tv Fast Money Halftime Report CNBC April 4, 2012 12:00pm-1:00pm EDT
debates that i'm looking forward to having. but, today, i want to thank all the members of congress who came together and worked to get this done. it shows that when an idea is right, that we can still accomplish something on behalf of the american people, and to make our government and our country stronger. so to the ladies and gentlemen who make this happen, thank you very much for your outstanding work. and with that let me sign this bill. >> welcome to a special edition of the "fast money halftime report" as we watch president obama sign the stock act into
law today. there's the president right there. meantime stocks are having their worst day in a month. worries that the fed won't be doing any more easing any time soon, a weak bond auction in spain and a warning from san disk only adding to concerns today. here's where we stand on the street. the worst day in stocks in nearly a month. the dow industrials down by 150 points. perhaps it's better to play michael jackson's thriller today, because it's a scary day on wall street. the nasdaq is off by 1 2/3%. the s&p 500 is under pressure. gold is having its worst day since mid-march. hammered down some 50 bucks. 3.75%. wti crude is down by more than 2%. as well today. so let's get to the top stories we're following the "halftime report" today. that is the market sell-off. should you be buying the dip or is this the start of something bigger? we're talking stocks and more with two heavy hitters tom barrack of colony capital, mark utay of clarion capital with us
today. crude reality, oil and commodities getting slammed but fridayers are hunting for bargains. we'll tell you what they're finding. plus opportunity in aig. we're talking to the analysts with a bold call that's purning the company into the green, even as the market sells off today. so what's shaping up to be a pivotal day for the markets. we've got big investors to help guide you through these rust waters. tom barrack has been called the world's greatest real estate investor. over the next hour he's going to give you his best ideas for investing in that space. we'll find out where he's making his next big belt and you'll hear how he's monetizing the celebrity meltdown as well. later in the show, clairian capital's mark utay makes his first c nshs appearance in a year and a half. he will tell you whether stocks or bonds are a better investment right now and where he's making money these days. the market today, worries about the fed and europe, $27 billion invested in the real estate world.
obviously want to know what higher rates mean for your world. what a great day for cnbc and for the cnbc euro. we appreciate you joining us very much on the "fast money halftime report." can you put into perspective where you see the world right now? i think all of us have a difficult time with transparency and visibility rules. but where i think we are is actually a great spot. i think that the u.s. has repositioned itself on a global basis. better than any of this competitive nations have. that americans are doing what they do best. they're adapting. they're moving. they're finding good as survival. which is where we need to be. the momentary ebbs and flows in the market are nothing that we really pay attention to.
we're stretching it out over a longer period of time and saying what we really have to do is get back to fundamentals, which for most of us in america, is working for it, not investing for it. at the very fundamental stage, especially in hard assets or real estate, i think it's safe to say we're probably at a cyclical bottom some place. whether we're at the very edge of the bottom or whether we're coming on the downside or the upside, i don't think anybody knows. >> do you feel like we have more transparency even in sort of that uncertain world? what i'm struck by you saying, i read something that you said at least a year and a half ago where you said the world right now is an environment that has very little visibility, and whatever you guess will surely be wrong the next day. sounds like you haven't changed your viewpoint on that. >> no, i haven't. i think that that's absolutely true. so what we need to do is go back to controlling only those things that only we can control. and not worry about the things that we can't control.
