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Welcome to Prof G. Markets. That's the other podcast. Fuckin' it. And I just found out that you and the team want a pre-record two shows so you can take Thanksgiving. You don't have Thanksgiving. You're British. You have like boxing day or celebrating the queen or whatever it is you do.
Well, I do celebrate Thanksgiving and I'm looking forward to it. Yeah, let me guess. You don't put on Thanksgiving. You bow guard off of some generous family that are such a nice British kid and you went to Princeton, which means he's safe. Bring him over. I'm doing it with my family. Going to see my sisters in California. Yeah. Going to San Francisco. It'll be great. Now I feel bad. Does your sister have kids? Yeah, that's right. Does your sister have kids? No.
And where do they live in California? My sister just moved to Palo Alto because her husband just started at business school and my other sister is in San Francisco. Where's your husband at Stanford? Oh, good. So when this should, when podcasting finally hits the rocks, you can go moving with them. He's going to be successful. He's going to be good. That's right. What are you doing, Scott?
I'm going to be in Florida. We had rented our house on a Del Rey Beach to this guy who started a company that's backed and he basically skipped town and fled to Australia. So we have our house backs. We're going to go have Thanksgiving in our home in Florida. And it'll be nice. My sons will get to see all their friends and we'll get to see our friend. I love Thanksgiving. We were actually we had a company dinner last night and the room is floating around that you want to move back to Florida.
I think I'm just struggling with London weather. I didn't realize what an impact it would have on my mood as in I can't wait to leave all the time. I love. I love the UK. I love British people. I love the Premier League, but I just can't handle the winner there. And so and I'm on plans a lot. I'm in Florida right now for this live nation speaking gig and I'm.
I've got master card in a week back in Florida. I'm just not plans a lot again, which in my age is just not what you want to be doing. So I'm thinking about in two or three years when we move back to the US and my hopefully my oldest gets into college and my youngest is thinking about high school. But where would you live? Well, I think you should move to New York.
I think about New York. This is the problem is my son. I don't for some reason him in high school in New York kind of intimidates me. I feel and to be fair, the kids I know who were born in New York are actually shockingly well balanced. I just I don't know if I want to give my high school experience in New York. I feel like the people who raise their kids in New York or most of them do it because they need to be in New York because dad or mom has a big job there.
I think high school should be somewhere else. I think anyways enough of my enough of my moving get on to the headlines. Let's start with our week. The review of market vital. The S&P 500 climbed for the week and had its best day since April the dollar fell Bitcoin was volatile and the yield on 10 year treasuries fell shifting to the headlines.
The consumer price index showed inflation fell to 3.2% in October down from 3.7% the month before stocks rallied broadly on hopes that the Federal Reserve has won its fight against inflation and will not raise rates again this year. Meanwhile, UK inflation slowed to 4.6% down from 6.7% the month prior. That's the country's slowest rate since October of 2021. President Biden met with China's Xi Jinping sowing more optimism in the markets that the country's economic ties might be improving.
Stocks that rely heavily on China for production and revenue posted strong gains after the meeting. Caterlent which makes the syringes used to deliver ozempic forecast that its production capacity for syringes will be booked out until fiscal year 2026 due to demand for the weight loss drug. The stock rose 13%.
The PGA tour is offering equity ownership in the league to its professional golfers. Commissioner Jay Monahan said the tour will be stronger if players are, quote, more closely aligned with the commercial success of the business. As we covered in a previous episode, the PGA is merging with Liv Gulf and the DP World Tour.
SpaceX is reportedly exploring an initial public offering for stalling as soon as next year. According to Bloomberg news, the company has been moving its satellite business into a subsidiary. But Elon Musk posted, quote, false on X and did not elaborate. And finally, we've got one more headline that broke after a regular recording. So I'm coming to you now from my home in Brooklyn.
Open AI's Board of Directors has ousted CEO Sam Outman from the company. In a blog post, the company said, quote, Mr. Outman's departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise.
Its responsibilities. The board no longer has confidence in his ability to continue leading open AI and quote, the company's chief technology officer, Miriam Marathi will serve as interim CEO for more on this developing news.
Check out our special episode from the weekend. So we predicted last year, and this is when we got right that inflation would fall as fast as it accelerated and 3.2%. I mean, we're bumping up against the Fed's target of 2.5%. I thought the more exciting news was actually that inflation was coming down in the UK where it had been frighteningly high. I mean, inflated people, people understand inflation starts revolutions because inflation, you get reminded every day.
