00:00 Speaker A
Primarily, are you deploying, uh, assets internationally or globally?
00:07 Dan Niles
Yeah, I mean, at the beginning of last year, I picked KWEB as one of my top five picks. And obviously last year, it, it did terribly relatively, was only up about 8%. If you look at it this year, what I tell people is everybody thinks, oh, there’s a hatred for tech stocks. Well, no, there’s a hatred for US tech stocks. Because the MAG 7 are down 20% year to date, but KWEB is actually up three. And the reason is really simple, which is, if you go look at China, valuations for a lot of the, the top AI plays in China are at half or a third of the valuation levels that is out here for US companies. And I think what DeepSeek showed people was that yes, China is behind. They, it’s not like they came up with ChatGPT, but DeepSeek has some really great innovations in it that, and it’s open source. So US companies are starting to use those innovations to make US, you know, uh, large language models that much better. And so, I am definitely looking overseas because I think, you know, the big thing you’re seeing is you sort of had this view over the last several years, the US is the only place you can invest. And I think valuations got out of control even as estimates started to go down because as I said earlier, Microsoft, Google, and Amazon all had estimates for the September quarter of last year get cut when they reported the June quarter. So this has been going on for a while. Now what happens is you get a catalyst and people go, well, maybe the China tech stocks are kind of interesting because those estimates are actually going up again for the first time in several years. And so that’s kind of where I’m looking, Nancy.
04:57 Nancy Tengler
So great. Dan, really quickly here, how are you viewing KWEB versus any sort of dip buying opportunity in US MAG 7 stocks? Would you still be more interested in piling more cash into KWEB?
05:12 Dan Niles
Well, let, let me be clear, I don’t own that right now. I, I look at components within that, but that’s just an internet index that gives you an idea of what’s in there, right? It’s like Nasdaq or whatever in, in the US, however you want to look at it. But, um, I, I think I’m an earnings driven guy, and I’m a, and I’m a risk averse guy. So I like good risk adjusted returns. And if you look at the Nasdaq, the, you know, the MAG 7 names, um, as a abbreviation, when you’ve got estimates coming down from the middle of last year, and six of the seven have estimates coming down when they reported their December quarters, it doesn’t make you feel really good when this was happening before you had all of this turmoil, right? And we can walk through each one of those names, but, you know, you’ve got advertising related stuff in there that could potentially get hurt when they report. Obviously Apple’s pushed out, you know, Siri into next year in terms of the AI upgrades. And, you know, Amazon’s obviously retail oriented if you’re worried about a recession. So you can walk through all of them, and, and Microsoft has had forward numbers come down for nine months in a row. So each of them’s got their own set of problems going on where at least when I’m looking overseas at China, I go, really since the Ant Financial IPO got blocked in, I think it was November of 2020 if I remember correctly, or December, those stocks have been horrible. And, but their government’s actually turned around and started to support their companies, put out stimulus, which is the exact opposite of what’s happening in the US, where, you know, those is focused on getting government waste out, getting the deficit under control. So you’ve got two very different economies working at the same time.