Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main street.

Frank Curzio: How is it going out there, it’s Thursday, May 23rd. I’m Frank Curzio host of the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets. So yes, I said Thursday, this is Thursday. My podcast always gets published on Wednesday. So why am I doing a day late? Well, I just took a vacation with my family. The first vacation I had with my family in two years. I’ve been going to Disney every now and then, which is about two hours away throughout the year. But it’s our first vacation in two years because it’s been very busy opening the business, Curzio Research, launching a security token offering where investor get equity stake in my business, that required quite a lot of time and efforts. And this is the first time ever where investors get an equity stake in a financial newsletter publisher through a security token.

Frank Curzio: But I needed to get away with the family, right? It’s why we work so hard. It’s why we do what we do, right? For our families to make things better for our kids. And we have an equity timeshare thing in the Dominican Republic and it’s at the Hard Rock hotel. And it’s something that we bought about four years ago, you get 15 weeks, all inclusive, you could use it any time. And it’s an international timeshare where we could vacation to several different Hard Rocks, pretty much all over the world. And I wanted my kids to experience what it’s like outside the US because most kids these days could be super spoiled good. Look at my kids, they’re spoiled. But yeah, they have phones at 13, 14 years old. They have access to social media and rant and rave about everything. They’re driving cars at 17, they’re usually wearing the latest line of new clothing and stuff like that. Hip clothes and the real world, there’s people who don’t have access to clean water, there’s people who don’t have access to food, to doctors.

Frank Curzio: And I wanted them to get a better understanding of the world, how they’re very fortunate to be living where they’re living in the US and just to put things in perspective, right? Not take things for granted, and it’s just something I wanted to do with my kids not that everybody has to do. But yes, I made sure I got something international. We can go at least once a year, but I haven’t gone in a couple of years because everything’s been busy, and we did it when our kids were in school. We made sure that they did a ton of work the weeks before because this week just made sense because it’s going to get very busy for us over the next couple of months as well.

Frank Curzio: So anyway, the Hard Rock is in Dominica and located in Punta Cana, it’s an awesome place. It’s on 20 acres of Beach Farm property. Has 12 major pools, right? So for adults, kids, partying, hanging out. Yeah, the kids pool has waterslides. There’s food at every pool, there’s liquor, there’s drinks, whatever you want. There’s over 20 restaurants you could eat at, and they serve everything from Italian, Mexican, Brazilian, buffets. You gets snacks, 24 hour room service, whatever you want. So, everything is free with the all-inclusive membership, almost everything, right? Except for excursions and things.

Frank Curzio: And so we’ve been going for five years now, this is our fourth time, but we missed a year. So, it’s just a really cool place to go. So, well you have all access to all these other places, why go there? Well they have this kid’s club where you can maybe drop your kids off and there’s 10 different girls that take them everywhere, all over the place. They do big contests, they take them to Michael Jackson shows and stuff because there’s a big theater there. They take them to the pools, lunch and dinner. You watch a crass arcade video games. And we know like four of those girls had been working over the years. My daughters love them, my wife keeps in touch with them through Facebook.

Frank Curzio: So my kids immediately, as soon as we get there, want to go to the kids club. And when they are there, we can’t get them out, right? They’re open from 10:00 AM to 11:00 PM we can’t get them out. They don’t want to leave. And we go on these vacations, say you don’t want to hang out with the kids. We actually feel guilty, but I guess our kids maybe just don’t want to hang out with us because they’re having so much fun and eventually pull them away and go on excursions and stuff like that. And they also have a casino there where my wife likes to play the slots, and we’ll play, and we’ll go to dart pools. They have shopping, relaxing, again, it’s just a really cool place.

Frank Curzio: Now this time around, things were going great. They have seven days and things were going great until the last 24 hours. So, we’re talking Monday night, and we’re leaving on Tuesday noon to come back. So I had the podcast plans on Wednesday, great guest, everything coming up in a minute. But Monday night, my little one, eight year old starts having bad stomach cramps. It’s one of Crohn’s disease, so I just figured out, we’re watching what she’s eating again international, but they have great food there, right? She’s been there before. So all of a sudden she starts throwing up. I’m like, okay, maybe it’s just one time. Maybe she ate something bad. Again, Crohn’s and stuff like that. She has a weak stomach as it is, but then she starts throwing up a few more times during the night. I said, okay, let’s see what happens when she wakes up.

Frank Curzio: Woke up Tuesday, our flight leaves at 12, six, seven, eight, she’s throwing up like crazy. So we basically called the doctor at the Hard Rock. That doctor diagnosed her with food poisoning, so she gets to the hospital right away, which was like 20, 25 minutes away from the hotel. They take blood tests, confirm that it’s food poisoning, and she can’t keep anything down. Even sips of water, she’s throwing up, right? So doc, tell us, listen, we’ve got IV’s in there, which is very important, right? Because, you got to be dehydrated, and she really couldn’t drink anything or eat anything. So, it’s smart to keep her 24 hours, and they were right. So they had IV on her and she started getting better. She wasn’t throwing up, she had diarrhea and everything.

Frank Curzio: But anyway, we had to cancel our flight, JetBlue. I always tell people about the horrible stories of airlines, JetBlue did a great job. I don’t get insurance for airlines because every time I’ve done it and three times, I needed it, it’s a massive, massive, massive process to get your money back. I’m just like, forget it, it’s not even worth it. You don’t go to the airlines, go to insurance, got to go fill out a whole bunch of paperwork, whatever. So they actually transferred everything without any fees, I guess they heard in voice say, listen, we had no choice and whatever. But they did a good job, so we were able to transfer that over through JetBlue.

Frank Curzio: So now we’re at the hospital and before we left the hospital, we talked to the manager, and they say, hey, don’t worry about the room. Everything’s cool. You guys are good, you have the room. We’re like fine, okay. So at the hospital in the emergency room, pretty much at five, six hours and then from the emergency she gets transferred to a regular room, right? So again, now she has IV and she’s okay. And, my wife’s hanging out with her the whole night. I have to go back to the hotel, pack everything and get everything in order. I take my other daughter back with me and when I go back to the hotel around five, 6:00 PM now in Tuesday again at the hospital whole time. We left without taking showers, we’re all wreck, whatever. Now the place sits on 20 acres. So when you walk to your room, it’s almost like three quarters of a mile. So, I go all the way to room, the hotel key doesn’t work. I’ve got to walk all the way back, again this after I spent the whole day in the hospital.

Frank Curzio: I go way back, I said, I have to wait on line. A lot of people are checking in, and I’m waiting on line for a good half an hour. And I go, and I say, the key doesn’t work. They said, well your room’s no longer available. I said, well, my luggage is in there. Told them the story. Manager comes out and says, well, okay, we put a hold on the room and this is what we’re going to do for you. We’re only going to charge you half price for today, and we’re only going to charge you $550 that’s their half price rate. Again, I don’t because we bought a package, and we get the whole week for free for another 15 weeks, we’re fine. It’s a VIP membership, we paid a lot of money for whatever. So they say, okay, we’re going to do you a favor. We understand your daughter’s sick, $550 stay extra night.

Frank Curzio: This is where things get interesting because I was like, are you kidding me? And then my daughter got food poisoning, eating your food, right? We eat all the food there, right? Different restaurants. We didn’t eat any place else, which I’m okay with, right? Restaurants have that. I’ve seen good restaurants have bad restaurants. We’ve been there all the time, everything’s been good, and it was just something that … Whatever. A bacteria on it, whatever it is, fine. That’s okay, but I’m here one extra day because of you. I’m not here using your facilities, I’m not here using your pools, I’m not hear using your restaurants. I’m at the hospital all day, have to pack my luggage, trying to get some sleep because none of us slept. My daughter was basically throwing up the whole night, and they were like, well, sorry, that’s too bad. Well, maybe she didn’t get sick from eating all food. I said, are you kidding me right now?

