Visa & Mastercard Continue To Dominate | Joseph Carlson Ep. 343

Summary

In this episode, Joseph Carlson discusses Apple's upcoming September 12th event, tech stock predictions by Dan Ives, and Visa and MasterCard's plans to raise credit card fees. He also analyzes the economic growth and resilience of companies like Visa, MasterCard, and Apple, and shares his investment strategies focusing on low-risk, high-growth businesses.

Takeaways

• 📅 Apple has sent out invites for their September 12th event, which is expected to be a significant event in the tech industry.
• 📈 Tech stocks are predicted to perform well, with Dan Ives suggesting they will 'rip higher' for the rest of the year.
• 💳 Visa and MasterCard stocks are up, reportedly due to a plan to raise credit card fees, which has been met with controversy.
• 🏦 Joseph Carlson's investment strategy focuses on low-risk, high-growth companies with strong market positions and minimal reliance on high R&D costs.
• 🚧 Companies like Visa and MasterCard are described as 'toll booth' companies, collecting fees from transactions and benefiting from high barriers to entry.
• 💼 Joseph Carlson's portfolio has seen gains, nearing a hundred thousand dollars, due to his focus on companies with dominant market positions and strong brand recognition.
• 📊 Visa and MasterCard have shown exceptional financial performance, with high revenue growth and efficient free cash flow conversion.
• 🛒 The proposed increase in credit card fees by Visa and MasterCard is set to start in October and April, primarily affecting online transactions.
• 📈 Despite potential regulatory challenges and competitive threats, Visa and MasterCard are seen as resilient, with Joseph Carlson maintaining his investment in MasterCard.
• 🍎 Apple's upcoming iPhone 15 event is expected to reveal new models with incremental improvements and a shift to USB-C charging, potentially boosting the company's revenues.

Q & A

What is the main topic of the Joseph Carlson show on this occasion?

The main topic of the show is the upcoming Apple event on September 12th, the performance of tech stocks, and the potential increase in credit card fees by Visa and MasterCard.

What is Dan Ives' prediction regarding tech stocks for the rest of the year?

Dan Ives predicts that tech stocks, in particular, are going to perform well and 'rip higher' for the rest of the year.

Why are Visa and MasterCard in the news according to the Wall Street Journal exclusive report?

Visa and MasterCard are in the news because they are reportedly preparing to raise credit card fees, which has been a contentious issue among retailers and lawmakers.

What is the investing strategy that Joseph Carlson discusses in his portfolio update?

Joseph Carlson discusses an investing strategy that focuses on low-risk, high-growth companies with dominant market positions, high barriers to entry, and strong brand names.

What are the characteristics of the companies Joseph Carlson considers as 'low-risk' investments?

The low-risk companies, according to Carlson, are those with dominant market positions, high barriers to entry, deeply entrenched brand names, cash-rich balance sheets, organic revenue growth, strong pricing power, and minimal reliance on high research and development costs.

What is the term 'tollbooth' used to describe in the context of companies like Visa and MasterCard?

In the context of companies like Visa and MasterCard, 'tollbooth' describes a business model where the company collects fees for providing a service that is essential or hard to avoid, similar to a toll collected on a road.

How does Joseph Carlson view the potential impact of Visa and MasterCard raising their fees?

Carlson views the potential fee increase as a positive for Visa and MasterCard, indicating that they are not overly concerned about competitive forces or government intervention.

What is the term 'economic durable advantage' or 'moat' in the context of Apple's business?

The term 'economic durable advantage' or 'moat' refers to the sustainable competitive advantage that Apple has, which makes it difficult for competitors to erode its market position.

What are some of the rumored features of the upcoming iPhone 15 according to the script?

The rumored features of the iPhone 15 include an A16 Bionic chip, Dynamic Island, a 48-megapixel camera, USB-C charging, and new color options. The iPhone 15 Pro Max is rumored to have an A17 Bionic chip, a programmable action button, a titanium frame, and a periscope zoom lens.

What is Dan Ives' view on the future performance of tech companies like Nvidia?

