Introducing our 7th Lead Advisor!
The secret is (almost) out! Join 7investing's founder and CEO Simon Erickson on Wednesday, January 19th at 11 ET as he announces this extremely exciting addition to our team...
We’re checking in on the progress of the space race and looking at Google’s partnership with a hospital chain to disrupt healthcare. In addition, we’ll take a look at just how far momentum can take drug companies and examine some of the legislative attempts to regulate big tech. Then, we’ll close the show by talking about the investing advice we wish we had known sooner.
June 18, 2021
We’re checking in on the progress of the space race and looking at Google’s partnership with a hospital chain to disrupt healthcare. In addition, we’ll take a look at just how far momentum can take drug companies and examine some of the legislative attempts to regulate big tech. Then, we’ll close the show by talking about the investing advice we wish we had known sooner.
Sam Bailey 0:15
Welcome to 7investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.
Dan Kline 0:24
Good afternoon 7investors and welcome to the Friday edition of 7investing Now if I look a little flushed, a little more tired than usual, it is because this is the marathon Friday for us. If you were a member of 7investing, you just sat through, not sat through you just got to enjoy our members call. We do 90 minutes where you can ask us any question we will tell you later on in the show how to join. My name, of course is Daniel Brooks Klein. I’m being joined today by a whole bunch, by Steve Symington coming to you from the Grand Canyon. Steve don’t do the thing where you ride a burrow down the Grand Canyon. It did not go well for the Brady Bunch. Anirban Mahanti or as he is known in honor, the “honor bound manatee” is joining us from Australia where it is roughly 2:00am in the morning, upside down and the toilets flow backwards. Anirban, Good morning.
Anirban Mahanti 1:18
Good morning. Good afternoon.
Dan Kline 1:20
Good afternoon. Good night. Good whatever. Joining us from her bar studio. That is an exercise facility. Not some sort of weird bar. In Houston, Texas. Dana Abramovitz. Dana, thank you for joining us between classes today.
Dana Abramovitz 1:33
Yeah, you got it.
Dan Kline 1:35
Maxx Chatsko coming in from Pittsburgh. Maxx have there been any Ben Roethlisberger arrests since last we talked a couple of days ago. I know it’s a it’s touch and go. No, just kidding. Don’t send me hate mail. Simon Erickson, our CEO, our leader and founder. Also joining us from Houston, Texas. We’re going to talk a lot of different topics the space race, regulating big tech, Google and healthcare investing advice. So many things before we do that. I would like to go around the horn to do something a little bit fun. Please share your answers in the comments as well. And of course ask your questions in the comments. Steve Symington. I’d like to know what is your summer drink of choice?
Steve Symington 2:16
My summer drink of choice. I say beer, then water. That’s that’s how it will roll. So preferably sitting on an inner tube in the river. That’s that’s how it goes.
Dan Kline 2:27
Steve if you want to go with beer then water you can just go right to Budweiser, which is beer that’s water. Anirban Mahanti your thoughts on this one your go to summer drink.
Anirban Mahanti 2:38
You know it’s winter here, but I’ll still give you my summer drink. I would actually take a cold beer on a hot summer day anytime. I’m not original, but I’ll take a pale ale, would be my preference.
Dan Kline 2:52
I’m gonna throw mine in and say I am a I’m a gin and tonic if it’s if it’s night preferably Tanqueray if you’re if you’re buying me a drink, and I am a big fan of iced coffee. Those of us from New England actually drink iced coffee year round. It is not uncommon to see someone shoveling snow with an iced coffee sort of wedged into the snow. Dana Abramovitz your drink of summer
Dana Abramovitz 3:15
So in the summer I like something light and refreshing. Lately I’ve been doing this gin that my brother got me from Vermont’s it’s Barr Hill and then I mix it with this ginger lemon seltzer from Trader Joe’s.
Dan Kline 3:31
I am coming to Dana’s house. That sounds awesome.
Dana Abramovitz 3:33
It’s really delicious
Dan Kline 3:35
Maxx Chatsko, your summer drink of choice.
Maxx Chatsko 3:37
Actually, Sam beat me to it here in our private chat. I actually like a good Mexican beer with some lime in there. I don’t know about salt. But uh, Sam’s a little iteration on my drink.
Dan Kline 3:47
Yeah, Sam Bailey, why don’t you throw up your choice so we can share it with people. Sam is a fan of the Dos Equis with salt and a lime. Hard to argue with that. That is a refreshing drink. Simon Erickson you can go last here your thoughts of a summer drink.
Simon Erickson 4:00
The Mexican Martini Dan. That’s a margarita with the touch of olive juice at the top of it. Fantastic here in Texas.
Dan Kline 4:07
That is a new one we’re going to, Sam we’ll go in order. Let’s Let’s share [name unknown] and we’ll go through some of the members of vodka with orange juice. That is a classic. At my age, I have a harder time with the orange juice than I do with the vodka. We’re going go with [name unknown]. Welcome back haven’t seen you guys make a comment in a while. Water Martini vodka tonic and lime. Yeah, that sounds that sounds fabulous as well. And finally, we will take just one more after this. An electric jellyfish hazy IPA. Daniel. I don’t know that one. But there’s a lot of great beer selection here. So we’ll check that out. And finally, David and I actually had a conversation about this, Vietnamese coffee. Yeah, Vietnamese coffee might be, I love Cuban coffee. But the Vietnamese coffee with the condensed milk is excellent.
But these are not investing topics. You probably did not come here to hear us talk about this. But I like showing that we’re people, that we’re human. We have other things, I often approach the show a little bit, you know, like law and order where it can’t be all about us. Nobody wants 30 minutes of me saying what I did this weekend, but I want to mix it a little so you know what I’m doing this show live from from a cruise or, or next week or next month from from Birmingham, Alabama and the Cherokee Casino. I’m going to tell you a little bit about why I’m there and what I am doing.
