is gross margins were okay. something else is going on. >> no, it definitely seems it's either a traffic issue, first quarter just some hesitancy about it. maybe there is more seasonality that they expected in sales so far this year. but there wasn't much in the quarter that was actually reported. there was a problem. >> exactly, those shares are down 18% on the guidance. >> that does it for us, have a good afternoon, everyone. >> "fast money" starts right now, overlooking new york city, time's square the traders on the desk. tonight on fox, it's the rise of the robots. black rock saying it will replace stock peckers with machines, it could be good news for investors t. one and only kevin o'hery is here to tell us who the winners will be if robots take over wall street. one trump trade wall street missed is hitting higher. it can be a bad sign for the trump rally. what it is and why investors are scratching their heads.

energy stocks soars, crude moves higher, one thinks the run is just beginning. first we start off with the other big winner, technology the dow slightly lower. it lost a four-day winning streak. it's higher for the month of march. two of the bis biggest names soaring to record highs today. those have been on a tear this year, just how big, check this out, combined. the two stocks had a market cap of more than a trillion dollars. >> that is equivalent to three exxon, four-and-a-half general electrics, more than six coca-colas. a lot of sugars, a lot of bubbles. >> are these big techs starting to fail, are they relying on the big tech names too much to keep this rally going? >> it feels like a safety trade. i know last year the market was stuck in the mud. some of the ones like apple that have good product cycles, those were safe. you have amazon and facebook

that have that incredible growth people felt good about regardless of the evaluation. to me, it's nothing short than bullish. you know, no way. it's also a safety trade away. i would add some of the big ones, apple in particular, if you're not going to get the sort of tax reform. you may get some form of repatriation, a tax holiday. apple has $250 billion in tax. most is overseas, they are the number one beneficiary of that. >> are we living in an alternative universe to say amazon is a safety trade a bit? >> a little bit. when you look at the evaluation, it's the one stock people want to give a break to it. right. they look at valuation, say, yeah, but look at the growth. look at aws, e-commerce, you get a press. all the money besos put out there. we use comparisons all the time. he is the steven jobs of where we are in terms of innovation. what he's created in a short period of time is absolutely unbelievable. but i think when you talk about the technology trade right now,

it's about fundamentals. you look at the fundamental story the pe levels. you look at in many cases you get great deals and you look at growth t. rotation to growth from big cap tech has been absolutely spot on. i think we have to basically give a tip of the hat to this ceos for doing an unbelievable job of going through this transformation process, whether it's cisco, intel, you go through the list, oracle, all of them as they move toward the clouds areas of growth. >> are you buying to the notion that biotech is a safety trade in today's market. >> >> i accept that appears to be happening. it's not something i would ascribe to. everything you say about the companies, it's innovation, all of that, completely true. i love the product. but that valuation, i can't get any comfort there. it would be expensive, 100 points low it will be expensive. so i can't -- but for me the big cap tech stocks, alphabet, facebook, those don't seem crazy expensive to me. you still have great growth

there. they have repatriation opportunities, particularly alphabet. if we get some tax reform, i'm not wildly optimistic we will see something soon. but just good for all of them as well. >> should we see some sort of any kind of instability, if you will? >> where? >> in the s&p and/or the nasdaq, the big tech stocks seem to be leading the way. >> i'm not trying to be a wise guy, instability, we thought we saw instability this week. the vix ran up to north of 15 on mompbd. wound up closing the day lower. it's lower still, so the volatility index that dan and pete know far bether than i do. that's telling you a completely different story. i don't know where the instable is coming from. i have a couple names. karen and pete have been steadfast. if you listen to what he has been saying, i'm say this, there are other names, too, that play in sort of that 15 to $20 billion dollar cap we did a great job w. look at adobe, for

