Transcript:
Caroline Woods
Joining me now, Ross Gerber, CEO of Gerber Kawasaki. Ross, great to have you here. Thanks so much for joining us.
Ross Gerber
Thanks for having me.
Caroline Woods
So, Ross, we had that impressive reversal yesterday. Stocks staged another rebound today. I’m looking at green arrows across the board here. Is the market right to breathe a sigh of relief. What do you think?
Ross Gerber
Well, I think obviously whatever Trump says the market’s sort of reacting to. And and obviously the continued selling in the markets was something that brought Trump’s attention. So he wanted to reset expectations about the conflict to try to boost the stock market. But it doesn’t change the reality of oil prices and how it’s going to affect the economy and how it’s, you know, going to affect the inflation numbers and then interest rates and, and all the effects of of these decisions.
Ross Gerber
You, you know, so that does put pressure on stocks. And there’s no way around it.
Caroline Woods
So stepping back, do you look at this as just a short term scare for investors. The geopolitical risk obviously this spiked oil prices. Or does it actually change the bull case for stocks this year.
Ross Gerber
Well I think does change the case for stocks I don’t know if it changes it out of a bull case because we still have really good fundamentals to the backdrop to the market. I think it’s more about the valuation multiple that the market has was a premium kind of price to perfection. And now we’re clearly not in perfection.
Ross Gerber
So the market actually price to a much more you know, reasonable multiple which which actually can bring stocks down you know without earnings going down. So, you know, if the war ends in a reasonable amount of time, which is let’s say less than three months, obviously the long term effects of this are wildly positive. So investors have to look at the other side of the coin, not just the short term economic implications, but how about the long term economic implications of a free Middle East without Iran is a menace, is wildly bullish.
Ross Gerber
So, you know, I just don’t see a reason to sell stocks because of this war. If we’re ever going to bomb anybody, Iran is probably the right people to be bombing.
Caroline Woods
Okay. But as we think about buying the dip and the potential bottom being in, how do you think about that with the current market, especially given the fact that we’ve experienced so much volatility in so many down days? But if you take a look, the S&P is basically flat now year to date only down about 2/10 of 1%.
Caroline Woods
Do you. So do you think that given the fact that even oil is sharply off its highs but is still up significantly year to date, which can have implications, does that mean it could all get worse for the market before it gets better?
Ross Gerber
Well and right. And I wouldn’t say that we found a bottom in the market by any means. You know, for us, you know, we look at around 6000 at the S&P would be a great price for us to buy. You know, that’s the price. If there is a correction that we think the market will get to. Certainly we’d be buyers if stocks go down, you know, five, ten, 15%.
Ross Gerber
Nor would we think that that’s, you know, abnormal to have a correction in times like this. So markets have actually perform pretty well considering the uncertainty that’s been created through this war. But I think a lot of that is predicated on the idea that what this looks like after the war, as I said, could be one of the paradigm shifts in what we call in the old days, the axis of evil, that we’re taking out one of the stools of one of the leg of the stools really weakens the other evil players, which are Russia, North Korea and now China has been added to this axis.
Ross Gerber
So I think there’s a lot of positive that can come out of this if they manage it right. The problem is the people managing the war aren’t the smartest people in the world. And very rarely do wars go your way. So, you know, time is of the essence. The longer this goes on, the worse it is for America.
Ross Gerber
And Iran knows that the longer this goes on, the better it is for them. So that’s why they’re pushing so hard to to hit Iran hard and get results quickly.
Caroline Woods
Okay. You mentioned around the 6000 level on the S&P 500 that you would be a buyer. What are you doing now? You just wait on the sidelines. Are you putting any money to work right now?
Ross Gerber
Truthfully, we’ve been taking money out of the market more than putting in in the sense of our allocations have been shifting more conservative and more diversified. So, no, we’re not being more aggressive. We’re still always buyers of stocks because we have new money and such. And, you know, relative to our allocation, we’re buyers. But, you know, I’m cautioning investors this is the time to be defensive, to obviously have part of your portfolio invested for the future.
