OpenAI announces testing of new search engine, SearchGPT

Yahoo Finance
25 Jul 202406:48

TLDRIn this episode of 'Goodbye or Goodbye,' the focus is on navigating the stock market with insights from Adam Johnson, portfolio manager of Bullseye American Ingenuity fund. Johnson recommends buying Builder First Source due to a significant housing shortage, anticipated lower mortgage rates, and the stock's low valuation. Conversely, he advises avoiding Charles Schwab, labeling it 'dead money' due to its prolonged earnings decline and lack of recovery. While there's potential for Schwab if sidelined capital reenters the market, Johnson prefers investing in more promising opportunities. The show airs thrice weekly at 3:30 PM Eastern.

Takeaways

  • 🏗️ Builder First Source is recommended for purchase due to a shortage of housing, estimated to be around five or six million units.
  • 📉 The stock of Builder First Source has experienced a wild ride over the past year, but the company is expected to benefit from the housing shortage and likely decrease in mortgage rates.
  • 📈 Builder First Source is trading at a low valuation, around 10 to 11 times earnings, with management guiding for 15 to 20% growth next year due to forward orders in anticipation of increased housing demand.
  • 🔨 The company supplies materials to builders, which is a positive factor considering the need to build more houses to address the shortage.
  • 💡 The potential risks for Builder First Source include economic stagnation where buyers do not materialize or delays in demand due to recession fears or inflation concerns.
  • 📊 Charles Schwab is advised to be avoided as it has been 'dead money' for two and a half years, not reaching its previous all-time highs.
  • 📉 Charles Schwab's stock has been declining for six consecutive quarters, which is a concern for investors looking for growth.
  • 💼 The company's acquisition of TD Ameritrade was expected to boost earnings, but this has not yet materialized, contributing to the 'dead money' status.
  • 💔 The lack of earnings growth and the waiting for a market turnaround that hasn't happened are reasons for selling Charles Schwab stock.
  • 💼 Charles Schwab has $6.1 trillion of capital sitting on the sidelines, not being put to work, which is a missed opportunity for the company.
  • 🚀 A potential positive for Charles Schwab could be if the large amount of capital on the sidelines decides to enter the market, possibly lifting the stock along with a general market rally.

Q & A

  • What is the main topic of the video script discussed in the transcript?

    -The main topic of the video script is the discussion of two stocks with exposure to interest rates, focusing on why one should consider buying Builder First Source and why one should avoid Charles Schwab.

  • What is Builder First Source and why is it recommended to buy according to the transcript?

    -Builder First Source is a provider of materials for home construction. It is recommended to buy due to the current housing shortage, expected decrease in interest rates, and the company's attractive valuation with earnings growth guidance for the next year.

  • What is the estimated housing shortage mentioned in the transcript?

    -The estimated housing shortage mentioned in the transcript is between five to six million units, according to Freddy Mack.

  • What is the potential risk for Builder First Source discussed in the transcript?

    -The potential risks for Builder First Source discussed are economic stagnation where buyers don't materialize, or the possibility that the demand gets pushed out further.

  • What does 'dead money' mean in the context of the transcript?

    -'Dead money' refers to a stock that is not making any money and is essentially stagnant, not reaching its previous highs for an extended period of time.

  • Why is Charles Schwab considered 'dead money' according to the transcript?

    -Charles Schwab is considered 'dead money' because its stock has not reached new highs in over two and a half years, despite the overall market making new highs, and it has experienced declining earnings for six consecutive quarters.

  • What is the current issue with Charles Schwab's earnings according to the portfolio manager in the transcript?

    -The current issue with Charles Schwab's earnings is the consecutive declines for six quarters, and the lack of materialization of expected earnings growth despite acquisitions and market conditions.

  • What is the potential positive outcome for Charles Schwab that the portfolio manager mentions in the transcript?

    -The potential positive outcome for Charles Schwab mentioned is the possibility that the $6.1 trillion of capital sitting on the sidelines could be put back into stocks, particularly through Schwab, during a market rally.

  • What is the portfolio manager's current stance on owning Charles Schwab stock?

    -The portfolio manager's current stance is that he has sold his Charles Schwab stock due to its 'dead money' status, consecutive earnings declines, and the lack of a turnaround despite waiting.

  • What is the frequency of new episodes for the show mentioned in the transcript?

    -The show mentioned in the transcript releases new episodes three times a week at 3:30 p.m. Eastern.

Outlines

00:00

🏗️ Housing Shortage and Builder First Source's Potential

The video discusses the current state of the housing market, highlighting a significant housing shortage estimated to be around five or six million units. This shortage is driving up prices and creating a favorable environment for companies that supply materials to builders, such as Builder First Source. The stock has experienced volatility over the past year, but the argument is made for a bullish outlook due to the housing demand and potential decrease in mortgage rates. The company is also trading at a low valuation, with management guiding for significant growth in the upcoming year. The risk involves economic stagnation or a delay in demand materialization, but the presenter expresses optimism based on recent GDP growth and management insights.