Dan Ives believes that despite a recent knee-jerk reaction to Nvidia's earnings report, the company and overall tech sector will see significant growth in the second half of the year and into the next 18-24 months.

Outlines

00:00

📅 Apple Event Invitations and Market Overview

The script opens with an announcement of Apple's official invites for their September 12th event, sparking anticipation for new product reveals. It also touches on the positive performance of the market, which has seen three consecutive days of gains. The host mentions an interview with Dan Ives, who predicts a surge in tech stocks for the rest of the year. Additionally, the script discusses a Wall Street Journal report on Visa and MasterCard's plans to raise credit card fees, a move that has stirred controversy and opposition among lawmakers and the public.

05:01

🏦 The Resilience and Growth of Visa and MasterCard

This paragraph delves into the exceptional performance of Visa and MasterCard, highlighting their significant outperformance over the market with a 460% growth over the past decade. The companies' revenue growth is noted as resilient, even during economic downturns. The financials of these companies are underscored, with a remarkable EBITDA conversion rate and high free cash flow generation. The script also addresses the skepticism and criticism these companies face, with some arguing they lack innovation and overcharge fees. Despite this, the companies have shown to be impervious to competition and legislative challenges.

10:02

💳 Visa and MasterCard's Fee Hike and Market Dynamics

The script discusses the impending increase in credit card fees by Visa and MasterCard, scheduled for implementation in October and April. It explains the complex structure of interchange fees and how they impact various stakeholders, including banks, merchants, and customers. The fee increase is primarily aimed at online transactions, reflecting the growing trend of digital commerce. The potential financial implications for merchants and the strategic benefits for banks are also examined, along with the broader economic implications for Visa and MasterCard.

15:04

📉 Investor Perspective on MasterCard and Market Threats

The host shares his perspective as an investor in MasterCard, detailing the company's growth and his rationale for purchasing shares despite market skepticism in 2022. He evaluates the potential risks to MasterCard and Visa, dismissing crypto and legislative threats as significant concerns. The host also considers Apple as a potential threat due to its influence over consumer behavior through Apple Pay, but does not see it as a major concern at present. The paragraph concludes with the host's continued confidence in holding MasterCard shares.

20:04

📱 Apple's Upcoming iPhone 15 Event and Product Rumors

The script shifts focus to Apple's upcoming product event, with rumored releases of the iPhone 15 lineup, including the iPhone 15, iPhone 15 Plus, iPhone 15 Pro, and iPhone 15 Pro Max. These new models are expected to feature upgrades such as an A16 Bionic chip, Dynamic Island, improved cameras, and a shift to USB-C charging. The iPhone 15 Pro Max is speculated to have additional features like an A17 chip, a titanium frame, and a periscope zoom lens. The host anticipates a pattern of pre-event excitement and post-event sell-off in Apple's stock price.

📈 Tech Stock Optimism and Predictions by Dan Ives

The final paragraph features insights from tech investor Dan Ives, who expresses bullishness on tech stocks, despite them being crowded trades. Ives highlights strong fundamental performances from tech companies and predicts significant gains in the second half of the year and into 2024. He addresses concerns about Nvidia's stock price reaction to earnings reports and positions it as a buying opportunity. Ives also shares his top picks among tech stocks, with a particular emphasis on Apple, which he believes is underestimated ahead of the iPhone 15 cycle.

Keywords

💡Apple Event

The term 'Apple Event' refers to a product launch or announcement event hosted by Apple Inc. In the video's context, it is about the September 12th event where Apple is expected to reveal new products. This is a significant event for tech enthusiasts and investors as it often influences the company's stock price and sets trends in the tech industry.

💡Tech Stocks

Tech stocks are shares of companies that operate in the technology sector, including computer hardware, software, semiconductors, and other technology-related industries. The video discusses predictions of tech stocks performing well, particularly as stated by Dan Ives, indicating a positive outlook for these investments in the remainder of the year.