example, which recently got two upgrade over the course of a couple days, now everybody is starting to understand that story and red hat, which we talked about seemingly for years, had a ridiculous quarter late last week or early this week. so both those names, theoretically, high valuation stovenlths i think they're growing into it. >> i just want to make one point about amazon, a lot of the attention has been placed. we know the retail has been growing a lot. this is a company that grew year over year the fastest pace in four years, expected to grow 21% this year. people keep talk about aws, more profitable than the retail. here's another thing, amazon with this echo right now, they are onto the next computer platform which is voice. they have a massive lead on apple. they have a pretty good lead on google right now. so for all of the people like me and i have been doing this for hundreds of points, talking about valuation, you know, you got to assign something to the ecosystem that they're creating around this computing platform because it's going to be really

big. to your point about besos, he will use it in many different ways to get to consumers. >> the next besos obviously is zucker burg. you look at he put out that ten-year plan. he has been absolutely brilliant. le tried to buy snap and couldn't. they didn't want to sell, everything he's gone out and done to make sure, he did it in mobile, then acquisition after acquisition. they have done a great job of figuring out how to take those acquisitions and make those, monetized world for them. >> that you can see, few look at the pe e right now something like facebook, it is not outrageous. it's in the low 30s. it's not something, we all talk about it like it's lots. it's not very hot, they're growing fast. >> if you miss the move open amazon, are there other techs you can buy? we have three ideas. chris. bring it to us. >> yes, three names and one is from very old tech. this is cisco. cisco, we think, is in a bull market. let's remember, cisco spent the last 15 years between there are 15 and $30.

it's through 30 now. it's come out of the bear market. it pulled back the last week or two. it's right at support near 32. we think, ultimately, is this is a $40 stock. it's a good uptrend and one we think we can buy on weakness, i put paypal in that area as well. high or low, high or low. start to come out of this big base, 42 very good support. we think $50 stock at about 18 up from here. and then lastly, i think guy had it dead right. red hat, rht, coming out of a big base, $85 stock. wily the $100 stock. another name looks fantastic to break out of this big base, there is more to tech out of apple. here are three ones you can invite here. >> i think i will get chris. >> a unilateral decision. >> come on, sydney will bring a chair. >> thank you, guys.

>> in spite of him saying you got it dead on. >> yeah, i know. >> how does nasdaq look? >> it looks good, i think the story no one is talking about, facebook is up quietly 25 this year. apple is up 20 plus. amazon is up 20 plus. i mean, three, four months ago, people were ready to kale call the trade dead. anything but, netflix is up 19. this is still a very good group. i think it speaks to, maybe a little of a safety trade, i think it speaks to the broader tape. >> does it make you nervous about the nasdaq? those three names, five days, including microsoft, that make up $2.5 trillion t. crowding in those names, we said safety. it's really because the stories are all intact right now. god, at some point do have you too many people ahead? >> here's a way to think about this. the ten largest stocks in the s&p right now have only contributed to about a fourth of the year's total. in 2015, they were responsible

for the year's entire. this is broader than five, six, seven, gain. there are things we want to watch the curve flattened. the oil is weaker, copper is softer. there are things on our radar that maybe stooek speak to this risk trade. by and large the signs at the top are not in place at the moment. >> we were talking about tech. does it look technically better than some of the other indices? >> listen, if tech is a safety trade, what are the others? tapeles? what would you rather own, strength the red hats, apples and amazons or campbell's soup, which looks boar, dollar general looks poor, if we think about tech as a safety trade, i'd much rather own tech. >> i have another would you rather, would you rather -- >> yes. >> at this point in time, would you rather invest in bank stocks because they're down this year or tech stocks because they've

been a winner the year? >> i think structurally banks have the up in upside, tech versus done this and tactically banks look washed out. you have 80% of the sector have a one-month low on monday. reverse those levels. i think the street is not bullish. i want to be there. is there thank you. >> snappy young image. >> how about you? answer the same, would you rather? >> i forgot what it was. no, banks or techs. i know what it was. i pave attention on this desk. >> thank goodness. >> current levels, if you look at where goldman sacks held, we failed in the middle of 2015, traded down, bounced. so to answer your question using goldman as a bellwhether, i'd rather financials. >> i bought city bank last week. i don't view this texting as a safety trade. citigroup. the rest of the market performed so badly right after the

