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These are the stocks to buy for the next 10 years - YouTube
Channel: Fox Business
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after more than 10 years of cheap money
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and surging stock prices rates are
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rising and tech stocks have crashed what
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stocks should you buy for the next 10
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years joining me now gravity capital
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management founder and author of where
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the money is adam cecil adam thanks a
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lot for coming in congrats on the book
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appreciate it jack so let's start really
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big picture the nasdaq is down around 30
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the s p came that close to a bear market
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how should investors be thinking about
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the market right here well generally
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speaking jack investors should be happy
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i mean the stock market is a market it's
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a place to buy great businesses and many
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are on sale now it's the only market as
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buffett says where people get upset when
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things go down so you go in the best buy
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and you look for a tv you're happy when
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the price goes down so you should feel
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this way about stocks on the other hand
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as you suggest there's been a lot of
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froth with the easy money policies over
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the last 10 years so you have to be very
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discriminating and it's really a
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question of separating the babies and
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the bath water okay well that's the
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trick right how do you pluck those
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babies out of the bath water what are
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the hallmarks of a company that can
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thrive over the next decade or so no
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matter what happens well the question
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you should ask yourself that every
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investor should ask themselves is
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actually very simple
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is this business invulnerable to
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competition
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have deep pocketed competitors taken a
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run at this business and failed this is
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the whole concept of moats that warren
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buffett has given us it's just that as i
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say in the book in the digital age what
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constitutes a moat and what constitutes
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a superior business is quite different
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than in the late 20th century and i love
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the way you take that analogy one step
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further in the book you write about
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throwing alligators and sharks in the
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moat so nobody can cross it give us some
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examples of these 21st century modes
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what would have been coca-cola and amex
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for buffett
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well two that i like right here
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especially at these levels jack the
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first is alphabet you know google has a
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95 share of market of search in on
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online search so you know being
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microsoft spent 10 15 billion dollars
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trying to make a run at google couldn't
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do it less well-known amazon made a run
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at google
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couldn't do it couldn't build search
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bezos told his people treat google like
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a mountain you can climb it but you
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can't move it that's the kind of
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business you want
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you know the other one that i love is
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actually bezos is amazon you know they
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have almost 50 percent share of
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e-commerce which is itself growing
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and you know a few years ago walmart
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tanked margins tried to make a run at
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amazon and they have less than 10 market
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share so those are two proven uh
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battleships for the 21st century i want
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to ask you more about amazon but one
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more sort of big picture question so uh
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as wonderful as these companies are
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the valuations are pretty steep by
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historical standards now stocks have had
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a great tailwind as bond rates have have
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come down for 40 years what if we're in
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a situation where rates are rising i
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don't know for the next 40 years could
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valuations go back to the levels that
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they were they were at the 80s so even
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if you buy great companies the
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valuations will continue to shrink well
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it's a fair point i mean you know
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interest rates are very important and
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interest rates are a headwind at least
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in the short term but you know i would
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turn it around and ask you a question
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you know why are in interest rates and
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inflation uh
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rising now we've had easy money since
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0809 so we've had it for 10 or 15 years
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so the answer to me is pretty pretty
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clear that it's covet you know we had a
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tremendous demand stimulus from the
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government putting money in people's
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pockets spending like drunken sailors
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themselves you also had the fed of
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course
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and then you had a supply
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slow down and stoppages because of all
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the you know
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supply chain constraints so when you
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have more demand and less supply guess
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what you have inflation but it's not
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structural in my opinion it's cyclical
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the structural uh pieces for inflation
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in my opinion are quite benign still
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ask yourself why have we had 40 years of
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low rates and low inflation
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in a time of easy money and it's because
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one globalization which is teetering a
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little bit with russia and china and so
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forth but i think is still pretty much
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intact and two as i write in the book
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tech is hugely disinflationary i mean
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before google we had to buy maps we had
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to buy encyclopedias
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and you just
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run examples like that throughout the
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economy and
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that that's not going away google's free
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google is free for everybody let me ask
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you one question about amazon though
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we've got a few seconds left here i've
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seen headlines that amazon's closing
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warehouse space closing stores that
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should be a little concerning to
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investors no no no not at all look the
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the job of a long-term investor is
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precisely to arbitrage between those
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sort of short-term headlines and the
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long-term substance of what's actually
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going on so amazon spent 25 years
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building out their infrastructure which
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no one will ever match and in the last
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24 months during covid they uh doubled
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their infrastructure again
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now sales grew only 65 percent so they
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over built a little bit so we can
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forgive amazon for for missing the mark
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in you know the worst health crisis in
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100 years but a they're going to you
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know soak up that demand that excess
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i should say excess space pretty quickly
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and b yeah they're paring back a little
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bit but that's the headline
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the substance is that no one's going to
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catch amazon amazon's going to keep
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growing and it's going to be protected
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by a very deep and durable moat adam
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cecil no wonder bill ackman liked your
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book so much thanks for coming in thank
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you jack
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