Ross Gerber
And and that’s always a part of it. And and whether that’s 50% of your money or 75% of your money or 90% of your money depends on your risk tolerance. But if you’re somebody that was running your accounts, let’s say, 75% in stocks, it’s not a bad idea to look at lowering that allocation right now because of all the risks out there.
Ross Gerber
You want to have the ability. That’s what I’ve done with my ETF. GK is we’ve built a little bit of a cash, cushion in here. So if there is a decline now we’re still buyers of stocks, but relative to our overall allocation, it’s lower.
Caroline Woods
Okay. So I have some of your highest conviction ideas that you sent over. I want to run through those. And then I want to know if if these are names that you are waiting to buy or that you would, buy. Now, the first one is Netflix, which did have a dip to buy until recently. It’s actually done quite well more recently, although is still off what, almost 30% from the highs.
Caroline Woods
So tell us why you like Netflix.
Ross Gerber
Well, now, film has been a core holding for a very long time. And when they started down this merger pathway, we were very disappointed with their desire to be involved with Warner Brothers, because it’s not a great asset and it’s never made anybody money despite five separate owners. So when and nor does Netflix really want to release movies in the theater.
Ross Gerber
So, you know, we saw this as a departure from their business model and problematic. So we sold some of our stock in in the higher prices. And then it declined too much. And then we added it back around the $75 range. But as the tea winds shifted, we became very confident that Netflix would walk away from this deal, make billions of dollars and avoid a disaster, and position themselves to be the dominant player in Hollywood.
Ross Gerber
So as Paramount’s guidance swallows up. You know, so much debt that they are not going to be able to be competitive in the future. So in a way, it almost like took out competitors from Netflix instead of adding a competitor, because Netflix got them to overpay by two times what Warner Brothers was even worth. So we still see Netflix as a great opportunity, and we’re buyers of the stock.
Caroline Woods
Yeah okay. Next up Eli Lilly one that’s down about 6% year to date. Tell us why you like this one.
Ross Gerber
Well I like is is a nice word I love this stock. You know they are changing the world for a much better place through their GLP one drugs. And we’re just about a month away from getting approval for the pill and the GLP one pills, which started with Novo, a couple months ago, have been wildly popular. And the Lilly pills even better than the Novo pill.
Ross Gerber
And it basically it’s a once a day pill. You can take it at any point in the day, and it cut your diet and you lose weight. I mean, this is like we mean, it’s like a dream for people. I think for generations to be able to take a pill and lose weight and with obesity being a massive problem in America and globally, this is a wonderful step in the right direction.
Ross Gerber
But even better, they have this new drug, which is simply called GLP three, which is coming out next year, which is way better than the current versions of weight loss drugs. And I’m really, really effective. So everybody in Hollywood is already taking this illegally already. And and that’s why you don’t see a lot of overweight people on the TV shows anymore.
Ross Gerber
But but essentially this combination, along with their other drugs, puts them in the pole position. And their main competitor, Novo Nordisk, is extremely poorly run. So they’re they’re not only a better company, they’re a better management and better drugs. So we expect Lilly to dominate this market for years to come.
Caroline Woods
Okay. The inside scoop from LA with GLP three is all right. Here’s one that the market certainly loves this year. Micron shares are up more than 40% in 2026. You like that one. You also like Nvidia. Would you be a buyer of both here.
Ross Gerber
Yeah. In fact this is probably one of the things that I think is so crazy about the stock market right now is how mispriced Nvidia and Micron are. Even micron more than Nvidia. I mean there’s like this continuous doubt about the future of AI despite everybody diving in and using AI at every major company in the world right now.
Ross Gerber
You know, it’s like it’s so funny how in one breath everybody was like, oh my God, AI’s changing the financial industry. Oh my God, what’s going to happen? And then the other breath, they’re like, well, you know maybe these chip estimates are too aggressive. You know. And I’m like, we are at the beginning of what this is going to be.
