What We’re Doing (or Not Doing) as the Market Drops

0:00The market is falling again, so what should investors be thinking this week? Motley full money starts now. Everybody needs money. That's why they call it money. The best things in life are free. But you can get them to the present. From full global headquarters, this is Motley full money. Welcome to Motley full money. I'm Travis Hoyam, joined today by Emily Flippin and Lou Whiteman. And guys, we've got to talk about the topic of the week. We have this, we have this war conflict. Whatever you want to call it in Iran that started last weekend. Started impacting the markets on Monday. We're down significantly early on Friday as we're recording. Lou, I want to just get your general thoughts on what do you think is an investor in times like this?

1:06What's signal, what's noise? Because it seems like the market goes from panic to, you know, the market shoot up every 15, 20 minutes. And it's hard to make sense of things. Yeah, so the first thing, I want to give everybody a free pass to do nothing. Because, you know, I mean, it's always fun to be able to brag six months later. Like I caught the low and I bought something. And you know, I mean, if you want to be opportunistic, that's fine. But I think it's good enough to, for your long-term wealth creation, to just not panic sell. And so, you know, I mean, the world is changing. Things could be fundamentally different after this than they were before. Good companies tend to survive these things. And, you know, so yes, I think there's every reason in the world to watch this, to monitor, to think about it. I haven't seen much of a reason to say, oh, no, everything I thought two weeks ago isn't right. Like even with today's sell-off, we're down 1.5% for the year in the market.

2:07So, I mean, I do think it's hard to take a long-term perspective in this moment. But to not take the second-by-second perspective, at least, you can do a long way towards preserving what you've worked for. Emily, do you have similar long-term views on kind of what to do on weeks like this? Yeah, and actually, I have some numbers to back it up to. And in fact, there is, to lose point, a lot of data that supports the idea that patients wins out whenever there is geopolitical volatility like this. And panicking does not, and will not help us. And history tells us that stocks actually do go up after these types of events, weirdly enough. And we can debate about why that is. But there's some good data here from the Morgan Stanley Wealth Management Global Investment Office that the average return of the S&P 500 a week after a geopolitical shock is actually positive. One month out, it's around 1.5%, and then when you zoom out to a year, it's over 8%. And if you look at that, the median return after a year, it's even better at over 10%.

3:07So, it goes to show that panicking generally after an event like this has already happened by either selling your stock, selling the market broadly, really isn't the best way to go about handling managing risk or volatility in your portfolio. But I say that not to be blasé about the risk of what we're seeing. And certainly what we're seeing happening in Iran, and particularly with the straight of our moves, like that is very, very concerning and can be concerning for very specific industries in certain businesses. So I think the bigger question, whether there's two separate ones I should say, there's a question of, oh my gosh, I'm the average American investor. I have a lot of money in index funds, I have a lot of money diversified across the market, across many different industries and businesses. And I'm panicking because of this geopolitical event, what do I do? And of course the answer, sit on your hands, be patient, do nothing. And then there's this question of, oh no, I'm seeing the fact that, you know, 20% of global ill consumption is flowing through this straight. There's a potential for further conflict in the Middle East. And now I think some of my particular stocks or individual companies may be exposed.

4:08And that's when you have to go back in and start evaluating those particular businesses and exposure and those specific instances. And there are some cases that I think are worth re-evaluating in this scenario. Lou, going to those specific points. One of the things that we talked about early in the week a little bit, and maybe we're seeing this, you know, as the week rolls on, is there specific risks related to the economy? Because Emily brought it up, the straight arm moves, there's a lot of oil flowing through that area. Oil is a big expense for a lot of people in the US and around the world. If we're already at this kind of weak economic position, particularly in the, you know, this K-shaped economy that you keep talking about, would this be the straw that breaks the camel's back? Yeah, it really could be. And I do, again, you know, you talk about, you don't want to be too, like Emily said, you don't want to be too just dismissive or ignore it. We already had had wins. We already had some percentage of the US consumers out there who are struggling.

