April 29, 2022

CIO Scott Martin Interviewed on Fox News 4.27.22 Pt. 2

Kingsview CIO Scott Martin discusses the technology names, what we’re seeing in individual performance and earnings reports, and the investor response.

Program: Cavuto Coast to Coast
Date: 4/27/2022
Station: Fox Business News
Time: 12:00PM

NEIL CAVUTO: By the way, Tesla stock itself is up a little bit more than 3%. So the 120 some odd billion in market value that the company lost yesterday and that Elon Musk lost it directly yesterday as a result. That’s clawing back a little bit right now. But there does seem to be an issue here that whatever Twitter gains, Tesla loses. I don’t know if that necessarily applies here. Back to Scott Martin, Jonathan Hoenig. Jonathan, what do you think of that, that that, you know, this is the currency, this is the collateral that Musk is using to to purchase Twitter. So whatever Twitter gains from that, do you think it’s automatic that that Tesla down the road loses or how do you see it?

JOHNATHAN HOENIG: Not necessarily automatic, Neil. I mean, there is some historical examples of CEOs, in fact, running to companies, even pledging some stocks back and forth. Even Warren Buffett back in 1991, he ran Salomon Brothers and Berkshire Hathaway and of course, Steve Jobs picture in Apple and Musk with Tesla and SpaceX. The trouble comes when, as you alluded to, when a CEO pledges their stock. So Elon is pledging some of his Tesla stock to buy a Twitter. Now, if Tesla stock continues to decline, he’s going to get that margin call. And that, in fact, can cause the whole House to collapse. So as long as Elon doesn’t pledge too much, he should be financially okay. But if one starts to weaken, if Twitter starts to weaken, you could see tech writ large follow suit.

CAVUTO: You know, Scott, what’s interesting to me with most of the technology names that reported yesterday, important, improved numbers, even in the case of Google, which disappointed just a smidgen on revenues and earnings and certainly really missed on on YouTube revenues. The fact of the matter was Alphabet did commit to buying back $70 billion of its stock. The other technology names put and posted great year over year numbers, but they were not rewarded. And after hours trading somewhat moderately, you know, rewarded today. But it sounds like the stuff that used to propel technology stocks or keep them going isn’t there anymore, at least for an extended period of time, that could change. But what do you think of that?

SCOTT MARTIN: Yeah, I think it’s a market phase we’re in right now. It’s a tough environment. It’s definitely sell first, ask questions later. And to your point about some of the individual performance, Neil, leading into the earnings reports. A lot of these companies get back what they lost during the day, in the after hours market and then get sold the next day. So investors are definitely taking, I think, the stock off the table and just going to cash, going to the sidelines and waiting for better days ahead, which to me is an opportunity down the road here to start adding to some of these names which you already own, like Microsoft, just because you’re going to get them at lower levels, at better valuations.

CAVUTO: You know, I wonder and Jonathan, you can help me with this when when people are nervous with the market, they’re using it almost. And I hear this increasingly flipping around and watching different shows. It’s my job. I got to do it. They’re getting nervous about buying into rallies, as I said at the outset here. And I’m wondering if they’re overdoing it, if they’re overanxious. And I don’t know and you always mentioned, Jonathan, about your long term perspective, and I get that. But is it something different going on here? What do you think they need to be convinced about to do it? Because earnings are still, by and large, coming in better than expected. What do you think it is?

HOENIG: Well, more than anything else, it’s cliched, but diversification works. I mean, look, even if this is a, you know, a quiet period or a bear market period for technology stocks, as it was in the first ten years of the 2000, you know, tech stocks back then basically took a nap for ten years. But other sectors, sectors did well, real estate, emerging markets, commodities. So, I mean, I don’t think the market is down and out, but I think the leadership is changing. And people who’ve bet all their apples on Apple, Microsoft and Netflix this time around will probably be a little bit disappointed, just as they were with Cisco, Sun Microsystems and Oracle 20 years ago. So the market tends to move in cycles if there’s a bear market for tech, I don’t think it’s a bear market for stocks writ large. It just means you have to look at other opportunities.

CAVUTO: Got it. Gentlemen, I want to thank you both. Appreciate all of that.

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