Ross Gerber
And the valuations are just wrong with micron because there’s just no acceptance that their earnings are going to go from like $8 a share to like 30 plus dollars a share. And so like if you just do simple math at $30 a share and 15 times earnings, you know, micron is still undervalued. And that and 15 times earnings seems absurd for a chip company growing by hundreds of percent.
Ross Gerber
And then with Nvidia now trading at a for multiple of under 20, where its long term PE has been around 40 to 45 for over a decade. You know if Nvidia makes their numbers this year the stock has tremendous upside.
Ross Gerber
So, you know, the doubt about these numbers creates an opportunity for investors. If you believe in AI Nvidia and Micron are the two players that benefit the most from infrastructure build out. And it just seems like like there’s the market just has mispriced these stocks currently because of doubts about something that everybody’s all in on. So it’s a huge opportunity I think.
Caroline Woods
This isn’t on your list, but I have to ask you about it because I think every conversation we’ve ever had had to involve Tesla. You’ve been I know you’ve been cautious at Tesla is about 20% off the highs right now. Would you be a buyer here or are you still in the.
Ross Gerber
That I’m still a.
Caroline Woods
Positive.
Ross Gerber
Karen I think I think Tesla has got big problems in front of it. You know, Elon is 100% focused on space right now and trying to get that money for x AI and go public. Tesla, you know, is struggling in all areas of their business now other than battery storage, which is really the stand out in their business is storage, which is growing.
Ross Gerber
I mean, really great business that they have, but they’ve given up on the EV business. They basically don’t care about selling cars anymore. And and consumers don’t like Elon as it is, but their lack of focus, advertising or any real attempt to sell cars ultimately will hurt them greatly because that’s their cash flow business, you know? And by just sacrificing this on the hope of the robotaxi, because we know the robots far off into the future, and we’re not sure whether there’s a use case for that robot yet.
Ross Gerber
We’ve seen these videos of robots folding clothes and stuff, but it’s definitely not as effective as a human. And what it turns out is humans are really effective at many things, and that’s why we’ve existed for you know, millions of years. So it turns out that maybe this robotics thing may or may not work out to the economic benefit that they hope, but we won’t know for many years into the future.
Ross Gerber
So they expect the company to be basically an autonomous Uber. And if you look at what the value of Uber is and you times it by for it still doesn’t make any number that Tesla has on a valuation basis make any sense. So I just just show me how the numbers make sense. Now, it doesn’t matter what the stock is in my mind from a financial perspective, the stock is worth like 200 bucks at best.
Ross Gerber
So, you know I just think it’s a tough stock to own. And and I get because I have clients who want to own and I get there. They believe in Elon in this vision of the future. And I’m not saying to them not to believe in that. I just don’t believe in the economics of that future. And it has to be proven to me, and it hasn’t yet.
Caroline Woods
Okay. All right. We’re just about out of time. But before we let you go, we want to play a rapid fire game of this or that with you. Ross, are you ready?
Ross Gerber
Yeah.
Caroline Woods
All right, here we go. Stock’s bottom in. Or more pain ahead.
Ross Gerber
More pain ahead.
Caroline Woods
Buy the dip or stay defensive.
Ross Gerber
Is the dip. Now if this is the dip I’m staying defensive.
Caroline Woods
But when we see S&P 6000 in your view that’s what you’re buying.
Ross Gerber
You are pushing my chips.
Caroline Woods
Yeah US markets are international markets. International markets surging oil short term scare or market killer.
Ross Gerber
Short term scare.
Caroline Woods
Inflation transitory spike or a structural problem.
Ross Gerber
Oh. I’m going to have to say we’re starting to get more to our problem. You know, it’s you know, the Trump policies are all inflationary.
Caroline Woods
Okay. Recession in 2026. Yes or no? No rate cut in March. Yes or no?
