Investing Expert Reacts to Embarrassing Wall Street Clips

No, [laughter] no, >> I think it is starting to slow. >> Okay, [laughter] >> the last time I did it, I cried. This time, I hope to be stronger. >> Oh, [laughter] man. Oh, man. Today, I'm going to be watching the absolute worst of the money management industry caught live on camera. I haven't seen these clips, so I have no idea what's coming, so this should be kind of fun. [clears throat] And the first clip apparently is called fund manager doesn't know what his own investment does. >> And some individual names that you like right now and have actually been putting money in right now include Upstart. >> Yeah. So, well, Upstart's up about 25% just in 4 days since we since we bought it. We bought it on uh about 4 days ago. Uh so that's actually made a a nice little move in the short term. Probably a little extended right now, but longer term uh that that's a that's a good looking uh name. Very powerful, very strong earnings. These stocks are >> What do they do? I don't even know them. What do they do? >> Uh excuse me. >> What does Upstart do? >> Uh well, I'm I'm I'm sorry. >> What kind [music] of company is it? >> Yeah, I'm not You're breaking up. >> Oh. Uh, well, I guess we we've got an audio problem there, Mark. I'm sorry. >> That hedge fund manager had no idea what that company actually did. He invested in it based on the chart entirely. And it's just a good example of a kind of hubris that goes on out there. You can have a strategy that is really effective for 2 or 3 years when you're catching a ride on hard charging momentum stocks and you may not know anything about them at all and you're making money like crazy. And those are the stories you hear in contradiction to value investing where we have to know what the company does in order to figure out what it's worth in order to buy it when it's on sale. This was a classic because this guy was recommending that stock when it was at 400 as he said it had gone up 25% in 4 days, right? was catching this massive ride up and he happened to be pitching it on CNBC almost on the exact day that it peaked at 400 and then it crashed and it crashed all the way down and hasn't recovered yet. Anybody who bought it at 400 lost 95% of their money. So, we don't like strategies that are all about momentum. It just doesn't turn out well in the long run, although it looks really good in the short run sometimes. Okay, next clip. Um, number two, a fund manager who drove his hedge fund into the ground making big bets selling naked call options on natural gas futures. >> Good afternoon. This is James Cordier of optionsellers.com. Needless to say, the events of this past week have been incredibly devastating for our clients, who I rarely call clients around the office. I refer to our clients as family. In the Wall Street Journal this week, it spoke on and on about the movements in the crude oil market and the natural gas market. It talked about the incredible volatility that cost funds and fund managers and hedge funds their livelihood. This rogue wave that I was unable to navigate has likely cost me my hedge fund. And the reason why I had a hedge fund is because you are clients. I am so sorry that I was unable to manage the rogue wave that hit us this week. I wish I could name you all by person right now. All 290 clients of ours. [music] You were my family. And I'm sorry that this rogue wave capsized our boat. >> I mean, I really feel for that guy. He's obviously deeply emotional about what went on there, but what's going on here is just showing us the folly [music] of making naked bets on options. You just never know when the market's going to act irrationally and just blow your position up completely. So, we never do short calls. We do long calls. We do short puts when [music] we're willing to take the company at the price that we set for the option. It's not risky portfolio betting when you are ready to own the companies or you're ready to let go of them on a covered call. Crazy betting to do naked options like that, particularly in a volatile market like natural gas futures. Now, maybe people expected this guy to roll the dice. I don't know. I don't know what he had told them, but just from the way he's reacting to this, I have a strong suspicion that they just never thought this would ever happen. Same thing happened to Long-Term Capital back in the '90s. I mean, it blew up a couple of Nobel Prize winners and people had a lot of experience and no one who was invested in that thought that this could happen and it did. So, we want to make sure we understand what we're buying and we want to make sure if we're putting money with somebody, we understand what they're buying and what they're what they're doing with their your portfolio. And it's why we focus you guys so much on value investing strategies. These have been around for almost a hundred years now. They have been consistently effective through all kinds of ups and downs in the market. When you buy something and you know the value, you very rarely are going to have a real problem. It's just buying something when you don't know what it is you're getting or you're betting against the market that you can run into trouble. So, we just don't play that game. We don't want you guys to play it either. Okay. This next one is um simply titled Jim Kramer's Greatest Hits. Now, I know Jim and Jim blurbed my book and I want, you know, always thank him for that because it really helped sell rule number one. Jim has [music] created an entertainment empire over on CNBC. And that's really what it is. It's entertaining. But as a result of that, inevitably, he's going to make some really bad calls. I I suspect that's where we're going here. >> Don't move your money from Bear. That's just being silly. Don't be silly. >> Bear Stern shares are down [music] 90% this morning. >> Listen, Tesla's a sell sign. You don't want to own [music] this stuff. You don't want to lease it. Heck, you don't even you shouldn't even rent the darn thing. >> You know, Jim, I'd say, "Yeah, sure, Jim. You know, we're no Bear Stones. Uh, but [music] I think we're going to do okay." You know, frankly, he's contraindicator. >> I see Netflix coming down. I see competition everywhere in that business. I don't want anything to do with Netflix. I think it is starting to slow. [music] >> [laughter] >> those