Frank Curzio: I said your doctor, your own doctor diagnosed her with food poising. I said, we only ate here. You can’t really go outside the facility, everything’s inside of the facility. They have everything, tons of restaurants. That’s where you stay, and they’re like, we don’t offer free rooms. And again, that’s where all hell broke loose. Now look, I’m not looking for a free hand out here, but the room at the hospital costs $1,800 which my insurance company’s going to cover the emergency part, but the fact she went to another room, they might not cover that. I’m not too sure, right? I haven’t talked to insurance company, hundreds of dollars in cabs going back and forth. I got lucky. I didn’t have to pay anything to transfer my flight on four hours’ notice before we were supposed to be there, right, Jet Blue did us a big favor. Doing the podcast one day late.

Frank Curzio: My oldest daughter’s supposed to be here on Wednesday because we’re supposed to fly in on Tuesday. She gets braces Wednesday, we cancel those appointments we have to reschedule. They’re also going to miss an extra day of school, which again, I made sure we did tons of work weeks before saying, go away with us. I never take my kids out of school to go on vacation again we just haven’t gone on vacation a while. I wanted to spend time with my family. But I went off on the first guy I was talking to. So then he grabs the manager, and she sits with me, and she’s like, well that’s all we could do for you, and it’s a great deal.

Frank Curzio: And I said, I have a VIP membership here. This is the fourth time I’ve come here, my wife and I go on tons of excursions with the kids, which I have to spend extra money for, we gamble at your casino. Despite being all inclusive, we spend a lot of money here. We do. We buy lots of stuff, have fun. Now, I told him you had the opportunity to do the right thing here and the only reason why I need the room and have to stay the extra night is because of you, because my daughter got food poisoning from eating at one of your restaurants, and you’re going to charge me for it? And she said that’s all we could do.

Frank Curzio: So I basically in a nice way told her that she’s an asshole, and I’m going to sell the membership, which I got tons of offers for since they only had three Hard Rock hotels you can go to when we first bought this membership and now they’re like 10. So when you try to buy it and said, hey, if you’re interested in selling it, you could sell your membership at big profit and this, and no, we liked there and everything. But it’s a company, it’s a hotel that made tons of money from us. We put a lot of money up front to buy this whole package, which if we go 15 times make sense. But if we don’t go then it would be expensive, and for $550 for the room, which by the way I said it’s 50% discount, I’m not too sure. Again, we bought the weeks pre time.

Frank Curzio: There’s well over a thousand rooms at this place. So you know they’re making $100,000 every night, but they didn’t even care. And I’m not here to rant in the opening, right? I mean everyone listening to this has their own story where they had a terrible experience traveling on vacation, buying something, whatever, I get it. So, I know you can feel me right now and everyone has their own stories, but there’s something much bigger to this is I’ve been doing business for 25 years, right? Been at different companies throughout that career. You guys know, you follow me, especially with the past 11, 12 years I’ve been doing this podcast, and I tell you guys everything. Up until about five to seven years ago, shit just changed. It just changed.

Frank Curzio: What the hell happened to people just doing the right thing? Because, there’s so few people and companies that do that these days. It’s like the contracts I signed with past employers before I got this job. Two of them basically lied to me, and you know what? Those two businesses are doing absolutely terrible. One stock crashed since I left, why? Because I wasn’t the only employee they screwed over, and the other closed their division as soon as I left. Imagine if they did the right thing. The franchise that I have today could have been under their umbrella if they just did the right thing. They just treated your employee the way you’re supposed to, you didn’t lie to me. You didn’t try to steal money from my podcast and tell me you’re going to pay me something and didn’t pay me. Just by doing the right thing, what happened to that? Instead, it’s all short term bullshit. How could I make a ton of money off this person over the next year or two? Well, you know what, to those two companies, look how that turned out for you.

Frank Curzio: And partnerships back in the day. I mean it’s like McDonald’s and Coca-Cola, it’s great for both companies, they’re partners forever. Nike-Apple, GoPro-Red Bull, Apple-Mastercard. I mean even Best Buy recently partnered with Amazon. But it’s got to be a deal if a partnership that works in both of your favor. And if I sign a partnership with someone, and I’m benefiting 90% they’re benefiting 10%, and they’re bringing a lot to the table then I’d restructure that deal later on and say, hey, let’s make … Because this is a great deal for both of us. Otherwise, that person’s going to be like, “Hey, you know what? It’s not a good deal for us. Let’s leave.” And you ruin the partnerships, especially the partnership could be like a Coke-Cola, McDonald’s, something like that. It’s a strategic partnership that benefits both companies.

Frank Curzio: I have my own business, my name’s on the door, we’re starting to partner with a lot of companies and every time I sit down with these companies, I say the same thing, it has to be a two way street. Let’s come up with a long-term plan, my name is on the door, I want to partner for decades, not the next six, 12 months where we’re screwing with people. And I promise I’m not going to be the one who gets screwed over, but what happened to this, this whole model? Because this happened over and over, and even the business deals that I signed, companies that I’ve worked for in the past, excuse me. Maybe over the past 10 years it’s been so bad like people screwing each other wildly. Especially in our business. When I see our business, Financial Newsletter Publishing business, it’s a small business. We all know each other. It’s not a zero sum game where, oh, I’m going to be able to take all the business away from my competitors, no. You get all my newsletters and on their newsletters. It’s like watching a news channel.

Frank Curzio: You’re going to watch CNBC or MSNBC, NBC, or you’ll watch Fox Business News and Newsmax whatever, you don’t have to watch one or subscribe to one, there’s … We know the numbers. People subscribe to a lot of different newsletters. If you potter, we could all do well together if we do the right thing. But even in our business as well, you see people just backdoor people. I don’t get it, I never understood that. If it doesn’t work, it doesn’t work, but why screw over with someone when it’s going to give you a bad name, that person’s going to tell 10 times more people, and even if it’s a good partnership, right?

Frank Curzio: Because people love to talk about the negative stuff and post it on social media and all that stuff. But it’s just crazy. It’s like absolutely insane. You go to Dominican Republic, they had to do the right thing. It’s not that I wanted, it’s not the 500 bucks, it’s we stayed an extra day because my daughter got food poisoning because of you. I’m in the hospital 24 hours. You think they’d be like, “Hey, you know what? You’ve been coming here for four years. You’re going to come here for another 10 years. Spend plenty of money.” We used a 500 bucks, it’s meaningless to you with the amount of money we’ll spend over the next five, six, seven years because we really like going there. Maybe we go to a different one, again it’s all under Hard Rock.

Frank Curzio: But really? And I told them you have the chance to do the right thing. If had to guess, I’m probably a top 5% customer there. I’ve been there four times, most people go there once, they go to different places. You had the opportunity to do the right thing, and you didn’t do it, and now you’re going to lose a client. But think about that guys. If you open your own business, if you’re doing that, I mean if you want long term partnerships, you want things that work, think long-term. Don’t think short term, you’re going to screw this person over. It just doesn’t make sense. Look at big companies, big companies, they don’t screw over those little guys all the time. Apple has deals with suppliers, Walmart has deals as well. Yes, the deals are going to be in favor of Walmart and Apple because they’re bigger companies, but still you want the partnerships to go long-term. Volume that you’re going to do with those people are incredible.

Frank Curzio: But I just don’t understand how people have it so many times to meet, friends, just do the right thing. I encourage you equity owners, I have a person who emailed me who came in for a $25,000 membership, which entitles, you have two years all of our services are free. You come in for a hundred grand, you get everything for free for life and this is a person that’s unbelievable like crypto, just a crypto analyst. Love him, he always comes up with brilliant ideas, talks to me all the time, really deep hardcore research and I told him, I said, you know what? He came here for $25,000, I said look I’m going to give you the membership for free for life. And he’s like, thanks. I said, no thank you. You give me a ton of research. Now I have a person I can rely on that if there’s something, remember crypto is a crazy world, if there’s something I don’t understand. He will answer me right away. We still talk. We send emails once a week or whatever.