With that we’ve got a ton of topics to talk about. We’re going to start with Steve Symington. Cause Steve is on a family vacation at the Grand Canyon. We’d like to let him see the Grand Canyon. Steve, I’d argue if you see one can you can see them all. But you’re there. You can learn that for yourself. It’s It’s It’s, I get it. But you wanted to talk about the space race. We’ve talked about this a lot recently, but um, is Jeff Bezos going to be first or is Richard Branson going to be first?
Steve Symington 5:48
I think Branson is going to be first. But that’s part of the speculation and make no mistake, this is going to dominate headlines in the next couple of months. So recall, Bezos and Blue Origin recently are auctioned off their first seats on Blue Origin’s passenger bearing flight, that person bought that ticket for $28 million, it goes to charity. So it’s not necessarily indicative of the pricing power of commercial spaceflight, though I do think it’s going to be higher than people think, potentially as much as $500,000 per ticket once they reopen those seats, but Bezos actually confirmed that flight’s gonna happen on July 20th.
And subsequent news from the blog Parabolic Arc a space blog actually reported that Virgin Galactic (NYSE: SPCE) is working on plans to launch their co-founder or their company founder, Richard Branson into space on July 4th, that is yet to be confirmed, though. If you look at message boards people are furiously perusing the internet trying to figure out whether that’s actually going to happen. There’s also speculation as to whether they, Virgin Galactic needs FAA approval to fly Branson. So you know, even though he owns a quarter of the company, as far as shares outstanding goes, they think that they he could potentially just skip that and say, Hey, Branson, you can be an employee of the company. We can fly you however we want. On the 4th.
So expect news probably in the next couple of weeks for that. Virgin Galactic has already said that it plans to complete its test flight program by the end of the summer, as well as the research flights either late summer early fall with the Italian Air Force for astronaut training in microgravity research. And then after the Branson flight, they’re going to reopen their ticket sales. So that will be very interesting because they already have 600 tickets they sold a long time ago for an average price of about $250,000. That’s going to be very interesting to see what they can charge or what they hope to charge and the subsequent demand for tickets for those flights. So it’s going to be really interesting summer for the space race that’s quite literally and figuratively heating up. And I’m excited. I’m a shareholder, Virgin Galactic, so it should be fun to watch.
Dan Kline 8:02
We’re gonna keep an eye on the space race, we will try to get Space Ghost as a guest on this program. It’s been in hiding since the end of Space Ghost Coast to Coast. That is a dated cartoon reference. For those of you who are watching, I’m sure the ones who got it will appreciate it. Steve, go see the Grand Canyon, go do that thing where you smash a penny fall for all the touristy stuff you possibly can. Enjoy. You could say I am not a, I am not a Grand Canyon or or big sights thing. I tend to like to do things on the inside. But have a great time with the family.
Steve Symington 8:36
All right see you guys.
Dan Kline 8:37
We will see you soon. We are going to segue into a segment that was originally going to be done with Matt Cochrane. But Matt is busy with with some outside things. And we’ll have him of course on next week’s program. So Anirban is going to step in and talk about this. We had a very spirited discussion in our Slack about regulation and big tech, I actually suggested that maybe we should turn it into content. So we’re going to do that right now a little bit with Anirban. There are five separate bills in the US House and I would call these bills a little bit muddled, but there’s clearly a real intent to consider regulating big technology. Some of that is political. Some of that is privacy. Some of it is well intentioned, some of it less so but let’s ask the big question Anirban, do you think big tech needs more regulation is is this actually something that should be talked about?
Anirban Mahanti 9:32
You know, I’m not a proponent of big tech regulation, largely because I think one of the things that’s lost in the debate is how technology works. Technology is not necessarily like an oil company. Right. And I think what most of regulation tries, it tends to do, is attempt to stop growing power in the current setup. Right. But disruption typically happens in technology quite frequently. And what it usually means is that somebody is going to come in with something different. It’s not a better mousetrap, it’s just completely something different. And that basically disrupts the incumbent. And I think that’s completely lost in this attempt to regulate the power of big tech. I think that’s, that was my sort of my biggest comment.
I don’t disagree with the idea that you shouldn’t have this thing called self prefacing, like, if Apple (NASDAQ: AAPL), for example, has Apple Music, putting that, sort of pushing that above other other competitors. Maybe it’s wrong, right. But at the same time, my argument always has been that, look, if you’re going to be a music delivery, streaming service, that is pretty much a commodity, right? I mean, you really are fighting over a commodity service. You know, you can say Apple shouldn’t compete, but maybe then, you have to compete with Google (NASDAQ: GOOGL), you have to compete with Amazon (NASDAQ: AMZN), you’ve competed with anybody else is going to do another commodity service. Right? commodity services have no moat. So. I mean, I agree with that.
I think privacy is important, because but I, again, there too, I think that there are so many nuances that are important in terms of what do you mean, by privacy? What has happened? So the the greatest example of privacy is that there’s a European regulation on privacy, what that has actually done is it has made it easier for big tech to comply, because there is overhead for complying with privacy regulations. Right. So the privacy regulations are essentially unable to be taken, actually disabled. Competition doesn’t have the capability to actually do these do the various crazy things that are required by the law? So that’s my general take. Right. But I do agree with some of these, I think the the overarching question, should we are consumers being harmed? And right now, I think the harm level to consumers is very little, I think, the, the issues could be around fake news. And I guess how AI plays a role in news dissemination and what people see and so on, so forth. But, those are also evolving questions, right. But I, consumers are not being harmed.
Dan Kline 12:19
And the self preferencing question can be tricky. So I would argue that there’s only a couple of players in streaming music. So it doesn’t really matter if in the App Store, Apple is first and Spotify (NYSE: SPOT) is second that I don’t see there’s a massive gain there. Where self preferencing gets tricky, is really Google. Because when you look at Google, and you say, okay, you know, Anirban and I had a long discussion on Crowded House a couple of shows ago, a band, and let’s say I wanted to share “Something so Strong” one of their big hits with Anirban and I searched it on Google, the best result is almost certainly going to be YouTube, it would be very strange, if what it gave me is like a fan-shot video on somebody’s page. So the reality is, a lot of cases that are self preferencing are bigger questions of whether Google should be able to own YouTube. And clearly, it’s been good for YouTube to be owned by Google and look do I think Facebook (NASDAQ: FB) hasn’t really done a good job with with getting rid of fake news with with getting rid of misleading headlines or posts. But clearly, they’ve done a lot better and a lot more.
