neil: my buddy, charles payne, up 400 points. take it my friend. charles: i will try, my friend. charles payne here, "making money." breaking now.

stocks popped big on earnings. they swoon odd on the housing data. here is the weird thing. supposed to go down on good news, up on bad news. it did the exact opposite. here is the thing that might be the difference. experts are the ones throwing in the towel. not main street capitulation. maybe they are looking for the pros, smart money to dump after all. you will look for a bankrupt farmer created a charting system still used today. he created this in 1873, folks. why the system may be calling the market bottom. earnings after the bell, wall street is warming up to the stocks. a lot of buy recommendations. needham company laura martin says pump the brakes. she has a different take at 2:50. do you think you're middle class? even folks earning less than $10,000 a year tell pollsters, i'm middle class. tweet me @cvpayne, tell me what is middle class and more

importantly when will the fed stop tramping on the middle class. i ask peter morici at 2:30. wall street is making retail investors look like geniuses. "my takeaway" and so much more on "making money." ♪. charles: so we bolted out of the gate on earnings an general sense that maybe, maybe, there is capitulation after all. now a lot of people looking at this bank of america fund survey, i talk about it every single month that it comes out, it is always compelling and there was headline in reuters that said it screams macro capitulation, investor capitulation, also start of policy capitulation. investors they say are starting to expect, maybe the federal reserve to turn around. so what is interesting to me, and i've been pointing this out, there have been record amounts of cash for a long time but this cash now is over 6% of what they own. this is like, this is the

highest they ever had. so they're the ones, professional investors are the ones who have been really, really bearish. then hedge funds, they're even worse. they have been betting on the retail investor to capitulate. they have puts, they are short. they have massive bets this thing falls completely apart. it hasn't happened yet. it is rare but wall street bears, the bulls rather now are beginning to blink. there is not a lot of bulls out there but one, marco, said maybe he has been a little bit too bullish. beyond sentiment the wild cards for this market has been the federal reserve. look at this, central bank hawkishness is climbing rapidly. it is one of the top concerns. i bet you soon it will be the top concern. we have crescent cio, founding partner jack ablin. i read your recent report. it is fantastic stuff. i stole a couple of your charts [laughter]. one of the first lines that jumped out at me, says we worry that the fed could overdo it

thanks to the lagged impact of monetary policy and the economy and credit markets. so how do investors, with that in mind, how do investors gardens if the potential follow at this of the fed? >> yeah. i mean, i think there is a couple of double-whammies here but you're right. you know, if you consider that the lagged effect of monetary policies could be as much as four quarters, the ratcheting up of interest rates at a pace that we have not seen, maybe the closest thing i saw was 1994, argues that they're likely going to be going too far. they're turning the dials too fast. they will have to start turning the dials back sometime later next year or early 2024. charles: right. >> that is one of the whammies working against the market these days. the other one is a little more near term, something i didn't mention in the report, but i'm

thinking about right now while everyone is in favor of these rallies, everyone loves these rallies going up, maybe not your institutional bears, but, the one constituent that really doesn't want to see the market rally very much is the fed. why? because remember, while maybe 80% of americans drive their financial well being off their paychecks, another, the top 20% of americans, we call it the wealth effect, really drive spending decisions off their portfolios. charles: right. >> i think the fed believes, and i don't know if this is correct, they believe that a sustained market rally undermines their ability to fight inflation. charles: of course you know we want them, they want the so-called negative wealth effect. that i think what people are concerned about. even less so on main street when it comes to the market, then housing. but when the market does settle, whenever that happens, we know eventually it will, one thing we all agree on, you point out

valuations and leadership will be different, in part because tech stocks got 60% valuations surge in a 10-year period from 2011, i think 2011 and 2021. you know, that sort of thing is magical, right? in fact your quote unlikely investors will have luxury value expansion over the next 10 years. with that in mind, does it mean you completely ignore technology? does it mean a smaller portion of your portfolio? >> yeah. i think, what it means is, you know, there are some great tech and there is some great innovation, but i think you have to take that portion of your portfolio put it aside, 15-year, long-term time horizon, recognizing that in markets like this, that wasket could be down 50%. so i think that this is something that you have to put away for much longer, more patient time horizon. for those investors looking to have more tangible returns