Frank Curzio: But now you have a contact for life who could help me. Not only help me help my subscribers to my Crypto Intelligence Newsletter. I mean, that’s the way things should be, right? When you do the right thing, but I don’t understand why that happens. I mean, email me, frankcurzio@research.com I’m interested to know more.

Frank Curzio: Again guys, I want to hear stories from you, because I see this all the time, and I’m engulfed in business all the time. I talk to so many people, I have a very big network. And time and time again, I see this where people are just getting screwed, and they get screwed, and it results … I’m telling you that people that have done this, even in our industry, you’re seeing their business decline now. It happened to me at a company I worked for previously a while ago and now it’s gotten around that I wasn’t the only person they screwed in the way out they screwed a lot of other people. Now, nobody goes there. It’s reflected in their stock price. It’s crashed completely, and it’s horrible because they lost a lot of talent. They screwed a lot of people over, so the long-term business model is broken. That’s why your stock is terrible, that’s why your company is terrible.

Frank Curzio: But I just don’t understand why people don’t do the right thing. Anyway, a little bit of rant there, but now I’m back at the states taping this from my office in Florida. My daughter is still sick, not throwing up anymore. Has bad stomach cramps, and the poor kid can’t catch a break, but she’s doing okay. She’ll probably be better the next couple of days, but that’s why I’m taping this podcast one day late, which I apologize for. Just that I always, always publish, we’ll shoot our blog on Wednesday and try to never miss a week. So, we didn’t miss a week, but it got published a day later. That’s my guests, it’s the one that only Andrew Horowitz. Who was nice enough to be very flexible since we were booked yesterday and everything’s got to get scheduled, and do the interview yesterday. And he was able to say, hey, you know what I’ll do for you today, which is a really cool.

Frank Curzio: Andrew is the founder and CEO of Horowitz and Company where he manages money for individuals and institutions. He’s also the host of Discipline Investor Podcast, which is the second best podcast on iTunes in the business section. That was a joking. Actually, Andrew is probably, I’m pretty sure this as a fact, the only one in the business segment that’s been doing a podcast longer than me by around a year I think.

Frank Curzio: So, I’ve been doing it, I think I’m on 12 years now, and it may be more out there, I just haven’t seen it. But I know most podcasts that popped up over the last two years are getting very popular. We were doing a land podcast was not a real medium, now it’s every place on every website. Everyone’s doing podcasts. It’s just amazing to see this grow and all audience grow as the industry grows. But Andrew is going to break down the latest on the trade war with China. It’s got to be a good conversation guys, because we have a different opinion, which I always like. Don’t look at it as like, oh, I’m not going to listen to, just listen to the positives and negatives. It’s good. You can agree with him, agree with me. You’re an investor. The best thing for investors is get both sides of the story, not just one. There’s going to be a great conversation.

Frank Curzio: Okay. Talk about what kind of impact if the trade war continues and what kind of impact it’s going to have on our economy and individual stocks. And we’re going to break down recent earning season, which is over now. A little bit better than expected, but many companies who offered guidance were very conservative. Not a lot of companies raised guidance because a lot of those companies came on the deck conference call and said, look, we’re not really factoring tariffs. There’s a lot of uncertainty in the market right now. We know uncertainty is not good for stocks. Does that mean the market’s going to fall even more? Andrew is going to let you know.

Frank Curzio: It’s a fantastic conversation. And of course he’s going to share some of his favorite stocks to buy and several shorts. He’s going to share at least 10 ideas with you, so a lot of great ideas, which I know you guys love, and you know what? Let’s get to that interview right now. Andrew Horowitz, thanks so much for joining us again on the podcast.

Andrew Horowitz: Hey Frankie, what’s going on there in the North?

Frank Curzio: Ah, well wait, what’s going on in North? I’d say what’s going on everywhere. I mean, the trade wars, right? I mean, it’s dominating the news. We’ve always had a little bit of difference of opinion over this pretty much over the last 12, 18 months where I argue that China has no choice to do a deal with us. Of course, they have to save face, put up a strong united front, but at the end of the day, if they don’t do a deal they’re going to fall into depression, which we saw in 2018 as the market crashed by more than 20%. But at this stage, I’ll be honest with you, I thought a deal would’ve been done last year. Now we’re pushing, I mean, we’re going further and further into 2019. What are your thoughts now because it is moving the market a lot on a daily basis. What are your thoughts on the trade war? Should investors be concerned like long-term and say, okay, we have to restructure our portfolios, or should we just get out of the market to see what’s going on? There’s a lot of uncertainty out there.

Andrew Horowitz: So, let’s get a couple of things straight. So, over the last 18 months since we started talking about this, the whole thing has changed. The dynamic of this trade war has gone from a skirmish, a kerfuffle, a disagreement, so I think we both agree now it’s a trade war, right?

Frank Curzio: Is it a trade war? I wouldn’t go towards trade way.

Andrew Horowitz: Wait, wait, wait, if it’s not a trade war, how do you define a trade war? Because this is the thing that’s going on. First of all, I don’t really know if the label means anything per se, but when we’re going off after [inaudible 00:22:12] on the other side. We’re arresting their people, when we’re going directly to tariff everything and look to try to crush their economy, I don’t know … And they do retaliations on our companies and we’re starting to see all of the ramifications from this. I just don’t know what else you want to call it. What’s a trade war if this isn’t a trade war?

Frank Curzio: Because right now I think there’s still potential for a deal. There’s a lot more where it’s not all out 25% tariffs on everything, blow out, we’re not the only China at all. Yes, they stopped talking for the past week or so. But for me, and it would have to be official where China’s like we’re never ever dealing with you. To hell with you, and US where it’s actually set where even the companies, and this is where it’s difficult. They reported decent earnings, decent earning season. I think they declined a little bit year over year, but we had a great year last year. But they all offered guidance and a lot of these companies didn’t … Even the ones who offered inline guidance, positive guidance, they were all conservative.

Frank Curzio: And I’ve heard it so many times with the conference calls where we’re not too sure what’s going on with tariffs. And that’s not factored into our estimates. When they’re factoring into the estimates, that’s when I’m going to say there’s an actual trade war going on. Until the USA and China say, listen, there’s no negotiation no matter what. But for me, I just think for both of these economies, I think China would get hit a lot harder than we would of course. And we saw that with the numbers, their market declined by more than 20% ours fell 6% last year. This year they were up more than 30% when things are going good in the first through April, we up around 13%, 14%. So, and now it-

Andrew Horowitz: Okay, Frank, let me just interrupt you. The reason their economy went up and ours to a degree was yes, there was a hope for resolution of some sort. But on the other hand, really it was the stimulus that was pumped in. The massive amount of stimulus as their economy was coming down, the GDP was softening the exports were seeing problems. Domestic issues were happening. There was a massive amount of stimulus that was put forth by China. They’re usually, historically, they’ve been very quick to start putting things back in, and our bed did the same thing at the beginning of the year. If that didn’t happen, we’d be in a much different boat right now.

Andrew Horowitz: However, I’ll go with you with the fact that, okay, a trade war is a, well say a stop, like a work stoppage, right? A trade stoppage. But, we’re getting to the point that we are now seeing that there is a real fight brewing. And I question, I really do question how far we really came to an agreement versus a lot of rhetoric. One of the things you have to understand, Frank, is that you’ve been to Asia, right?

Frank Curzio: Yup.

Andrew Horowitz: There’s a much different culture there than there is here.

Frank Curzio: Of course.

Andrew Horowitz: And they’re saving face. They’ve been conquered. Has the United States ever been conquered? Never. How old are we? 200 and something years old, right?

Frank Curzio: Mm-hmm (affirmative).