Now, are they labeling harmless things with with COVID warnings? Yes, they are like you. It’s very much like the, you know, the software designed to keep your kids away from from racy sites stops you from making your doctor’s appointment, because there’s words or colors or images, so it’s not perfect, but Anirban one more question, and anyone else can weigh on this as well. Do you think regulation will actually bring more harm to consumers than solve problems?
Anirban Mahanti 13:50
Oh, that’s a that’s a tricky one. I mean, um, so I think the one thing that I think has potential trouble actually brewing is around acquisitions. Right. And, so I think the regulation or the regulations, one of the bills that has been put out is basically says, Well, we’re going to, you should stop big tech from acquiring companies, because that’s stopping competition. But I think the problem with that is, is actually it can have a reverse impact, because one of the legitimate ways of creating wealth is acquisition, right? Somebody might build YouTube thinking, I want to be acquired, if you stop them from being acquired by the legitimate players, then they have no acquisition outlet. Or you could be Fitbit (NYSE: FIT). And you basically need an acquisition to survive and have people employed and for the Fitbit journey to continue, well, then an acquisition is a problem. People look at the end result and say, well look at Instagram, how big it is, what people forget is there is another world where Instagram could have been its own platform and have been maybe half as successful. Right. So I think that’s the way I think the harm could be in innovation, the, the innovation that we currently get to experience but actually degraded.
Dan Kline 15:00
There are 1000’s of companies that you’ve never heard of that have been snapped up by these big players. Sometimes it’s as simple as they do one thing right that somebody wants to own and integrate their team and people get a payday and a really good job. And a nice story to tell, I would not want to stifle that. Simon, you want it to weigh in? And then we’ll take a question from Max Lucas.
Simon Erickson 15:20
I think Anirban nailed it. I think that’s exactly what this debate is framing up to be is who is pissed off about big tech becoming even bigger tech over time.Users, for the most part, don’t seem to be too too too upset about this, because they still want to get Gmail for free, you still want to get all the services that Google has that are billion-user products out there for free. We love our Facebook, we want to be able to keep Facebook free. So we don’t want to pay for that. But in exchange, you’ve got to give up some information for targeted advertising.
But for the most part, I would argue that it’s not the users of those sites that are that are up in arms about this. It’s the competitors that are not named Facebook or Google, right. This is Yelp (NYSE: YELP), throwing up its arms and yelping about how upset it was about Google Maps being the self preference for anything that was Android going to Google Maps, instead of Yelp’s for local reviews, local marketing that it was doing. It’s the, it’s the companies are saying this is anti competitive, there’s no way we have any shot of building a business if these companies are just going to steer it to their own businesses and their own reviews and their own sites and everything else that feeds the advertising machine.
So I think it’s going to be interesting to me, I think we tend to frame this most of the time, Dan as ourselves as users, when in reality, I think a lot of the real hate of these big tech companies getting even bigger this from the competitors that just don’t think they compete against them anymore.
Dan Kline 16:37
We will check in with Tom from MySpace on a future edition of 7investing Now. And the Snapchat (NYSE: SNAP) ghost, we are just bringing up all sorts of potential guests. I wanted to share a comment from Max Lucas and get Anirban’s thoughts on it? Because I actually think this is a bigger issue. “Should there not be a real concern from US regulators that we need to look at the global marketplace when trying to judge tech monopolies?” The challenge here is we don’t have like a global organization that could regulate these things. But Anirban as a shareholder, there is some risk here.
Anirban Mahanti 17:11
Yeah. So I think what’s happening is so is an interesting use case from Australia. The Australian government passed a regulation that basically said that, Facebook and Google now need to actually make a deal in with the news publishing houses, in terms of whether or not the news is going to be shown and who’s going to get the money for it and things like that. I think, my own view is that I think it’s, it’s, again, as exactly what Simon said, right? It’s about whether the users are already getting what they wanted to. Here the issue was the news media, the publication houses actually want to make money. And they figured that this is one way to make money is by basically getting these guys to pay for it. Right. So now, again, it’s not about the consumer, so are the competitive landscape.
So there’s no global body? Right? And there’s, I think, my view is that there is an underlying feeling, whether it’s Europe and Australia, or wherever else that big tech is basic, when you say big tech, and basically means US big tech, and they basically own so much of the tech landscape. There’s history behind it, because of the internet coming from the US and things like that. And that has, the Silicon Valley being in the US, but that is what it is. And I think the solution for that is to compete, not to regulate, I’m always a believer that you can compete and competition actually, ultimately provide better products. And as I said, I think if anybody who understands disruption in technology will say that, you let the competition play out, and MySpace got killed, and Facebook came, right. So there’s always something, and Shopify (NYSE: SHOP) today exists, despite the fact that there are so many other players in the e-commerce space, right?
So it does not, if you have an innovative product, you can still win. And I think, Shopify is a great example, as a Canadian company that has, made made and made a space for itself. So I think, again, there’s, I think global, there’s gonna be I think global regulation is gonna cause issues, which is gonna make it complicated, which is going to again, I think, how big tech because they’re gonna be the ones who are going to be able to actually manage the regulation. So.
Dan Kline 19:32
We’re gonna make a segue into healthcare. And I’m actually going to have Simon lead the next segment, because it’s something he brought up that he wanted to talk to Dana about.
But I’m going to give him a second to think about the question he would like to ask by talking about how you can become a member of 7investing. Now I just talked about that we just did our members only call. Before that we did our new members called these are things that just go to our members. Right now you can join 7investing For $49 a month or $399 a year, those prices go away on July 8th. So right now, if you join before the end of the day on July 7th, you will lock in those prices forever. 2350, when it’s literally Anirban’s head in a jar and Maxx in a hologram, you are going to still be paying $49 and robot Simon is probably gonna be pretty angry about it. But we appreciate that you will have been with us for 300 years at that point, I’m being very optimistic about mankind and our own survivability, there.