election. sometimes they catch up. >> that seems like it should have, not that it's a flight to safety. >> that's a would you rather for me like picking your kids. >> c'mon. >> or watch them it's cool. >> i love financials. >> i think the one thing we didn't talk about this whole entire conversation of tech, how about if you widen it out towards those chip names? i mean, that has been just as strong, it's not this narrow just tech trade. >> right. >> you go to the chips, mike-on-sky-- micron. oracles. it is broader than we put it out there. this is a great trade going on. >> i just add other one salesforce.com people are worried about on valuation, it had miserable last year, it was down 13% of the year. it's 25% this year, late in the day i know you saw it. call buyers, 85 strike in june. above the all-time high, playing for new highs. here's the thing, we talk about this a lot on the program.

option premiums are keep. you are not risking a lot par tis makes. if you are worried about all time highs and getting too giddy on a near-term top. there are ways to find it. >> sold off that stock, primarily based upon, they thought it was going to make a bad acquisition. >> bingo. >> but now that that's maybe pushed to the side he will make a foolish acquisition, i think there is much more upside, giddy up to you. >> coming umm, shares of lululemon, the stock is tanking. look at that, down 18% right now following its earnings report and guidance, we will tell awe caused the retail wreck. plus, one thing the markets are getting wrong, according to closely followed the global fund ra raoul paul. the final spot in the "fast money" madness championship game. will it be nvidia or allergan?

much more "fast money" still ahead. ahead. with passion... but i keep it growing by making every dollar count. .

careful joe, they've got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. >> welcome back to "fast money"

lululemon getting slammed. >> reporter: investors are looking past the fourth quarter, focusing on lululemons very disappointing guidance, for the first quarter and the year. shares are down 18% or so after hours as the athletic revenue guidance is far shy of the street's forecast, reported two-thirds over with already. even though lulu has a history of conservative guidance, this looks like they have a long way to make up the difference. ceo then notes the year has gotten off to a slow start and on the call, executives said the slowing sales trend even in the first quarter is a result of two things, soft traffic in stores and the e-commerce results. lulu says the store conversion in average unit retail or prices, those are solid. it's traffic, that's the problem. then when it comes to online, they say they've identified the problems. there is not enough color or depth of assortment and items were presented in their best light. they gave an example of a

jacket. explaining when it changed the way it was presented visually online the sales performance improved. >> that didn't move the stock after hours. in the quarter comparable sales did increase 7% marking the tenth straight quarterly increase. women's bottoms comp grew 14%, men's grew 20%. market improved. that's an estimate we look at carefully especially for lulu. they spoke about growing the brand outside of north america and leading in both innovation and design as key pillars to continued growth. they didn't really focus a lot so far on the call on the guidance, but that's really all that investors can pay attention to right now. melissa. >> courtney, thank you, keep us posted. again, on the details that lululemon. wow, what an investor. >> you talk about expanding bottoms, i think. but the disaster was the valuation going in. this is a bad quarter. this is a bad guidance. both of those are bad, for sure.

but when you trade the multiple they do, which is based on growth for a while, will you see not just you have the earnings level, that growth isn't there, maybe he's right about that merchandising, that could be, we'll see in a quarter or two. this i think is the least important quarter for them. but i don't know if this is a question of the pie getting smaller or the pie getting more competitive. so for me i am long on foot locker. i care about the space, clearly, stocks were down after hours earlier. it seems to be flattish now. if it's more competitor, that's fine for foot locker. they don't carry lulu. so if the atmosphehleisure tren place, that's fine. if lulu i'd wait. >> if athleisure is shrinking or the same size. >> or growing even. >> the decline, torey birch is