Andrew Horowitz: Asia, those countries have been conquered. They have vowed never to be conquered again, whether it’s by trade or by actual boots on the ground, you have people coming in and China’s been conquered, and they’ve had various times in their history where parts of China or areas and Japan came in the last time, and really destroyed Shanghai and a variety of other areas. They do not want to have any kind of major power that is going to have their hand on their throat or their foot on their throat. And I think that’s something to be said that in this negotiation process, the way we’re going at this, which is, hey China, listen, you don’t like what we’re doing. We’re going to raise the tax overnight on a Sunday out of nowhere. Hey, you know what? We’re going to put …

Andrew Horowitz: When a deal was supposed to happen, Frank, within days, the deal was supposed to happen. And all of a sudden, you know what, five days before we’re going to put on an extra tariff on $300 billion potentially and we’re going to raise the 10% to 25% it’s like, what’s going on here? It seems to me that our administration, president Trump doesn’t want to do a deal with them, wants to keep on squeezing them. They’re not innocent either. China’s not innocent either. What is that doing? Here’s the problem, whatever you want to call it. In my opinion, we have a situation, we have massive uncertainty and I think we both can agree that uncertainty does not flow well down to stocks and we have deals that are on, off, increases, decreases. We have bans on companies then walking it back. We have a deal that’s on, a deal that’s off and there’s too much bs going on. I mean, I just don’t see this as a negotiation, I really see this as amateur hour.

Frank Curzio: It may be, but here’s … And for me, a lot of people have written into, especially because our podcast and I think you’re the only one that’s been doing a podcast longer than me, right? Maybe like a year or two longer than maybe, we’ve been doing it well over 10 years. And it’s global, right? So I have a lot of Asian investors that email and it’s cool, they give me the whole scope. And the same thing they said the same argument like, hey, it’s very proud nation. They’ve been conquered, it’s different now, 30 years. But I have to say, I don’t put that in the same category of what’s going on today because it’s different. I mean, they’re stealing our intellectual property. They have a massive trade deficit with us, which we can make up.

Frank Curzio: We have unlimited natural gas, they need natural gas. Anything we can make up that trade balance somehow. So the fact that we’re asking them to play fair is a lot different than us going there and bullying them, which it may seem like we’re bullying them, but at the end of the day, what’s going on with China and us it has to change. I mean, it’s affecting us. It’s affecting our profits and for China to really say and have that pride factor and say, you know what, I don’t even care. I think China, to me it seems like China’s not doing the right thing here and they just need to do the right thing a little bit. And the risk of them saying, no, is a depression. Okay, it’s going to be a depression. Just forget about the numbers because the numbers suggested 100% but look at … I mean China is a huge producer of our goods, we are the richest country in the world. We’re going to buy the hell out everything they sell.

Frank Curzio: We’ll find ways to buy it someplace else, but it’s almost like an Apple supplier trying to play hardball with Apple when Apple could go to almost anybody else. Yes, it’s difficult. Yes, it will require moving things around. Yes, it would be more expensive. But the whole China economy at the end of the day, do they care? Because, did you really look at their numbers last year? I mean those numbers when you look at housing and retail, I mean they crashed, everything crashed and you’re looking at an entire economy going, wait, can’t we work out something? We could say whatever we want. Say we fought the US a terrible but [crosstalk 00:28:38].

Andrew Horowitz: I agree.

Frank Curzio: To me, I’m just surprised none of that is really going on where it’s not like, hey, we’re picking on a tiny country or we’re trying to make things to me with the numbers and I’ve been following this story for over two years and written 20, 30 page reports on it. We just want it to be a little bit more fair here. So, when I look at what’s at stake in terms of hay to solve this, it seems like it could be a lot easy to solve this leaving thing behind closed doors than to risk everything. And the reason why we in CR economy come down, it’s because of the tax reforms, right? I mean that added a ton of money to the balance sheets where it didn’t hurt us last year. If we didn’t it would have crushed us. But we’re seeing it this year.

Frank Curzio: So it just makes sense if both parties were to negotiate something. But, you brought up a good point because I love … We have two different opinions on this and it’s great, but at the end of the day we both agree this creates uncertainty. So, how do we play the stock market? How do people view this? Because they’re reading every single day, the market’s up 350 then it’s up 250, down 350, we’re really only like 4% off the old time highs here.

Andrew Horowitz: Yup. It seems like a crash of course.

Frank Curzio: But how do we play this? Because this is something where individual investors who listen to our podcast for this, is it something where they need to readjust and they go into more, sounds crazy, but small caps which aren’t going to be as leveraged to international, right? They do most of the-

Andrew Horowitz: Meanwhile, I looked at the small caps just this week and the small caps are really not doing well compared to the large caps. I think that we’ve seen once again a move into the more we’ll say stable companies, like Apples and the Facebooks and those had been holding up really well. Those and Microsoft, they’ve had a great amount of … To a great degree, they are represented in the various indices and that’s been helping. Let me just mention one more thing. Just go back one second. I agree with you. I think there’s two sides of this trade discussion.

Andrew Horowitz: What is the intellectual property as well as fairness in terms of how they deal with our technology and our IP? The other one is about this whole trade deficit thing. Don’t forget who created this trade deficit with them, right? We shipped the jobs over there. We wanted cheaper goods, we felt it was better by our companies to produce and manufacture elsewhere that was much more cost efficient because we were able to then bring it back here and sell it cheaper and sell more of it. There lies a little bit of a problem with that. So I don’t know how that’s going to solve because we’re just going to move it to another country like Vietnam or maybe Indonesia, and that is going to create another problem with those countries.

Andrew Horowitz: Intellectual property, I totally 100% agree with the way that they are stealing things like technology, but just look at the fake products that they have. Nobody really talks about IP, they all think about technology, but look at the fake bags, the fake clothes, the fake luggage. Just all that kind of fake that they put out is a real problem for our companies as well and companies around the world. I think we should try to tackle the intellectual property part and not worry so much about the trade issue as much. Let them make money, it’s good for us too. Who cares? Seriously, who cares?

Andrew Horowitz: To get back to your other question, what do you do? I think that there is something to be said about de risking a little bit because the question you have to ask yourself is do I want to actually be out there over the near term, let’s say six months to a year with the potential for companies having caught the cold that’s out there from the rest of the world. Don’t forget, it’s not just China. We’ve got Europe showing horrible numbers across the board. Emerging markets, very questionable. So now if you want to look at this, and you want to say, okay, here we are. I have a portfolio. I don’t think you should be super allocated towards technology right now. I think that could be a problem for you. I think that maybe de-risking somewhat if you want to stay allocated to equities, et cetera. Or allocated to positions, that’s fine, but try to move it into the … Or some of the staples, higher yielding physicians.

Andrew Horowitz: Looking at some of the more beaten down areas we like and seemingly energy has come into our portfolio recently, which I find very odd, but it has. Stay away from the super aggressive IPOs that move very freely, and stay away from some of the China shares just to see when this thing dissipates a little bit here. So, I think that a de risking in terms of sector allocation, in terms of the type of stocks that you’re going to be looking at, staying more domestic would be helpful, although that limits you. Small caps will get hit because they are significantly … The small cap universe is just when markets come down, they get hit harder, they’re less liquid, it’s a whole different animal there. But I think de risking is not inappropriate mechanism right now because there’s no reason just to try to be a hero in the face of what could be a continuing economic slowdown, which brings me to where we are.

Frank Curzio: Yup.

Andrew Horowitz: Now Frank, we saw a 3.2% GDP number, look great, like wow. Now remember something that was Q1. They’ve been tinkering with Q1 GDP from a statistical basis for a while because they were very-

Frank Curzio: Just three revisions to everything, so. But the first number always is the biggest and then nobody really pays attention to the revisions, and that could be 2.1, but it’s under revisions. It’s just funny when I went with the numbers.

Andrew Horowitz: But particularly with GDP the first quarter has always been this weird aberration in terms of last several, many years. And there was always concerned by the economic community about, hey, what’s going on with GDP first quarter that it gets so wacky and seasonally adjusted issues. What’s the story? So they tried a couple of years ago to put a new calculation and that’s always a problem into the GDP number. And here we go with this crazy number 3.2% which blew it out of the water from everybody’s perspective. One of the things that I’ve never really understood about what is included in GDP? This one particular component and that’s inventories. The greater the build on inventories, the more effect it has on GDP. GDP, inventory builds actually or inventory builds actually have a positive appearance in the GDP numbers.

