>> i'm irish. lou: takes more time. tom, you're a very good person. you listen to me so carefully. thank you, tammy, thank you, tom, we appreciate you being with us. [laughter] thanks for joining us, have a great weekend. kimberly guilfoyle among our guests monday. be with us, please. good night from new york. ♪ ♪ >> this show has never been solely about investments. we've talked about anything that affected people and their money. ♪ ♪ >> from foxing business headquarters -- fox business headquarters in new york city, the new wall street week. >> welcome to wall street week, the show for long-term investing, i'm gary -- >> and i'm. maria:. a few weeks ago we were in las

vegas, quite a conference at an event so full of legendary investors it struck me how the vast majority of people we spoke with were pessimistic about the u.s. market at least in the near term future. gary: why is that in and do our guests today hold the same view? we welcome chief investment strategist liz ann sonders and morris mark, and we were all, actually, at the salt conference. morris, let's start with you in terms of the markets today. you don't see things as negative as some of the other participants that conference did, do you? >> no, i think it's a fairy valued market -- fairly valued market. i think there's great opportunity for really terrific businesses to build value, and there's a lot of problems for businesses that are going to be taken advantage of by those great businesses. >> well, you have invested, you're the envy of many investors because many of the stocks that worked last year -- we're talking about facebook and google and amazon -- you're a value investor, but you owned a

lot of these stocks, and you continue to own them. what's the thesis besides them working, why do you own them? >> yeah. we don't own -- of course, we want them to work, but i think we really want to own great businesses. we're very cog cognizant of val, but to us, value is the present value of future cash flow properly discounted. you don't want to pay too much for that, but none of these companies, not even amazon if you look at it in terms of its free cash flow multiple, are expensive. and conversely, they're really super businesses. if i were to look at google and facebook, for example -- and they are important investments -- to me, they're the two most important media companies in the world. there are a lot of other great media businesses, including fox. but both of these companies, t the entire world excluding china. so they can leverage their asset base, their database, their software, their skills and, in fact, benefit from the fact that

they control networks that are worldwide. maria: so you're doing what any great investor would do, and that is looking for growth in a low-growth world. liz ann, let me turn that to you. where do you see the growth today, and would that be a place -- not necessarily a specific stock, but spaces, industries, would that be a place to actually put money to work in? >> yeah. i think you do want to have a cyclical bias in portfolios right now. i think the pickup in the economy that we anticipate is going to come. financials, i think, are interesting. i can take the fed at their word that they are going to continue to inch up interest rates, so we've had an outperform rating on financials for a while. got a little bit painful there for a short period, but i think that makes sense. and technology, actually, i think is one of the primaries where you can find growth at a reasonable price. those are the two sectors we have favorable ratings on. gary: you know, morris, we're going to talk later in the program of the tech bubble of '99, and when i think about those stocks that are working

right now and continue to work, how do you know when to exit a stock like that? what's the sell signal when the growth is no longer paramount and you have to worry about the right price? >> a lot of reasons i think two stocks like this that we sold in the last year, linkedin. a lot of the businesses that they acquired did not contribute to the company's growth, and it was a very, very generously-valued stock. so when you see that, don't pass go, don't collect $200. leave. another one that we sold also was yahoo! because we did a lot of work on the legal risk related to the proposed spin-off with alibaba, and we did a lot of work on alibaba, and we weren't comfortable with the legal risk, and we got a lot less comfortable with alibaba. so it's looking at the business. if the numbers don't work, you leave. maria: so you're looking at valuation as well as the growth prospects. in terms of valuation, why aren't some of those other names

like the facebook, the googles, the ones that you've owned and sort of ridden as they've moved up, why aren't you having issues about valuations there? >> well, we have issues every day. that's why we go to work every day, and we love it. it's a great opportunity -- maria: but you don't see the same situation there that you do in, like, a linkedin. >> absolutely not. facebook, one, you have a very entrepreneurial ceo who owns a lot of stock, so he's your partner. seems to be dedicated to building the respective businesses that it owns. and if you look at it, it has literally billions of users as of the last quarterly report. they said that about a billion of them spend 50 minutes a day on the respective networks. i think there were tv networks that would kill for that audience. maria: for sure. gary: liz ann, let's talk about active management. morris, obviously, an active manager versus index. one of things i heard over the