You get a croggers and you have your weekly list of groceries. And this year, it's 180 bucks, not 130 or 140. I mean, it just hits you every day and you get angry and you start blaming, you can't help it be blamed, the current leadership, whether it's their fault or not. So inflation is always an existential threat to the current people in power, you know, mood around the country. So I'm thrilled to see it come down.
So the markets are ripping because everyone thinks, well, maybe we're going to get the punch pole back. And that is non market artificially suppressed interest rates that make borrowing money and buying stocks and bidding up stocks, you know, part of kind of standard operating procedure.
So the markets just began to rip, especially the growth, you stuff that's highly dependent on low interest rates because they need money to finance their companies because they're losing money to finance this incredible growth.
So it's less expensive to finance this growth. And the cash flows at the market discounts back that they're expecting the future get discounted back at a lower rate, all adding up to this enterprise value that increases dramatically in a low interest rate environment and decreases dramatically when interest rates accelerate. So this is, this is probably the biggest news of the week. By the way, do you want to hear my 10 downing story?
Do I have a choice? Two story I got contacted by a special advisor to the prime minister and said, we hear you're in the UK. We'd like to put you on some sort of advisory board around tech or media. And I got very excited. Bragged to my kids, put on a student tie, drop everywhere that I've been invited to 10 downing. I roll up in my Uber looks because this is a big day for me. I bomb out. There's a huge crowd outside of 10 downing.
I cut past the line. I'm like, I'm sorry, I have an appointment. And I go up to the security guard and all the machine guns. And they say, I de please. And I get my dean is like, I'm sorry, I don't have you down on the schedule. I'm like, you know, of course I turned into the real Scott, which is an arrogant prick.
And I'm like, well, you need to check your list again as I have an appointment here. And again, he's like, I'm sorry, you're not on the list. So I called the individual who set this all up. And she picks up the phone. She's like, oh my god, I'm so sorry. We have big news today.
I guess David Cameron's back in government. They sacked a bunch of people. It's like, I forgot to call you. We're not meeting with you. And I'm like, no problem. Got back in my car and took off and had to go back. And I walk in and everyone's like, what was it like? Did you meet the prime minister? And I'm like, no, they didn't have me down the schedule. I'm back at home.
Anyways, that was my, my brush with UK greatness. By the way, sorry, just on the inflation point. I think we should mention that, you know, UK inflation is coming down. But if you look at food prices, food prices are up 10% year over year. Was energy the brought it down, right? Exactly. It's the energy prices that are down. So if you think about it from the from an actual UK consumer experience, the UK still has a ton of work to do on inflation.
No doubt, but it was, it was crazy town. I mean, the UK had this, and I didn't, well, there's peanut butter and talk is a good thing. I don't know, Nitro and glycerin or I don't know, spinach, spinach and, I don't know, something else that's bad beats or something combination of high inflation and low productivity.
The UK, the UK is the only nation in Europe that hasn't grown in five years, 90% of the IPOs are last 10 years or below their offering price. And when you look at the assets, the UK brings to the table, a democracy, incredible universities, massive amount of capital, you know, really impressive education system.
The entrepreneurial culture here, I would argue it's here, but it's mostly around serving other rich people. It just makes no sense that this country wouldn't be quite feng a booming in an information driven economy, but they said, I know, how can we elegantly fuck this up? And they managed to do it with Brexit. And also this head up your ass economic policy is what the last prime minister said, I know let's cut taxes on the wealthy, but they can't print money the way we can so the markets said, sorry, that's, that's a really bad idea.
So the UK is a story of snatching defeat from the jaws of victory, just like the English national team in World Cup. But anyways, don't cancel meetings on me, 10 down. How embarrassing is that? How embarrassing is that? I just, I'm trying to imagine that moment where you like got the call and then turn to the security guard. You're like, oh, yeah, I actually, you're right. I'm not on the list.
Never mind. I didn't even say anything. I just literally literally slithered away. I just, you know, that Homer Simpson's meme where he like goes back into the bushes. I just, I would, I couldn't even look him in the eye. I just like kind of like stepped back and looked at it. I was like a dog that's been caught in the trash. Like they won't look at you. If I don't look at him, you know, if I don't look at him, he doesn't exist.