Andrew Horowitz: So therefore what we’re saying here is if companies either produce a lot, create a lot of inventories, that’s good for GDP, that makes sense to me. However, if there’s a big increase to inventories because maybe people aren’t buying things, that also helps GDP. So, if you strip out the inventory number from the last GDP number, which actually accounted for 0.7% of GDP, you’re talking about still a good number, 2.5% or so, 2.4, 2.5% depending on how you round it. But that’s not the kind of growth you want to see. It’s like when you look at a stock, right? If you see that earnings are up just because of buybacks, that’s not as good as organic growth from revenues, cost cutting to a degree and more efficiencies, right? You follow what I’m saying?

Frank Curzio: Yeah, yeah, no, I’m following you.

Andrew Horowitz: So this is not a good GDP number. It wasn’t a good GD … It fine on the outside, I get that. But this is still, there was some underlying issues that showed a lot of weakness in the economy. Manufacturing has been slowing, retail sales have been slowing, housing is starting to come back a little bit and stabilize. But the one thing that’s been really good is employment has been just dynamic and dramatic and great. But if you look at what’s happening with retail, the consumer, yes the consumer confidence index popped back a little bit last month and that was good. But a lot of things are starting to slow down. And when I see that and I see what’s going on, I do wonder. Okay. Earnings, as you said, earning season was good. However, it was a really low bar, Frank.

Frank Curzio: Oh yeah, no, when I say good, it beat expectations, which could be nothing, right? Because expectations and that’s when we realize even Apple and not to go off point here really quick. The reason why Apple beat their numbers last three quarters is because those numbers were significantly lowered by the analysts into the … If you look at the numbers, earnings and sales are both declining year over year for Apple. People wouldn’t know that because they repeat the numbers that the analysts put out there that they lowered. So, if you’re lowering GDP numbers and you’re just beating them, it doesn’t …

Frank Curzio: When I say, earnings were better than expected, it means it was better than what the projections were because we were projected I think a 3% loss and I think it’s around a half percent loss. It might be even when all is said and done, I think like 98% of the companies report all ready. But yes, but listen-

Andrew Horowitz: And no growth is not a problem on earnings because we’ve had such an incredible 20% plus earnings growth last quarter, last year. So that’s not the worst thing in the world that we didn’t have earnings growth. However, we saw PES retrofit and get right back up to 60 and a half on forward on S&P 500 and a lot of that was due to, as they call it, expansion of earnings multiples rather than earnings actually moving up. So, that was one issue there.

Andrew Horowitz: I mean, I just think that it’s time that we want to be a little bit more cautious now. There’s no reason to be cavalier and balls to the wall out there, it just doesn’t make sense. Our portfolio, the TDI manage growth strategy. Let me give you a quick 20 seconds snippet here. The manage growth strategy was a long short strategy that we manage. We use a screening criteria to pull in stocks for a core position. There are several different components of this strategy. But one of them is a core equity exposure.

Andrew Horowitz: We start with about 5,000 stocks. We filter it down utilizing things like earnings growth over many, many different years and revenue growth and margin expansion and ROE, a variety of things. So, when we come down to that, what’s interesting is we had about, last year about 65 stocks that made the cut. So therefore we had a higher exposure to equities. The last time, which was last month, 41 stocks. That’s a big differential. The lowest I’ve ever seen is about 30ish, about 30, I think it was about 32 maybe. Highest I’ve ever seen about 72. So now down 40, which means companies are not meeting the criteria for earnings growth, for revenue growth, for margin expansion, something behind all this is a problem. And I think that really, really states the story really well that why have xx exposure if it’s not warranted?

Frank Curzio: Now, when you look at those 30 stocks that popped up, are you also factoring in because you said earlier that hey, you know what, it’s probably a good time to get a little defensive, whether it’s consumer staples, whether it’s utilities, is that factoring in? Because I know your strategy is looking at earnings growth, but what do some of the companies that actually … Not to give anything away, I know people pay for your research and stuff like that.

Andrew Horowitz: Give it all away man. Give it all away to the [crosstalk 00:39:19].

Frank Curzio: Give them all 30, name them right now, no. But what are some of those names? Are they in the technology sector? Because like you said, that’s a risk too with everything going on with [inaudible 00:39:27] and who knows, right? With semiconductors and Apple slowing completely, which nobody’s really talking about. Looking at their services even though it is an iPhone company, and iPhone sales are slowing significantly. So it’s-

Andrew Horowitz: So, let me give you some of these names. Essentially we have a lot more energy in this all of a sudden. I don’t even know why, we have a variety of limited part, the LPs in terms of ProPetro Holdings, PagSeguro Digital is in there, that’s a digital … Trade Desk is in there now. US Steel made it, which I thought was really fascinating. Let’s go through here, Antero Midstream is in there now. Cabot Oil and Gas. I was really surprised the first time, Carrizo oil. This is the first time I’ve seen a lot of this. Devon Energy, this is the first time I saw so much energy come into this screen in the last eight years.

Andrew Horowitz: We also have Canada Goose, Five Below, Copart, Microsoft is in there, Lululemon’s in there. KEMET is in there, Intuit is in there, Visa. I’m just looking at all these names here, CBRE group, Commons. I gave you enough there. That’s enough.

Frank Curzio: If anyone is following along. So, these are basically companies that have grown revenues, growing sales, I guess greater than the overall market. I know there’s a lot more detail into it.

Andrew Horowitz: Well, it’s more detailed and that’s also has a high ROE and has margin expansion, probably eight other components that are showing these to be superior, “superior.” Now listen, they’ll fall along the market to a degree, right? But they have better fundamentals than we’re seeing elsewhere. And, these stocks, generally speaking have done pretty well compared to the market. This is that core holding that we have. But now, like I said, we’re down to a 50% exposure on equities right now. That’s much lower than we’ve been. So, it’s saying something. And we use that as always a tell on markets. How many stocks are making it through the screen, give us a really good tell on what’s happening with the bigger picture.

Frank Curzio: Now, okay. Now, we talked about the big picture, you talked about these companies that you like, but you also, because you said, I say, what topics we want to touch on whenever we go on each other’s podcasts because you’re covering a lot of stuff. I’m covered a lot of stuff and you actually had a lot of companies that you said it’s either short or avoid, which Big-Box retailers all reported horrible numbers. I thought Macy’s numbers were actually pretty good and they reported in line for a stock at a 52 week low. But again, that stock fell a little bit because they said tariffs aren’t factored in. So and we’re going to have to make adjustments if this trade war really takes place. And, right out there okay.

Frank Curzio: But that uncertainty, again, that uncertainty hurts these stocks. And you also throw that name, Best Buy as well, that you said, maybe you should short. Is it all obviously consumer names there. Go a little bit more into those.

Andrew Horowitz: So I mean, the Big-Box retail, you and I have also talked about this. The mall is dead, the mall is not dead, it’s back to dead again. I’ve been into a few malls but it’s only in my area and they’re like, what’s going on here? I mean, I went to Dillard’s the other day and I’m like, I think I was the only one on the floor. I mean, it was ridiculous. And they don’t have sales, they don’t have stuff on the racks. It’s like just this, eh. I think the Big-Box retailers still do not get it. Now, whether they oversold and whether they on a theme for a while back a year ago or so, and then you correctly said, hey, they’re not dead. And you had a huge run on many of these names.

Andrew Horowitz: I think a Nordstrom’s, has had a nine year low as of their recent numbers. The problem is that the next generation doesn’t buy up. Forget the next generation. I’m not buying the same way I used to buy, are you?

Frank Curzio: No.

Andrew Horowitz: I buy stuff online. If it doesn’t fit I send it back.