Dana will just be the same because she does bar every day and and will probably outlive us all by 50 years anyway, if you would like to become a member and lock in that pricing, and the price after that goes up to $49 a month or $399 a year. So it is a big increase. It is well worth it. But you can go to www.7investing.com/subscribe, and lock in that pricing. If you’re already a member. We’d also love for you to tell your friends get out there, use your referral code. Every time you share that referral code and it gets used, you get a free month. That can be very, very valuable. We have people who have like something like 50 something free months. We won’t belabor the point go to www.7investing.com/subscribe
Simon Erickson, you wanted to talk to Dana, about Google and its partnership with HCA (NYSE: HCA), which I believe is a hospital chain. That is all I know. So I’m going to turn it over to you for a couple of minutes.
Simon Erickson 21:30
Yeah, thanks very much Dan. Thanks for mentioning too, that if you’ve ever been on the fence about joining 7investing, now is the time to take the jump because starting on July 7th, we’re going to increase the pricing like you said, so if you get in now and you like it and you want to stay, you can lock in pricing up until July the 7th, we’re locking in anybody who signs up by July 7th at our existing rates of $49 a month, we’re very thankful for everyone who’s helped us get this business up and running.
Dan Kline 21:55
And Simon, Dana has about two minutes. So you’re gonna have to keep this a little bit brief.
Simon Erickson 21:59
Dana and I’ve been chatting quite a bit about healthcare, we talked a lot about technology. And I think that one of the biggest industries that big tech companies have gone after, or at least are very interested in going after his his healthcare. This is a $4 trillion market, we know that it’s got its limitations and its challenges. And one of the things that Dana has really been chatting about with our entire team since she joined, is it’s not just so easy for technology to all of a sudden fix all of the problems with healthcare.
And Dana, we actually just released one of your special reports, you can access that if you go to www.7investing.com right on our homepage, front and center, you can access your report for free if you join our email list. But I wanted to kind of chat with you about, kind of what’s going on in the bigger picture of healthcare. I know you have a PhD in biochemistry, you also consulted with CEOs and in a consulting role kind of leading strategic decisions on this hugely complex industry. But can you kind of kick this conversation off before we get into Google and HCA of, of healthcare at large? What’s the status quo look like out there?
Dana Abramovitz 23:14
So um, yeah, so healthcare is complex, I talk about it all the time. And, there’s lots of, you look at technology, you look at ways for technology to help out. But if you don’t, and this is true, I think with every industry, it’s just that healthcare is kind of special, unless you’re, from the inside to really understand what it is to find that right product market fit. And so I think that that’s where, we run into a lot of problems, especially with health care, because it is really unique, doctors don’t like change. Um, I mean, like, the Hippocratic oath to first do no harm, right. So they’re not, regularly taking risk. So, that just makes it a little bit complicated to, try something new, especially, if it may, if it might not work, so, just the adoption, makes it a little bit more challenging.
Simon Erickson 24:23
Yeah, and just continuing the conversation. Dana if we still have you for a couple more minutes. You know, you and I have chatted about Google teaming up with HCA health, based out of Nashville hospital chain, like Dan mentioned, this is kind of, in my mind a really big story, because we’ve been there. And we tried that before Google tried to work with Ascension Health several years ago in the Midwest, and there was just this, it blew up. Everyone said, Oh, privacy, we don’t want this. I don’t want Google getting access to these things. It has to be at the hospital level though, because that’s where you have the patient records in the data that’s really, really important to make changes. And in my opinion, I think that seeing a hospital group like this embrace Google and say, Hey, we’re gonna put trust in your algorithms, we’re gonna put trust that you guys know what you’re talking about, and this is actually going to improve the outcomes for our patients. To me, that seems like that’s a pretty big deal.
Dana Abramovitz 25:13
Yeah, and, it’s being led by an innovative hospital chain. Right. So, and, I said in the special report, it needs to come from within the industry, the adoption of the technology. So the fact that HCA, is innovative, they want to do this, I think will help make it successful, right, and, hospital chains, like they, they have all the information, right, they have all the patient information. Obviously, with HIPAA, the health care, information, privacy, no portability, it’s not even privacy, its portability, and Accountability Act, makes it, such that they can’t share personal information, like, personal information, like your name and address and all that stuff. But like, having all of that data, I think will be really powerful. Especially helping the hospital understand, starting to look at like demographics, different disease states in different areas, that kind of thing.
Simon Erickson 26:27
It’s fascinating, I’m really looking forward to seeing where this goes, I think there’s a huge risk of going first, right, like everybody else has kind of said, Oh, I’ll adopt this if it if it shows and proof of concept and some other people do this first, to see to see a really large chain really innovative, really, innovative companies publicly traded HCA. Do this is a big first step in my opinion.
Dana Abramovitz 26:49
Dan Kline 26:50
Dana Abramovitz. Thank you for this, your students need you. We are looking forward to doing a bar class as a team. And you’ll all get to learn how incredibly inflexible I am. I’m very flexible with with with my stock market views, not very flexible when it comes to exercising. But Dana, go, we appreciate it. Thank you,
Dana Abramovitz 27:07
Thanks guys see you soon.
Dan Kline 27:09
We’re going to stick in the healthcare space. Maxx, you and Simon have a bet that that’s not going to be the crux of the discussion, we’re going to talk momentum stocks, I’m also going to say that, we’ve got three great comments that we are going to share towards the end of the program. So we appreciate people and feel free to get more in. But Maxx, why don’t you explain the bet you have with Simon.
Maxx Chatsko 27:31
I like how we had six squares at the beginning. And now we have four I feel like there’s like a, there’s gonna be a one on one at the end, and only one person can win.
Alright, so we have a bet. And actually, Sam, I think we have a graphic if you can pull that up. All right. So this month was actually the three year anniversary of the bet #TheBet between me and Simon on the future of DNA sequencing. So there’s actually two parts of this bet that have come true. And the winner has to have both come true. So I said that Illumina (NASDAQ: ILMN) will have a market valuation of $40 billion or less 10 years from the date of the bet. And that Oxford Nanopore would have a 50% market share of the total global DNA sequencing market. And if I win, Simon’s gonna fly to wherever I am, and hand me $200. So I’m going to be in Antarctica or in the Amazon rainforest. If it’s still around 2028 just to make his airfare even more, laborious.