so in these markets today, i think the answer on visibility is to stick to a business plan, capitalize at all-time low costs, interest rates are the lowest they've been, and the real estate sector supply and demand is probably the best plan. real estate is always a drunk driver on the highway of the economy. every decade it's always the same. usually it's oversupply. this last tsunami was an oversupply of debt. not an oversupply of stuff. how much are you watching what's been going on in the treasury market as you see interest rates rise, the market seems to be a little bit concerned about that, obviously wondering what the fed's role is going to be given what the fed did or didn't say as part of its minutes and how that's being interpreted. yesterday. how does that factor in to your way of thinking and where you're looking for the next opportunity? >> quite honestly, i'm not smart enough to know what the fed is doing or not. >> i think it was interesting that this morning on the squawk
segment we all came out of the richard rain water sid bask coalition which was a conferring investment forum. so all that i know is interest rates are at historic lows. that if you look at ten-year yields, ten-year interest rates, and any and any section of post-war history there's never been a better kind of borrower or lower interest environment. which tells me interest rates are going to go up. inflation is going to come back. we have 15 trillion of debt year. there's no way out of the box for europe. one trillion is nothing. they're going to print money, whether they say they will or they're not. pretty soon money is not going to be worth anything. assets will be worth everything. fewer really state assets have been built in the last decade than ever. and occupancy is returning. cyberspace, of course, is
influencing the organization of all real estate. but i think it's probably one of the best opportunities for those with a little bit of contrarian testosterone to invest. now is the moment. not when the hers are running. and debt is prolific in those markets. >> now is the moment. >> it is the moment. as we were talking before the cameras turned on, we were talking about the mortgage rates. and you have a mortgage rate clny and the opportunity that's there. so if the environment, real te e is bottoming, and it's very tough to call the action bottom, as you point out, but if you know the risk reward is very attractive what do you think of the mortgage reits here and which ones in terms of their solid investment would you focus on? in other words, ones that have shorter duration or a.r.m.s or longer duration? how do you see that playing out? >> it's a great question. and i think my quick answer is shorter duration. longer duration is dangerous.
fixed income on a long-term basis i think is a trap. and mortgages are a difficult place. i was running in the park this morning, and there was a girl who was running in the park right in front of me, and there was a rock by the pond and there was this little frog and i saw her lean over it. the frog was talking. and she said my goodness a talking frog. she said yes, now can you help me because i'm actually a market broker. and i was put a spell upon and if a beautiful lady would kiss me i could be returned to a mortgage broker and she looked at the frog and put it in her pocket. and i ran up to her and said aren't you going to kiss the frog? she said well today a talking frog is worth a lot more than a mortgage broker. the bottom line is mortgages are misunderstood. fannie mae, freddy, credit ratings, the investors who
all of this stuff over the last decade are still in a toxic waste dump. so short-term reals as an arbitrage i think across many mortgage reits are an unbelievable investment. long-term a little more difficult. rates are going to go up. indexing is important. inflation no doubt will be here. and you've got to be cautious. >> joe terranova, difficult segue from talking frogs to you. take no offense. where do you see things on today? this is shaping up to be a potentially pivotal day for the markets. is this going to be a deeper correction that is beginning now today, or is this a one-day thing you can see the markets have already come off their worst levels here? >> well, you know, i think we're talking about something that's a little bit slow -- faster than what tom was talking about. we all highlight it today in terms of the adp coming out and the expectation of what that could bring us on friday for the actual jobs report. i think it's warranted to take some things off the table ahead
of earnings season next week. you see the small caps really not doing well today, leading the market lower. that's been a leader, financials, technology, they have been leaders as well. those are getting real ly risk s coming off the table. we'll highlight my feelings on the precious metal space. you have to focus on what you're holding, where your stocks are, and whether you want to hold it long into earnings season. >> dr. j., you've got some really interesting calls that are weighing on the markets today. both mcdonald's and ibm being dow members that get downgraded. obviously that's having a negative impact on stocks today. what are you doing on a day like this? >> well, just as you said, judge, what am i looking for are signs of big institutional wholesale selling. i'm looking for those block trades and so forth. saw a little bit of it, judge, in a couple stocks that i'll talk about in a bit. but for the most part i see most people holding their cards a little closer, not necessarily dumping out of those cards. i think some of the hands that held all the way to the end of
the quarter markup are a little bit scared today. i think a lot of the longer-term investors like your guest on set aren't so much scared this is a blip. and it needs to be significantly more percentages before you gut worry ed when you're a long-term holder. when you're a short-term trader i'm looking where that fast money is today. you named two of the four areas that i was looking at and shorting this morning. but i'm shorting them for minutes or hours >> you want to say something? >> i actually love the market here. i thought the fomc statement was absolutely perfect. it said we're going to keep rates low until 2014, put aside the fact that the fed is probably the worst forecaster out there but they all said the economy is getting better. i'm looking forward to earnings season because the people i talk to, i think you just had confirmation from tom that's at a bottom i think the markets move aggressively higher. i'm taking long-term view.