quicker, i would focus on companies that have a higher earnings yield. in other words, if you flip that around, a lower p-e ratio and high and consistent dividend growth. there are a couple of tech stocks that can do that. ibm is one. certainly not the most glamorous name in the, in a portfolio. microsoft is another one that has a decent dividend but also a strong track record of growing that dividend over time. charles: yeah. although i tell you when it comes to big blue, this time around seeing money into the company rather than returning money to investors. certainly not through buybacks, right? that is the lesson everyone teaches in grad school. the worst part about buybacks is ibm 10-year record. fantastic report. i urge everyone check it out. thank you very much, my friend. >> thanks, charles. charles: my next guest says we can trade this bounce, but also says there is point, a certain point where he thinks the bear

market is over. we'll talk about how to clear where we clear that threshold, bring in tjm institutional director jim iurio. jim, first of all, someone watching right now, listen, you got a few bucks, itching, burning a hole in your pocket you want a trade, where are you looking for short-term trade in these bear market bounces? >> to me this is a bear market bounce. i believe it brings us up to 3800 which is fine. there was a ton of put buying in the last few weeks and those people have to unwind. i think this is important to me because technicals lead -- there are plenty of bottoms made that start out as a short squeeze. if we can settle a week above 3825 which we're dangerously close to that level too, probably 80 ticks away from it, i will believe the bear market is over. i will not jump in to start buying everything with both hands. i believe this is a bounce. i believe we have further to go. i believe we don't put in a bottom until the fed, they don't have to pivot.

charles: right. >> what they have to do is start saying they see something on the horizon. to jack's point, the fed there is statistical certainty if there is lag effect jack talking about, they need to see the effects of their hikes, that means they hiked the right amount six months before. it is fiscal certainty they will overdo it, flip, start easing at some point in time. right now the fed funds curve is pricing in easts easings july next year. charles: the market come back during this period until after the first rate hike. could this be so pervasive, the fed is so hawkish, signaling they're done would be enough to get the pivot? >> yeah. no doubt. part of rally yesterday, i think by far a bit of a short squeeze. after we saw the cpi number on the 13th we pulled rate hikes forward. we're pricing in two consecutive

75 basis point hikes but then the fed fund curve said the end will be a little sooner. all the market wants to believe there is an end point. by the way we talked about the statistical certainty that the fed overdoes it. i think they have overdone it right now look at mortgage rates. if you don't think going 3% to 7% seven months time don't think it will do serious damage to the housing market you're out of your mind. it might take a year. there is damage to the economy been done. they literally set out to damage the demand in the economy. i think they succeeded or will succeed. charles: we kind of talked about that, the so-called negative wealth effect which is sadly hitting main street. a lot of people who never even been in the stock market first and foremost. jim, good stuff, my man. i appreciate it. i love when guests give specific markers, right? people write it down, take a look at it to see. this is what we need. we need guidance, right? you certainly gave it to us. thank you so much. >> appreciate it. charles: so my next guest is

positioning her clients defensively as we all, of this drama, all the unknowns play out. want to bring in capital founder president shana sissell. great to have you in studio. when you say you're positioned defensively, what does that mean? >> i'm focusing on large cap stocks, quality factor, low volatility factor. our primary areas i want to have focus, going to stick with sectors like consumer staples, health care. i like some of the defense stocks, not defensive, but defense. charles: right. like lockheed martins of the world? >> my favorite name in that is lidos. charles: ldos. >> more of a mid-cap name. it has done really well. it has good diversification, and it is not as heavy in the war-time kind of business. i like that name. other thing i'm doing a lot with

