You, on the other hand, I think you're far more analytic and more precise.

Well, there's more than one way to skin a cat.

I think o- o- one way you could do it is look at the price to earnings multiple of that company versus some of its peers, then compare things like revenue growth, gross margins, free cash flow, and c- stack them up one against each other, and that could be a way deter- t- to determine if a stock is cheap or expensive versus the group.

So what we try to do at all times is make it so that we do not swing from one company, and that's what makes us feel like you've got to do some trimming.

Yeah, I think there's also a difference too between trimming versus selling.

If we've learned anything from 2022, it's that even the best companies in the world with the best products, great balance sheet management-

I like to see who has the highest gross margins, because that means they've got the biggest moat, that means they can make the most money, and it's something that people don't look at enough, the gross margin.

Yeah, that's a great way to do it.

You could also look at who's growing the fastest as well, revenues.

But a- another way I, I think is really important is read the conference calls of, of the companies-

Definitely

... and, and, and their peers and their customers.

See who's partnering with who.

That will give you a good tell about who's best of breed, who has the best products, who's doing the best by their customers.

W- w- why arson?

Look, we have to remember, turn of the nineteenth century, you have millions and millions of immigrants pouring into, uh, America.

Uh, and for longtime inhabitants of, uh, of America, especially in urban cities, this, what seems to feel like an intrusion of foreigners, is greatly alarming.

Um, if you look at the press at the turn of the century, it actually sounds vaguely familiar.

Um, who are these immigrants coming in? They are branded as criminals.

They're bringing in disease, um, uh, and they're gonna take our jobs.

Great deal of anxiety, uh, about them.

Can you tell us the story? Walk us through it.

Jeff, I think that we're investing, and we're investing for the long term, and if a company does poorly, we sell it, and if a company does well, we don't touch it, and I don't think the tax person should figure into our equation.

No, and of course, uh, all of our capital gains and dividend income, uh, the charitable trust, uh, has each year gets donated to, to charity.

But, yeah, I think i- if you do have a, a really specific tax question, seek a tax advisor-

But it's not the way we think of things.

No, we're diversified, but if there's a, uh, a mega-theme that we like, whether it be, uh, electrification, clean energy, um, infrastructure, then, uh, we're not opposed to investing more heavily in that space-

Definitely

... and, and, and their peers and their customers.

See who's partnering with who.

That will give you a good tell about who's best of breed, who has the best products, who's doing the best by their customers.

Don't be a mutual funder yourself.

Yeah, I think the benefits of diversification, they start to diminish, uh, at a certain point if you keep adding and adding and adding stocks, but that's, five to 10, that's what we generally say for the club.

Start with what you can handle.

You have to kind of, at times, take the risk, but you just use smaller amounts of your capital.

Yeah, I think that there's always a balance to everything, right? Uh, one thing I would point out is, uh, without knowing the stock, if the dividend investment is in the red, well, uh, maybe they're not growing their cashflow, their earnings.

Maybe they're not growing their dividends, and that could be a red flag that something's wrong about this company.

All right, next up in Br- is Bruce, and he's in Michigan, and he says, "How do you set price targets?" I am gonna defer to my colleague, who does a lot of the price target setting.

Well, look, I think that it's an art and a science, right? Um, there's no one standard rule of thumb to apply.

But what I will say, though, uh, when looking for price targets, what you can do is look at some historical multiples of where stocks trade at, and, and, and, and try and figure out how much you think the stock will earn out in the future, and apply that.

But another key considerations, too, is that if the company is, um, improving its margins, maybe taking share, then it would deserve to trade at a premium versus its historical levels, or maybe at least, uh, catch up, so to speak, uh, the multiple re-rate closer to some peers in this space.

Yeah.

Um, if you c- if you're able to continue to do the homework, then you can still hold them, especially if the prospects are quite good.

But yeah, it's a, it's a challenge because you don't wanna spread yourself too thin with a whole different number of stocks.

Uh, but look, if they're going higher, um, you know-

... versus stock further out.

Right.