I'm trying to get into a nightclub. Anyways, awful. I've done a lot of that. Yeah. I have friends inside. She's shimping. She and Biden meeting is really good news because effectively the largest tax cut in the world right now would be if the world's largest and second largest economies,
Kiston made up and said, all right, our IPR innovation, your manufacturing might let's, you know, let's boogie together and cool things down. And I think they see, I think they both have a mutually vested interest and kind of re embracing, if you will. And so I think that's, I think the market in the world really likes to see that.
Can I just, sorry, I just want to point out one other thing on China. Fuck you're getting opinions. That really bothers me. Go ahead. Yeah. That's right. The other thing that they mentioned out of the meeting was the Fensal Crisis and it's sort of a serious note.
But I just, I do really appreciate the fact that Biden is finally pressing shimping on the Fensal Crisis, specifically the fact that all the Fensal that's coming through Mexico is basically all being produced in China. And they came out of that meeting with, you know, they called it an outline of an agreement of how they're going to address this issue.
It's possible that it was just kind of a message to please voters like myself. But in my view, this issue just deserves so much more attention 77,000 Fensal deaths in the past year. I'm just glad that Biden is finally recognizing it and addressing it publicly and apparently taking steps to prevent it. Like you said, I hope it's real because it is, we have people close to us here are property that lost family members because of Fennel. So it is, you know, you just hear tragedy after tragedy.
And so many I mean 77,000 is just insane. And the way the media reports on it, it's like, oh, 77,000 overdoses. It's like these are not overdoses. This is just these are poisonings. It's like biochemical murder basically bio warfare is one way to look at it. It's really interesting. Yeah.
And just moving on, Catalan, we got to give props to our analyst, missile, various she called this she found. I tacitine was saying what are the outer rings of the ozemic economy and she found these two companies that are suppliers and said these are probably good buys right now. Their stocks have been hammered and one of them is Catalan. And then literally a week later the stock pops 13%. So let's give all our money to me. She should be a headstrong manager. The PGA tour.
This is smart. It's good business practice to give the people driving value in your company make them if you want people act like owners, you got to make them owners. And them saying to their best athletes or basically everyone here's a small here are options on equity and the league that's just smart. Still come Valley really did kind of pioneer this whole notion that you should give equity or ownership to everybody.
It just didn't used to be like that. It used to be just the senior management and even just here a prop G. We I don't think this is the kind of company that gets sold if you will, but we make good money and media is a great business. So we have profit sharing and the result is, you know, the people feel like owners and they don't take massive amounts of time off around key holidays like thanks.
Wait, never mind. Never mind. Scratch that. Scratch that. Anyways, SpaceX look, you know, I don't like the man starlink is a juggernaut. This thing would be a monster, just a monster. I don't I don't know if it's going to go public next year, but when it does, it's already built one of the best brands in the world.
So I think it's going to be just enormous and you know, we'll see, but it is genuinely a 10X better product. The people everyone I talk to that buy starlink says this is a better product even and there's all sorts of commercial uses for it. I think planes are going to have it or commercial aviation is going to have it. But even even homes in more rural areas, I guess you buy starlink.
It's pretty easy to set up and boom, you have lightning fast internet and broadband. And so there expects to generate $10 billion in revenue next year, which is just huge. And according to Elon, the companies now reached break even. And that's a massive turn around from last year when he said the goal was to quote not go bankrupt. I mean, he always says stuff like that. But yeah, incredible business and very lucrative investment problem.
I believe it's the most actively traded private stock whenever I get or space access. Yeah, space X whenever I get emails from the secondary market platforms, they list the most actively traded stock in the secondary market and space X is always at the top. We'll be right back off to the break with a look at bite docs.
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This information obtained new financial data on TikTok owner BiteDance and the numbers showed the Chinese company is continuing to grow. Second quarter revenue surged more than $40% to $29 billion. That growth rate was far higher than competitors, Metters' revenue for example rose 11% in the same period.
The new data was also broken out by region and showed sales from outside of China accounted for only 20% of the company's total revenue. Since TikTok is not available in China, its Chinese equivalent is another BiteDance owned app called Duyen. That means TikTok generated at most $6 billion in quarterly revenue. Scott, we've discussed BiteDance and its dominance before. Any reactions to this newer data.