05:01

📉 Charles Schwab's Stagnant Performance and 'Dead Money' Label

The second paragraph delves into the challenges faced by Charles Schwab, which has seen its stock performance described as 'dead money,' meaning it has not returned to its all-time highs for over two and a half years. Despite market highs, Schwab's earnings have been on a downward trend for six consecutive quarters. The presenter discloses a personal decision to sell the stock due to the lack of earnings growth and the company's inability to capitalize on a large amount of capital sitting on the sidelines. The potential upside for Schwab is discussed, which involves a market rally that could bring in the sidelined capital and boost the stock. However, the presenter remains skeptical about waiting for this to happen, suggesting that there are better investment opportunities available.

Mindmap

Keywords

💡SearchGPT

SearchGPT refers to the new search engine being tested by OpenAI, as mentioned in the title. It is a significant development in the field of AI and search technology, indicating a potential shift in how users interact with search engines. The script does not elaborate further on SearchGPT, but its mention sets the context for the technological theme of the video.

💡Stocks

In the context of the video, 'stocks' refers to shares in companies that can be bought and sold on the stock market. The script discusses the performance of certain stocks, particularly Builder First Source and Charles Schwab, in relation to interest rates and market conditions. Stocks are a central theme of the video, as they represent the assets that the show aims to help viewers navigate.

💡Interest Rates

Interest rates are the cost of borrowing money and a key economic indicator that influences various financial markets, including the stock market. The script mentions that the stocks being discussed have exposure to interest rates, indicating that changes in these rates can significantly affect the value of these stocks. For instance, the potential for interest rates to come down is seen as a positive factor for Builder First Source.

💡Builder First Source

Builder First Source is a company that supplies materials for home construction. The script highlights it as a stock to consider buying due to the housing shortage and the company's potential for growth. The company's stock has experienced volatility, as mentioned in the script, and is presented as a good investment opportunity in the housing sector.

💡Housing Shortage

The term 'housing shortage' refers to a situation where the demand for housing exceeds the supply. In the script, it is mentioned as a reason to invest in Builder First Source, as the shortage implies a need for more construction, which benefits companies that supply building materials.

💡Mortgage Rates

Mortgage rates are the interest rates charged on home loans. The script suggests that if mortgage rates come down, it could make housing more affordable, thereby increasing demand for homes and positively impacting companies like Builder First Source.

💡Earnings

Earnings in a financial context refer to the profits a company makes. The script discusses the earnings of Builder First Source, noting that they are down this year but are expected to grow by 15 to 20% next year, based on forward orders. This is an important factor in evaluating a company's stock as it indicates the company's financial health and potential for growth.

💡Charles Schwab

Charles Schwab is a brokerage and banking company mentioned in the script as a stock to avoid. The term 'dead money' is used to describe its stagnant performance over the past two and a half years, indicating that it has not provided returns to investors and has underperformed compared to the broader market.

💡Dead Money

In the context of the video, 'dead money' refers to an investment that is not generating returns and is essentially stagnant. The script uses this term to describe Charles Schwab's stock performance, which has not reached its previous highs for an extended period, suggesting that it is not a good investment at the moment.

💡Earnings Decline

An earnings decline refers to a reduction in a company's profits over time. The script mentions that Charles Schwab has experienced six consecutive quarters of declining earnings, which is a negative signal for investors and one of the reasons why the stock is considered 'dead money'.

💡Capital on the Sidelines

Capital on the sidelines refers to funds that are not currently invested in the market but are held in reserve, often in safer assets like government bonds. The script mentions $6.1 trillion of such capital with Charles Schwab clients, suggesting that if this capital were to be invested, it could potentially boost the market and benefit companies like Schwab.

Highlights

OpenAI is testing a new search engine called SearchGPT.

The show aims to help navigate the best moves for your portfolio amidst stock market noise.

Builder First Source is recommended for purchase due to its role as a provider of materials for homes.

There is a significant housing shortage, estimated to be around five to six million units.

The housing shortage is driving up prices and benefiting companies that supply to builders.

Mortgage rates are expected to decrease, making housing more affordable and boosting demand.

Builder First Source is trading at a low valuation of 10 to 11 times earnings.

The company is guiding for 15 to 20% growth next year based on forward orders.

Builders are selling out faster than expected and increasing speculative house construction to meet demand.

The potential risk for Builder First Source includes economic stagnation or delayed buyer materialization.

A strong GDP report suggests that a recession is not imminent, supporting the housing sector.

Charles Schwab is advised to avoid due to its lack of growth and disappointing earnings.

The term 'dead money' refers to a stock that is not making any progress or gains.

Charles Schwab's stock has not reached its all-time highs in over two and a half years.

Earnings have been declining for six consecutive quarters at Charles Schwab.

A significant amount of capital is not being put to work by Charles Schwab clients, indicating a lack of investment activity.

The potential positive for Charles Schwab could be a market rally that brings in the sidelined capital.

The show will continue to provide new episodes three times a week, focusing on stock market insights.

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