💡Market Position

A company's market position refers to its standing within an industry, often determined by factors like market share, brand recognition, and competitive advantage. In the script, the presenter discusses how companies like Apple and MasterCard have dominant market positions, which contribute to their status as 'toll booth' businesses that can charge fees with little competition.

💡Toll Booth Companies

The term 'toll booth companies' is used metaphorically in the video to describe businesses that have a dominant position in their market, allowing them to 'collect tolls' or fees from others for using their services or products. Examples given include MasterCard, Visa, and Apple, which benefit from their entrenched positions and the fees they charge for transactions.

💡Interchange Fees

Interchange fees are the fees that a payment card network charges to the merchant's acquiring bank in a credit card transaction. In the video, it is mentioned that Visa and MasterCard are planning to raise these fees, which could lead to increased costs for merchants and potentially consumers.

💡EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's financial performance and is used in the script to highlight the profitability and efficiency of companies like Visa and MasterCard, with a significant portion of their revenue being converted into EBITDA.

💡Free Cash Flow

Free cash flow represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. The script discusses how companies like Visa generate a large percentage of free cash flow from their revenue, indicating strong financial health and the potential for shareholder returns.

💡Moat

In business, a 'moat' refers to a sustainable competitive advantage that protects a company from competitors. The video discusses the economic moat of companies like Apple and Visa, suggesting that their market positions and business models provide them with a significant barrier to entry for potential competitors.

💡Regulatory Threats

Regulatory threats involve potential changes in laws or regulations that could negatively impact a company's operations or profitability. The video mentions the possibility of legislation that could affect Visa and MasterCard's ability to charge certain fees, indicating a risk to their business model.

💡Innovation

Innovation refers to the introduction of new methods, ideas, or products. While discussing companies like Apple, the video mentions the importance of innovation in maintaining a competitive edge. However, it also notes that some companies, like Visa and MasterCard, have been successful without significant innovation, relying instead on their established market positions.

💡Pricing Power

Pricing power is the ability of a company to increase its prices without losing customers. The script discusses how companies with strong moats, like Apple and the toll booth companies, have the ability to raise prices, which is a sign of a durable competitive advantage and can lead to increased profitability.

Highlights

Apple has sent out invites for their September 12th event, signaling the next major Apple product launch.

Market has been in the green for three consecutive days, indicating a positive trend.

Dan Ives predicts tech stocks will perform well for the rest of the year, citing their potential for growth.

Visa and MasterCard stocks are up significantly, possibly due to reports of credit card fee increases.

A Wall Street Journal exclusive reports Visa and MasterCard are preparing to raise credit card fees, facing potential backlash.

Investment strategy focuses on low-risk companies with dominant market positions and high growth rates.

Tollbooth companies, such as Visa and MasterCard, have a strong position in the market with high barriers to entry.

Apple's App Store is a significant tollbooth, collecting fees from numerous transactions.

MasterCard and Visa are considered top-tier companies with exceptional long-term market performance.

Visa and MasterCard have resilient revenue growth, even during economic downturns.

The economic model of Visa and MasterCard shows high efficiency with a large portion of revenue converted to EBITDA and free cash flow.

Crypto projects and legislative threats are not seen as credible risks to Visa and MasterCard's dominance.

Apple is considered the most significant potential threat to Visa and MasterCard due to its digital wallet concentration.

Apple's iPhone 15 event is anticipated to reveal new features and models, possibly boosting stock prices temporarily.

Dan Ives predicts a new tech bull market starting in 2024, focusing on the fundamental growth of tech companies.

Nvidia's stock price has remained flat despite strong earnings, which Dan Ives sees as a buying opportunity.

Dan Ives considers Apple to be massively underestimated leading into the iPhone 15 cycle, highlighting its potential for growth.