Dan Kline 28:25
There’s a better chance you’ll be at a Rain Forest Cafe in 2028, than the actual rain forest. Simon, your comments on the bet here?
Simon Erickson 28:33
Well, well, first of all, I think that taking a bet on the other side of what Maxx is betting on in healthcare is kind of like betting against LeBron James on a game of one on one and basketball, it’s very hard to bet against Maxx on anything healthcare related. I do think that Illumina is still got a long path ahead of them of growth. So we’ll see we’ll see where we are in 2028 Maxx, hand delivered to you wherever in the world that you are.
Maxx Chatsko 28:57
So I will say, that $40 billion market cap that’s not looking like a good part for me. So it looks like I might lose just on that alone. But if you’re thinking, who the heck is Oxford Nanopore? Why would it have 50% market share? Right now, it’s kind of a nobody. But if you understand the technical differences with nanopore sequencing, or just kind of this, like third generation DNA sequencing, or fourth or fifth, I guess, if you go back, I think it really is possible. And you also have to understand DNA sequencing is actually a very small market we talk about all the time, it’s very important. There’s still only maybe four or $5 billion in total annual revenue.
So it’s a very small market now. And it’s going to expand greatly. And technologies like nanopore sequencing are going to be a part of that. So nanopore is what makes it possible one day, where we might all have DNA sequences at our house, or you can at least get your genome sequenced at Walmart (NYSE: WMT), say or Walgreens (NASDAQ: WBA), right? You can’t do that with the current technology from Illumina or PacBio (NASDAQ: PACB). So these are things that you either think about when it’s 2028, 50% it’s gonna be hard to come by, but maybe maybe it’s possible.
Dan Kline 29:58
I’m smiling because Walmart struggled to make a copy of my key. So I’m not so sure I want them sequencing by DNA. If this was Jerry Springer right now, we’d be welcoming in 2028’s Maxx Chatsko, but Simon has not given me the budget for time travel. I’ve been bringing it up in every meeting. But I know Simon doesn’t like us to give away things behind the scene, but I’ve been pushing for time travel, it would make picking stocks so much easier. But he keeps saying no, that we have to keep it honest.
I’m being a little silly, because we have been doing this for quite a while. And we are very excited. You have great questions. You have great comments Anirban. It is now something like 2:00am in the morning. And did you sleep at some point? Are you just up straight through? Or did you take a nap at least
Anirban Mahanti 30:44
I’ve actually not slept today. It’s 3:00am in the morning
Dan Kline 30:48
That Australian coffee is better than our coffee. But Maxx, that is not the crux of what you wanted to talk about. You wanted to talk about, and I’m probably gonna pronounce this wrong, Orphazyme (CPH: ORPHA). And basically saying that momentum can only take you so far when it comes to drug companies, you’ve got about 90 seconds here
Maxx Chatsko 31:04
Alright ya, there’s Orphazyme, which was a, it became a meme stock just in the last couple of weeks or so. And so the funny thing is, this was a small company. This thing is somewhere in Europe, and it had Heat shock proteins. And the phase two-three clinical trials actually failed, but they still went to the FDA for approval. Somewhere on social media, people got a hold of it and, pumped it up for lack of a better term, Heat Shock proteins. I’ve heard about those on the Joe Rogan podcast, they must be big, everybody piled in. Actually, in recent weeks, it had a day where it’s actually of over 1,000% in a single day, didn’t end the day up 1,000%. And it had like dozens of holds from the SEC on it during that single day.
So it was, pumped to high heaven. And then today the FDA said, Yeah, there’s no way we’re approving this. And so today, the stock is cratering. Let’s see it’s now 45%, probably down more and more than that. So this is a good example that as momentum, it can be good, I guess, in certain stocks. In drug developers or all comes down to the data, and can you actually sell the thing on the market? Right. So I think that’s true, not just for mean stocks, but other drug developers, you do have to be cautious of valuations, everything comes down to de-risking events. And if that doesn’t happen yet, and the valuation gets a little detached from reality, then it can lead to events like this. We have very sharp declines in a single day.
Dan Kline 32:21
And 7investors let me point out you all know this because you’re here watching with us. Be really careful who you take investing advice. Don’t get it from Joe Rogan. Don’t get it from Hulk Hogan. Get it only from people who are professionals in the field where you can vet their credentials, where they’re not just telling you to buy a stock. They’re giving you the underlying reasons. That’s what we do here at 7investing and I’m not just touting us, I’m just saying you wouldn’t take like healthcare advice from some guy on a podcast. So don’t do the same when it comes to your financial health. It can be very dangerous.
Speaking of financial health, we’re going to segue into talking about pieces of investing advice we wish we knew sooner. Sam Bailey, I don’t know if you have these tweets in the system. So if you do, why don’t you bring up Robert Leonard’s if you don’t, there it is. “There’s a lot of value in in qualitative factors. Investing isn’t purely quantitative”. Yes, absolutely. I consider myself somewhat of an emotional investor. Simon I’ll give you the first word on this one.
Simon Erickson 33:25
No, I agree. I mean, so much of this is is management, they’re making decisions on your behalf and how they’re going to spend that capital that goes to the company from you buying shares of it. I mean, it’s still discretionary, on what companies do. Are they going out and making poor acquisitions on your behalf? Like Hewlett Packard (NYSE: HPE) did years ago, and then the stock price completely fell apart? Or are they going out and investing in something that’s tied directly to customer orders? I mean, there’s a huge decision making piece of investing, that’s not showing up in the numbers of the earnings per share right away, at least.
Dan Kline 33:55
Yeah, absolutely. Maxx, you want us to share a piece of advice that you have learned? Why don’t you start with that?
