring a couple of .400 hitting Allstars. This one was a dandy and my “watch again” might really pay off 18 months from now when the advertising shift away from FB and Alphabet could begin in earnest. I would like to mention the exceptional “detective work” done by Raoul when he began looking into RV’s advertising budget expenditures a short while back. I’ve read his work countless times on looking under the hood on those “clicks” RV paid for without getting Value. I was SO impressed with Raoul’s persistence in getting to the issue—are we getting value for our Ad budget or not!?

  • SW

    Steven W.

    30 10 2017 22:32

    5       0

    Let's watch Amazon put it's new headquarters in DC and hire several hundred lobbyists while bringing thousands of jobs to the beltway.

  • DH

    Dominick H.

    30 10 2017 21:57

    1       1

    Great interview! I think everyone knows FANG is in bubble land, just like DOTCOM days in year 2000. Million $ question is when (not if) it's going to pop and how to capitalize on this idea . “Markets can stay irrational longer than you can stay solvent.”

  • SW

    Steven W.

    30 10 2017 21:43

    0       0

    Jesse's full presentation with slides was absolutely phenomenal at Brasada.

  • MB

    Max B.

    30 10 2017 20:23

    2       0

    I am struggling to see clarity in this market at the moment because with the ETF model I keep asking myself........will there ever not be a bid??? The very fact I am asking this question scares me.......

  • DK

    Damian K.

    30 10 2017 20:00

    3       8

    Jesse is good and is able to articulate his views well even if I don't fully agree with him. But for Grant, it's all about personal anecdotal evidence which adds no value and is so biased. Would be a much useful discussion if you had somebody with opposing views to those of Jesse...just my two cents

  • AA

    Aaron A.

    30 10 2017 19:53

    10       0

    I was able to see Jesse's outstanding presentation in Oregon at the Roundtable conference. Thanks for going over this RV. I hope more people go and look into the fundamentals of the FANGs. Only wish this conversation was longer and more in depth.

  • JV

    Jason V.

    30 10 2017 19:50

    6       0

    Excellent work by Jesse, as always. Combined with Julian Brigden's work on 'classic bubbles', this all makes for a very compelling argument.

  • gg

    gurdeep g.

    30 10 2017 19:38

    1       0

    Nice to see the beard back Jesse! Great stuff as always, this interview gives points beyond investing

  • MB

    Matthias B.

    30 10 2017 18:48

    8       0

    top notch discussion with some unique aspects which were highlighted and are non consensus info. would have wished for a longer one, as well as for the B Fleckenstein one. that was RV vintage! more of

  • VP

    Vash P.

    30 10 2017 18:12

    9       1

    I agree with most of the interviewees on the medium to long-term bear view, but I really think RV needs to start bringing bulls in to interview. Every great investor says that one of the most important things in their success is to talk to people with the opposing viewpoint and see where you might have tunnel vision, and I don't think we're getting that here. Everything from the Weekly Hacks to the interviews to the other newsletters are almost exclusively bearish, and I'm afraid I'm not getting any views from the other side.

  • CD

    Colin D.

    30 10 2017 17:45

    7       0

    Excellent discussion between two people whose views and thoughts I value so much that I subscribe to updates from both! Keep up the great work Grant and Jesse.

  • LA

    Linda A.

    30 10 2017 17:30

    9       0

    So rational in an irrational mkt. Jesse, u hit it on the head- semiconductors are cyclical & my co has a 401K fund just for semis' in addition to a tech fund. Many people are going to suffer huge losses after the cycle has run its course. I wish I could warn my co but that would subject me to getting fired. Thank you, I really enjoyed the conversation.

  • TW

    Tim W.

    30 10 2017 16:46

    2       0

    I like to binge watch Real Vision.

  • dj

    daniel j.

    30 10 2017 15:35

    0       0

    Fantastic - however little talk of the valuechain

  • AF

    Andrew F.

    30 10 2017 14:41

    3       0

    A Perfect Storm for a Perfect Crash.
    Is this a future movie? or Book?

  • AG

    Amir G.

    30 10 2017 14:18

    12       0

    This was such a great discussion that if I were Grant I would just let my guest talk non-stop without any interruption in the interest of time. I don't know if it's just me but I feel that great content interviews are usually constrained to a half hour time limit whereas the 'story telling' interviews can drag on for over an hour sometimes.

  • RM

    Richard M.

    30 10 2017 14:02

    81       2

    And not to beat a dead horse, but.... I could have happily listened to an hour long segment with Jesse and Grant instead of the new half hour format. Just say'in. Thanks. :-)

  • RM

    Richard M.

    30 10 2017 13:45

    4       0

    Fantastic! Just love hearing Jesse and Grant talk. Agree with all of Jesse's points (I think Fleck and Fred probably do too!). Keep up the great work!

  • JV

    Jens V.

    30 10 2017 13:02

    3       0

    Very interesting. I was holding on to my Apple shares due to the expectation of a tax holiday from Trump (leading to profit repatriation), but now I'm selling...
    Facebook and Google will certainly see a backlash, and it looks like it has already started with the EU competition authorities.
    Netflix and Nvidia are just outrageous. I'm buying puts on those two.

  • PU

    Peter U.

    30 10 2017 12:45

    6       0

    NVIDIA's hype is not around bitcoin as much as it is around self driving cars.

  • SS

    Sam S.

    30 10 2017 12:26

    7       0

    Grant, you interrupted Jesse during the Netflix discussion too many times and I felt like he wanted to tell us more. You know I think you're one of the best ever interviewers---love you best! Fred Hickey has been on this FAANG train for long time and now it's beginning show signs of derailing. Wonderful discussion---thank you.