in there. everyone and their brother are selling those pants. >> i hope it's pink, god help us all t. people i see strolling around in these things in the mall. >> what are you talking about versus a baggy sweat pants? i'll take the lulus. >> sweat pants are the other side of it. can't we look like gentleman and ladies? >> lulu attire. >> at $55, you said guy i get you will point out 55 is a level all its own. >> it's a mocking point, by the way. it's not hading it right now. >> we are not holding it now. there is a lot of time now. i think 75 is a critical level. >> karen's points are 100% true t. only saving grace is operating margins held in there a bit. >> you saw a lot of the department stores, here's one i think is interesting, also a 55 member would be target. >> that one, i will tell you

that, it's so beaten down. i think if you used a 50 stocks to the downside it holds 55, i think, you know, they got to get a lot of stuff right on the omni channel. literally, they got it by the kitchen sink this last quarter. i think this is a shot right here. >> in the past, a company worth taking a shot. >> the soda company. >> he loved it. >> but the management's got to come in and tell us that it's finally clear and they're coming in. just like jimmy daymond have done and target in the past on harsh sell-offs. back to lulu for one second. i actually like the quarter. it's the guidance. you look at the revenue growth, that was pretty strong. >> yeah, i know the direct maim, that was a little off or whatever. but it's really all about the guidance going forward. i mean, they missed from a big way. that's why it's getting punished. i'm totally shocked by it. the lululemon ceo is on "mad money" tomorrow at 6:00 p.m.. >> still ahead -- you hear that

music? you know what that mean, a dire warning. a globe fund manager raoul pal is in the house the one thing he says the market is missing, why it could end so badly, that's later on. i'm melissa lee. you are watching ""fast money."" here's what else is coming up. >> america, here's what your mutual fund manager will look like in the future. and according to mr. wonderful, it could be a boom from one asset class. he'll be here to explain. plus, the last time guy faced pete najerian in "fast money" madness this happened. and you can watch the replay when "fast."returns. "fast."retu.

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welcome back to ""fast money"" we are live at the nasdaq site. wall street closed lower, the ninth negative session. meantime the nasdaq posting the fourth straight day of gains. here's what's coming up in the second half of the show. alf of . plus our "fast money" madness begins with allergan and nvidia, pete najerian is back to take one last time against guy adami. we will let you be the judge. first we start off with a what surprising trend in the markets right now in bond. holding up in the face of the trump rally. cnbc's dom chu. >> hey, mellissa, would it surprise you deposit bonds are holding up pretty well given all the headwinds out there.

probably not since the "fast money" crew and viewers are in tune to what's happening in the market. let's put it out there for the record. treasury bond prices are generally up. albeit modestly in 2017, that means yields are generally lower, all beit modestly. look at the 20-plus year's treasury etf. the ticker tlt. if folks were that optimistic of a ramp up in growth expectation, why warrant yields a lot higher and prices a lot lower. you can argue investor expectations are there for more fed rate hikes later on this year, so does this mean less optimism about the future growth and success of policy initiatives in things like trump tax reform plans and regulatory overhauls, that's spilling over to the stockmarket, where high dividend paying sectors, like utility, consumer staples, all pretty much outperforming the s&p 500 albeit again modestly t.

big question is whether or not that trend can continue. to be fair, melissa. those ten-year treasury yields are 2.39%, they're still way above the 1. % before the 11th. still, it's something to watch in the coming weeks, guys, back over to you. >> sticking with the hunt for yield, our next guest knows why wall street dropped the bomb in the trade. macro-investor reports at the nasdaq. hello, nice to see you. it seemed like everyone and their brother was short the bond trade and everybody and their brother got it wrong. what'd they miss? >> because they thought what was a trump inflation trade. in fact, it was the change in basis from last year. if you remember january/february last year, it was a super week. prices were falling, oil was down $20 bucks. >> that translates to a strong cti as they stabilize, what happens now is once you get to april and may, you get the opposite, so what you will get