banks, it's panacea. jpmorgan down 3%. now they can make money on the spread as well as buying nondistressed assets from distressed sellers in europe. >> yeah. >> and in the u.s. so i'm positive. >> tom i'm wondering because you make your name, and your fortune for that matter, in real estate. you must have a broad view though about what the equity markets look like. i'm sure you have an interest in some of the equity names for example, not asking you obviously to pick stocks. but when you look at a market that looks the way it does today, putting into context the kind of game we've had, from the beginning of the year, until now, the s&p was up 12% or so in the first quarter how do you feel broadly about the stock market, as you sit here today? >> tremendously bullish. look, from a global perspective, i can't keep a job in one place so i've been forced to kind of move around geographically. scale is everything. many countries are printing money. if you go to the middle east
they have the opposite problem we have here. they have 50% of all the natural resources moving through the straits of hormuz and you have young burgeoning populations who have to reinvest as stewards of their own populations in non-oil or gas producing entities. where are they going to do it? where is the transparent liquid marketplace that has a legal system that's enforceable that's inviting for foreigners? it's here. so if you look at just what's happening in the in asia, in the middle east, and in europe, the flight to quality, the flight to predictability, the flight to an entrepreneurial system that can adapt, that doesn't exist anywhere in the world. it doesn't exist in china. you have a central planning philosophy that has tremendous arbitrage over a couple hundred million of rural to urban young employees moving, and now you have perhaps a harder landing than we thought. and it certainly doesn't exist in europe, which has this
jurassic park environment of entitlements which has choked it. so, the proxy for wealth creation for everybody else in the world is the u.s. stock market. and the transparency and liquidity in the legal system will continue to assure that we're just at a temporary blip and i'm not a very good fast money guy because i'm in the slow money business. i think slow money at the end of the day is the name of the game. >> let's do pops and drops. the midday market movers that might not yet be on your radar if that's even possible on a day like this. us airways group popping 2%. >> i like it. i own it. and the reason is, that they're not dependent upon asia and europe. and i look for domestic plays. it's two times earnings. it's tremendously cheap. oil is coming down. i like it a lot. >> nxp semiconductors, joe, dropping 2%? >> i think it's indicative of the entire conversation we're having today. it's had a heck of a run since january. 15 bucks higher. got out of it now, it's pulling
back, i wouldn't sell it short. just looking to re-enter again. i still think it goes up. >> eddie lampert kept the sears conversation pretty close to his vest today on "squawk box." sears holdings which he is the biggest shareholder is down 6% today. >> yeah, sears getting punished and i think it's because of the run, judge, it's because this stock, you could have picked it up for 35 debeginning of the year and because of some squeezes, and perhaps good news from consumers and where they're spending, sears has had a nice pop to the upside. getting a little back. >> it is interesting nonetheless on a day when eddie lampert speaks for the first time in an awfully long time that sears shares give a little bit back from the tremendous gain that they've had. cummins, weiss. >> class h came out yesterday with bullish views. i look at this sector and think nat gas. nat gas trucks. so for the future looks good. they pull back a little more. >> occidental petroleum.
>> energy holdings remain few and for. occidental is a name i continue to hold long and will add to as it further declines. holly frontier, hf krchl, that's a beneficiary of oil prices coming down. >> and pulte group. >> i like the home builders, but i've liked them for a 70% rise. in this case, 140% judge over the last six months. obviously people are just looking, and that looks like an outsized winner and they're taking a little off. >> next up on the "halftime report" lots more on the market sell-off, plus tech has been the breakout investment but there are cracks forming in that trade. we'll get to the bottom of that when we come back.
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3%. take a look at copper as well. terranova, as we have this conversation, are you adding to your shorts in gold? and if so, why, on such a big down day? >> well, we got back in to a short position in the gold futures yesterday after the fomc minutes. in silver added overnight. so now i'm short both gold and silver. it's a position that i'm staying with. not looking to cover at all. i think when you look at who's trapped on the long side in this ultimate safe haven fear trade it's those that are long gold and silver. i keep hearing everyone saying you got to buy it here, buy it here. there's plenty of downside i think still available. the dollar is rallying. qe-3 is being taken off the table. i think it's the right trade. it's a hard trade but it's the right trade. >> let's talk more about real estate and where you see the biggest opportunity right now. and then we can sort of bring it down to the trader level of people at home can actually do some actionable stuff based on the kind of thing that you are talking about. housing. you have amassed a pretty big collection of homes.