5:08Adding a dollar to a price of a gallon of gasoline could be the tipping point that sends just so many consumers that we do see just a real pullback in spending that then, you know, spirals into a pullback in commercial spending and becomes a recession. Even here, it's good to recall that this is part of the cycle, even if it comes from an unexpected event. We are probably due for one of these. And, you know, again, I think as a long-term investor, we try and, you know, weighted outlook for opportunities. So even there, I don't want to panic. But I do think that it's at least a reasonable worry to say, I mean, I don't think that the conflict is going on, that's going on, can't be resolved in some way that we can, you know, go like this changes everything. But I do think we have to, you know, look at where the economy may go from here and at least prepare ourselves for it. We've been talking about it forever.

6:09Maybe this is what doesn't. Well, the good thing about the United States in particular is that we're relatively energy independent. And so there is some insulation that happens here and the good thing about the conflict in the Middle East that we're seeing is that there is going to be pressure from both OPEC and the UAE and other countries that depend upon this street for other shipments to probably resolve this problem sooner rather than later. And it's not to say that we haven't seen massive infrastructure issues that's going to take, you know, months, if not years to fix. That is a very real headwind. But I do think that the world we're living in today is different than the world we used to live in, where a lot of the geopolitical events like these, when we saw a conflict, it was for lack of a better word, something that was months and months and Britain planning. And in this administration, we see an administration that is more willing than ever to try new things and then also walk them back quickly if and when they don't work out. So things are more volatile, more quickly shifting now than they ever have been. And I think that's part of the reason why we're heading into the weekend here. There's a lot of volatility in the stock market just today because people are trying to price in.

7:10How much can change just in the next 48 hours for the markets? Open up again on Monday. So there is a lot going on here that I think people are trying to price in. But the good news is that I actually think there's a lot of pressure to get this conflict resolved relatively quickly. America in particular is pretty well insulated here. In my opinion, the most actionable vice I have for anybody who's looking at their portfolio and is thinking, what do I do in this scenario in my mind? And this is just my opinion. I kind of think energy might be a trend here. It's the best performing sector in the SAP 500 so far this year. We're seeing oil obviously spike up as a result of this conflict. And a lot of people I think are doing a bit of panic buying in my opinion. That's a good time to be a little bit contrary. If your exposure is too high and you're seeing all these assets, appreciate and value, now might be the time to consider exposure. I would personally take a little bit off the table. And then if and when we see the price of oil or gas come back down, that might be the time to buy back in. Well, let's talk about some of those contrarian ideas, Lou. Where are you looking for opportunities in the market? And as you guys are talking, I'm thinking through the stocks that I own.

8:12And I focus a lot over the last year, a lot on balance sheets. You know, what companies are sitting on a whole bunch of cash that gives you the optionality that, hey, if there's a moment like this, maybe you just say, okay, fine, I'll buy back 20% of the shares outstanding. Or I'll acquire a company that's in a little bit worse financial position. These dislocations don't necessarily last forever. But if you were able to play offense in these moments, then that can be a good thing. But how are you thinking about maybe putting your money to work or like Emily said, taking things off the table at a time like this? Yeah, look, I mean, I'm a believer that there's always opportunities somewhere and I don't think that changes now. But yeah, like how does that change? I think you're right. I think there's a lot of, I mean, but to me, it's more just recession thinking I go into now. Like what companies are being beaten down, but can weather this and still thrive long term? Just I mean, very simple things. I don't think we're there yet, though.

9:13Again, you know, I mean, we're basically flat for the year. Unfortunately, I think that for this to really become a buyer's market across the board, I think I've got to get a lot worse, which I don't know if I love that. You know, to Emily's point, I agree 100% on oil. If I had energy exposure, I'd probably be looking to take some off there. You know, other things too. Like I think across the board, just even I own some defense stocks. I actually think the reaction that has been to the upside is probably overstated there. I'm not actively looking to trim because it's going to, you know, the long term is opportunity there, but I honestly think there's more opportunities to think about, do I want to hold this through a recession right now? Then there is opportunities right now to say, I want to buy. Emily, how are you thinking about maybe if you're taking some of that energy when you off the table, where are you looking for opportunities? Or what characteristics are you looking for?