alternatives as a hedge. there are liquid alt products that are really diversified. charles: let's talk about that, liquid alt products, what does that mean? a lot of people are hearing, experts are coming on tv hey, forget the market for a minute. buy short-term bonds. get a yield, 3%, 4%. go to bed at night, go to sleep at night there is a world out there of alternatives that are a little bit more sophisticated but can make more money on. explain for someone who has never done it before. potential client sitting down in front of you the first time really interested in this? >> first off i hate the term liquid alternatives. there is nothing else to call it. that is what we refer to it as. basically products out there are hedge funds, kind of like hedge fund type products but they're available to everybody and a lot of people don't realize this. they are more sophisticated. they are harder to trade in

fidelity, e-trade, pick your poison accounts but they can offer some really good diversification and downside protection and i think the important distinction here is, there is a difference between a fund, etf mutual fund using options, puts, leaps, covered calls -- charles: right. they have strategies though that thrive in these environments though. it is more so than taking a risk on the extremely volatile markets? >> yes. they're diversifiers don't necessarily need the market to go up or down. one of my favorite, etf, ticker symbol is btal. it's a long-short, goes long low volatility stocks and short high roll tilt stocks. it is completely market neutral. it doesn't really matter which way the market goes, as long as low vol outperforms high vol it will outperform. it is up double digits year-to-date. not many products out there with

equity exposure up 14, 15% year-to-date. charles: meantime, obviously defensive, neutral, with respect to these strategies. so you're anticipating the fed to be a major headwind for sometime well into next year? >> yes. so i think that jim is right. i think you see the fed turn and raise rates two more times, 75 basis points. i think they will pause 2023 i actually think we'll see recession in 2023 but fun fact there has never been a recession that started in the third year after presidential cycle since 1929. charles: right. >> historically it would be a big deal, this would be the third year but i do think we are going to see that. i think you need to stay defensive going into 2023. as the fed pauses their rate hikes -- charles: get a better handle on the federal reserve broaden out, get more aggressive. i think i read the third year after new president is up on average 17%, 95% of the time. >> midterms, midterms always have positive returns.

in 12 months following midterm elections the s&p has never been negative since 1942. charles: we'll keep an eye on it. we have a strategy to get us to that point, to that launching point. >> exactly. charles: shana, appreciate it. there are some ideas, so many trends, so many things to discuss you see how much time i spend on this show i want to invite you, read my daily market commentary every single day. i know you love it. at wstreet.com. check it out. meanwhile, should the federal reserve remain independent? now both sides of the political aisle are asking this question out loud after a series of major mistakes that have hurt you personally. i will ask economist peter morici himself at 2:25. but first, get out a pen and pad first. we'll take you to history school and chart school all at the same time. you're going to love this segment. mark newton is with me next. ♪.

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♪. charles: tell you a story about a farmer named samuel benner. he saw his finances evaporate in the panic of 1873.

it coincided with a massive cholera apozeme epidemic. he wanted to find out causes of economic collapses. the century, in the 1800's, marked by a whole bunch of banking panics. most in new york city, some was regional. this was the first of nationwide calamities, worse than the depression. he published his first edition of charts and price cycles. benner's prophecies of futures up and down this is great, what year to make money on pig iron hogs and corn provisions. my next guest references benner, not only has it worked since then but it is still working. it will help us find a bottom in this market. bring in funds strad global managing director mark newton. i didn't hear of this before i read your work. i love the story. i will order book on ebay.

he writes a book in 1870 that is still relevant today. one of cycles you're looking at you're seeing next year potentially second quarter, s&p bottom on a weekly chart? >> there is some light at the end of the tunnel for us all. my composite bottoms out april and june next year, that is based on a composite but also lines up with benner's work suggesting 2023 is a major year of importance. my thinking a lot of these will come together and -- charles: what is it about it? what is so distinctive about it? why does it have such longevity and why do these things work so well? >> these are cycles which worked over time. difficult to go into that. that will take us half an hour but repeat 20 year cycle. it repeats, it is important to pay attention to that. it is important, you can reference benner's work, seek that out for the foundation of study of cycles. charles: talk about the here and now, 10-year yield which is really moving everything. now four has become the important number. above it typically we're down.