holiday weekend, again, and you hear it daily, is why give money to an active manager? indexing continues to work. what do you tell the schwab climates? >> well, i think we are seeing a shrinkage, and i think that's a long-term, secular trend. the key, obviously, is which active manager -- gary: yes. >> so i think we're probably overstored in a lot of that space, but i think there is still a tremendous amount of talent. it may be a smaller number than existed before, and i think for a lot of investors taking a passive approach probably does make sense as opposed to either trying to do it on their own or trying to find some of those high quality managers. fundamentally, though, i think with correlations coming down broadly from a macro perspective and the opportunity for active overpassive is here right now. gary: all right, we'll be right back with more. >> up next, navigating the investing world amid the most volatile and uncertain election in history. how you can trump the trends.

we'll take that to two of the sharpest minds on wall street when we return. stay tuned.

♪ ♪ maria: welcome back to "wall street week." we are talking with liz ann sonders and morris mark today. we can't talk about the economy without talking about this once in a lifetime presidential election and how it will impact your money. do you see an impact to stocks, to the markets, morris, depending on who wins this election? >> yeah, i think so. the way we look at it, and i'm trying to be simple in this analysis, we think the market is what it is, and if hillary's, to us, a conservative candidate. if she were the next president, the environment we have is the environment we'll have.

maria: so you're talking about 2% economic growth. >> exactly. the real question mark is the republican candidate. he's got some really good ideas, he's got some oh -- other things he's said which frighten people, and you just don't know whether he will implement the good ideas or not. he's going to have to convince people that his good ideas will make sense, and he'll implement them. maria: so it could be great, it could be horrible. >> exactly. [laughter] and i think it's really important. gary: do you think that's going to happen in the next several months? is this going to become an issues-related campaign? >> i'm not a political forecaster. i'm just saying as an investor what i'm interested in is will we see growth initiatives from our government? i don't think anything will change if we're in one direction. but we need things like corporate tax reform. we have $2 trillion sitting offshore that's not doing anything either for us or for the world. if we can resolve some of those questions without screwing up international relationships, i

think the economy would explode. gary: liz ann, at schwab where individual investors are at the forefront, how important is the election in terms of what they've been doing and how they anticipate moving their investments around? >> i don't think it's important yet in terms of what they're doing, but it's the majority of questions i'm getting now when i'm out on the road. so i think it's an uncertainty factor. a lot of the concern surrounds trade given that regardless of who we get, there seems to be uniformity in terms of views on trade which i think is at least on the surface at this stage a net negative for both the economy and the market. but ultimately, it's a function of we actually have to hear some actual policies in more detail from the trump side. i think the concern is how far left does bernie sanders pull hillary, and if -- assuming she's the candidate, does she move more toward the center. the other thing that is unique is that this is an eight-year cycle here that we're in.

people talk about the four-year presidential cycle, the third year being the best. we bucked that last year, obviously. but there's also sometimes an eight-year cycle where you have an eight-year -- two-term president so that the election becomes an open election. and in the eight-year cycle, the only year historically that the market is down on average is year eight because of that natural uncertainty. i would add there's even more because of let's just call it the unique nature of this election. maria: well, you know, you really haven't heard a lot of talk about tax reform from the hillary camp. you do hear it from donald trump, although we're getting mixed messages in terms of what that might look like. but his corporate tax rate in his tax plan is saw %. 15%. so if the market starts figuring out or believing that we're going to have a corporate rate of 15%, you want to buy stocks with both hands? >> you bet. maria: that's what i figured. >> i look more at cyclicals. we have a cyclical play which is housing. we think housing is getting

