So let's get into this.
I want to start with probably the biggest thing that happened last week is Amazon. So Amazon, it was down twenty percent after hours, but then it rebounded. I think it finished the day down like seven percent something like that, but missed it's uh, it's expected guidance. The guidance was lower than they were expected. Still profitable, still made a ton of money, but just missed Wall Street's expectations, and it dropped to a fifty two week low. Like I said,
rebounded a little bit from that. But yeah, it's interesting, man, it really, you know, had a really tough day and it's been having a tough year.
It's been having a tough couple of years. Actually. Well, so now the stock market, Oh are we.
Going to get the dialogue and debate that we get sports? Well, what's the show is going to be the one? What's the base show?
Is?
So the stock stock market is up for the month of October.
Yeah, that was up eleven percent.
The Nasdaq is up even the other day when when Amazon crashed, NASDAK was up. That's when people was up. That was up. But so Amazon was your pick of the year, Yes, it was. So I'll let you start off this conversation is do you want to reverse that? I'm not there down Everest? So which which way are we going? Which way we're going?
Yes?
Sension or the sension is key?
Yeah, I mean based on everything that I had read in my in my information, you know, I stuck by that pick.
Has it gone the way I predicted? No? No? Do I still believe in the company. Absolutely.
So the report, the earnings report was interesting, right, because there was some like if you looked inside of it, there were some good spots, but the bad spots were so bad that it got overlooked. So I'm gonna break it down by the numbers, and so a good spot the revenue group about fifteen percent. Anytime you have a business and it grows, that's great. The advertising, right, which is we said was going to pass Google at some point, was up by twenty five percent. The big pitfall was
the operating income that fell by forty nine percent. Right, So those who don't know what operating income is, can you really quickly explain to them on I mean, I think the best way to say it is the money that they are taking in and how they're going to use it now and specifically for tech companies and inflationary environments, this does not bolde well, right, And so as inflation goes the cost to do things to operate your business
obviously goes up. And so when you see interest rate rise, you see right, since January, if you look at the NASTEC, the tech stocks have taken descension. We're gonna stick with that work. Most of them died riding down ever or walking down evers, right, most counts die on a decession, So that that that was huge, all right. The arnth per share dropped right by an estimated forty five percent.
So those those two things, when you're talking about operating costs and the earnings per share drop in there you can see why a company like Amazon, which I still think is a top three, if not top two companies in the world, had such a negative quarter. Operating cash flow also declined by twenty five percent. So like now we're talking about three major factors of things that are like,
all right, this is a rough quarter. But even Basos when they asked him about it, he was like, look, we're gonna have to really tighten the belt because the climate is about to get a real tricky. So those are three factors you add on to one other thing that was almost positive.
And kind of got overlooked.
But the fourth quarter revenue is expected to grow by two to eight percent. Fourth Quarta, obviously we know, is how they shop and how they season. More people are in e commerce. The only thing is that what they're seeing is that more people are going back into the stores. We thought that obviously from the COVID time that people were shopping online and it was a positive. But people are back outside right e commerce numbers are not looking the same as they did when you know, it was
a lockdown. So all those things taken into account. I understand it. Do I still believe in it absolutely. Is it going to be the stock of the year. Absolutely not. It's still one of my top two or three companies.
Though.
The big thing I want people to realize is that even in a company when it's going down.
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To wait for a great price to get in. Everyone on a stock club, please put in chat Woll was a number our coff Amazon. You can still make money on a heavy drop like that. So the fundamentals of the company haven't changed that much. Their global market share dominance has not changed that much. When you have interest rates of course going up and we're now going through I think this ultimately will be a bigger recession when it's all said and done in two thousand and seven,
two thousand and eight. But Amazon is primed, no pun intended to do really well. Once things start to settle out, they could be a hell of a lot lower. Being in that tech space. They haven't fallen into the seventies or the sixties. Ninety nine was like a good spot that we liked, got in. It's like currently like a one oh four if you're holding it for the long term, you will be good also for a quick homework assignment. Internationally, if you're going to order online from someone who are
the four biggest competitors of Amazon. Now ask yourself, who's going to get the goods to you there faster than Amazon?
No one.
They'll fix the operating income. Any money they're losing right now, they'll fix. Going into next year, you're going to be really upset if you don't hold a stock twenty twenty five, twenty six. Yeah, and if you look at the climate of the world, like every country is trying to create a business that replicates Amazon, right and I won't give them the names because you gave them a homework assignment. But go look in China, right, Well, we know that company,
but go look in South America. There's another company there that is duplicated the business model of Amazon. And so they'll figure it out. I believe in them. Well, let me ask you this ian.
You you said a few times that your theory of two tech two index, if inflation gets something to over eleven percent, then that right, eleven percent? Yes, then that that is gonna hurt your your theory. So why is high inflation bad for technology?
Especially when quantitative easing goes away all the easy wins, like for all my hoopers, like when we play on like a nine foot rim, we all look like Lebron ten feet dramatically different. So that difference between happens your interest rates and being able to borrow money. Like imagine if if I said, hey, come to invest fast euro We'll give every entrepreneur one hundred thousand dollars and you never have to pay us back. The upside for the
entrepreneur is probably a ninety five percent win rate. If we give one hundred thousand pounds away and say hey, you got to pay us twenty five percent back, now maybe only thirty percent of the businesses will actually be profitable as a result, So that arbitrage is one of the biggest reasons Now Apple inside of that two tech two index model has worked well. That's why always say
pair with the top two. But if you're going through tech and you're looking at something that's fifteenth or twentieth, that's not going to do really well because what the technology industry really has done has gotten venture capital, which has funded all of the ideas, and we have a funded innovation. We've really funded the ideas that can get funded. That's why we have a whole bunch of social media apps.
We could talk about it later. Now Jack from squares looking to make another social media app, which I think is a mistake. But you're really playing an interest rate arbitrage game. So if I'm getting loan money at three percent, when I can find a way ultimately to sell advertising or a subscription to my user base at nine percent, I'm playing an arbitrage game and getting the profit in between. If interest rate is high and then no one's loaning the money out, it's really hard to win that game.
So we are in a space, but we need more innovation, and ironically enough tech has not done a great job at making a bunch of innovation. How we thought Like when we were kids, I thought we would have flying cars by now, Yeah, Jetson's for sure, we're not there. Like RAYJ is the only one still making scootie bikes shot up in the city.
Shout out to ray J.
So we need more innovation, and I think now we're just going to clear the way for people to be able to get out all the bad companies and create companies that will actually have a real ima.
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