Maxx Chatsko 34:02
Well, it’s a comment about the last thing, that’s one of the things I struggle with a lot, I’m I guess my engineering background or whatever, I tend to be more numbers oriented. But qualitative factors do matter, right. And sometimes companies deserve a premium, maybe because you’re a leader, or something. And if I sit around on the sidelines, waiting for that valuation to fall, and then it eventually grows into and above that, then I’m sitting there like, dang it, I wish I bought it back then it wasn’t so stubborn. So definitely an important piece of advice.
What I wanted to add was, log off. That’s good investing advice, right? Too many people are like logging in all the time, or checking apps and looking at numbers all the time, every hour, this is up 3%, now it’s down 2%. And really, the best returns and the best way to build wealth is over the long term. So that’s how you get compound interest. If you own a stock for for 10 years or 15 years or seven years, right? And you reach those different de-risking events and all those quarterly earnings reports come up. It’s not going to be all fun and roses in a straight linear line. But if you log out and you have patience. It takes a lot of the emotions out of it too, I think so I do a lot of my research upfront, I feel good about those companies, I still watch them. But I’m not really so tuned in every day. Well, I am because it’s our job, unfortunately, but but I’m not logging into my investment brokerage account, on a daily basis, I actually only log into that maybe once a month really,
Dan Kline 35:19
Based on our Slack, I don’t think any of us log off all that often. But that’s in service of you, the viewer, and, and the member of 7investing. And this is also fun for us, we’re not tinkering with our portfolios based on on daily moves, we’re obviously more engaged with stock prices, because it is what we do for a living.
I’m going to throw this one to Anirban. It is from Robert Carter, if you want to share that one, Sam. He says, “time equals money and seek out a mentor as early as possible in life”. I’m going to jump on the second part of that there, mentors are really important having people to look up to, I did a show a few weeks ago with with with one of my high school video teachers, who basically was someone who was telling me I was good at things at a time where a lot of people were telling me I wasn’t. And I don’t mean, I was not a great student. So having someone saying, Hey, here’s something you do really well, was very meaningful.
In my investing life. I’ve been lucky. So have all of us to work with so many brilliant people that have informed how we invest, how we learn about it. You know, I’ve learned things from all of you since we’ve been here. But in a lot of cases, having a formal mentor, part of why I’m good at this whole broadcasting thing is I got to sit down with our friend Chris Hill many times and talk about broadcasting, sort of a luminary in the field and just get ideas and have been lucky to meet lots of professional broadcasters and interesting people who all are willing to take the time, I think it’s something all of us are willing to do as well. Anirban, your thoughts on this one?
Anirban Mahanti 36:50
Yeah, I think a mentor is, if you can, if you have the luxury of having a great mentor. That is fantastic. Because the mentor can show you the ropes. One of the beauties that we have in this world today is that there is a mentor that you can find. It is the internet or your podcasts. And there’s so many different ways in which we can learn today. It’s it’s not even like funny anymore. Like I mean, it’s not. It’s the the knowledge is just flowing, you just have to be willing to grab it right. So I think, listening to great podcasts, listening to, we have a lot of podcasts here we bring, CEOs and other investors, we also think those are really, really interesting because they bring different insights, and we can then take those different insights and then try to make them our own. I think making things our own is very important. You can’t take, you can’t really be me because you’re not me. But you can take something that I do, which you think may work for you and adapt it for your own processes. Everybody needs to build their own processes, but I think if people learn from, you can individualize based on what you learn from others. I think that’s really cool. And I love listening to podcasts of, of investors and business people and learning from them.
Dan Kline 38:06
I’m going to throw out a few more quickly in a row here, because I won’t have time to answer some of your live questions here. So I’m gonna let Simon weigh in on these. But Sam, if you want to share Joshua Johnson, and then Shane, and then our friend, Danny Venna, they’re all sort of in the similar light. And I will read them all out.
Joshua Johnson says, “just because the share price is high, doesn’t mean there isn’t room to grow”. And then we’ll move on to Shane here, “Let your winners ride”. That is very excellent advice. And Danny Venna, who I cannot wait to see a dear friend, “Far more money has been lost by selling a blockbuster stock too soon, then by selling a loser too late”, Simon, these are all sort of in the same vein. But I’d love for you to share your thoughts here before we move on to some questions.
Simon Erickson 38:51
So true. Dan, how many times have we recommended stocks that were selling an all time highs when we recommended them? And people that’s that’s almost counterintuitive, right? It’s buy the dip is kind of the prevailing knowledge out there. That’s not true. Stock prices go up because the intrinsic value of the business marches higher over time. So companies that are getting stronger and performing very admirably are creating value for shareholders. And that’s what pushes stock prices higher, higher over time its fundamentals of the business.
When you look over long periods of time, which we are long term investors in in at 7investing it’s driven by fundamental expansion. It’s not just valuations going up and down because people want to pay 30 times sales one year and then 25 times sales the next year. It’s because those sales march steadily higher. So find great companies, hold on to them even if they’re selling at all time highs
Dan Kline 39:42
“Buy the dip” is bad financial advice, but it is excellent sandwich advice. The French Dip is a delicious, under rated sandwich that does not appear on enough menus. As you can tell I’m being a little bit silly today, and it’s obviously because we’re having so much fun.
We’re gonna bring up David [unknown name] comment first. We’re going to rapid fire go through some questions here, Sam, if you want to pull that one up, “Global minimum tax agreement recently reached among G7 leaders. What’s your takeaway from it?” I’m confused by this one, I actually wanted to have an opinion on it, and don’t really understand how it would even sort of work. Anirban, Simon, Maxx, anybody want to weigh in on this one?
Anirban Mahanti 40:20
I can weigh in on this one. Yeah, I can weigh in on this one. So I think this is less about the companies. And this is more about basically countries actually grabbing some tax off them. Because right now that there’s, there’s so many different, basically, you can set up a subsidiary in our know, some tax haven through which all the profits and because the IPS house there is routed, and therefore no taxes being paid. They want to close that loophole so that some taxes is collected. For the billions of dollars of sales that has been made. And I think if the if the if the if there’s a uniform tax rate, or at least a global minimum, then companies change moving their headquarters, for example, from one country to another would likely stop. So I think this is a good thing. I am generally kind of supportive of this sort of idea. There’s a lot of work actually. It’s too early to rejoice, I think it’s a lot of work that needs to be done. This is just the G7 seven countries can’t decide what’s happening in the world, right? That needs to go to G20. That I don’t know, G50, G180. It’s a lot of work that needs to be done here. But I think it’s, it’s a good first.