10:13I just love indiscriminate selling. The panic selling that other people do. I just view it as a great opportunistic chances for patient long-term investors. Well, everybody who's listening is. Yeah, one of the things I do early on days like this is I'll look at the market and I'll go, okay, is everything red? Is everything down to three, four percent? Or is it something specific? And this is not a SaaS apocalypse this week. This is just everything was down. At least a couple of years trading days like today. Yes, exactly. You nailed it, Travis, which is to say, this is the reason why I say I love to keep a watch list of companies. If you don't have necessarily the assets to buy everything you want to buy in any given day. It's great on days like today. If you have a little bit of cash on the sidelines. If you're taking your termings a little bit of energy today, you're thinking where can I invest? Having that watch list of businesses that are being indiscriminately sold off. And it's not necessarily saying, okay, well, I know software is down big. Is there seeing massive AI based disruption now is the time to buy in? Because there is still this really big question mark. And obviously it's a case by case basis here. But those are companies that maybe there's a reason why they sold off.

11:14On days like today were the indiscriminate selling. And you see great companies that have maybe existed on your watch list for me. There's a lot of great consumer goods, facing names, which I'm sure we'll talk about later in the show. These types of businesses are the ones where it's like, okay, I see a pull back here. Maybe I'm waiting to get in today's a day. When we come back, we are going to get a little update on earnings before doing a deep dive on a company Emily and I have been talking about for a while. That's Disney. Stay tuned for that. You're listening to my cool money. These days I'm all about quality of a quantity, especially in my closet. If it's not well made and versatile, it's just not worth it. That's honestly why I love quints. The fabrics feel elevated, the cuts are thoughtful, and the pricing actually makes sense. Quints makes high quality wardrobe staples using premium fabrics like 100% European linen, silk, and organic cotton poplin. They work directly with safe ethical factories and cut out the middle man. So you aren't paying for brand markups or fancy stores, just quality clothing. Everything they make is built to hold up season after season and is consistently rated 4.5 to 5 stars by thousands of real people like me who wear their clothes every day.

12:19The quints Mongolian cashmere crewneck sweater may be the most comfortable one that I own, it's light, soft, and was a lot more affordable than you think quality cashmere would be. Stop waiting to build a wardrobe you actually want. Right now, go to quints.com slash Motley for free shipping and 365 day returns. That's a full year to wear it and love it and you will now available in Canada too. Don't keep settling for clothes that don't last. Go to cuince.com slash Motley for free shipping and 365 day returns quints.com slash Motley. Welcome back to Motley for money. We got a number of earnings reports this week and one that we wanted to talk about a little bit because there's so much involved is Broadcom. Broadcom talked about 100% increase in their AI related revenue. We don't typically think about them and we as a company that is on par with Nvidia, but they really are.

13:19And if you're not aware of them as investor, now is the time to at least look at it. So what do we learn this week? Oh my gosh, Broadcom. First of all, one of the largest companies in the world. I think it's over one and a half trillion dollars in terms of market cap and it's amazing to me. We give a lot of focus to Nvidia, but Broadcom is kind of a sleeper agent in the world of AI. And their quarter was pretty stellar. Actually, I think part of the reason why we so both Nvidia and Broadcom, I will say since the they are serving the demand that exists due to capital expenditures of hyper scalars, these large tech giants. There's very little surprises in my opinion that come out of these quarters because we've already had quarters from their largest customers who said, hey, we're, we're three Xing, the amount of money we're spending on CapEx for data centers this year. So of course, we're going to see great demand for Nvidia and Broadcom and these other types of chip makers at chip players, I really should say. So these companies, we already had an idea that their quarters were going to be good. And the reason why I think we saw a response that was positive for Broadcom's quarter, but a little bit more muted for Nvidia's. Was it because, oh, Broadcom's better than Nvidia, it was because of some of the guidance around gross margin that I think we got previously for Broadcom's some of their newer initiatives or which they thought management said, hey, maybe our gross margin will be a bit lower, came out this quarter leadership basically should all that down said, gross margins are great.

