MOHNISH PABRAI 00:00
If you look at things today, so in my opinion, we have another Nifty Fifty going on today.
And it's more amongst a sliver of the tech space where you have, you know, I think Amazon more than – it's more than 576 times earnings now, it might be more than 600-700 times earnings.
And then you have Netflix, I think also naught of 200 times earnings. Twitter, Facebook – Telsa doesn't make money – if they make money, they will be at over 100 times. Solar City will be at 250 times. And Uber you know with the – well over $50 billion last round or so.
In fact, interesting thing about Uber – its valuation is 1/6 of Amazon. And so if you thought Amazon is a fair value, then one would question whether 1/6 is a correct number for Uber.
Basically, investors aren't focused right now on the valuations. What they're focused on is they believe that these businesses will be transformational long-term in terms of how we conduct our lives and they will be very much very central to our lives. And therefore, they are interested in going into these spaces.
And of course, one of the reasons things – one of the ways that bubbles get going is that when people start seeing prices go up, they feel like they're left out and they want to join that party before the train leaves the station.
And you know, I remembered I was – in 2000, I was living in Chicago. And I think it was late 1999 or early 2000, I was in downtown Chicago and I got into a cab, and a lot of the cab drivers were Indian and Pakistani in Chicago at the time.
So this Pakistani cab driver, you know, he noticed that I probably was from India or Pakistan and he says to me in Urdu, you know, "Apka Cisco k bare mein kya Khayal hain?." And for the sliver of you that didn't understand that – what he was saying is that what are your thoughts on Cisco as a stock?
And so, you know when the cab driver is focused on high-speed data networking stocks in the year 2000 and you know that it's like the shoe shine boy in 1929 giving you stock tips. And of course, Cisco never saw that market cap again, they were at 600 billion at that time and they never seen that again.
So these companies – and you know, we have a polarization going on just like Nifty Fifty right now where you have these sliver of these tech stocks that are valued very richly.
And then even the older techs, once you get to things like Oracle or Microsoft or any of these other companies, they have very even Apple and Google, et cetera have very [Inaudible] valuations.
And then when you get to kinda old economy stocks today, like – if you look at you know the banks, so you look at you know normal manufacturing companies et cetera. Again, you might even say they are undervalued because what happens when you have these bubbles is, the money is being flushed into one particular area.
And of course, right now one of the issues that investors face is on the fixed income side, there's no money to be made. So investors would normally be in fixed income are very frustrated and then they see these kinda high flyer, so you know I suspect some of that fixed income money is heading this way which is a huge amount.
And I also suspect that money that would normally go to the rest of the stock market is being kind of disproportionately funnel this way.