David Trainer argues tech will be the best long-term investment, citing 11% YTD gains and transformative tools like BlackRock's robo-analyst technology. Eric Schiffer counters that Apple, Snap, Twitter, and GoPro are severely overvalued. Both agree smaller companies like Nova Measuring Instruments offer better value.
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Is this still a good time to get in? Joining us now are David Trainer from New Constructs and Eric Schiffer from Patriarch Equity with 2 different points of view here. David, you're a bull on tech. I see Google in here, but, but why?
I think, you know, technology is in everything these days. What, what sector doesn't have technology? I mean, you've got Facebook. It's a media company, but it's a technology company. Uber is a transportation company, but it's really a technology company. So I think technology is increasingly embedded in everything we do, and it's the most innovative and productive part of our society. And I think it will continue to be the best sector to invest in, at least in the long term.
Eric, you're our bear today.
Why?
You know, I think some of the big leaders like Apple, for instance, are tremendously overvalued. I mean, it's a one-product company. There hasn't been much innovation. You've got these other crazy companies like Snapchat where there's no significant competitive advantage. I think you'd have to be suicidal to invest. And I think it's a shame what's happened to millennials who bought into that investment. So again, the leaders in tech today that have been driving it way overvalued. And so that's why I'm suggesting that.
So, Eric, what about Facebook, for example?
You know, I think that there are always pockets. OK. And so it's like anything. I think that certainly pockets of investment. But again, too many that I feel are overvalued. You go and look at Twitter, for instance, and look, I'm a big user. I love Twitter. I've got a big following. I like it as an application, but certainly as an investment right now. I don't think it's a good one. I think it's overvalued. And despite what many people may say, GoPro, I mean, what do we got here? I mean, look, the hardware has been failing. There is a very small group of users that actually want to continue to buy it. So again, way overvalued. Another big issue.
Okay, David. So Kelly mentioned that you like Google. Let me bring this other one in, though. Not exactly a household name, but it's one you like in the tech sector, and that would be Nova Measuring Instruments.
Yeah, I have to say, you know, I agree with Eric on a lot of fronts. I think there are plenty of highly overvalued tech stocks. Snap is a great example of just sort of, you know, it's hard to make a straight-faced argument as to why anyone should buy that. Nova, on the other hand, you know, is one when you, when you dig around and we, we specialize in technology, robo-analyst technology to go through footnotes and some of these undiscovered gems in the lower, smaller-cap area like Nova Measuring are growing revenues at double-digit rates. They've got very high returns on capital and the stock prices imply little to no future cash flow growth. So, you know, as Eric said, there are pockets, pockets of really expensive stocks, pockets of really inexpensive stocks. And I think you've got to be very careful about what you choose.
David, looking at the performance of tech, I think it's up 11% this year, by far the market's best performer. What does that tell you? You take that as a sign that everybody kind of understands the thesis, or you take that as a sign it's kind of getting divorced from reality?
Yeah, I think that there are some overheated names, but I think overall technology is going to continue to be a leader. You know, I think you have to be creative sometimes about technology, not just think about where it is today, but where it's going. Look what BlackRock is doing and, and focusing on robo-analyst technology. I think that's going to transform financial services. I think you almost can—
sorry, go ahead. Let me just give Eric the last word here. What about some of these companies you never hear from that are down in the trenches, that are not the high-profile Snap and others that maybe are a little expensive right now?
Look, I'm a bear. I've been a bear. I think they're overvalued. I think that there is a lot of, you know, hype, tremendous hype and tremendous overvaluation driven by investment bankers, driven by these promotional, you know, players in the marketplace. And I think investors need to be careful and it's not worth it. It's not worth getting hurt. And certainly we saw this with Snap, where, again, I think it was, it was honestly a giant scam, in my opinion. And I think that they were trying to get out They really don't have anything. It reminds me of MySpace in terms of it being over with. So be careful, investors. Don't just believe the hype.
All right.
I like it.
Very good. Thank you both, David Trainer and Eric Schiffer. Appreciate it very much.