Transcripts

welcome back everyone today on the

Joseph Carlson show Apple has officially

sent out the invites for their September

12th event this is the next Big Apple

event we're going to be going over the

details of what to expect we have the

market in the green three days in a row

and we have here Dan Ives predicting

that tech stocks in particular are going

to rip higher he came on an interview

and stated just that so I'll be looking

at his comments and why he thinks tech

stocks are going to do so well for the

rest of the year and then finally we

have some big news that visa and

MasterCard are both up big today they're

up way more than the market mastercard's

up 1.26 percent today both of these

companies Visa Mastercard are trading

higher following a report suggesting the

companies are preparing to raise credit

card fees and we have that report it's a

Wall Street Journal exclusive where

they're going over how Visa Mastercard

are now preparing to raise fees once

again and you better believe every time

they want to raise fees there's a lot of

people including lawmakers that don't

want them to so we're gonna be going

over this issue of the moat a vset

MasterCard whether they can continue to

get away with this or rather competition

or congress will stop these companies

because so far they remain undefeated so

as always we have a lot to get into

let's go ahead and Jump Right In now

let's start off with a portfolio update

this is my passive income portfolio it's

my biggest investment vehicle and we've

had three days of gains in the portfolio

leading this back close to a hundred

thousand dollars in gains so far I've

been very happy with the performance of

this portfolio now the investing

strategy that I do is a bit different

than what other content creators are

doing on YouTube and on Tick Tock and on

Twitter I don't like Risk I don't seek

out risk with my investments in fact I

feel like Risk is the obstacle the thing

that I want to control and minimize in

as many ways as possible so I invest in

companies that I consider to be low risk

now this doesn't mean that I'm putting

my money in cash or buying bonds that's

not the way that I think that you reduce

risk I believe that low-risk companies

are are ones that have dominant Market

positions High barriers to entry they

have deeply entrenched brand names and

distribution companies that have cash

Rich balance sheets they have organic

Revenue growth lots of pricing power and

they have no Reliance on high research

and development costs all in all those

are low-risk businesses and these are

the exact type that I try to compile in

my portfolio now they're not just low

risk they're also high growth these

companies have above average growth

rates in both their top line revenue

their ebitda their net income their

earnings per share and their free cash

flow on a per share basis so these

companies are low risk and they're high

growth and that is the combination I

look for in these companies now there's

also something you may notice with the

Holdings that I have I say these are

companies that typically have high

barriers to entry they have deeply

entrenched brand and distribution modes

some of these companies can be described

as being tollbooths a toll boost sits

Upon A Road when you cross over it you

have to pay the toll to go across the

road being the toll booth collector is a

very Advent position you basically just

sit there and collect fees without doing

much work many companies like s p Global

have elements of their business that are

toll booth-like this company along with

Moody's collects fees anytime a company

issues debt and has that debt rated by s

p Global and moodies they've also built

out other toll booth businesses owning a

tremendous amount of the data that's

being sold to Market participants now

MasterCard one of my main Holdings here

and one of the companies we're going to

be discussing is the quintessential

example of a toll booth company along

with Visa they form a duopoly over

credit card processing because of the

interchange fees that they charge

they're able to collect fees every time

someone uses their card by swiping it or

by typing in the numbers online

MasterCard collects part of that

transaction now all of these companies

to some extent You could argue have a

bit of a toll booth Intuit has us with

small businesses they have a virtual

monopoly on small business tools Apple

has one of the best tollbooths in the

world which is the apps store they sit

upon one of the busiest roads in the

entire universe all of those

transactions going through the app store

and they charge a fee for many of those

transactions that fee accumulates to be

a massive amount of money for apple and

it goes up almost every year Tollbooth

companies are highly attractive and

they're common amongst the best

investors in the world you may have

noticed that in Buffett's portfolio he

has many of the companies that we

describe as toll booth companies Apple

being one of them American Express he

owns Moody's Corporation and visa and

MasterCard you can pluck out one out of

every four of the companies that he owns

and it's a toll booth company and most

notably the one that's weighted the