It's competition for dollars, like you brought up, uh, well you mentioned, but, uh, interest rates are also used, uh, to, in a, in a discounted cash flow model where, uh, investors, they look at the cash flows out, they estimate them, they discount them back, and when the interest rate's higher, they get discounted, discounted at a higher rate.

That lowers the present value.

Uh, you just keep letting it ride, and I have seen in my lifetime the dramatic amount of money you make from the dividend reinvestment.

Yeah, absolutely.

That's how you take advantage of the power of compounding, by reinvesting those dividends quarter after quarter.

Now, unless you need the income, of course, depending on where you are, uh, in, in your life, that, that may be a reason not to, but always reinvest.

And it works for high dividend stocks like a con- consumer packaged goods stock, or even tech stocks too that offer a dividend.

Uh, it, it's a good thing to have.

It's another way to dollar cost average into positions as well.

So for instance, Nvidia, if I had discipline and said that I wouldn't pay more than 20 times earnings, I would've kept out of Nvidia for a decade because Nvidia is about future earnings.

But we don't like to view a company as a loser or a winner, and a stock as loser or winner because some of our greatest picks have been losers.

Sure.

There's broken stocks, there's broken companies.

What you have to identify is that if the issue at hand is a structural issue at the company, structural issue at the, uh, industry level, then that, uh, you're being stubborn if you hold on for too long.

Stocks historically have outperformed bonds.

Yes.

30 years long-term time horizon.

The key line, too, you're fortunate enough where you don't need to live off that money.

Jeff, I think that we're investing, and we're investing for the long term, and if a company does poorly, we sell it, and if a company does well, we don't touch it And I don't think the tax person should figure into our equation.

No, and of course, uh, all of our capital gains and dividend income, uh, the charitable trust, uh, has, uh, each year gets donated to- to charity.

But yeah, I think if you do have a really specific tax question, seek a tax advisor-

But it's not the way we think of things.

No, we're diversified, but if there's a, uh, a mega-theme that we like, whether it be, uh, electrification, clean energy, um, infrastructure, then, uh, we're not opposed to investing more heavily in that space-

I like to see who has the highest gross margins, because that means they've got the biggest moat, that means they can make the most money, and it's something that people don't look at enough, the gross margin.

Yeah, that's a great way to do it.

You could also look at who's growing the fastest as well, revenues.

But a- another way I, I think is really important is read the conference calls of, of the companies-

Definitely

... and, and, and their peers and their customers.

See who's partnering with who.

That will give you a good tell about who's best of breed, who has the best products, who's doing the best by their customers.

So my answer to this one is that I... you have to kind of, at times, take the risk, but you just use smaller amounts of your capital.

Yeah, I think that there's always a balance to everything, right? Uh, one thing I would point out is, uh, without knowing the stock, if the dividend investment is in the red, well, uh, maybe they're not growing their cashflow, their earnings.

Maybe they're not growing their dividends, and that could be a red flag that something's wrong about the company.

And he says, "How do you set price targets?" I am gonna defer to my colleague, who does a lot of the price target setting.

Well, look, I think that it's an art and a science, right? Um, there's no one standard rule of thumb to apply.

But what I will say, though, uh, when looking for price targets, what you can do is look at some historical multiples of where stocks trade at, and, and, and, and try and figure out how much you think the stock will earn out in the future, and apply that.

But another key considerations, too, is that if the company is, um, improving its margins, maybe taking share, then it would deserve to trade at a premium versus its historical levels, or maybe at least, uh, catch up, so to speak, uh, the multiple re-rate closer to some peers in this space.

You, on the other hand, I think you're far more analytic and more precise.

Well, there's more than one way to skin a cat.

I think one, uh, uh, one way you could do it is look at the price to earnings multiple of that company versus some of its peers, then compare things like revenue growth, gross margins, free cash flow, and c- stack them up one against each other, and that could be a way deter- to, to determine if a stock is cheap or expensive versus the group.

So what we try to do at all times is make it so that we do not swing from one company, and that's what makes us feel like you've got to do some trimming.