ask an unexpected weakening in inflation number, unexpected weakening in growth numbers the bond markets aren't predicting. that everyone is going for the inflation trade is going, it's going to go ballistic. there is a chance they did everything wrong here. >> we are laughing, easy come. comps are tougher now. >> exactly. exactly glchlt so what do you do now? everybody's got it wrong. everybody is short position short bond. >> exactly requirement i think things like the ltl look like a pretty good risk-reward for me. if it's the ought way around, bond yields come down, i think going back to the, you know, 1.81st yield for the ten year seems a reasonable start to go back where we were. is that equity mark yet, it does say the growth is not as strong as people think it is. >> i don't want to get economic

wompgy t wonky. what could it mean for the fed market? >> the fed always hikes into a recession, the question is is how far are we down that track? it's difficult to know with almost zero interest rates where the curve should be, but the probability is, is that at some point they will go too far. whether they've gone too far already, i don't know. i have a feeling that it will happen and its coming. we already are overdue a recession. >> let me ask you about this you stay the fed hikes this into a recession. doesn't the fed respond to inflationary data? >> yeah, but it always lacks and always at any point before we get a recession the fed are hiking rates, because they tightened the money in the system. so they're trying to slow the economy down and the end result is they slow the economy down. so you know that does lead to a recession. so it depends how many hikes we've had and what we call hikes, because tapering qe was essentially a hike as well. they have been hiking for a long time. so, you know, i don't know how much further it goes. i don't think the hike is much

further, i'm not sure, the basis will weaken. >> connect the dots for us, taking a look at stocks and where they're valued right now. if you don't believe necessarily the inflation trade is a reality in that the comp in terms of the economic data is going to make the economy look worse as we enter the back half of the year. we bought the the fed threatening, but at the same time, that's always the bad news for the stockmarket. at the same time you have bond potentially going higher, yields coming down, and that could be actually helpful for valuation. >> yeah, i don't think it's negative in the shorter term until we see once the data is normalizes, goes back to where it was, then we can see what happens to the economy. if it gets much weaker, yes, it becomes negative. right now, it's not a negative event for the stockmarket necessarily t. other thing is the oil market, if oil starts to fall, which i think it will in the back end, probably from the summer onwards. if that starts to happen, then things will weaken. the u.s. economy is so strongly a type of oil matter. >> what is your highest conviction trade at this point? and this sort of it's not a

threat yet but it could be in the back half scenario. >> yeah, i think either way, to own bonds or own tlt things like that is a good effect either way. if the stockmarket does get into trouble, if the economy slows down, you will make more on that trade. in the mean 'em jutime, risk is opportunity. >> is the corollary the short dollar? >> no, i sold long dollar. i think the dollar still goes much higher. i still think the euro goes towards parity and the pound goes toward parity overtime. so i'm in a strange world, most people don't understand why i like dollars and i like long. >> interesting, well, thank you, good to see you pa you'll praou. >> it is a trade, there are a lot of ways to plate. on the long side, if you think the ten-year yield will go back towards 2%, the 200 day moving average, tlt 121 out to july.

we have a few months here is 2% of the stock price. are you risking 2% of the tlt to have that long exposure. if the ten-year yield goes back to 2%. it will be that at 130. >> the positioning, the extreme position on wall street, do you remember he was about to lose, i ask him, are you short bonds? he says you bet your hiyee, which indicates very short, right? >> it's going right into space ever since. not interesting enough smr which could mean a qwiz, or mean more. >> typically, these things can happen much longer than the market thinks they can or wants them to. i'm trying to physical out. you played all that dark ominous music. there was nothing dire there. >> now he brings a smile. i mean, really. >> happy as a clam. >> this is a really important take away in the call is that the data was so bad in january and february that to your point about laughing, all of a sudden, if we see the city supplies index and the cpis, all this