absolute highest is a huge toll booth

company now whether or not Buffett seeks

out Tollbooth companies or whether or

not they just naturally meet the

requirements he looks for that's Up For

Debate but either way a lot of them tend

to make it into Super investors

portfolios like buffets but Tollbooth

companies always seem to be under attack

they always seem to be talked about like

they don't offer a lot of value we see

in the recent attacks that Apple has

faced they were sued by epic games for

kicking the game out of their App Store

and this caused a ton of drama epic

games is furious at the market position

that Apple has now because Apple

technically doesn't have a monopoly at

least by the way the laws are written

they were excited to go to court and

argue their case and apple had a

resounding Victory defending their app

store and the fees that they charge so

the toll booth of Apple lives on and so

do the profits for investors like me but

another company that's coming under a

lot of heat recently and one that's been

the target for many people in law and

many people in retail is Mastercard and

Visa these companies have become the big

Boogeyman of the market because these

companies are just so good when I review

the analysis of companies and I've

looked at many of them I've selected

what I believe are the top one percent

of the top one percent of companies Visa

Mastercard are in A League of Their Own

it's like you have normal companies 99.9

999 percent of them then you have Visa

Mastercard which are just abnormal they

don't fit into any other category the

first thing about these companies is

that they dramatically outperform the

rest of the market over long periods of

time 460 percent not including dividends

over the past decade that speed out the

QQQ and the s p 500. the companies have

incredibly resilient Revenue growth

growing every year by 10 to 11 percent

even during recessions or pandemics it

goes down temporarily but then it

returns back to all-time highs now it's

not just the Top Line growth that's

magical about these companies the real

magic comes in with the economics behind

them for example out of the 29 billion

dollars in Revenue 20 billion was ebitda

so from 29 to 20 billion dollars in

ebitda that is an incredible conversion

of Economics the free cash flow

conversion is also astounding The

company generated 17.8 billion dollars

in free cash flow off of a year that

they did 29 billion dollars in Revenue

so they generate over 50 percent free

cash flow from revenue and if we factor

in dilution or expenses these companies

are incredibly efficient 600 million

dollars in stock based comp based on

17.8 billion dollars in free cash flow

big Tech looks bloated and slow compared

to visa and to put this in perspective

of how fast a company like Visa is

growing in its economics in the actual

cash flows that investors receive over

the past 10 years Visa has outgrown

Google they've outgrown Microsoft

they've outgrown meta and they've

outgrown Amazon the only big tech

company that's outpaced them in this

metric is Apple which has had unusually

high growth over the past five years

Apple beat Visa by releasing airpods by

releasing the Apple watch by upgrading

iPhones upgrading tablets creating an M1

chip and doing a tremendous amount of

innovation and work but Visa has nearly

kept up in economic growth while simply

running the same old business they

always have and and with MasterCard this

really hasn't been any different in fact

the only noticeable difference with

MasterCard is over the past five years

it's growing a little bit faster and

frankly a lot of people seem to be

frustrated with it they're frustrated

that Visa Mastercard continue to do so

well against any level of competition

against any legislation these companies

seem impenetrable they seem like they're

just these big growth monsters that

charge fees and they can grow without

offering any real Innovation and some

argue that they don't offer really any

value to Consumers as well and then on

top of those frustrations we have the

news that visa and MasterCard are

preparing to raise credit card fees once

again what can people do to stop them

well that's the question but with that

news this is a reaction of retailers and

Congress

you can't keep getting away is

he can't keep getting away with it

they're not happy about this and they

think there's got to be some way to stop

Visa Mastercard now there have been some

that have argued that Visa Mastercard

will be taken care of by the natural

competitive forces of the market

including crypto projects this is one of

the takes back in 2021 from the great

chamath polyhapatia he's someone that

has become almost this routine Giver of

terrible takes let's go ahead and listen

to his predictions of what was going to

happen to Visa Mastercard in 2022. my

biggest business loser for 2022 is Visa

and MasterCard and traditional payment

rails in the entire ecosystem around it

so I think

that this is the year you can put on

what probably will be the most

profitable spread trade of my lifetime

which is to be short these companies and

that anybody that basically lives off of

this two or three percent tax and be