The shocking thing here is how little revenue as a percentage of their total revenue they're getting from reportedly getting from TikTok abroad. I wonder if that's their attempt to say TikTok is not the juggernaut that all of these pundits are saying and it's not that big a company and you don't need to worry. I just wonder are these numbers bullshit or are they just numbers that they make up to try and thread the needle between ensuring this company is valuable if and when it goes public.
But reallocating the revenues to places outside of the US such that it doesn't raise the suspicion or inspection of US regulators and media here. What are your thoughts? Yes, I guess the thing that annoys me is this is one of the biggest social media apps in the US and in the world and it is a reminder of how little we know about BiteDance and how little we know about how it makes money.
It just feels so dangerous because one of the great benefits of having a publicly traded company is just the fact that you get general disclosures. We know how meta makes money so that enables us to know what questions to ask and more or less it helps us figure out how to regulate it. But BiteDance is this total black box. So I guess my question to you would be do you think the US before we flat out ban the app as people have been talking about.
Do you think we should be putting more pressure on China and on BiteDance to start releasing some semblance of regular financial disclosures or is that just a lost cause? Yeah, good luck with that. I think we ban the app and I think under the threat of a decretable threat where we actually are on the eve of banning it, I think they probably say, well, you know, okay, we'll spin it out to US interests or you know, put the servers all in the US with absolutely no link.
Back to engineers in mainland China until that happens. I don't know. I don't think you can trust anything that's coming out of a private company. The numbers that come out of a private company. They are, you know, I think all of Bob's numbers are real when they want to monetize or want the two access Western financial markets, they realize they have to play by the rules.
And I think those disclosures have a racity to them. A private company, I don't, you know, I think they just sat down and said what would be best for the company and the CCP not in that, not in that order. But let's assume the top line growth of 40% in the number of 29 billion are real.
What that means is based on recent private transactions with a company about shares back from employees that by dance is a great investment right now because the revenue multiple at alphabet is 5.8 and by the way that's down, meta at 6.9 and by dance, it's 1.9 and by dance according to this is growing faster than meta at 23% and alphabet at 11% and again by dance grew 40%. So the number and why this should be banned or spun is the following.
The average minutes per day spent on TikTok versus YouTube versus Netflix for US kids kids in the US spent 52 minutes a day on Netflix right there. That's a problem. Jesus Christ our kids are spending an hour day on Netflix. Whatever I spent a lot of time on TV probably more when I was a kid. YouTube 77 minutes I still think YouTube is probably the most under recognized platform media company people are so obsessed with meta and reels and TikTok YouTube is taking share from TV like crazy.
But then wait for it. TikTok 113 minutes a day. So if the CCP owned YouTube and Netflix would we be down with that. The problem is that people of my generation who get to make the decisions and the people we elect and the people in the White House either are on TikTok very little or they're actually not on it. You're not allowed to be on it. And I think the problem is TikTok's hiding in plain sight. I don't think they understand just how good it is, how dominant it is.
I think there are more of a juggernaut than people think. I think it's the only internet company in the world right now that is sandbagging its numbers such that it doesn't raise the alarm bells. And from an investment standpoint if you had access to shares in the private market of this company I would argue it's probably a pretty good value and that it being banned in the US maybe has already been priced in.
Yeah, do you think that's the reason that it's so undervalued is just as like it's all just regulatory risk. Yeah, I think that's right. Also people don't know how to buy stock in the private market and there is some real geopolitical risk here. The big players, you know, the institutional investors, you know, they have such good jobs. They're kind of paid to just not get fired.
They have such good jobs that you really want to be the guy that came in at a quarter of a trillion dollars in the bite dance. And then a week later Biden does ban it. That's how you get fired. But it's just not getting around it. It's trading in a substantial discount. The two big US retailers target and Walmart reported earnings last week.
Target's revenue fell 4% but due to tighter inventory management and lower costs, the company increased its net income by a whopping 36% shares rose more than 17% after that report. Over at Walmart, it was a different story sales rose 5% and earnings beat expectations.
But the company also gave a cautious outlook on consumer spending for Q4, which slightly spooked the market. The stock fell 6% after the report. Scott, this is all coming after a slightly weak retail sales report from the US Commerce Department. Retail spending is down in October. It's the first decline we've had since March. What's your overall outlook on retail right now? So the most kind of seminal business influence of 2023 hasn't been AI or supply chain. It's been the year of efficiency.