14:32The market is like, okay, great, wasn't necessarily pricing that in. So the price movement there is less about our Broadcom and Nvidia competing head to head and more about the expectations baked into each of these businesses. But I do think it's interesting that as both these companies have grown, and you make this good point, Travis, that they're maybe learning to compete more with each other right now. They aren't really competitors, they're complimentary in terms of the services that they offer and video selling the GPUs, Broadcom can't really make their hitting the switches, the chip infrastructure that helps make Nvidia systems run. But as we get more into these custom chips, there's going to be a question mark of, okay, what is the software that ultimately ends up running them. And right now Nvidia needs that software to justify its valuation. And I think there is still this question mark about who wins the software race. Lou, we are getting to the point where Broadcom Nvidia, their numbers are phenomenal, but we're not seeing stocks jump 30, 40, 50 percent anymore. Is all this, we talk about everything being priced in, are we at the point finally with AI where like Emily said, okay, we know what the capex numbers are going to be.

15:35We know how much cash flow, all the big tech companies can put to work not only next year, but in the future. We kind of know what these companies are going to be even if it is 100 percent growth rate. Yeah, you know, that's the thing. I'm old enough to remember when a quarter like Broadcoms was really celebrated and the stock was up, but it wasn't both of these companies. Nvidia is actually the winner of at the last six months, but both of them are basically flat over six months. And I do think to your point, that might be exactly what's going on, not that we've become just bored with these growth rates. I think we still love these growth rates, but there are limits to how much more we can accelerate from here. I mean, there has to be at some point a limit over on the private credit side, just kind of these big hyperscalers going to the debt markets, looking for creative ways to fund to kind of continued growth. Questions about everything we talked about before about the war and everything. We still have to support $4 trillion in IPOs this year to kind of keep this going too or so.

16:38So is there just I think the market is concluding that while this is sustainable and these are great businesses, the growth year over year growth that we've seen that maybe that that is going to cool off and since the market tries to be forward looking since it tries to look for what from here. I do think that kind of the muted reactions across the board is just maybe conventional wisdom shipping to all right, we've finally hit the point that the question is can we sustain, not can we double from here. Yeah, do those growth rates continue to slow. Emily, as we were preparing for the show, one of the areas that I think is interesting that's held up well in this SaaS apocalypse so far in 2026 is cyber security stocks. What is what's happening there? This is an area that I cover so give us an idea of what what these companies are doing and why maybe investors are thinking about this differently than they are something like a sales force. Yeah, and the world of enterprise software, everyone forgets that cyber security technically counts as enterprise software too.

17:43But the reality is to your point that AI is being weaponized against enterprises like right this very moment it is happening and they're trying to commit security breaches at the same time. So these companies are trying to use AI to prevent those breaches as one of those things where it's kind of like you need the fire to fight with the fire. So it's hard to argue that despite the fact that it is a seat based software enterprise software company that cyber security needs are going away in the world of AI. If anything, I think the market belief right now is that AI has made cyber security companies more relevant. Even though I would argue that the quarter that we got out from CrowdStrike earlier this week was one of the largest cyber security companies and one of the largest most highly regarded players in the market doesn't necessarily back that up and the thing that I'm watching closes with them is their CCP program. This is the program they launched to make customers whole after their outage over the last couple of years. I think it was about three years ago. Was it the gift cards that they handed out? Effectively what they allowed what they allowed their customers to do was kind of add these add-ons and not charge them for them.

18:43So they're basically having a lot of customers that are underpaying the market rate for these cyber security offerings that they're going to over the course of the next year so start to lapse. I think investors are assuming and CrowdStrike is assuming that these customers are going to come in and start paying full price for these modules. And I actually don't necessarily know if we have data to back that up as important as in mission critical as cyber security is. This is the industry that I'm probably watching most closely because we need evidence of dollar based that retention rate for these customers that are turning through the ecosystem are actually going to renew at the higher rates needed to make the AI investments worth it. It's really funny because I do wonder just kind of generally if the greatest tool corporations have right now is even if they no desire to replace CrowdStrike or something to when they get their annual renewal. And it's a what I don't know 3% increase say this is great thanks we have to talk to open AI and then we'll get back to you. And if that's sort of just neuters the price increase even if they don't want to go so I mean I think that that scares me more than yet people ripping out the systems.