long well thought out web 3 crypto

projects that are rebuilding payments

infrastructure in a completely

decentralized way so tremas advice for

the most profitable spread trade was to

be long crypto projects and to be short

Visa Mastercard and of course if you did

that you would probably be bankrupt

right now or at least have lost a lot of

money the complete opposite has happened

most crypto projects have gone under or

have been under great distress Visa

Mastercard are hitting all new highs

smile a company like MasterCard is

sailing to the sky with its stock price

they now feel like it's a good time to

raise the fees of credit cards so let's

go ahead and look at this inside report

from The Wall Street Journal they say

the fee increase are scheduled to start

in October and April many of the

increases are for online addresses now

this is something where even though

these companies are really big a lot of

people don't understand really the

relationship of how visa and MasterCard

work with banks merchants and customers

visa and MasterCard are actually not the

biggest hog of fees in this process

that's the banks for example here's a

flow of what typically will happen we

have the customer pay 100 with their

credit card the issuing bank will take

around

1.75. the card Network processor only

gets around 14 cents so not that much

actually goes to the credit card

processors the payment processor gets 30

cents and then the merchant gets the

remainder of 97.81 so the split between

this is actually more favorable for

banks than it is for Visa Mastercard and

that's the reason that Banks love when

Visa Mastercard Raise The Interchange

fee it means more money for the banks as

well and that also means that they can

pay you higher amounts of credit card

rewards and when a company says that

they're going to raise interchange fees

there's not like some core fee that's

interchange and it's just one set

percentage The Interchange fees are

incredibly complex there's dozens of

different percentages based on the

different types of transactions they're

doing for example there's card present

EMV that's 0.92 percent there's

unsecured card present there's digital

Commerce there's contact lists there's

of course the standard rate and then

there's the separate fees for charity

and utility so this is a breakdown based

on where you're buying what you're

buying if you're buying online and if

you have your card or not all of this

breakdown is summarized as The

Interchange fee and from The Wall Street

Journal here they're saying that most of

the raising of price is going to be with

online purchases I can see this helping

out Visa Mastercard a lot as more and

more shopping goes online the changes

could result in Merchants paying up to

an additional 502 million dollars in

Annual fees so when we break down the

actual math of this this 502 million

dollars is actually less than a one

percent raise in Revenue now the they

say that card networks such as Visa

Mastercard set the fees at the

Merchant's pay Network fees get pocketed

by Visa Mastercard interchange fees go

to the banks that issued the card Visa

Mastercard and the big banks have set up

fees to help cover related costs to

fraud prevention and Innovation the

banks often use the money they get from

interchange fees to fund popular credit

card reward programs so that's the basic

effect they're raising prices ever so

slightly and more importantly the banks

can give more rewards to Consumers now

when I look at the news of a price

increase I see this as a definite

positive for these companies because it

shows that they're not too concerned

about both competitive forces or the

government there has been some threats

to vsem asked a card with a new bill

proposed by Mr Durbin one of the

Senators who was one of the original

ones that proposed a bill that killed

the rewards for debit cards so he was

one of the ones that really shut down

the rewards for debit cards and he's

trying to do the same thing for credit

cards but this bill which is a very very

bad Bill for consumers at this point is

unlikely to be passed and I haven't seen

any movement whatsoever of this bill

through Congress right now it seems to

be at a standstill now part of being an

investor and seeing these companies

raise prices is always assessing the

future risk of this company because when

I look at my investment in MasterCard

this is a massive investment it's

ballooned up to a sixty five thousand

eight hundred dollar holding now with

eight thousand dollars in the green and

this is a company that I bought into new

this year I was looking over this

company and how it's been trading over

the past five years it spiked up in 2021

like a lot of other great companies but

then it started to sell off investors

were really sour on these companies in

2022 we had people like chamath

polyhapatia saying that the best days

for Visa Mastercard are over and I just

viewed that advice as being wrong I

thought this time period right here was

a good time to start buying into this

company because I believe one of the

most important things an investor can do

is accurately assess the future risks

facing a company when I look at the