i think some 500. >> yes. >> and you will rent those out or you're already renting those out? >> they're already renting them out. and i think at the biggest tumor in the u.s. economy, the biggest problem that we're confronting is the shadow inventory of foreclosed housing in our system. and the biggest dilemma for homeowners, for americans everywhere, is this -- because it's not just the six million people -- if you take u.s. housing. let's say there's 115 million housing units. 20 trillion dollars. it's the largest asset class in the world. not just in the u.s. larger than debt. larger than gdp. and we've had this absolute disastrous tsunami hit all of us, and it didn't hit us because of bad borrowers or because americans were too leveraged in debt. it hit us because we had a government policy that encouraged ofry one of us to work for a living that we could make more money through the proxy of borrowing money on a house that was going to
appreciate in value than we did working for a living. so all of us bought houses. in 2000 -- in order to get out of the tech wreck they had to increase fanny and freddy and jenny's buying ability. then the community reinvestment bank said you have to lend to those who are not worthy of borrowing. it wasn't their fault that they borrowed. now we have 6 million units default, delinquent or foreclosed and 15 million units in the shadow inventory. so the home builders can't fight their way out of this box. what has to happen is that shadow inventory has to be utilized. and opportunities presented to those families that are out of houses. u.s. housing as an ownership percentage, usually about 68%. that's now gone to 62%. so that's 9 million houses out of inventory. plus the six that are in foreclosure, delinquency, default. so you have 15 million units. in a marketplace that should digest about 1 million new units a year on the demographics that
are available. so you see, fannie and freddie starting to have sales of massive amounts at auction, and amazingly, individual investors are the largest buyers of these units today, and that's about 20% of the housing market. now the banks haven't really loosened up. because for the most part, the banks were originators and syndicators of the mortgage product, which were then sold in mortgage pools to foreign investors primarily. so, the banks in managing fannie and freddie are going through bureaucratic mechanisms of deciding, do we foreclose? many of the states are judicial foreclosure states and the states have said no way. you had robo signings which was a gigantic problem. so you have people living in their houses for years not making the payments because they don't know what to do. if you call up a bank and say i'm having a hard time making my payment because i know my mortgage balance is way above my value of the house, they say
unfortunately we can't talk to you until you default. >> right. >> and this person says pardon me? what did you just say? well if you default on two payments if you call us back, we can do something about a loan modification. it's just bizarre. so we think that national brands will be built up, as an asset class just like a multifamily business. in 1990 there was no such thing. >> you're talking about single family reits. >> absolutely. there's no national brand. it's very difficult to manage. it's very difficult to lead. >> it's difficult to buy. >> totally. >> bring it down to ground level for us for the trader who's either watching or for that matter on the panel today, i mean you've seen the home builders obviously have a tremendous gain on the prospects that the housing market is in fact improving. so what do you do here? >> as we were talking again during the break, i'm short the home builders index. i think they're vastly overville ued. you've got huge inventory. you're not even at 500,000 a
year, no less a million a year where you need to be. it's coming at cheap prices and it's going to come from individuals who bought these homes who can't hold it forever and are looking to turn it for a profit. so short the home builders now. go long, the mortgage reits as we spoke before and i think you can do very well. >> joe and then john. >> i think there's two places you can look. essex properties, ess. that is apartment reits they've done incredibly well. i think that's a trade on a correction that you want to find out as an opportunity and buy it. digital realty trust. that's technology reits, again, that's a great smpace to be in. any correction you want to buy it. >> anybody from warren buffett to tom that's talking about buying real estate you look at the people that profit from people going in there and fixing them up, making them rentable, average spend is somewhere between 9,000 and $13,000 to fix them up for rent. that goes to home depot, that goes to lowe's.