better regardless, and it make sense here. but if that were to happen, i think housing starts would explode. >> big market move. gary: you know, morris, you said if you don't do macro, macro will do you. >> right. maria: i love that quote. gary: i want to speak to both of you about this because it's been so hard for big investors, institutional investors, professional investors to not have a macro viewpoint. how do you do it? >> well, you keep reading the newspaper, and you recognize the fact that we're not running a macro fund, we're trying to find good businesses. and we just really want to make sure those businesses will be good in most reasonable environments. you look for key issues. you listen to people like liz ann sonders, and you pay attention. gary: and so when a macro issue might impact a name, a position in the portfolio, you have to then evaluate what possibly could happen or you wait to see a change in the business model as a result? >> i think both, gary. i mean, you're always judging probabilities. gary: right.

>> and since it's very hard to assess those kinds of probabilities, you just watch it really closely. but i think the first question you ask yourself today, is there systemic risk. gru gary right. >> if there is no systemic risk, you can stick with the business and wait and see what happens. gary gary yeah. liz ann, macro to you is what? >> it's everything as a top-down person, that's what i pend all of my time doing. what's remarkable to me is the yawning gap between macro reality and macro perception. and i think we have such a strong muscle memory of not only the most recent financial crisis, but the fact that it came within a ten-year span of the last crisis and brutal bear markets that what we find from a macro perspective is they either think we're still in a recession, or they feel that the world is going to come to an end next tuesday at 3:00. the focus on the negative, what's the next shoe to drop, what's the next black swan is really remarkable, to me.

and i don't think the macro environment has been extraordinary, certainly, from a global growth and the unis certainty related to -- uncertainty related to central bank policy, but i think the reality is a bit better than what the -- gary: it's been refreshing to actually hear from people who are investing, making money in this environment and doing it successfully. thank you both, morris -- maria: can i ask one before you go, the fed. is the fed going to raise rates june 15th? >> i don't think they're going to do it in june. i'm pretty sure they're going to do it in july. and as of now, i don't think that's a good thing. maria: liz ann? >> i think they will, and i think it may be a better thing than people believe from a confidence perspective. gary: that's what they were saying in december, so we hope you're right. liz ann sonders, morris mark for joining us. we'll be right back. >> is silicon valley partying like it's 1999? aztec companies hit record valuations in the billions, some experts say we're looking at another market bubble. our all-star panel weighs in next. stay tuned.

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♪ ♪ gary: welcome back to "wall street week." is silicon valley partying like it's 999? -- 1999? more and more tech companies getting valuations exceeding a billion dollars. maria: many of those companies have yet to turn a profit. people like mark cuban and carl icahn have questioned these sectors. to our fox all-stars on whether we are witnessing a technology bubble, we welcome deirdre bolton and charles payne. what do you think, charles, bubble or no bubble? >> unicorn, sure, i think there's a -- maria: the private companies. >> here's the thing i think is really interesting, and it's a two-pronged thing.

h investors, it's okay with me. what i don't like is to extract all the value out of these things and foist them upon the public as an ipo. maybe alibaba could be -- to a earn degree -- an example of that. i don't like this new model of all the great gains happening in the private sector, and then they go ipo at these rich valuations, and i hope that the public gets hip to that. >> actually, i would like to answer that because i do think most of the risk is happening in the private market. even the venture capitalists are slowing down, they're looking for this hybrid between boot strapping and the big v.c. money where they may never get their money back. let's face it, as far as bringing new issues to market, it's really slowing down. so this bubble is a little bit kinder to the public investor, people buying stocks. it's a little bit more difficult for the pros, but that's what they get paid for. gary: well, there's two things that mutual fund holders probably don't realize. a lot of them are actually buying these shares in the private companies because they felt after 1999 and 2000 that