future risks facing MasterCard and Visa

I don't see any competitive threat that

I believe is credible I still do not

believe that crypto poses a credible

threat to MasterCard and visa and I do

not believe consumers are going to like

a bill that wipes out their credit card

rewards so Congress is going to have a

difficult time passing that legislation

both of those threats currently are very

low for MasterCard and Visa the company

that I continually see as the biggest

threat for Visa mastercard's moat is

Apple I really think this is the biggest

one Apple pay has a concentration of so

many people's digital wallets in a

single place and having that

concentration of power lends Apple a lot

of Leverage over consumer Behavior even

though Visa Mastercard right now are

working with apple things could change

in the future so when I'm looking over

either of these companies visa and

MasterCard right now I still consider

Apple to be the biggest threat but it's

not a big enough threat for me to be

concerned about my my current position

and I'll continue to hold my shares

MasterCard unless that changes but as of

right now I have no concerns over the

modes of these companies now moving on

we have some news coming out of apple

they officially released the invites to

their new iPhone 15 event called

wonderlust and Apple's one of my largest

Holdings I've gone over this one many

times in the past so I haven't done

analysis on Apple in some time but if

you search Joseph Carlson Apple you'll

see many videos of me going over the

case on this now every time there's an

Apple event I noticed the same thing

happens the stock usually is a little

bit excited the stock price goes up

leading into the event and then there's

a sell-off after the event so I expect

nothing different this time let's go

ahead and take a look at what Apple's

releasing in this event now all of this

is rumored it's not officially confirmed

but we have the iPhone 15 iPhone 15 plus

iPhone 15 Pro and iPhone 15 Pro Max so

basically the entire lineup of the

iPhone 15. the iPhone 15 will largely

inherit the feature from the iPhone 14

pro this includes an a16 bionic chip

Dynamic Island a 48 megapixel camera a

fresh set of colors and USBC charging

will round out the list of changes

so lots of little upgrades there but one

of the notable ones which I'm actually

personally excited about is moving away

from the lightning charger to a simple

USBC charging every device I have in my

house charges by USBC except my iPhone

so it's going to be nice to have all of

that in uniform now they say the iPhone

Pro Max will have an a17 bionic chip the

first three nanometer processor and a

smartphone action button a programmable

button that replaces the mute switch a

titanium frame a lighter material will

replace the stainless steel design

refresh thinner bezels and slider curved

edges USBC charging port will replace

the lightning Port battery life

improvements a periscope zoom lens

that's going to be in the iPhone 15 Pro

Max only new gray and dark blue colors

are placing gold and purple higher

storage tears and last but not least a

higher starting price from 1099 to 11.99

so they're incrementally bumping up the

price of their higher Terra phones by

another one hundred dollars now there's

going to be Tech reviewers after this is

released that are going to go through

and show you how great or not great

these features are we don't need to do

that to know that these changes are in a

positive direction every year they

incrementally improve their overall

design of their phone keeping the lead

between them and their competitors

greater and greater and every couple of

years like every great company they tend

to raise prices you'll notice that

raising prices is a common theme among

strong companies now Apple's revenue is

in a bit of a slump we've had three

consecutive quarters of it being lower

and lower year over year each quarter

and this could continue on for a little

bit but I think that it's a temporary

thing apple is going to grow revenues

over time and with their install base

growing the amount of people using their

services Apple insurance and the App

Store the amount of people that are on

that road that passes through the toll

booth gets greater and greater so

Apple's another one of these companies

that a lot of investors look at the Ford

PE of the company they say that it's

trading at a high multiple a 25 Ford PE

while them Market's out of 20 and

Apple's growing slower in Revenue than

the rest of the market therefore Apple's

a bad buy I think that's a very poor

form of analysis and it will lead to

underperformance the most important part

of Apple is the economic durable

Advantage otherwise called the moat and

as far as I'm concerned the moat has

literally never been bigger for this

company now moving on we have Dan Ives

who's one of these he's one of the

investors that focuses on big Tech and I

have a little bit in common there I love

big Tech I think these companies

dominate the markets they have

incredible economics they have wide

modes and they're continually

perpetually undervalued but he's asked

why he thinks these companies will

continue to race higher even though

they're becoming technically speaking