rebutes, right? Netflix to the moon. Tesla, maybe it's overpriced now, but it's phenomenal car company, right? You can't deny that. You know, I forgive him for it. I know a guy who created the inverse Jim Kramer ETF, sells everything he says buy and buys everything he says sell. And I don't know how it's done, but it has become sort of a running meme through the industry. And God bless you, Jim. You're a phenomenal entertainer, man. and an and obviously a great investor on his own right, but that show is entertainment. No question about it. Okay, next up we've got better CEO fires 900 people via a mass zoom call. No. No. Hi everyone. [music] Um, thank you for joining. Um, I come to you with not great news. The market has changed [music] as you know and uh we have to move [music] with it in order to survive so that hopefully we can continue to thrive and deliver on a mission. This isn't news that you're going to want to hear but ultimately it was my decision and I wanted you to hear from me. It's been a really really challenging decision to make. have. This is the second time in my career I'm doing this and I do not do not want to do this. The last time I did it, I cried. Um, this time I hope to be stronger, but we are laying off about 15% of the company >> for a number of reasons. If you're on this call, you are part of the unlucky group. >> [ __ ] you, dude. >> That is being laid off. Your employment here is terminated effective immediately. Are you [ __ ] kidding me? [laughter] >> Oh man. He's faced with this really impossible problem of letting go of 900 people. And how do you do that in the right way? Right. So, he thinks he's being a good guy by telling everybody individually via this video that they are now fired. And you can hear the reaction on that was really immediate and just shocked. Right. There's another way to do this and that is you have to treat people with compassion and with empathy. Most of these people would like to hear it from their boss or direct report to have them sit down and talk to them about what's going on. They have families and they have rent to pay and some of them just bought a house and this this is the worst kind of thing you can do to people. I mean, I've had to lay people off and I'm I'm telling you, I hate it. You try to make the below land as softly as you can because that's how you'd want it done to you, right? And the last clip here is P and O completes mass layoff by sending staff a pre-recorded video. >> Business has been struggling financially for the last few years and has lost around 100 million pounds each year for the last 2 years. These circumstances have resulted in a very difficult but necessary decision to restructure Pop Fair's workforce and operations in order to protect the future of the business. The company has made the decision that its vessels going forward will be primarily crewed by a third-party crew provider. Therefore, I am sorry to inform you that this means your employment is terminated with immediate effect on the grounds of redundancy. Your final day of employment is today. There are details in the written pack for where you can go for more information if you have any other questions. And please appreciate that I can't take questions and answers on this call given its format for obvious reasons. >> These guys, it sounds like they were laid off to be replaced by much less expensive foreign crews. And I'm reminded that Disney laid off their IT people and replaced them with people that they imported and paid a lower salary to. This is one of the real crimes of public companies, you guys. They are so driven by the bottom line that they effectively don't feel that they can take care of their people. I've always admired Ivon Shannard for stopping the growth at Patagonia and just saying we're done growing and we're not going to go public. We're not going to have a gun at our head every quarter by Wall Street telling us that we have to grow and we have to grow relentlessly. And I'm also reminded of a rule about restaurants that I read once. I don't know if it's really true, but basically that once a restaurant goes public, its quality goes downhill. And I know since I'm a big fan of Chipotle Mexican Grill that they've done a great job of upholding quality. As a general rule, what happens when a restaurant goes public is all of the things that they did to become really well-known and become really successful, great service, great food, those become targets for the bean counters in that public company's financial department to try to find a penny here and a penny there. And they basically strangle some companies and and you can see that in some some restaurants, they've just gone downhill since they went public. One of the really wonderful things about being a value investor is we're not looking for quarterly excellence. We're not looking for even annual excellence. We just want to be along for the ride and support the company in its mission. And hopefully part of that mission is to pay the CEO a reasonable wage relative to everybody in the company to treat people in the company as we would want to be treated ourselves. And one of the things you guys can do that's really phenomenal by being an individual investor is you can sort of vote with your feet. And if we all did that, in other words, if we all sold out of companies where the CEO is paying themselves an exorbitant fortune while chopping people's jobs, which happens, if we all just sold that company, guys, we control 85% of the money in the market. We're just handing it over to people on Wall Street and letting them do it, and they don't care. Become an individual investor. We would love to train you. We're going to have a 3-day workshop coming right up. We've got a live one in Atlanta coming up really soon. We don't even charge anything for the live workshop. just get there and be part of it. It's live with me and my team. We get crazy NPS scores and Trust Pilot scores. We have people tell us it's better than the education that they got in an Ivy League MBA program. And I don't doubt it. It's the best value investing workshop in the world by far. So, if you'd like to learn, we'd love to teach you. The description on how you get to the course is right there in the description or in the pen comment. And with that, hey guys, thanks for watching. Now, go play.