so i buy those on dips. a quick question, i was at a distressed equity conference yesterday, and everybody was talking about europe because when they were talking about the availability of assets in the united states, they said there are good ones here, but they're much closer to fair value in their opinions than the units are overseas. what's your opinion on that? >> yeah you know, it's a great theoretical and intellectual theme, totally impractical. because the european legal and banking system does not work like ours. so the idea of foreclosure laws, bankruptcy laws, are real a anathema there. so even you though find tremendous distressed assets the european system serves at the benefit of the borrower. as long as that's the case we as investors or an individual investor exercising in that marketplace cannot utilize the normal resolution process. so even though the appearance is that that mark to market should be a trade there's no tradeable event in our opinion. >> if you were to pick one
region in europe that has loss most like our it's not germany, it's not france, isn't it the uk? >> totally. but as i tell our own troops all the time, uk is a place to be very careful. because, it's very seductive because you think we speak the same language and have the same legal system and we do not. by the way, they are very smart, they're very bright and they replicate all the elements of our system. i always feel like the anchovy on a cesar's salad, that there's some reason we're being presented on top of that. >> okay as we head to break, let's take a look at the worst performing group today. that is technology, leading the s&p 500 lower again. we are off the worst levels of the day, to. the nasdaq is still down by 52 points. that downgrade to ibm, sandisk warning certainly not helping things there. next up a stock that's in the green on a very red tape today but do you dare buy shares of aig.
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at&t, versizen, p&g, philip morris and kraft outperforming along with the i-shares dividend etf and that is the dvy. >> and for good reason judge because people are looking for a safe place to hide out especially on days like this. as you recall we mentioned this about what people could do with that $474 million lottery win. you could buy 15 million shares of at&t. not that that's my advice alone. identify diversify but it's yielding 5.5%. so you make $26 million on a $474 million holding there. i think a lot of people are looking for yield like that even though they think the fed may eventually take their foot off the brake. >> second. jpmorgan telling off 3%. financials are the worst performing group today. steve weiss as you were telling tom you like the financials here. >> i added jpmorgan. of course it went lower today. but to me this is panacea for the high quality banks of which jpmorgan is the highest quality. the wind is completely at their
back. there are no issues going forward. it's dirt cheap. so i think you have to own the banks here. i think they'll lead the market going higher, when rational thinking takes over again. >> no issues going -- >> very few issues. relative to what people were looking at and their fears no spread for the flat yield curve. i think the fed will be wrong and raise rates sooner. we talked about the inventory. they're getting smarter. there's so much there. credit quality. >> starbucks upgraded to buy from neutral over at goldman sachs. >> we talked about this yesterday. 54.62. that's last week's low. you stay long against that level. everything is going great for howard schultz and starbucks expanding in china. fundamental solid technicals as well. >> shares of aig in the green today, after an upgrade from bernstein research. the analysts there saying that the government exit is close. and should help boost aig
shares. josh sterling, senior analyst at bernstein research made that call joins us now. interesting call, you know, obviously the stock is up in a down take. >> yeah. it's a tough day to be bullish on financials obviously. but we've been looking at aig and doing our homework and of course at bernstein we have a long-term view of value. in the short-term we're getting interested in the game. because we think we have macro risks and you can start taking bullish or bearish view on how the world performs from here. at aig we see a clean restructuring story. where if the world continues to hold together, if markets don't fall apart, aig is going to be able to divest its remaining noncore assets and buy back shares from the government. that creates two things. it really sort of is twin tail ends both fundamental book value growth and earnings per share growth, as well as the very technical but very real story of investors, losing the most popular and sort of the primary reason investors today don't own the shares, which of course is the government's 70% owned.