19:45Bigger threat here is that cyber security has been notorious like as the threats change the companies change. I'm not saying CrowdStrike can't be the most relevant provider in five years in a world of AI but I at least have to leave myself open to the fact that a history is a guide as things evolve so do the winners. So they have a lot of work to do not that they can't be a long term winner but I think I'd be surprised if it is in five years the incumbents are still the incumbents. When we come back we're going to talk about Disney you're listening to my little money. Have you been sleeping on your mattress a little too long like I have my back's getting sore more than it used to and I feel like Homer Simpson with my body shape and printing on the mattress. But like you I'm busy with the job and kids and who wants to go to the mattress store with the family only to deal with the pushy sales person. That's why I was excited to learn about Lisa and their premium mattresses you can shop for from the comfort of your own home. We want stability and comfort so we went with the legend hybrid.

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21:49Let's start with the studios business. This is Disney animation Marvel Star Wars Pixar of the top five movies in the past three years. So 15 movies total how many of them were made by Disney Emily of the top five movies in the last three years each of the past three years. So 15 total options. I would say 9 out of the 15. Alright Lou. I think I guess this is prices right I'm going with 10 because I think because you think two thirds of the movies the top movies come from Disney. Travis is like this is not the direction I know it's high but it's it's so it's about half of the movies. But the thing that I think is interesting with that stat specifically is the movie business has become a blockbuster business and Disney is I think the best at making blockbusters. Emily do you think that's the case or is this is this the best studio in Hollywood or you know a conglomeration of studios or is there a better player out there.

22:56No I actually wholeheartedly disagree and I actually think that their studio business is a desperate need of a leadership overhaul. I think it's a depleting asset or should say depreciating asset really because of franchise fatigue and Disney has been hitting customers consumers. You know even Disney enthusiasts over the head so often with reboots of the same franchise over and over again that it actually in my opinion doesn't necessarily matter. If they are doing well quote at the box office right if the biggest hits because they spend so much money to make them they end up being not that big of a profit driver for Disney as a whole. And I actually think the company the more they kind of overuse the IP and the studio business the worse it gets for Disney as a franchise as a whole because what they're doing is they're devaluing the value of that IP. And they're focusing on quality over quantity I actually think that'd be better for their company.

23:56What IP do you think they're overutilizing here. That's a great question if I actually knew any Disney movies I probably would answer you my concern is this is the narrative that I hear from the big Disney fans. You are not talking to a big Disney fan but I assume it's it's all you know all of the same. I mean think about every every major blockbuster name off the big blockbusters for Disney they're all reboots at the same franchises. I'm just going to guess here and I don't know either because I'm not really a movie person but I'm going to guess that you know the normals like a lot more than the people who are allowed about it but I have no idea. The thing I can't figure out here is like yeah so yes they have leaned in on franchises but some of the movies that I'm guessing that weren't Disney movies that were on the top or like despicable me I don't know 30. Or do you did do in two seven or whatever you know so it's not like they only do that best just so subjective certainly Disney isn't the place to you're even going to get like let's see why Oppenheimer or something was like you know a creative arts film but you know yeah Disney isn't going to lean in there.

24:59But they have won the global box office nine or last ten years creativity really isn't the money maker I think these franchises are great for other parts of the business. So I don't I don't think this is a weakness or an Achilles heel I think they know what they're doing and you know they may not win a lot of critics choice awards with some of this but I think as a business it is at least okay when you look at the some of the parts. It's so interesting that you guys have generally negative views because I have little kids and Disney is the like we will go see every single Disney movie every you know Pixar movie. Disney plus is the one that they have basically complete access to because I can trust Disney as a studio to make movies that they're going to they're going to enjoy and are also not you know going to be appropriate for kids. So I this is always one of those I may know no the fan that you're talking about Emily who is so negative on over using it for Star Wars in particular was.