Frank Curzio: Clothes are tough. Clothes are tougher. I feel like [crosstalk 00:43:17]. But you have a guy like me who’s on the chubby side, it’s a little different. So, everything extra-large isn’t really an extra-large. Sometimes an extra-large for Calvin Klein is really like an extra small. So, I have to go in and try these things on. But I still enjoy … So, if I’m going away for a trip and I just want to get a couple of shirts, I’ll go to a Kohl’s because at least they have a large selection or something, but it’s not like I’m a huge Kohl’s shopper or a Macy’s shopper. But, when I do go there, I do see people there. I think that they’re trying to adjust.

Frank Curzio: And the reason why I’ve always said that malls aren’t dead is, one, if you look at Christmas time, you can’t even get a space, there’s millions. But more important is there’s a mix, right? I mean there’s a reason why Amazon is looking to open up Big-Box stores. There’s a reason why they partnering with Kohl’s, there’s a reason why. They might take over Big-Box retailer this way, yes, one day delivery, it goes out to 70% of the people they can reach. But what about the other 30%? You’re going to need more distribution, and they can’t open up another headquarters ever again in this country, right? Because with all the backlash they’re going to get, even if you say we’re going to create five billion dollars and hundred thousand jobs, politicians find a way to just shoot it down, right? So even though they don’t understand the math, that’s fine.

Frank Curzio: But when I look at even Amazon, there is a mix. Of course, you want to have more online, right? Less employee, I get it we all know that model. But the Best Buy model has worked up to this point, which is you seeing the short, but what Best Buy does is say, hey, we’re matching everybody, they are partnered with Amazon, but what they make money on is this services. So hey, you know what? You want a flat screen TV, we’ll put on your wall for you, we’ll come to your house. We’ll do all the settings, we’ll have everything done for you, and that’s pure margin, right? That’s pure profit for them. So they found ways to adjust while you still think the Big-Box retailers are struggling, but I can’t say being completely dead considering that a company like Amazon is partnering with Best Buy is partnering with Kohl’s.

Andrew Horowitz: I agree with you. No, no, what I’m saying is the mall is a problem and the concept of the mall being a … Listen, when I was a kid and probably we’re not too far away from age.

Frank Curzio: No.

Andrew Horowitz: What did we do on the weekends?

Frank Curzio: We were at the malls all the time.

Andrew Horowitz: We were at the mall. That’s what we did, we went to the mall. We went to the mall. I mean, it’s not the same thing anymore because people can get on their screens and just talk to each other and do a multiple chat and they don’t have to, they hang out like a hangout with somebody on their phone. It’s not where you have to go to the mall and hang out there and you have a little lunch and maybe you shop and he grew up in that and that’s what you did it. All I’m saying is that there are many other options that are better, Best Buy, we just looked at the technical.

Andrew Horowitz: We’re short Best Buy by the way, we traded a couple of times recently. The earnings came out this week, and the earnings actually beat pretty well. However, they were reaffirming their full year guidance, which meant that if their earnings beat by 20 cents, or maybe it was 14 I don’t remember the exact beat. Something like 15 cents, we’ll call it this quarter. That means somewhere on the back end of the year, they’re going to take it off of that, right? Unless they’re being very conservative. Secondly, they also said that, and I think they were also talking about the tariff issue and there’s some uncertainty there. Their revenues beat slightly, and on top of that, their same store sales were up ever so higher about 1%, same store sales growth. So, stock is, I don’t know, it was down 5% after earnings. So that’s good for us. But the thing is we’re going to trade it back and forth here. We just think it’s a little bit over valued for what it is, and the other options that are out there.

Andrew Horowitz: However, if I was going to buy a big screen TV, yes, I would go there and then put them in their place and say, listen, I can get it here for that price. And they’ll go, okay, we’ll match. Which isn’t the best thing for them because you think that they’re putting out the product, it needs to be the price where they make their right amount on it. But anything smaller, I’m buying somewhere else. And there’s plenty of places to buy stuff these days and plenty of opportunity to price shop and just, I don’t have to go anywhere, deal with traffic, deal with people that are parking and trying to hit my car and I’ll just, okay just buy it online and get it right there.

Andrew Horowitz: So, I don’t hate this stock, I just don’t like it. And I think it’s a good play on the retail space, that is an area that we can go short. Other stuff, I don’t know how much more down some of these companies can go. The Nordstrom’s, the Dillard’s, the Macy’s, the Big-Box guys, I’m not getting near those because they swung pretty hard. So, the other one is Tesla. I don’t know if we want to talk about this, but I’ve been really negative on Tesla since, probably Tesla’s IPO.

Frank Curzio: So you’re still down like 30% of that trade war.

Andrew Horowitz: Yeah, I’ve short a couple of times, but I really haven’t … I talk a short game, but I don’t play the short game on Tesla. Here and there, a little bit here and there. I think that the one thing that really troubles me the most about Tesla aside from the fact that Elon Musk needs to stop tweeting and he needs to get some sleep, is that the biggest thing that really irks me is that tweet that he did about the funding secured. I got to tell you something. There’s a lot of things that I do, I listen to his conference calls and he’s just all over the place. Doesn’t make a lot of sense, and he doesn’t give you any detail.

Andrew Horowitz: He’s very short tempered with anybody that goes against anything that he talks about. The thing is that, that 420 funding security tweet, it troubled me so much about this company because it was so desperate and so weird. And so frankly, against SCC standards, et cetera. Now I’m thinking, I don’t think he’s fit to be a manager at Tesla. I think if Tesla, here’s something for you, if he steps down from the board and from the CEO position into just an engineering or some other position and they bring on an adult to run the company, I would consider buying the company, maybe. Otherwise no touch for me.

Frank Curzio: Yeah, I mean, I agree with Tesla. I mean it’s coming down, you’re seeing slower growth and it’s at a crazy evaluation, right? Which is fine. We’ve seen Apple, we’ve seen Netflix at crazy evaluations though back in 2002, four, six, and those stocks are up tremendously. But that’s because they saw earnings growth, huge sales growth, which you’re not seeing right now. The estimates is still too high, but you brought up a good point, it’s just very dangerous to short.

Frank Curzio: I mean, they have space X, who knows, it’s a multibillion dollar evaluation. I know he took over his solar company, which blew up in the shorts face. So, for me, I wouldn’t tell people to really short it here, I think it’s dangerous short, but I think it is going lower. But again, when you short and you’re wrong, you could really, really get crushed. But I definitely agree with your thesis on Tesla. It seems like it’s going lower here.

Andrew Horowitz: I agree too. I’m a Tesla shorter in commentary.

Frank Curzio: And it’s like guys, if you’re Tesla bullet there, just go on Twitter. I mean, Twitter is amazing. I mean, they are die hards, that’s all they post. It’s crazy, it’s nuts. But, the bears definitely been right and you’re seeing a much slower growth, more competition into the market. But I wanted to go into one of the stock sheet that you do like, which is a conservative. Before I do that, because we’ve been talking about, hey, there is uncertainty in the market. We don’t know what’s going on with tariffs. I’ve seen a lot of companies beat estimates like you pointed out with Best Buy, but they didn’t raise their overall yearly guidance, right? And a lot of them said, well we don’t know what’s going on with tariffs. We have an election cycle coming out, right? Presidential election coming up next year. We know that people, the voters invest with their wallets and they’re definitely not richer today than they were three, four years ago.

Frank Curzio: However, the market does happen to crash going into election. It’s going to be very bad for Trump. Trump has the ability to solve that by doing a deal with China. Do you see this as a risk? The thesis where, we’re both saying, hey, it might be good to be a little conservative here because if this is a market really coming down, he’s going to do everything in his power I think to do a deal because he won’t risk his presidency. And if he does do a deal, I mean again we have earnings guidance that no company is really raising that guidance significantly because there’s so much uncertainty. But if we didn’t have towers on the table, I bet you about 15% of those 20% of those companies would have raised guidance for the year. It just makes sense to be conservative. So, if we solve the tower problem, I mean is that a risk? You think stocks will go much higher from here.