they needed to participate. so a lot of the public mutual funds are buying -- >> td ameritrade, fidelity -- maria: buying things like uber, snapchat, valued incredibly. gary: charles, we just had morris mark on the program, and he's talking about facebook, you and i were just chatting earlier. you're looking at mutual fund companies that are, by definition, maybe in medical technology or they may be in international, and they're trying to find ways in their charter to be able to own those stocks because they see the performance that they're given, and doesn't that give you shades of 1999? >> it does to a degree except the valuations aren't there yet. obviously, listen, i do a lot of portfolio reviews every week, and it's so funny because i don't care what the name of it is, it could be the new dimension fund and the great horizon fund. they all have these great names, and you look at the top ten holdings, and eight out of ten of them are the same names. even from a diversification point of view, the investor

thinks, hey, i've got five different funds. no, you got eight different stocks. [laughter] maria: so where then, charles? let me ask you what we asked morris and liz ann just a minute ago, where's the growth? >> you know, i think it's more about valuation. that's how i've been playing the market. maria: okay. >> i had big wins this year on buying some of these blue chip names like caterpillar -- not ibm hasn't really worked out, but somebody like united rental. there have been some extremely oversold, boring names out there that, in my mind, have been absolutely phenomenal to own this year. gary: deirdre, back to technology for a second. if i'm an individual investor, i watch the program, i listen to morris mark, and he says that's where the growth is. how do i protect myself if i want to participate, but i'm worried about a bubble? >> well, maybe we can split the difference here. i mean, there are some public tech companies that are fighting for your living room, right? microsoft -- actually, microsoft just announcing a v.c. unit. but you have microsoft, you also

have apple fighting for your living room, and then on the flipside you have amazon that's creating whether it's these ambience sort of personal assistants, i think you just decide what you think is going to be around. amazon, i feel like looks good, feels good, doing a lot with content -- maria: what about valuation on amazonsome. >> well, the valuation's a little high -- >> i just took profits on netflix maybe a little bit early, and i am intimidated, i am worried about getting caught in these things. i'd like to get a double-digit gain in a short period of time. if you're willing to hold for five years, most of these people think they're going to make money sooner rather than later -- >> but that's kind of their responsibility. [laughter] maria: good point. gary: before the program i was thinking about amazon. i've been in the market for 30 years now, and i've seen a lot of great growth companies through many, many cycles. the fact in this company -- and,

again, the valuation issue has burned so many short sellers -- maria: it really has. gary: but i don't think in 30 years -- and, again, i'm not talking about the valuation, i'm talking about the business, the revenue growth, i can't recall any business that can grow at this level, at this size this terms of the -- >> buy what you know. if you think a company's going to be around and delivering productses or services you're interested in in in five years,y not to why at the top. maria: first we thought it was buying books, the barnes & nobles of the world, then it was about retail, they're coming out with original movie content. they're taking market share from all sorts of industries. gary: but you have to worry about the valuation. >> because when they get hit, they get hit. when amazon has a bad quarter, that's the kind of thing where the average person would probably sell at a panic. same thing in netflix. i've had to wait for it to recover 100 points. the good news is it didn't take

long -- >> you did very well with apple. >> i took your advice. [laughter] we say buy what you know, but do we really know -- and that's another question. we know, like, amazon's got a lot of initiatives, but i think in a lot of these cases beyond these five or ten names, we don't really know what these tech companies -- >> i like netflix too, especially after that meeting. gary: what about apple here? i mean, we can't argue that the valuation on apple is not attractive. >> no, you can't -- maria: well, it it's come way d. >> that's been the argument for years. particularly metrics like your pe ratio. having said that, i think some of the ancillary players that have exposure to apple -- >> is apple innovatiing that seems like the bigger question. if they buy netflix, maybe they get to innovate to buy acquisition, which works just as well. maria: any impact going into the election? >> not yet. [laughter] maria: deirdre, charles, amazing insights, as always. gary gary next week, bob

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be with us, please. good night from new york. ♪ ♪ >> this show has never been solely about investments. we've talked about anything that affected people and their money. ♪ ♪ >> from foxing business headquarters -- fox business headquarters in new york city, the new wall street week. >> welcome to wall street week, the show for long-term investing, i'm gary -- >> and i'm. maria:. a few weeks we