26:01I you know I star something but that group of fans is is so intense and then you get the people who actually go to movies who are kids with their families and guess what Zootopia 2 was great it was great. And actually I think Zootopia 2 to your point out performed virtually all the frozen franchises so you're right maybe I am maybe I'm being overly dogmatic here by focusing on only a couple of the big franchises that they seem to reboot every other year. And to your point Travis to also I am not the target audience for a lot of these movies I don't have kids and I am not going to go see Zootopia 2 although I have her to your point heard great things. Shouts out by the way to one other franchise that I think was Disney inside out. Go see both of those if you have another yeah. All right speaking of where where do these movies end up well they end up at the parks and they end up driving the parks. If you look at we are actually going to go to Disney here in a month or two and. The amount of upgrades that they're they're making in Disney world and all the parks around the world is is crazy right now and it's all based on most of it is based on this new newer IP.

27:08And so in the last 10 to 20 years instead of the old IP. But since 2017 my question for you is how much has Disney's experiences revenue grown so almost a decade they. Change the way that they reported so that was the furthest went back so 2017 how much bigger is that business today Lou. I couldn't even tell you 10 years. I'm just going to show my ignorance and say it's up like. I don't know it's it's up big. It hasn't doubled I'll say doubled just to move on. Gosh I just lost my breath there to realizing that 2017 was almost 10 years ago goodness gracious. I actually think that lose probably not far off that parks is my favorite part of Disney's business and I I think they're. Probably close to probably close to a double maybe maybe a bit below that let's say. 80% growth yeah you guys are right 86% my other fun stat is. The cruise business doesn't get a lot of attention from investors because it's just it's it's a volatile business if you look at the cruise lines.

28:12But Disney has seven cruise ships and is actually launching another one next week. And that is an area of huge investment for them that's one of the bigger drivers of the parks business. But Emily when you look at Disney's business overall how much does the parks business play into your thesis on the company. It's virtually everything to me and I not to say that I think that Disney could just get rid of everything else and only be parks and I'd be happy with that. I really do love the other aspects of Disney's business too. And I do think the IP that they're building with their studio business and streaming business is critically important to maintaining the demand for the parks. So it all works together in one big ecosystem but the parks and my opinion it's the bread and butter. I love the fact that Disney's new CEO is somebody who is formerly the head of parks, which is I guess the name is that didn't they didn't go well last time. Okay, I have I have a bone to pick actually about this with the chain pack but we can get to that. I know we're going to I presume you're going to ask us about the streaming business and I'll I'll give my spiel then.

29:12But I do think that having somebody who understands the core value of the parks is absolutely critical because if you over invest into less profitable areas. Then the reason why people are buying Disney shares starts to lose focus and that's exactly what happened over the course of the whole Disney plus. I think that was like the 2019 ish era when she came into power and I think any money that the business chooses to reinvest into the parks. And I recognize that a lot of the investments are having here not necessarily going to just you know content build up a big good portion is but a lot of it is maintenance of infrastructure. I mean, these are expensive large beast to run and manage, but I think it's a money well spent here. I mean this generates the lion share of Disney's operating income. It's it's more than 70% of total operating income from Disney just comes from the parks. The one red flag that exists for me or actually I should say it's two one is I hate the fact that they don't break out the cruise revenue as different segment within parks because cruise ships are so expensive hundreds of millions of dollars and I'm sure they're very profitable.

30:12But I don't know. I think they don't do it because they're so profitable everything that I've seen about their the pricing of their that they have such pricing power in that market specifically that they're charging 50% more than other cruise lines. And so I think they want to hide that I think. I hope that's the reason I wish I knew. Look, let's let's be honest here though. The whole like parent criticism is is that they you know lock you inside the park and then charge whatever you want for food water stuff like that. I mentioned sending you out into sea and what do you know like the pricing power they have that so of course people do it voluntarily. Yeah, I know I know like everything Emily said is correct. So I don't know what I can say more to that other than just kind of see for from our discussion above this is what justifies the movie theater. I mean the movie franchises to obviously I mean look parks is a great business and it's a better business from them for them that it is for anyone. Are they better at it? Yeah, I think they're pretty good at execution and they think about it.