Andrew Horowitz: So I think, I have always been of the mindset that any deal that we do with China is going to be a watered down just deal for the sake of saying we’re doing a deal. Very much like the Nafta Redo. I think that it was going to end with just, hey, we got a great deal. One of the great, well greatest deal in all of history. No other president could get a deal like this, and it’s going to be a few things that are changed and maybe they’ll buy some more soy beans and maybe they’ll say, you know what, we won’t mess with hair dryers. And we promise that on all of our exports in the area of baby toys, we will no longer have surveillance devices on them. You know what I mean? Something crazy like that.

Andrew Horowitz: So I think that, yes, I agree with you that there is a political motive here that will be utilized to make sure that if markets do start coming down, maybe they’ll talk about tax reform 2.0, the infrastructure deal that was supposed to happen now all of a sudden is on ice. President Trump came out this week and said that, you know what? If you keep on investigating me and you use the I word any longer and call me names and say nasty things about me, infrastructure, the $2 trillion infrastructure deal is off the table and I’m probably not going to work with the Democrats on anything. We’ll just keep on doing executive orders.

Andrew Horowitz: So, I do think to answer your question with all of that is yes, if we can come up with a deal and if tariffs come off because they may not come off even with the deal, they may use that as a checks and balance to makes sure that things are done and slowly take them off. But I think that president Trump is pretty dug in here and I’m questioning whether he’s going to really come off of this at this point. They’ll look really weak.

Frank Curzio: Yeah. I mean both of them don’t want to look weak, right? So that’d be something that I just can’t believe it’s-

Andrew Horowitz: But China doesn’t care though. Frank, China doesn’t care. Presidency XI is in for life, he has no elections anymore, so he has no political capital that he can lose by doing anything. People may hate him, they may throw lo mein at him, they may try to assassinate him. They may do something terrible, they may call him name, but it doesn’t matter. He’s in for life.

Frank Curzio: Yeah, no, I mean look, all good points here. It’s going to be interesting to see what happens, but again, one of the things that we touched up on, even if there is a tariff deal, guys, you have to understand that one of the biggest risks right now I believe, and I think you do too, based on what you said, is a political risk here. I mean not getting stuff done. I mean you have Democrats and Republicans that absolutely hate each other. Even when you talk politics among your friends, it comes to a fight and a hate, and that’s being controlled by the media and you have to hate the other side. It’s so extreme right now, but at the end of the day, nothing gets done. Even if Trump lose the election and you have Biden who wins who is in the lead right now the same thing is going to happen.

Frank Curzio: This isn’t a Republican, a Democrat, this is a thing that there’s no negotiation. If there’s no negotiation, that means there’s not going to be a reforms on banks, which the balance sheets are stronger than ever. They’re not allowed to lend money, so what are they doing? They’re buying back. I mean, city goes buying back at 18% of its float over the next three years because they have so much cash they’re not allowed to do anything else with it. They can’t lend it based on a current laws, right? So you’re looking at, none of that’s going to change infrastructure. There’s not going to be an infrastructure deal.

Frank Curzio: I mean this has serious impacts to people’s portfolios. And I don’t think, I would say like 90% of the people out there that have 401ks are really not positioned for this because this is a much different political environment. They always argue for decades. They argue at the end of the day, they go out, and have a drink, have a shot, and be like, okay, let’s now … I mean, there is hate where …

Andrew Horowitz: Hatred. Absolute, it’s to the core. It’s so deep the hatred right now. And it’s really sad because it’s really that’s a big issue, Frank, where you’re really putting a wedge between people. I mean, I know people I’ve heard that they’re not friends with other people anymore because of who they believe in should be president of the United States. That’s just nuts.

Frank Curzio: It is crazy when you think about it. Hey, but I mean, if you’re an actor in support of Trump, you’re going to get blacklisted. I mean, and on the other side too, it’s just it’s insane. The Fox business, and again, it’s both sides guys here, and I don’t care who you like, who you vote for, whatever. But, there’s things that Democrats are going to do, you’re going to like and there’s things that Republicans are going to do, you’re going to like. But now, even if it’s a good idea, you’re conditioned to hate it, no matter what it is.

Andrew Horowitz: Yeah, terrible. And that’s good because nothing will get done and markets like when Congress and things are not getting done because the more the things stay the same, the better. But no infrastructure deal. I know we need infrastructures, but where are we going to get the $2 trillion from anyway? That was a whole different discussion. But with the election cycle, you would think there’s going to be a lot more potential volatility going in. I mean, right now it looks like we have 75 Democrats running for president. It’s crazy the amount that we have in there, and it’s just what is going on in this realm and I think that was the whole …

Andrew Horowitz: And who knows where we’re going to go with this investigation by the Democrats into Trump and where this whole Mueller investigation is going. But I think some of that is temporary. I think we really need to look at the impact of how all this plays into earnings. The uncertainty factors and how the global backdrop is so weak right now and you have to wonder with our multinational companies in the United States, I think 40% of all profits for the S&P 500 comes from overseas. Is that going to become a problem? Again, that’s why I think it’s just a good idea to either, I’ll use the word de risk. I’m not going to say lighten up, I’m going to say de risk into areas like some of the more higher dividends. Ford, which we talked about. Ford’s doing a massive-

Frank Curzio: We didn’t talk about, we didn’t talk about it.

Andrew Horowitz: Well, you mentioned the word.

Frank Curzio: I mentioned a little bit and I was going to bring that up as the last topic because nobody likes Ford.

Andrew Horowitz: I like Ford.

Frank Curzio: [crosstalk 00:57:08] Ford, at 6%, which I love by the way. That’s why I’m saying guys be careful shorting Tesla because there’s not a person on the planet that likes it. And usually when you see that it’s very dangerous, right? Usually the other side happens. So with Ford, nobody really like the fact you like it. I’m saying it as a positive, but why do you like Ford?

Andrew Horowitz: I mean it has a six and a half or six and a quarter percent dividend, which is interesting. I don’t think there’s any real risk on Ford having a dividend cut. I think the question about autonomous driving, that under 25 aren’t buying cars as much anymore. I think the whole issue of the seven year lease terms that were entered into a few years ago that I knew was going to slow down the possible sales of cars, that’s starting to wear off a little bit. They have good utility vehicles to do an immersive, incredibly large expense cut across the board. I think it’s going to save them $600 million per year, $600 million a year in cost cutting.

Andrew Horowitz: So, I think that when you’re looking at this and you look at the stock chart and you look at the fundamentals are okay, I mean it’s the car company, so I’m not thrilled. I’m not saying, oh my God, this company is going to take over the world. No, not at all. But in a de-risking environment where we have a decent dividend, we have a stock chart that looks like it’s pretty much obliterated. Where’s it going from here? Hasn’t really come up from wherever. And they’re doing this major cost cutting, I just think that if they get back in their groove a little bit, there’s some good upside there.

Frank Curzio: Yeah and guys, cost cutting is such an amazing thing because it goes under the radar because costs cutting when they cut costs it goes directly to the bottom line, directly to the bottom line. So a company is usually cutting costs because things are bad. Now, if they’re cutting costs and then they’re able to turn around operations you get that double impact to earnings that usually blow out estimates? It’s hard to predict because it takes long and you know that cycle could last three, four quarters. For IBM, it lasted 20 quarters, 17 quarters before they finally turned around. But when it does turn around with all the cost cutting going in, and that money that they’re saving and then become more lean. And they finally figured out, hey, you know what, let’s get into businesses that are growing.

Frank Curzio: If you’re a technology, let’s get into AI, let’s get into data analytics. Let’s get into social media. So, you’re getting out servers and things like that. When you’re able to just transform your business, I mean those are companies I like to eat a lot, but it’ll be interesting to see if they could actually turn operations around because their expectations are really, really low for Ford.