Dan Kline 41:32
Thank you for that. We’re gonna take Irwin Smith’s comment next, we’re gonna work through as many of these as we can. We’re gonna save the complimentary remarks for the end. “Apple seems to be advertising very big in privacy. This is affected Facebook, and targeted ads”. Yeah, so I updated my iOS on one of my devices. And when I started logging in, I was asked the privacy question, and I’ve actually had this discussion on air, I begrudgingly did give permission. And it’s because on Facebook, if I don’t give permission, I’m not gonna see local restaurant ads. And really, the number one way I’m learning about new restaurants is Facebook ads. So I don’t love that you there’s not a lot of parameters. It’s kind of a yes or no. But Apple is setting new privacy standards. Maxx, you’re more private than I am. Any thoughts on this one?
Maxx Chatsko 42:24
No, I think actually Anirban and Matt, who’s not on the call, had some great conversations in our Slack channel about Apple’s ambitions and privacy and how it’s actually not just all talk. So I don’t know if Anirban wants to weigh in there on on Apple’s privacy ambitions there and how it’s different.
Dan Kline 42:40
And then I’ll be giving out Simon’s social security number and his credit card number, because we have no privacy, I don’t have access to either of those things. Anirban.
Anirban Mahanti 42:51
I’ll be quick. So I think, this, this is basically it goes to fundamentals of how to actually do ads, you can do privacy aware ads, and Apple has been building, essentially what’s known as differential privacy, a framework where basically you can add noise to data and still provide useful aggregate information. Right. Now, I think the reason other companies are not doing this is that they don’t want to rebuild what they’ve built. So I think there’s a fundamental, and what’s fundamentally interesting is that differential privacy was actually invented in Microsoft (NASDAQ: MSFT).
So it’s not even an Apple invention, really, it’s been in the, in the academic literature for a long time, and Apple has basically taken that and I think what is happening is a lot of this requires on-device processing. And as compute, has become, powerful, more powerful yet about five nanometers, three nanometers coming, you could do a lot of things on a small device, using AI chips, and things like that in a system on chips, which have got special and neural processing happening. So if you run neural networks on them, so I think that’s the reason and Apple has, I think, ambitions and wants to build its own ad networks. I think that’s what’s going on. Here. It’s a little bit of, yes, privacy is important, but it’s also because they have a framework that they can apply, which they’ve been working on for a long time.
One last comment I’ll make is Apple does not do anything in one day. Apple’s everything is a decade in progress, right. And Apple is one of those companies, which actually does not talk about what it is going to do. So unlike, say, Facebook, which we’ll talk about, oh, we’re doing Oculus, and it will be great in VR. Apple will not say anything about VR until it actually has a product to send out. So you only see things when they come into reality. Right? So this basically, what I’m basically saying is that this has been happening for the past five years, at least, maybe longer. So you know, I think there’s changes afoot.
The last comment would be that I think screen is more important than what I’m when I say screen, I think video is more important as a medium now for advertising, than your mobile screen with an app. So there’s a think some other things to consider there.
Simon Erickson 45:11
One other comment I’d like to get to if you don’t mind is, I actually just had a great interview with Rajeev Goel who’s a CEO of PubMatic (NASDAQ: PUBM), a publicly traded company, who and he does a lot of the ad tech exchange. He’s actually matching publishers on the internet with with, with ad agencies and things. And he really believes that, and I agree with him on this, that so much of this is a mindset about privacy too. The technology is going to do what it’s available to do. What people don’t like is they don’t know how Facebook is using your data. Right? How many times have you said, Oh, I was talking about a new blender, with my spouse in the kitchen, and all of a sudden, I saw a Facebook ad for Blender show up. It’s creepy. It’s weird.
But if you reframe this, where everything is saying, you can opt in to see content, if you agree to things, like what GDPR was originally trying to do in Europe, then people are much more comfortable to say. Okay, I can see this if I’m willing to let my web behavior be tracked, or I’m willing to let my email be tracked or something. It’s like when you go to the Wall Street Journal today and says, Hey, do you want to read this story? Log in or Subscribe now to read the rest of the story? We’ve gotten comfortable with that. The next evolution of that is, Hey, are you okay? With cookies, or universal ID, or whatever the next tracking software is going to be? If you click Yes, I’m okay with this. And now you get access to that story. It’s content that’s provided to an opt-in up front. Rather than just getting all this mind on the backside where you have no idea where your data’s going.
Dan Kline 46:36
My wife was looking at bedframes for our guest room, and I started getting ads for bedframes. We didn’t discuss it. I wondered why this was showing up in my feed. There is a level of sinister that I think we need to get rid of when it comes to this sort of thing.
We’re going to take two more related comments as we close out this segment. So said, we’re going to go with Doris and Renee [name unknown]. And then a similar comment from Stock Investor. So if you want to throw up that one, “we wonder and worry about people we know that jump into GameStop (NYSE: GME) and AMC (NYSE: AMC) feeling that they’re going to get rich, not a good move, we think” and then a similar comment from Stock Investor who says, “How can I convince the AMC apes that the AMC entertainment is not a wise buy and hold investment”. And I’ll just comment with AMC and GameStop, that at the bottom of their valuation, there was a world where you could argue for a turnaround that they’d be able to right their business, especially with GameStop, which has a good balance sheet which AMC does not. You could argue that, hey, this could be a three-bagger, maybe even a four-bagger over the next five years. There is no case to be made for where the valuations have gone. Simon, you wanted to weigh in here?
Simon Erickson 47:49
I think you nailed it, Dan, is that this is over corrected. I mean, at the end of the day, the GameStop thing was not baseless, right? Like this was the power of the crowds figuring out this was a manipulated stock, short sellers were pushing it down because they thought it was such a safe bet. There wasn’t a whole lot of catalysts out there that GameStop was going to go grow revenue 100% year over year or something. And they said, Hey, this is being pushed down by people with a lot of money. What if we started buying this and flip that equation where there was a run for the exits, and you had a short squeeze?