that creates a technical story. you saw this with citigroup in 2010 and outperformed meaningfully against financials. that was a rocky period for the stock. and so we look at this and see a lot of upside in a stable market. and really sort of not the same sort of risk profile as most of the financials in -- if things roll over. >> 35% or so year to date. you see 50% upside and i hope you also saw the great interview that cramer did, as well. >> yeah, yeah. you know, he's been on the road a lot lately. starting to tell the story. you know obviously we need some specific cat list to happen. we need them to sell maiden three, their cdo assets that the fed helped take over and we need them to sell or ipo and we think a sale is sort of been where we think this is sort of going to play out at iofc. >> that's exactly. breaking news that an ipo could be soon for iffc. >> i don't think we've seen the company comment one way or the
other what the real plans are. but we think the story of that being a worthless, you know, asset is overdone. i think they obviously have older planes but they've taken a lot of marks and in a market where you have ultimately, financials with sort of buying power and low cost financing, you know, this is a spread-based asset. >> josh, thanks so much. doc with a comment? >> yeah, just international lease finance corp whether or not it's north of even 10 billion on the ipo as kayla said, it's somewhere between 7 and 10 judge, that's what the ceo said it was worth back in january. if they get north of ten that's good for a significant pop in aig. >> all right. another story that kayla tausche has been on top of. next on the "halftime report" clarion capital's marc utay joins us with his take on today's ell- where he's investing now and whether he prefers stocks or bonds. [ male announcer ] what if you had thermal night-vision goggles,
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up with tom barrack in major deals like the bid for the dodgers. you are fair to say a contrarian investor. i read one of your notes where you say if the world goes left, you go right. i don't know if the world is going left or right today. but it's down big. what are you doing today? >> well, i think we tried to take a little bit of a longer time frame perspective on what is happening in any one day. i think the volatility that we've seen over the last couple of years, where the market could go up or down by a percentage or more in a day, is actually a difficult market to handle. and therefore, we don't look to invest and take vac of that on a day-to-day basis. what we're really looking at is much more over the longer run, where are the flows of capital going, and which asset classes, which stocks, which kinds of investments, is there money flowing into, and where is there money flowing out of? and we try to go where everyone else is coming out of or sell when everyone else is coming in. >> the great debate, clearly, in
the market over the last few weeks on what's happening in treasuries. where the stock market goes from here after the great gain that we saw in the first quarter. equities, are they to be here right here, right now? >> well, i think we like equities a lot more than we like long-term debt. we put together a few slides where we could talk about credit. and i think we would see that long-term, either government or high-grade corporate debt is going to be a pretty lousy investment over the near term. in the long-term, so, we had a slight where we basically showed the monthly yield -- excuse me the yield by month for ten-year treasuries over a 25-year period. not surprisingly i think tom made reference to it earlier in the broadcast that we're at a all-time low in terms of long-term interest rates. but we cut the data a little differently, and if we could pull up the next slide, what we did is we looked at each off the months, and we said, we bracketed them by interest range.
and said, so how many of the months over the last 25 years, so we're talking about 300 months, would the ten-year interest rate have been lower than where it is today, and how many would have been higher. and basically, in six of the last 300 months, interest rates were where they are today, or a little lower. so, from our standpoint, looking at it historically, unless you think the world has changed in such a fundamental way that money is going to be cheap forever, you're at a point where interest rates have nowhere to go over the long-term but up. >> right. let me sort of bring our viewers up to date on marc's last appearance on cnbc or one of the last was in 2009. again, still dealing with the credit crisis. he recommended buying these four funds. eaton vance, nuveen, if you followed his advice the worst performing fund was up as much as 67% to the best performing up
almost 120%. so where would you say you're seeing the best opportunity then today? obviously have a great track record. people who are watching the show today are going to want to show where the smart money is going. >> just finishing the thought though on credit and then you go to the flip side of where it is you'd like to go. if you buy long-term debt, long-term bond right now and we did a little bit of math for the viewers, where if you buy today at 2. -- last night it was 2.19%, it's a little higher today, what would happen if interest rates five years from now went up to 3%. and what you see is that you'd have made 1.5, 1.47% over the five-year period. that's probably below where inflation will be. so basically if you buy long-term credit and you think interest rates have nowhere to go but up you're basically going to have a negative real return. so what do we like? given that we'd much rather be in equities. and we took at look at where forward multiples are for the s&p 500.
over the last ten years. and admittedly there's always an expectation involved so you don't know where earnings are going to go but this is the consensus. and what you see is that wile we're not at the absolute low, we're not too far off of it. so people's expectations of earnings, growth, and what they're willing to pay for it is really not that high at the moment. >> well, with the big setup, going forward, if you're trying to look at what -- the next catalyst for the market is going to be, it's earnings season, right? you look at that and you're talking plays right into what you're talking about with p/es, who knows what the "e" is going to be. do you feel that earnings growth is going to slow somewhat dramatically going forward or are you in the camp that those fears are overblown? >> i think we have relatively positive but modest expectations of where earnings are going to go over the next year or so. we own a number of companies that give us a wide range or view into the economy.