crowded trades so doesn't that mean that

we should be careful because they're

becoming so crowded I think those are

all the arguments that the Bears are

making I think it just comes down to the

growth I mean what I believe in I think

we'll see with Salesforce I think it's

doing a lot of these off-court earnings

Palo Alto of course this is going to be

a strong fundamental mental performance

from Tech from software from chips could

go in the second half of the year and in

my opinion despite the FED despite what

we see in terms of the 10-year I think

they pecked Powers through this we see

12 15 gain second half of the year and I

think Guzman in 2024 we believe the new

tech bull market is here now this might

seem like a big bold statement but I

don't think it really should be we had

2022 which was a horrible year for Tech

all of these companies went down like

crazy so it makes sense that we should

be starting a new tech bull run these

companies are now off to a good start

their economics are improving we know

that Apple's slowing down a little bit

in top line revenue growth but other

companies like Amazon are focusing

intensely on profitability alphabet as

well this company's becoming far more

efficient and growing in its profits now

they turned the attention to Nvidia this

is one of the big tech companies now one

of The Magnificent Seven that's had an

incredible rise this has been one that

I've missed I don't have fomo I'm not a

afraid of missing out on Nvidia but it's

simply one of the companies that's

outside of my level of predictability I

don't know what direction Nvidia is

going to go I don't know what their cash

flows are going to look like in the

future and I don't know how sustainable

their remote is and Dan Ives is asked

about this being priced in because even

though Nvidia had an incredible quarter

the stock price after this last report

has remained relatively flat yeah I

think that was a knee-jerk no doubt I

think that definitely scared a lot of

investors that I talk to right like if

if Nvidia put the Godfather of AI Jensen

puts up a quarter like that and the

stock sells off what is that telling you

but I believe we sit here six to eight

weeks from now and that stock is much

higher because ultimately just come down

to fundamentally it's unprecedented

growth that we haven't seen in 30 years

since internet you said what is that

telling you so it's not telling you

anything I think it's telling you that

that was a knee-jerk reaction that I

don't think is going to be sustainable I

believe

Nvidia and overall attack is going to go

I we believe it rips much higher into

the second half of the year I viewed

that pause that we saw post you know

sort of sell up as more of a golden

buying opportunity not the time in my

opinion to get out of this because I

believe this is just half time of a

Super Bowl type Tech rally that we see

going in to the next uh 18 24 months you

can criticize Dan Ives all you want for

lots of different points here for

example I don't like the fact that he

makes short-term predictions on stock

price movements that's something that I

don't like to do I'd never try to say

that I think stocks are going to rip

higher the second half of this year but

I do like the fact that he focuses on

the fundamental developments of these

companies and that's the basis on which

he believes these stocks are going to

move higher so I again find myself

agreeing with Dan Ives even though I

don't agree with his prediction per se

about the prediction of stock prices

moving up I do agree about his

prediction of these companies Being A

Step Above the Rest and then having

pricing power and economic growth each

of these companies I think will have

higher free cash flow in 2024 than 2023.

is there a name in the in the

Magnificent Seven or Mega cap 8 that you

would underweight at this point well I

mean look our top picks have could have

been if you look at Amazon if you look

at Apple I think from a if there's a

name that you'd underweed here look I

think metas obviously had that massive

move that we we believe probably a lot

of that is is probably not going to be

as significant as some of the others I

think the one that I view as a table

pounder is Apple because in my opinion

going into this iPhone 15 cycle it's

massively underestimated by the street

just how big this install base upgrade

is going to be and I think Cupertino

continues to play Chows others play

checkers the table Pounders Apple that's

the one who thinks investors should be

the most focused on of course no

argument from me here apple is in an

outstandingly good position right now

but there you have it from Dan Ives he's

predicting more bullishness out of this

market and you have to give credit where

credit is due Dan Ives has been correct

basically all year long and even leading

into this year other super investors

many notable ones like Michael burry who

have been short on the market and buying

puts and saying sell they've had some

pretty poor calls lately this is why

it's difficult to make big predictions

the market can be extremely humbling but

that's going to wrap up this episode if

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