31:13But how much of it is just all of that IP that you know I mean I don't think you want billions of billions of loss leaders feeding in. But to me this is what justifies everything else going on. Everything just you know those parks are just where everything flows to that and it ends up it's a big pile of money. What seems like this is also the one that has the biggest moat you know you can't just Netflix is can't just go out and build a whole bunch of parks to compete with Disney. All right, let's talk about that streaming business that that Emily mentioned earlier. My question for you is how many subs does Disney plus and Hulu have as of at least the last time they reported this and I'm just combining those two because those are kind of the biggest thing they they had ESPN plus they're not they split the split off that app. But that's a little bit wonky. So we'll just go with Hulu and Disney plus streaming. What is if you add those two together. What do you get to Emily? Oh, I was really hoping to go to Lou first so I could have something to gauge my answer off of because I actually have no idea and it's embarrassing I don't I I'm not a guest to make 50 million.

32:17Oh, all right I'm going much higher but now I'm really scared because again I was I'll go 150. 195.7 million. Disney plus alone is 131.6 million to put that into a little bit of context the last time that Netflix reported they don't report their their total numbers now but they said they're over 300 million so they're not quite the same but you're kind of getting into that territory. Emily, I'm going to lean on you here first again. How do you think about the streaming business because this is a business that you know you mentioned Chapeck when he came in that was basically the pandemic started. Iger said I'm out of here. Chapeck saw the growth going on at Disney plus and was like I'm in a lean into that didn't necessarily work out super well when Iger came back he got the the streaming business back to profitability. But as an investor how do you think about that business is it just attack on is it a profit driver where are we going with this in the future.

33:18Yeah, you can tell how little I care about the streaming business based off my answer there great for Disney plus again clearly not the target audience here although I do subscribe to Hulu so maybe I should have factored that into my my equation here. I will say I rewind back to when Disney plus was initially launched and what happened at the time was Bob Iger set up the expectations for what Disney plus could be in terms of Disney getting into the streaming service and I was being my classic self very skeptical at the time because we saw the decades the many many years of Netflix and other big streamers who burned cash trying to make the content game work and yes of course Disney was sitting on a bunch of very valuable IP. But we know how expensive it is to make valuable content and there is a lot of price compression for streaming at the time as well and Disney plus was being launched and sold well below the price of the need to be to be profitable of course now I were practically giving it away and they were practically giving it away for free exactly. Iger did all this let's be very clear about this Iger set up the strategy and then he left and he said I'm going to put Bob Chapeck in charge Chapeck the guy who ran parks.

34:24The guy who has all the experience with the biggest profit driver at the company but very little experience with say streaming and content management and then of course when Disney plus proceeded to destroy Disney's financial performance or the next couple of years they struggle to make that business profitable. Iger then comes in and says wow Chapeck did a terrible job executing my plan that I set out I'm going to come and fix it. So I have a little bit of a bone to pick I think that Chapeck was the right person to lead Disney as a company but not the right person to be launching Disney plus to be using that as a corporate strategy now since then obviously Disney has gotten its act together raise prices on Disney plus. Yes manage its content library I think a lot of this by the way has come from Hulu and price increases with Hulu and benefits from ESPN of course massively under reach. They've been their bundle in these that are now to your you they didn't own all of Hulu when Chapeck took over yes so there's there's advantages that they have only exactly but I think all of that is the reason why the streaming service now is more profitable and this now is it's not quite making up a

35:29thought mistaken for the legacy networks business in terms of total profits being driven to the company but it's well on its way to making up for it and in my opinion that's all the streaming business needs to do for Disney all it needs to do is make up for that nominal portion of sales that was being generated by the networks business make up for that that capital there and they continue to build the IP so that people want to go to the parks that's all I need. Yeah spot on spot on Lou I'm going to go to you first with this legacy question do you care about the legacy business ABC ESPN is part of this they've got effects there's a if you have cable you're paying a lot of money to Disney is that a business that you value at all looking at their company. There is value but it is the least important thing I mean there's some IP here too so you know you do have some of that I think that if any part of this business goes it's this one in fact if you want to take look at there are so many of these like kind of orphan businesses out there I don't see Disney buying and and and adding scale here it's not important enough but it seems like you just spin this out maybe Disney holds on to 5 10% of the merged networks business with