some of them are companies that lead in a recovery, like advertising based companies and we see very strong demand in those companies right now. some are more employment related, particularly small business employment, and what we see is choppy. we don't see -- we have a competitor to aep so we see the actual payroll data every week on who's hiring and who's, you know, laying people off. and what you don't see is any sustained recovery. you see a few months of good numbers like the last few months, and then it backs off a little bit. so we think it will continue to drift in the right direction but not necessarily be upward in a very strong way. >> marc, you had an amaze iing, think the viewers might be interested in too, we're in the slow money business on a fast money show. and the slide that you have that shows kind of fund performance over a decade, when your mandate
is to outperform the market in any given year, do you -- can you comment a little bit on the performance of those funds over a ten-year period? >> yeah, i'd like to. because i think this is a theme for us as we invest. and scott your very question really speaks to this. because you asked me where do you think earnings are going to be the next quarter. and we think that trying to look at the next quarter is both very difficult, everyone's looking at the same thing. it's hard to have any advantage and when you do so, you actually create a disadvantage for yourself. and this is where the retail investor can actually be a better investor than the professional investor over a long period of time. and if you pop up the slide, it's really a great slide, and i should give credit to an old college friend of mine, who is money manager who's name is joe greeneblatten first showed me this slide. what it is is a -- they looked at one point in time, this came from davis advisers, on people who had been in the top quartile
as fund managers over a ten-year period. so these are the best guys, right? how much time did they spend in the bottom half or the bolt up quartile and 96% of those people spent at least a three-year period in the bottom half of fund managers. so what you see if you manager quarter to quarter you undermine your ability to manage over the long run and that's how we run our private investment business, but i think it's how a retail investor can actually run his own portfolio, because he's in a different business. the retail business is a very simple business. scott, you've got $10,000, and you invest it today, how big is that stack of chips ten years from now? the bigger it is, the better job you did. it's just that simple. but that's not the business that the professional is in. the professional has to say what does next quarter look like? because that's going to determine if assets come under management to him and that's how he makes more money.
so you're playing a different game than the professional and in this way you actually have an advantage. >> next up on the "halftime report" investing in everything from baseball to hollywood. we're talking media sports and entaintment with with our guest host. americans are always ready to work hard for a better future.
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u.k., tesco has stores, literally, they're closed. you do fulfillment from them. so you order online and they'll pick the orders and ship them to your home. >> that was eddie lampert earlier on cnbc. i would love to get your comment on eddie and sears, but in general how these real estate properties were the big draw for some of these retail companies. now as you find as eddie says shrinkage of the footprint whether virtual stores or sears looking to small -- to make some of their stores smaller, whether best buy, walmart, et cetera. what's your opinion? >> i think eddie summarized it perfectly. by the way, i would never bet against him. he's brilliant. he's bright. sears is an ir rep lickable.
every young kid buys online. they don't think of going to the store. brands at the top end of the very wealthy do find and everybody else fights for market share. what eddie has and i think everybody is missing is if you look at a sears just as a locale in every major regional mall in the nation, take david simon, he just bought clay pierre. that sears sitting in his shopping center, the residual value of what that is to simon at his cost of capital and multiple is expo nen shl. it's so severe it's ridiculous. he'll figure it out. the bricks and mortar rep lickable and the retail brand will become a brand just as best buy and amazon are fighting it out online. >> let me steer the attention or conversation if i could totd dodgers. you guys were part of the losing bid for the l.a. dodgers.
$2 billion was the price tag. mouse hit the floor, mark, when that number came out. can you comment on what happened here? >> i'm going to disappoint you a little bit in that, you know, like anyone who papts. >> were you surprised as others that it got to that high? >> i think we all saw value in the media. let's just say it went for full and fair value. >> tom, you said the dodgers, it wasn't about baseball. i mean, didn't have $2 billion worth of dodger dogs. >> yeah, it isn't. i think mark and leo henry did such an amazing job of analyzing it. i feel differently because i'm so upset and i hate guggenheim because they won. so whether the price was right or not, no one will know for ten years. and i think all of us as
disgruntled bidders are disgruntled because we didn't win. they'll do fine. the value is the regional cable network rights. not who's at bat and players. so over time as in all media pieces, the nonbricks and mortar part of this is what's really at issue and whether it was $200 million or $300 million for the regional piece, we'll see. >> final trades when we come back. e time books and panther coffee with free enterprise puns like hugh and crye, and smash records. and one saturday a year small businesses remind a nation of the benefits of shopping small. like the way david kaplan at shell lumber shows you how to use a chop saw. then invites you back when the warehouse becomes the community theater. or the way camille russler of ever after travels the journey from despair to bliss with every bride to be.
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