But gradually, I have to acknowledge that when Elon Musk cuts the staff at Twitter 80% and it still has, you know, it's still up, it's still running. Most consumers wouldn't know. I mean, they might see more as lmphobic and drastically more anti-submit content and more hate speech. It's definitely become the sewage system of a sewer.
But in terms of the actual functionality, the fact it was able to cut 80% of employees kind of shows this company was pretty fat and then medic came in and said we can get the great taste of lower costs without the calories of declining revenues. And we're going to triple our stock price. And the year of efficiencies is now extended to retail because if it's sales aren't up, but it's profits jumped dramatically.
And let's say some sort of income gain that it recognized due to accounting, essentially that all leads to the same place and that is they have cut costs. So this was this was kind of the year of efficiency. It sounds like for target. What was interesting is this is definitely a tale of two worlds Walmart had the flat sales of the
anemic sales without the cost cutting the CEO there, Doug McMillan said that they could have done better keeping a lid on costs and warned about slowing sales. So in some it looks like target got more kind of Zuckerberg and musking around cost cutting. Cost of sales increased 5% while operating in SGA Walmart declined 3% and the reasons for resilience Walmart makes more than half of its annual revenue from selling groceries. And I wonder if Walmart is now on the ozemic cell list.
I just got a thing. So 40% of America's obese 70% of obese are overweight. I would imagine it's that or more in terms of Walmart shoppers. And so when you get half your revenue from grocery and people are probably going to have a few less high margin salty snacks ice cream in fatty foods in their card.
That's going to register an impact and even the Walmart CFO acknowledge that impact in their last earnings call. So I think Walmart because of its dependence on groceries is on the ozemic hit list right now. Yeah, just some more detail on targets your efficiency. So yeah, the sales down 4% and that cost of sales down 8% hence why you're seeing that earnings bump.
But the main the main takeaway is that they fixed their inventory management. And I know if you remember when we discussed target around a year ago. The troubles that they were dealing with this thing called inventory glutt. Which is basically that downstream of all the supply chain issues that we were seeing they had miscalculated their orders and they just had too many items on their hands.
And so now their inventory their total inventory is 14% lower compared to last year. What I was surprised by is the extent to which fixing that that is the inventory management can reduce your costs. And I know you have some experience in retail. I mean you started an e-commerce company 20 years ago. So talk to us about the relationship between inventory management and expenses and how that can positively impact earnings.
The number of times you turn inventory is directly correlated to your reputation is strong operators and to your profits because if you buy $100 with a beach towels. You've allocated $100 of your finite capital. And as long as you hold those beach towels in a warehouse or they're in transit. The value those towels goes down and that $100 you're still paying interest on it. You're still paying a cost on it.
So the faster you can move stuff through your supply chain and get consumers to spend $130 on those $100 of towels the more profitable you are. So the number of times you turn inventory is directly correlated to how how profitable you are. And as a matter of fact the best run retailer in the world has inventory turn of infinite.
And that is Amazon now gets the majority of its e-commerce revenues from its third party retailers where they take no inventory where they just create the platform match buyers and sellers. But they never actually take license to the inventory themselves. They never have to put out their own capital. They never have to let put these items items in a warehouse and watch the matrophy and value.
So that's the best inventory turn model in the world. That's why platforms are so powerful is you never actually have to take license now. You know, put your own capital forward in a case like Target or Walmart. They've got to buy the case of ginger ale. So the faster they can get that money back at a profit is directly correlated to the profits. So it's all about supply chain.
Now the focus on supply chain has been so intense on efficiency that during COVID what we found is there was no slack. What do I mean by that? You're in the business of garage doors. You sell garage doors. You figured out a way with technology and information systems.
In flexible supply chain and real time analytics that once you take an order once you build and get all the parts together and import the stuff from Turkey and from an Indonesia and you assemble a garage door literally the next day it's out the door. You have very few garage doors in inventory. Let's go to right until COVID shuts down the supply chain and that factory in Turkey gets shut down and you can no longer get whatever it is that widget or template that you needed for the garage door.