36:43the Comcats Network business has a sweetheart licensing deal but yeah this is the afterthought of the company Emily agree. Yeah if you thought I didn't know enough about say the studio portion of Disney's business you're going to be appalled by how little I care about the networks part of Disney's business in fact I actually think the faster they they do spend it off the better and now it does seem given the benefits that we've seen from the Netflix at the attempted now Netflix deal with Warner Brothers and the spin off of that studio business from the the kind of legacy media business and the different content assets there now might be the good time for Disney to be thinking about okay you know we see profitability picking up and streaming now is a chance for us to take this legacy networks business and find a buyer for it's because I do think that the faster they get rid of it the easier it is for this this new management team which by the way we do have a new management team here to focus on what's most critically important for the company but I recognize that it's much easier for me to sit here on a podcast and say this and much harder to turn this you know multi hundred billion

37:43dollar business around at the drop of the hat when we come back we're going to get to the stocks on our radar you're listening to Motley for money Robin Hood and a little John walking through the forest laughing back and forth and what the other has to say reminiscing this and having such a good time with a lot of lolly golly what a day never ever think and there was danger in the water they were drinking support for the show comes from fund rise investing in companies already in the S&P 500 can sometimes feel like you're being served someone else's leftovers it's still a great meal but it's hard not to imagine what the food tasted like when it was fresh out of the oven historically only venture capital investors were served access to the best that companies in the world that had not gone public yet and that meant the rest of the world simply had to sit on their hands and wait for an IPO fund rise says they're completely upending that dynamic with its new venture capital product with just a $10 minimum investment fund rises mission is to give everyone the access required to invest in the best tech and AI companies before they go public there's nothing wrong with leftovers but now if you want with fund rise you can take a seat at the table alongside the biggest names and tech investing visit fund rise.com slash fool to check out fund rises venture portfolio and start investing in minutes all investments involve risk including the potential loss of principle past performance is not indicative of a few

39:11future results this is a paid advertisement as always people in the program may have interest in the stocks they talk about in the mountain pool may have formal recommendations for again so to buy yourself stocks based solely on what you hear a personal finance content follows the school's editorial standards is not approved by advertisers advertisements are sponsored content provided for informational purposes only see our full advertising disclosure please check out our show notes like to end the show with stocks and our radar Emily read it this week stock my rate of this week is a company called stand tech the ticker's STN this is a Canadian designed focused engineering consultant don't let your eyes glaze over because I promise you this company is a lot more exciting than it seems that a diversified mix of clients across infrastructure of our mental services water buildings and energy lots of mission critical projects I really like this management team that's growing double digits on their top line will also expand their bottom line through a combination of both organic growth and a positive growth and have a track record that spans decades I think it's trading at very reasonable valuations today as well one of those babies with the bath water that's been sold off with the

40:19broader stock market Dan what do you think about stand tech did you all know they have their own 66 story skyscraper and Edmonton called stand tech tower that's pretty cool that seems now maybe a little excessive I hope all the locals call it the Stan right I hope they designed it themselves I knew what's on your radar this week Dan I'm doubling down I'm looking at Honeywell ticker HON but I'll be honest I'm thinking about GE GE was an under performer for years until it split now two of those stubs are a 100% and 500% sense Honeywell is doing a similar break up I think it could do just as well this week we got details about the soon to be independent Honeywell aerospace business split pretty evenly between commercial and defense with huge spare parts business that's great for margins generating three billion dollars plus free cash flow I'll know they're going to take on a lot of the parents death so they do need to manage that but post split I think Honeywell aerospace could be a top choice to take advantage of this surge in demand I'm very intrigued Dan does Honeywell have you intrigued Honeywell such an innocuous name and it's like they're a you know giant company with a ton of diversified

41:32business do you know their fingers are in a lot of different pies gang but then you hear Honeywell and you're like oh it sounds nice you see Jenny you're making my point though imagine how simple it's going to be once it's three companies and we'll know exactly what they're doing I do like that all right Dan which one's going on your radar on your watch this this week you know I like simplicity Travis so I you know hopefully Honeywell does get a little more simple with how they name things so let's go Honeywell why not it's worked out for GE or Emily Flippin Lou Whiteman I'm Travis William that's it for us folks we'll see you here next time you