stuff slow down a bit, then everyone will be saying, okay, what do we got here? you may see bonds start to rally. >> give me that scenario, can't you stay long and cover and give yourself a hedge in some passion, particularly in a spider-type head right now that's very, very cheap, gives you an opportunity to stay. >> a long stock. >> you got to believe, they're missing this. >> you watched "fast money" on monday, we detailed this five h five-put spread. >> sorry. i was at the mall of america. >> media mista. >> energy is surging today. one trader is inteting on more gains ahead, so dwhan did you see? >> so we will talk about the sop oil and gas etf. much less concentrated in the xle etf we talked about a lot. here's the thing, call activity was hot today. i think it was behind that of puts. i want to quickly talk about crude oil here. look. we have this 10% decline, it

slows the uptrend. it didn't place the february 2016 lows. it looked like a trade here. so we have this noise two-delay bounce if crude oi bounce in crude oil. that's an important level here. this is the oil and gas etf i was talking about t.xops saw a lot of heavy call activity. look at this down trend. it hasn't gotten up to it yet. this is an important intersection, this is the uptrend over the last two years. if it fames here, will you not really want to be long oil stocks in my opinion right now. so the trade that i want to talk about, there was a buyer when the xop was trading at 15 earlier today, bio 11,000, april 7th. that's a week away from the calls, not a huge capital commitment whatsoever. what that says to me is that an oil trader or somebody bullish in your term view is playing for further upside, not particularly convicted one way or the other. it's kind of interesting from a sent it's standpoint.

i think you ought to keep an eye on the levels in the etf and the underlying commodity. they look to me quickly approaching a level they could be rejected at. >> tomorrows action, check out "option actions" 5:30 eastern. you will be on friday? >> that's why i got to watch. >> still ahead, kevin o'leary said robots could lead to a boom for one asset. he will tell us what it is and how to cash in. plus the pitbull is back. once and for all we will let but the judge when "fast money" returns. returns. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony.

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>> welcome back to the show. it's time for our "fast money" madness, pitfall, pete najerian is back for one time to take on the champ, guy say adame. he is fighting for nbpa. >> i appreciate that. here's a is that right of nvidia, it's a great graphic that cracks ec put together, kristen, well done.

nvidia, why? gaming, the gaming leagues, tim seymour did a whole thing in madison square garden, 30,000 people, the place jammed in, playing video games, nvidia wins at. that you foy what else they win, too? automated automobiles the whole ai thing, pete loves intel, i'm not saying nvidia will get bought. if they get it right on this whole ai auto makes thank you, no driverless cars, nvidia wins, babe, instead of being a $106 stock, it's a $175 stock. i know valuation is ridiculous, guess what, if they catch this right the beta trade is nvidia. >> time is up. go, pete. 45 seconds for allergan. go ahead. >> threats start with aller garn, now i cheated on some notes with this guy from the other night. you know what he talked about just now valuation, are you kidding me? that's no valuation. this my friend is valuation. trends at about a six multiple. the cash they got is absolutely

incredible. that's pretty much you need to know. they didn't have a very good argument. actually, that's not true. ly come back, more on the valuation, the book value of this company is $213, trading at $240. that's incredible. how about the fact fact they have blockbuster drugs in the pipeline, five in the next five years. how about that? 70 drugs int pipeline, oh, be i the way, you got botox and a couple other things already blockbuster drugs. this thing is too cheap. it should be a $300 stock. >> they also have cool sculptin sculpting. >> sigh how we're sculpted. >> you guys are not food advertisements. you have a question? >> pete i have a question for you, clearly, we're in some time of uncertainty in the drug space. so how do you think that flows into valuation? all the testament is priced in. >> i do. i think that's gone past both in

the big pharma names and biotech names. a lot has passed, put out there. health care is not anything anybody is talking about more, i think everybody is focusing far more on the repatriation taxes and the trump agenda. >> so who should aadvance? "fast money" madness, cash our vote in our poll. the winner will be announced at the end of the show. already we are getting tweets. one says i'm feeling sorry for pete najerian already. >> please go an vote. still ahead. kevin aleery ak -- kevin o'leary aka mr. wonderful will be join us. you are watching "fast money" first in business world wide..