Ross Gerber
No.
Caroline Woods
You’re one must own stock for 2026.
Ross Gerber
Well I just gave you 3 or 4. But if I had to own just one, you know, God, it’s hard to bet against Nvidia and Jensen. Yeah.
Caroline Woods
Okay. You’re one must avoid stock for 2026.
Ross Gerber
Oh, must avoid is a big term I would say. And I’ll I’ll put this out there Berkshire Hathaway avoid.
Caroline Woods
Because of Buffett being gone.
Ross Gerber
That Buffett arrows over and and able. What he’s trying to do is kind of hard. You know this is sort of a and a creation of a different, century. And and the modern century isn’t going to be kind to all these businesses. So they got to break up Berkshire Hathaway and sell off the parts they’ll get. Oh, that’s the only way they’ll get full value out of the stock.
Caroline Woods
A beaten down software stock you’d buy right now.
Ross Gerber
A beaten down stock. And the stock that I like to buy right now is this genius sports. It’s my small cap loser right now. GE and I, it’s trading about 550 a share. It’s in the sports gambling and marketing business. And and they made an acquisition on the street in like. But it’s not a bad acquisition. The stock got hammered.
Caroline Woods
It’s cheap high right a beaten a beaten down software stock you would buy right now.
Ross Gerber
You know, that’s a question I get a lot of and and I don’t like a lot of them, you know. So that’s that’s a tough one. I would say ServiceNow has the best opportunity of the software stocks to recover.
Caroline Woods
All right. Down more than 20% so far this year. Better bet for the next decade. AI or biotech.
Ross Gerber
It’s I 100% I mean, biotech is always good, but AI is is clearly the theme for the next decade.
Caroline Woods
Best investment advice amid all of this market volatility. Not a this or that hurdle.
Ross Gerber
You know hold on for dear life. Buy great stocks and hold them forever. I’m 55 years old, you know last month and I’ve been doing this since I was a kid. I’m buying technology stocks and holding them forever is the way to wealth. It’s not complicated. It’s not hard. It’s super easy. Just buy these stocks and hold them forever.
Ross Gerber
No matter what they do, they’ll go down 50, maybe more percent at certain times. But over time, this is the way to wealth.
Caroline Woods
All right. I have to ask hold Bitcoin to.
Ross Gerber
The I own bitcoin. I’ve owned it for a long time. And I don’t think this is the time that Bitcoin is going to go up a lot. But in the having in a couple of years it’ll go up again. And and I think over time Bitcoin is a you know it’s a good thing to own like gold okay.
Caroline Woods
And just finally one sentence to sum up how you’re feeling about the market in 2026.
Ross Gerber
Very concerned about valuations relative to inflation and political, upheaval.
Caroline Woods
But overall bullish in the longer term.
Ross Gerber
Overall I’m very bullish because what we see among our clients and in businesses in general, there are lots of people making money and having savings and good jobs. There are a lot of jobs in this country if you’re willing to do hard work, like building homes and like just physical jobs and there’s a lot of opportunity with technology and new companies doing all kinds of interesting and fun and exciting things and all types of industries right now.
Ross Gerber
So, so the economy is really good. It’s really more like a situation that for us to screw up more than we have a bad situation that we need to improve. So, so in general, I think we’re in a changing economy because of the different demands in the workforce, let’s say, for AI versus healthcare and laying off, let’s say, white collar workers with lack of experience versus huge demand for nurses, for example.
Ross Gerber
So our economy is changing, but it’s still a very, very good one and extremely dynamic with lots of innovation. So so I’m very bullish on America overall. It’s just we have a political upheaval. And policies that are detrimental to the country regarding tariffs, inflation and such.
Caroline Woods
All right. Well we’ll check back in with you if we actually do get that buying opportunity. Russ Gerber CEO Kawasaki. Always a pleasure. Thank you so much for joining us.
Ross Gerber
Yeah, thanks for having me.