Andrew Horowitz: And one more name I’ll just throw out there. This is on the opposite side of the spectrum, something that if you haven’t experienced this, probably here everybody has. But, the world of paper has been turning dramatically of course, since the computer generation, right? Who writes a letter except … The only people that seem to write letters these days, actual letters and send them somehow are the heads of state that send it to Trump glowing letters.

Frank Curzio: Or inmates.

Andrew Horowitz: Yeah, and inmates, yeah. That’s right. So, but one of the things we had was emails, then we had some security issues on that. Then you had some forms and all that. DocuSign, DocuSign, really cool company. We use that for our business. And I looked at it very closely, and this is really revolutionary in terms of a cost savings for off for your office. And it’s like anything else, you need to get seats, you need to have people in your office be able to use these things. And once you get on DocuSign as a business, I don’t know how you’re going to get off of it.

Andrew Horowitz: The thought of all the templates that you build, all the automation that you built into your CRMs and things like that, it’s just one of those companies like Adobe, a subscription based software as a service type of situation where you get on it, and why would you ever give it up? It’s 40 bucks a month per person. Why would you give it up or your Microsoft, well that’s the LS. But, these kinds of programs, and these kinds of things that are so helpful. Even if I only did three documents a month, the ability to push a button, send to a client, have it come back to me rather than print it, send it in the mail, remember to get it back, track it, get it back, scan it, send it back to them as a copy securely through some kind of secure system or through the mail and then file it. I mean, the amount of time that takes versus send like a DocuSign. Are we being sponsored by DocuSign?

Frank Curzio: Keep going because it really is, it is amazing. I mean, I used it for our Curzio Venture Opportunity. So, we used it for basically for our token, and when people [crosstalk 01:01:32].

Andrew Horowitz: You don’t ever talk about that, right?

Frank Curzio: DocuSign. Oh, it’s amazing because now you read everything, you just click it, you sign it, you’re good. Book it, the contract sent us the email, but it just makes things so much easier. Again, it’s something that if you use, you’re not going to get off. You’re going to continue to use. I don’t see a ton of competitors. There are some popping up here and there, but DocuSign is really controlling that market.

Andrew Horowitz: Really, really impressive. Really impressive.

Frank Curzio: Yeah, it is a great company really. And, I love just using a product that actually is amazing and it works and it’s awesome. And yeah, I use it for our business too.

Andrew Horowitz: I have companies that I call sticky, right? The concept of a sticky company. Now if employment drops, if the economy goes into a recession, these companies will have problems, no question about it. But in the normal course of business, these sticky companies where it’s like, the last thing, it’s not like I’m looking around my office during really hard times. I’m like, you know what? I’m going to cut back on this cost. I’m going to cut back on that cost. DocuSign will be one of the last things that I cut because we use it so regularly and it creates so much cost efficiencies. So sticky companies, I like sticky companies.

Frank Curzio: That’s all. You can give us a lot of names there. So let’s finish with this. Okay. So, we talked stocks, we talked about the economy. Let’s talk about fishing. Since you go fishing a lot and you have your boat and things are great. Talk about that, because a lot of … Make everybody jealous because all the time you showed me pictures of you with these big fish and no invites, I’m still waiting.

Andrew Horowitz: No, you’re always invited. I actually caught a record, small Mahi-mahi. It was about eight inches long. Mahi-mahi one of the fastest dolphin, one of the fastest growing fish in the ocean, they double their size in some, I don’t know, every month or something ridiculous in the summer. They just, they eat everything. They’ll eat their own, but we caught this little Mahi, but caught some other big, we caught Reef Donkeys, which are these Amberjacks, which we go down deep about 200 feet and you start digging a little bit and then all of a sudden you hold on for dear life.

Andrew Horowitz: I mean seriously, for dear life. And by the time you bring it up, you’re like, I don’t want to do that again. And then do it again, and then you’re like, oh, this hurts. These things weigh 30, 40 pounds, but they somehow, they’re so strong. These particular fish, they just drag you down to the bottom and they’re like, just look it up going, you can’t pull me up. We snapped five lines on these guys. But fishing is good, a lot of fun down here in south Florida. You’re always welcome to come on the boat and spend some time. So, open invitation. You’ve never even see my new office. You got to see the new studio we’re building, a video studio here.

Frank Curzio: I’ll definitely make the visit. You’re not that far and yes, I travel down in south Florida a lot, so it’s a few hour drive for me. Now to finish us off, Andrew, listen, if anyone wants to learn anything or find out more information about you, how can they do that?

Andrew Horowitz: You go over to thedisciplinedinvestor.com. Of course the Discipline Investor podcast. Also on the weekends we have some great guests this week is coming up, John Mark Been. We had a fed insider last week and we have some great guests lined up as well. But you can also do our Friday Premarket Webinars that we do through TriggerCharts. TriggerCharts is a company that I founded that does trading algorithms and indicators for trade station. And we go through from 9:00 to 9:45, go over to triggercharts.com, click on that.

Andrew Horowitz: And actually, I don’t know if you know this Frank, but we were the number one highest rated in the entire trade station trading app store, very popular-

Frank Curzio: That’s cool.

Andrew Horowitz: Yeah, very cool. So, you go over to traggercharts.com and sign up for one of the Webinars that we do on Fridays at nine in the morning.

Frank Curzio: Sounds good. So Andrew listen, as always, thank you for coming on especially today. You were supposed to come on yesterday, my flight had delays and stuff like that. Took an extra day, so I love the fact that you’re flexible.

Andrew Horowitz: How is your hangover by the way?

Frank Curzio: Oh, I wish it was that hangover. I wish. It was my daughter getting food poisoning, which I explained in the opening.

Andrew Horowitz: You’re kidding.

Frank Curzio: Yes, the very last day. Yes, so we were in the hospital 24 hours and that changed everything. What a nightmare. But the trip was fantastic other than the last 24 hours. But yeah, thank you so much for being flexible. I know my guests love you and guys, make sure you check out the Disciplined Investor podcast. And, hopefully you join us again soon bud.

Andrew Horowitz: All right, I’ll be there. See you soon.

Frank Curzio: You got it. Thanks buddy.

Andrew Horowitz: Sure bud.

Frank Curzio: All right guys, great stuff from Andrew. He covered a ton there, man, he shared a lot of names, a lot of names. Last time he was like, yeah, I don’t know. We share a lot of names. This time he shared a ton for you. I like your screening process, it was 30 companies. He shared some of those. Again, that’s a starting point, right? Just start looking at some of those companies he mentioned, whatever it was these Intuit bunch of companies. Cobol, and make it a starting point. Say, hey, these companies have a strong growth. Their stock prices are doing pretty well, still holding up well. Markets down with a 5% off of its highs with all the risks going on, these guys continue to grow earnings and that tariff risk comes off the table, which is high probability I think unless Trump wants to lose the election and figure something out.

Frank Curzio: And China wants our economy to crash, I’m sure these guys will figure something out. And a lot of those companies are going to see probably nice pops from here. So just again starting point, that’s what you want to starting point, dig into the research. Maybe insiders are buying, maybe you’re finding something that’s not factored into estimates, but that’s the starting point. I want to get guys on here for you that just throw tons of ideas and Andrew is one of those guys, and I know that’s why I get the best feedback when guys like Andrew is on and John Petrides and just guys that can go anywhere with the markets. I know you guys love that.

Frank Curzio: So the podcast is about you, not about me. So let me know what you thought frank@curzioresearch.com, that’s frank@curzioresearch.com and guys next week, I’ll have a great educational segment for you, which I wanted to do today, but our interview went well, and we covered a ton, and gave you lots of ideas. So, we’ll be back on schedule next Wednesday, again, my apologies for being a day late, but next week we’ll publish Wall Street Unplugged on Wednesday, on time. Everything will be cool. So guys, thanks so much for listening. Really appreciate all the support. I’ll see you in six days. Take care.

Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility. Wall Street Unplugged produced by the Choose Yourself Podcast Network, the leader in Podcasts produced to help you choose yourself.