careful joe, they've got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. welcome back to "fast money". black rock is overhauling its stock picking business turning to more machines and fewer humans to decide what to buy and sell. now in 1997 when i first came down here to the new york stock exchange, there were 5,000 people on the floor. today there is 450.

it's all from direct technology. this imstraights this black rock story, there is a technological arms race the winner is the average investor. at the nyoc and other trading platform, it was about the ability to create computer programs able to trade stocks at intervals far faster than humans could. for black rock and other asset managers, it's about the ability to create computer programs at a decades old investment methodologies, thanks, to advances in big data analytics and machine earning, these investment styles can be put into ale go rhythms today t. problem, of course, is these active funds generate big fees, this trend is a problem for active management. the stocks of these companies have really suffered this year. this is great news for the average investor, with i is not only getting advanced computer picking technology, but the fees are going down. their lower for actively and passively managed etfs, even the trading economics are dropping,

fidelity and the e-brokers dropped it dramatically in february. the stock exchange has a small core of people watching the markets. there won't be more people down here in the future. that's what will likely happen to actively managed stock pickers. in ten years, they won't be gone, but there will be fewer around. back to you, melissa. >> thank you very much. just a little irony here in talking about this story on a desk full of active traders. >> human beings. >> human beings who actually pick stocks in this start of the market. for the investor we see it go down. this is another choice, it's not just passive investing, the etf low cost. now a sort of middle option where you don't pay the full fees for an active manager, you go in between and get a computerized active manager. >> i think the trend is here to say. the typical hedge fund model i

think is broken for all but the very, very fewest. so, i think it's unfortunate. i wonder, though, for an e-trade, is it not about. is it really about the margin business? and that's going to be if rates go up, that's good for them. even if wonderful that pressure on pricing, maybe it's okay for them. but for i don't know for the active managers, i love the success. >> and we've seen a lot of consolidation in the active management space already and firms americaning with other firms. >> so these things have taken off the market has basically gone up, listen, effectively in a straight line here and there. my question would be, i don't know the answer to this, but how well would these programs do in a market that goes the other way? that would be my, you know, when everything is going up, everything is fine, i'd love to see it the other way now. >> even if they all go down, that's food enough. >> august 24th, 2015, may 10th, 2010. we've seen some major major

hiccup, obviously, we recovered quickly from both of them. the stockmarket has been up every year since 2009, since 2002 we've had one down year. one. 2008. that's a really crazy stat when you think about it. so at some point there will be a reckoning. it's not a tire barng. we had two 50% corrections in the s&p 500 in the last 17, 18 years. >> we have to embrace ai. i was on the trading floor, nobody was there. the nyoc there are people there. you have to embrace what's going on. one of the things i'm involved with is we still have very active managers, you know what we are doing as a group, with ework off the algorithms. they feed into what you are doing. it's man working with machine. that's where i think the left is going. >> intelligence assistance they call it. >> that's night. ia instead of ai. >> ai into ia. >> they're talking about

improvement. >> thank you for being late. where's regis. >> no throwing things on this desk, please. it's all fun and games until somebody gets hit in the eye. our next guest is here at "fast money". we call him simply mr. wonderful, kevin o'leary. good to see you. >> great to be here. thank you. >> it's a great thing for investor, isn't it? lower fees, do we know the performance that's going to be there? >> yeah, i think. so let's just look at plaque rock. their move mark weissman, he's a very interesting person. because he actually managed hundreds of billions of dollars, one of the world's largest sovereign funds on equities. he got a really good long-term track record, using every asset class, including active managers, hedge funds, private equity, you name it. what he observed over a long period of time, if there is a way to use a computer to crystallize a good active