The problem Dan is that you still have to have fundamental growth of the business. If you overcorrect. And now all of a sudden everybody has reversed that trade. Now it’s a question of who gets stuck holding the bag at too high of a valuation when in reality of the business is at a much lower point than that. So I can’t completely disagree with a lot of like, fundamentally what happened with GameStop. I just think that this is way too short term focused, when you really need to be investing in businesses that are growing those earnings and those profits over time, the fundamentals of the business is much more important than just the short term. Okay, this, this pops. And now what do I do with this stock next week, because I want to get out.
Dan Kline 48:58
And in terms of these, let’s call them “meme stocks” or even some of the let’s say manipulated, I hate to use that word, cryptocurrencies is that if you’re not in early, there’s every chance you’re going to be left holding the bag. I think I’ve told the story on here, about a friend of mine who’d made a small investment in a crypto coin, and logged into his account and realized he’d made $80,000 and immediately sold. It was just dumb luck. And hey, if you have a dumb luck, stock, I have friends, people you guys all know, who believed in GameStop and owned it. And when it went up five or six times and we’ve talked Simon and I about how this may not be true of a tech stock. But in a retail stock. There’s there’s sometimes a valuation ceiling, there’s only going to be so many locations of GameStop. And at some point, if there’s nothing else, they’re not going to be able to keep to keep growing. So those people went Oh my God, this played out way better than my thesis and they made a lot of money but it wasn’t because they thought people were going to jump in and manipulate the prices
I want to close out the show with a comment from Daniel Delgado. I’ll let Simon read it because we don’t toot our own horn often, but I think on the third Friday of the month, the day we do all sorts of member driven stuff, that it would be fun to share a comment saying something nice about us. So Simon, go ahead.
Simon Erickson 50:16
Oh, thanks very much, Dan. And also Daniel, I believe is also a fellow Houstonian of mine here. So nice to see you on the show. Again, “well worth the subscription”, he says, “as a member receiving stock information at my fingertips monthly stock reviews on the first of every month podcasting and the 7investing team is amazing, and so much more. I couldn’t do this research by myself. I’m glad to be a member”, Daniel, thank you very much really appreciate that.
Dan Kline 50:39
Simon as a Houstonian let me throw out a question here, who will win more games this year, the defunct Montreal Expos or the Houston Texas?
Simon Erickson 50:49
Oh goodness I’d go for the Expo’s, Texan’s have a lot of rebuilding to do.
Dan Kline 50:53
I think there’s a good chance it’s going to be a tie. And neither one of those teams wins a game. That is being a little bit silly. Roman Michael, we thank you for your kind comments, everybody who participated. We thank you. We are going to be back on Monday. We have sort of a weird thing that we just had a new federal holiday approved so the markets are open. But there are some people not working either today or Monday based on where they work. But we will be here doing a live show Monday at noon.
If you would like to get in touch with us. It is email@example.com. That’s for questions about your membership, questions about the service, questions about anything you want to talk to us, but probably not “please research this stock for me”. If you would like to talk to us more socially, we are @7investing on Twitter, lots of spirited discussions, lots of things going on and Simon I did the close of the show I forgot to do the finisher.
Sam Bailey let us quickly bring up Simon’s graphic here for the finisher. Simon shared this yesterday with all of us. Bitcoin today is used primarily as a store of value. People buy and HODL. Oh, I hate that. Without using it for actual transactions. Which of the following would you most likely to use Bitcoin as a currency, i.e. for you to actually use it for buying things. 63.8% said “reduced price volatility” and 23.5% said “retailer I use accepted” 6.5% said “better safety, fewer hacks” 6.2% said “their friends start using it”. It’s amazing actually how powerful the whole friends thing is, I went out with a bunch of colleagues, and every one of them was under 30. And not one of them had a dime in their wallet. And that’s how I ended up having to get on Venmo because I learned that everyone under a certain age just settles things in these micro transactions between each other. Simon, why don’t you weigh in here? Because this was actually your poll question.
Simon Erickson 52:49
It’s something that’s really fascinating to me, Dan. And I always when I make these polls, I make every word perfectly fit into the question on purpose. But when you look at disruptive technologies like Bitcoin and cryptocurrencies are there has to be something that crosses the chasm, there has to be something from the early adopters, and the techies that really love with this is, to get it more mainstream. And so my question with Bitcoin, which can be used for transactions today, I might make the assumption that most people watching the show are not paying for things on their daily habits with Bitcoin. At least I personally am not using Bitcoin for daily habits. But what would have to happen to get to that future? Five years, 10 years or so in the future? And we talk about a lot of these, maybe we even have a second show that, Dan, that you and I can chat about more about this. But I wanted to start gauging what’s going on out there that might possibly get you to adopt Bitcoin. It’s kind of an interesting conversation.
Dan Kline 53:43
I think it’s an important topic. And there is a critical mass thing, because I knew Venmo existed. But I had PayPal (NASDAQ: PYPL) and I could pay the occasional vendor that came to the house contractor or a plumber or whatever, using PayPal or using a credit card or what, I didn’t need this service. Well, now, I also have Zelle because my landlord decided he wants to be paid with Zelle. So we’re renting the property, I do this for him. And I have to log in once a month and make that transaction. So sometimes, you’ll use Bitcoin when there’s a reason for you to use Bitcoin. And those reasons could be happening sooner than you think. There’s also a regulatory component and a tax component that we can absolutely talk about on future shows.
Mike Fee. We appreciate the comments, but we are out of time.
I have already shared how you can get in touch with us. So I will just say for everyone who’s here for Dana Abramovitz who had to leave early for Steve Symington, who has some you were in the Grand Canyon right now. He’s probably running up and down the Grand Canyon. That would be my guess. For Sam Bailey behind the glass for all of you watching. I am Dan Klein. This was 7investing Now. We’ll be back on Monday. See you then
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