Yeah, I think there's also a difference too between trimming versus selling.

If we've learned anything from 2022, it's that even the best companies in the world with the best products, great balance sheet management-

Yeah.

Um, if you c- if you're able to continue to do the homework, then you can still hold 'em, especially if the prospects are quite good.

But yeah, it's a, it's a challenge because you don't wanna spread yourself too thin with a whole different number of stocks.

Uh, but look, if they're going higher, um, you know-

... versus stock further out.

Right, it's competition for dollars, like you brought u- uh, well, you mentioned.

But, uh, interest rates are also used, uh, to, in a, in a discounted cash flow model where, uh, investors, they look at the cash flows out, they estimate them, they discount them back, and when the interest rate's higher, they get discounted, discounted at a higher rate.

That lowers the present [laughs] value-

It's a reminder of what happens if you're patient in these, uh, uh, breakups.

Oh, absolutely, and some of the early notes on Cunity, uh, at the beginning of the year were, were saying how this could be kinda like the next GE Vernova spinoff where it just, it spins off from its parent company and, uh, it, you know, doubles in the year that follows, and, and we're seeing that now with a healthy, uh, beat and raise here, revenue and adjusted EPS much bigger than expected.

A 16-cent beat, but they raised the full-year outlook by 22 cents, so you love to see that where, uh, they raise the full year by more than the beat.

That's just strength.

Uh, on the call, management framed this narrative of how Moore's law, uh, means shrinking transistors, transistors to improve performance and power.

That has been the previous dynamic.

It's changed.

No one really cares about this thing except for the people who are buying it, Jeff, and they're buying it really furiously.

Oh, thank you

... over the weekend, uh, it, with Micron being a one that's front and center after it just continues to go parabolic here.

[laughs]

... maintaining the buy.

We just heard from Wendell Weeks, the CEO, last week.

He was on Mad Money to discuss the investor day, but also that big partnership with Nvidia, where they are ex- 10X-ing their optical solutions capacity and increasing U.S. fiber production by 50%.

That's one word, morningtake.

We did make some trades yesterday, taking profits in Goldman Sachs after a nice, uh, comeback off of its lows.

Absolutely.

Big position there.

So a little bit of a right-sizing.

We plowed that cash into J&J.

Uh, some healthcare names still struggling in this tape.

Um-

but nobody cared

...

the quarter was fine, just a bad day to report, and they, and again, you had this parabolic move.

Stock was as low as 145 this morning, so it, it's come back a little bit from there.

But, um, you know, this was, uh, a double year to date just the other day.

But you had a, a, a, a small revenue beat, earnings per share 70 cents, beating the street at 69 cents.

Uh, strong growth in optical communications, up 36% year over year.

What do you think?

That's one word, morningtake.

So we decided to sell the rest of Cisco, lock in a very nice gain in a stock that's up year to date, uh, which, uh, of course, the S&P is, is down mid-single digits, down today.

Um, but still like the networking AI story here, the, the accelerating product orders.

It's really the sec-

This is Splunk.

Yeah.

It, it's predominantly Splunk.

Um, Piper Sandler with a note saying today that, uh, you know, they can continue to give away market share, um, uh, consistently.

It's among the best management in the whole S&P.

And this is...

You've likened it to Google when they first rolled out Bard.

That was a, a huge whiff, a big miss versus ChatGPT and the other AI models.

But, um, Gemini has taken leadership.

Right.

Melius saying you don't do this into strength.

This is weakness.

And I think that's what we're feeling some degree.

Well, as the war continues on, we are always looking for companies and stocks that could have some, uh, a benefit from it.

We've highlighted, uh, a helium shortage could be good for Linde, uh, as helium has been in oversupply, and that could help their pricing.

It's doing well

... was, um, when we historically see increases prices at the pump, increase in prices at, at the pump, uh, it's simply good for Costco because, uh, people go maybe the extra mile or two to get that lower price.

And while they're at the gas st- at, at the, at the gas station at, um, they, they'll take a look i-in the store, and it increases traffic.