manager's philosophies, and have no style drift, there is a way can you save a ton of money. that's exactly what's happened. you can see this occurring everywhere. i'll give you an example. this is actually a bunch of merrill lynch accounts that black rock acquired a long time ago. there are a lot of wealth advisers, let's say you want to put 20% in your portfolio into small cap stocks or the russell 2,000. but you're concerned that there's too much volatility. so you want to have 20% less volatility or you are concerned that the dividend yield has to be over 3% or you are concerned you don't want companies using leverage or sales accruals. those are methodologies used by active managers, can you now go to an index like footsie russell or the case of black rock, do this yourself, because you will pay to maintain it. basically, footsie russell, i have all these rules, go make me an actively managed platform that encompasses all these rules and picks the stocks for me. >> that exists today. i happen to be using it.

ousm. >> that takes the russell 2,000 down to 239 stocks 20% less volatile than the russell 2,000. give me exposure to every sector. no stock more than 3%. that's exactly what black rock is doing. instead of paying an ad advisor 100 basis points. you are cutting the fees in half. that's why this asset class actively managed platforms or indexes or etfs, whatever you want to call them is the fastest growing agree set class in the world today. >> kevin, the 350,000 give or take financial advisers in the united states in 2020 when your prime minister of canada, what do you think that number is going to be? >> there's a consolidation going on, most of these accounts now in the big wire houses don't want an account with less than $250,000 less in it. they can't make money. those will get pushed down to robo-plays, some will be owned bety schwould bes and everybody

else -- schwabs and everybody else. nobody can do this with fixed income very well. you have to look at credit quality and duration and asset class and all of that. and i think there is a rule for that. but the same number could exist. it's just that the account size will be at least 250,000 or more. there is such a clang going on in the industry. no question about it. >> kevin, i got to ask you about the backlash recently against etfs, jim cramer last week made an interesting argument saying he does not like etfs, bad performing stocks can hijack the entire etf. you take, for example the exam of the ibb, gilead is down 20% over the past 12 months, biogen up 14% t. whole thing is down. how do you defend the etf industry when you can be held hostage to those sorts of effects? >> it's a good comment. jim was talking about the first generation of et frks market indices, you have these massive

-- a single name can be as you much as 14% of the portfolio. what i'm talking about is a new generation of product that's now the fourth generation. these are actively managed, so that covenants like a 3% maximum waiting in any one name and multiple tests on the names, themself, they reject high risk nature. that's what's going on here. you can make the argument about first generation etfs that are market cap waited. the eqqs, yes, those are issues, what i'm talking about are brand-new products on the market for as little as 18 months to take away all those risks, so i don't 100% agree with jim on this. >> kevin, good to see you, thank you, kevin o'leary of o shares investments. what is the trade on these robotic movements? >> i don't know. i think the sector etfs speak to what jim is talking object. you know what you are getting to me they're cheap and liquid. i think there is no reason why you shouldn't be using those on

a routine basis. can you craft a very interesting aloe indication against equities and ipp. >> have you to have liquidity. i think people don't understand there is not enough liquidity. >> ahead, did pete pack enough heat to reign guy adami? please do so, go to twitter. we will reveal the big winner after the break. after the break. at vicarious visions, i get to be creative, work with awesome people, and we get to make great games. ( ♪ ) what i like about the area, feels like everybody knows each other. and i can go to my local coffee shop and they know who i am. it's really cool. new york state is filled with bright minds like lisa's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. search for our page, ♪you're a crazy big fan of sports. and you don't wanna miss a thing.♪ stream all your live ncaa march madness games.

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the blig bank sell offwas too hard. >> i like cisco.

>> 11 time champion, this is unprecedented. >> my god, it's like brew na san martino. >> sure. >> all right. we'll see you there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer, welcome to "mad money," welcome to cramerica. some people want to make friends, i help you make money. i'm here to educate and teach you. call me at 1-800-743-cnbc or tweet me @jimcramer. the market showed its true colors today, the