And guess what? You have absolutely none in the warehouse. And so what some brands have done is they have purposely said we need our inventory levels to raise a little bit, especially high margin retailers such that if there is an interruption in the supply chain we have a little bit of slack. Because everything was optimized for efficiency, including when I was in the board at urban outfitters we had just too much manufacturing and production coming out of small regions in China.
So when there is a supply chain interruption there it literally kind of shuts down the stores. But inventory turn supply chain information systems. This is really what Walmart does really well. They hold on to shit for less time than almost anybody. They're like once we own it it's a ticking time bomb. It's going down in value. We want money for it. We are in the moving business not in the storage business.
And again, the most profitable company or the best retailer not even most profitable has a $1.5 trillion market cap versus Walmart at $460 and targeted 60 because they're biggest business. They don't take inventory risk. They're just a platform. And then finally the one that was an interesting topic on earnings which was theft. And Tog has been talking about how it's been struggling with theft for a while now.
And it said that that was the reason that they closed nine stores this quarter. And another topic that came up was the glass panel that all of these retailers are putting in front of products then you have to press a button and someone comes and opens up the door for you. The target CEO said he thinks that customers actually like those panels. He said he said quote actually what we hear from guests is a big thank you.
What because it means like the products they want are in stock. But then there's a survey showing that 26% of consumers say they'd shop at a different store rather than ones where the products are under a locking key. Another 26% said they'd shop online instead. I mean, no, how important this is in terms of earnings, but it's fun to talk about what are your thoughts on locking up products behind that my thoughts are the CEO of target. Thanks for idiots.
I mean, that's just that's is not true. And I have, you know, I don't like to shop. I don't like to go out. I'm very privileged. I can get shit. I get everything kind of delivered in my house. But as I'm heading out of town, I'm like, OK, I need some deodorant. I just need stuff, right. And so I went to a CVS. I couldn't get over everything was behind these little guarded, classic things. And I thought, and you press it.
And it says customer service and deodorant. And I don't want some guy knowing that I use old spice or whatever it is I use, you know, to get rid of my my must. I just think there's got to be a better way because it really slows down the shopping experience. It's frustrating. And I hope that they can come up with some sort of system. There's got to be laws. I think that I'm going to sound like Juliannie or total Republican here.
I think you've got to figure out a way to put the algebra to turn some place and that if you steal the shit, we're going to find you. It really is getting kind of crazy. And I think it really, it's such an enormous tax on people. It takes you 20 minutes to do what you take five minutes. You know, I sound like a total Karen right now. By the way, about an SUV, it's a white suburban. I named it Karen. Get it? White suburban.
That's why people come to the show. We'll be right back after the break with a look at luxury watches. Support for ProvG comes from a net suite. Businesses can't afford to fall behind. So it's a big problem when teens get buried in manual busy work. It's a big problem when it takes forever to close the books. It's a big problem when you don't have a single reliable source of truth. If that sounds like you, you should know these three numbers. 36,025-1.
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Prices for luxury watches on the secondary market have dropped to a two-year low. That's according to Bloomberg's sub-dial watch index, which tracks the 50 most traded watches by value. Since the index is peak in 2020, pre-owned Rolex and protect for leap watches have declined by 28% and 47% respectively.
Scott, the pre-owned watch market had a massive spike around 2021. I was around the time when crypto was soaring. It's now come back to Earth. Do you think it's fair to say that this was a bubble and that the bubble has popped? I wouldn't say it was a bubble. I think that the 1% economy was the gift that kept on giving. And the watch industry has done the same thing as the diamond industry. And that is they've managed to create this illusion that these things are store value.
And also for the first time, the luxury market is taking a bit of a hit. It's not a bubble popping. It's more like a healthy correction. And someone sent me the charts of LVMH and Netflix. LVMH is down substantially and Netflix is up 47%. It said the market thinks the recession is coming. And people are going to be spending more time at home and spending less money.
And I think that there's some of that baked in here. Also, I just don't think you can ignore the kind of the gray white shark in the watch market. And that is Apple who has been very steadfast, committed tons of capital, iterated. And now the Apple Watch sells more units than the entire Swiss watchmaking industry. And that's I think that's catching up to them. In addition, I just think wealthy people are a little bit feeling a little less confident than they used to maybe.
Why do you think that is as a wealthy person? My horns are definitely more in. I've had a bad year in the market so far a year today. And also I was one of these idiots. But hindsight's 2020, I got five years. I got more gd's with five year terms. And they all sort of came to term, you know, in the last year or coming to term in the next year. Meaning I have to refinance them. And instead of refinancing them to 2.4%. I have to refinance them at seven or eight.
And so what I've done is I've taken in this again as a position of privilege, I've taken some of my excess capital and I've just paid off my mortgages. The way I see it is that's guaranteed return of 8%. I'm like, well, okay, just pay down your mortgage and you're getting 8% a year. Whereas if rates had still been at 3%, I would have rolled into another mortgage and I would have had a lot of excess capital to buy more stocks, which would have sent the markets up and perhaps buy another panorai.
So I don't think there's any getting around it. Interest rates absolutely damp in or squelch discretionary purchases because you have to spend more money on the essentials or in my case, you spend, you decide not to finance your housing because the cost of gone up so much.
I found it interesting that there are all these watch indices that are basically treating these watches as if they're a legitimate asset class, which maybe they are. Do you think of watches as a viable asset class? Would you ever buy a watch as an investment? Have you ever bought one as an investment?
I think the true story when I was 19, my mom bought me my first nice watch. We did not have a lot of money. It was like a really cool tag-hoyer. And I'm at crew practice and the thing, the buckle comes off and I watch my watch slide down the orr into Bologna Creek in Marina Del Rey literally five days after she bought a for me.
It was really was a very upsetting at the time. Anyways, I probably own four or five. I don't know a ton of watches, but you're not a watch guy maybe. Yeah, I don't have a ton of nice things. I have nice homes. I don't own a car. I'm more about spending money on travel and also giving money away. Hashtag don't kill me.
But no, I don't think watches the watch industry and the luxury industry is trying the only thing I think of it as an investment is I think it'll be an ice moment if I don't lose them before then to give them to my sons on key moments when they get older. Hopefully the panel I will still be in and I think it will be that'll be an ice moment. But the diamond industry and the luxury industry in the watch industry have all created this myth and the handbag industry is trying to do this at these things are stores of value.
And generally speaking, they're not the majority of people never sell them. It's pure consumption. It's not investment and you might think it's investment to make you feel better. Or rationalize your consumption, but now you're you're spending the money. That money's gone. So I see your advice to young people would be just never consider this an investment.
Look, I think that having one nice watch, I think it's a wonderful gift. You know, it was meaningful when my mom bought me that watch. It was meaningful and it's very strong signaling. A lot of people say you can basically sum up a person in terms of their economic way class by looking at their shoes and looking at their watch.
And I think when someone like you is in your mating years, I don't I don't I empathize with wanting to have a nice watch. Well, let me ask you to you want a nice watch. I have a T so. Yeah, that's nice. Does it was a given to you in a meaningful environment or yeah, my dad gave it to me. It was it was very nice and I mean, I talk about watches all the time with my friends and what's your dream watch?
This is it. I mean, this is the discussion. I mean, I do actually love Rolexes, but they are so they're so ubiquitous at this point in terms of like that's the banker bonus watch that everyone gets. So I don't know. I it's it's a tough one. My first my ex wife, I should say, bought me a really beautiful. What did she buy me? I don't remember. She's out of my life.
It really meaningful gift. That's good. Yeah, but and I buy watches I buy watches for employees of my companies. I think it's important to meaningful and I like it. I keep six whatever they call them. It's a it's an entire industry, but you buy them for a consumption. They are not stores of value or investments. If let me put it this way, if you end up selling your watch, I mean, things are not going well for you. Yeah. All right, let's take a look at the week ahead.
We'll see the minutes from the last federal reserve meeting. I'm also see earnings from Nvidia and a few more retail stocks, including lows, best by and dick sporting goods. Do you have any predictions? Yeah, the year of efficiencies to retail and we're going to see over the next couple quarters, really outstanding earnings and contrast really lackluster revenue growth from some of the bigger retailers. Best by is a really well managed company.
And I would imagine that they have adopted this strategy almost right away. So I think we're going to see shockingly strong earnings in the face of anemic top line revenue growth in the world of retail. This episode was produced by Claire Miller and engineered by Benjamin Spencer, our executive producers are Jason Stavars and Catherine Dillon.
Mia Silvario is our research lead and Drew Burrows is our technical director. Thank you for listening to Property Markets from the Box Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday. Happy Thanksgiving everybody. You have me in time. We're you.
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