a little bit below it we're sort of breathing room. where is the key? where do we want to see this on the downside, we can say okay maybe the coast is clear or getting clearer until we get the ultimate bottom? >> that level is 384. that is really the lows we've seen for october. getting under there will allow for larger declines in yields which i think will be very important for stocks to have any sort of longevity on the bounce. charles: one other problem, not problem, but the other thing we're all looking at the dollar. i think it is way too strong. creating problems around the world. creates problems for multinationals. we have a chart with the dollar year-over-year versus the yield curve. what is the significance of this? >> this typically leads the dollar, when you see it flatten out like last several months. not talking real yields but curve in the real yields. it suggests the dollar is late in the gain and should start to turn -- charles: the yield is turning at some point we hope the dollar will follow as well? >> we've seen evidence of negative momentum divergence,

exhaustion. sentiment has been strong on the dollar for all the right reasons, my thinking, pullback between october and december, but in general a larger peak in the u.s. dollar is approaching. >> everyone seems to like oil these days. i happen to like it too. it feels like a no-brainer. if you look at the chart with a naked eye it made a series of lower highs, it keeps failing at certain points. i look at chart screaming sell not buy to me. anything on the chart suggest that it's a buy? >> from long-term trend line perspective it made good progress since early october. i mention the last 10 days crude is down 10% but xle is up 3 1/2%. it outperformed s&p. there is positive divergencing in is peaking. this will bottom out, turn back higher in crude, potentially bad for inflation but it means energy is one of the better sectors to favor. charles: definitely want to have

exposure to this? >> 100%, particularly in the services stocks. that is what is interesting. oih really come to life. halliburton, schlumberger, outperforming xlp and xle. that is a area. could be short-covering. could be good news to come about the election. charles: right. >> better power of drillers to start drilling, who knows this is simply an area to watch. oih is favorite within energy. charles: thank you very much, appreciate it, mark. folks, meanwhile the biden administration keep pushing the narrative everything is hunky-dory. how will they spend new projections of economists that there is 100% probability of a recession in the next 12 months, 100%? we'll go live to the white house next. the fed keeps powering, the fed powers keep growing and growing, they're omnipotent. should they be? should they be independent anymore? tweet me your thoughts @cvpayne. we will be right back.

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charles: keep brushing off concerns about the downturn we're experiencing even after a bunch of experts have come out to say you know what? there is 100% probability that there will be a recession in the next 12 months. edward lawrence is live from the white house with more. edward? >> charles, you know, the data we're seeing now is showing inflation being more entrenched now in this economy and many economists believe we're currently in a recession but as you mentioned the bloomberg statistical projections show 100% recession over the next 12 months, within the next 12 months, inflation again driving all of this. shooting up from the first month that president biden was in office. the white house press secretary told me the president empathizes

with those economic struggles that are facing americans. he is reportedly considering announcing a new release of 10 to 15 million barrels from the strategic petroleum reserve. now a source familiar with that announcement says it will be in response to putin's war. the white house chief of staff says announcement coming tomorrow, the american petroleum institute pushing back on the possibility of another release. they said this the spr was established to reduce the impact of severe supply disruptions, not as a long-term solution to the economic pain americans are feeling at the pump. we urge the administration to recognize that short-term policy make something no substitute for long-term strategies needed to encourage american energy production. white house now publiclying there will be consequences for saudi arabia because opec plus decided to cut oil production by two million barrels a day. this comes as new provisions of the inflation reduction act increased taxes on natural gas,

and reinstate a previously lapsed tax on crude, imported petroleum products on 16.4 cents per barrel this is self-imposed pressure on inflation to go up as the president is saying that he is trying to do everything he can to bring those inflation pressures down. back to you, charles. charles: all right. thank you so much, edward. you know, economic turmoil really is reining all over the united states and europe. some is coming down to failed policies, some miscalculations but the real crisis at the very moment with your own lives is mismanagement, the folks in charge of getting this right. they're preoccupied or they have ulterior motives. maybe in some cases they're incompetent. for instance, the white house says that this inflation push really is, that the federal reserve could push for a soft landing. that their work is working. those kind of things. it is simply not true. i want to bring in university of maryland economist peter morici.

yesterday the white house spokesperson saying that inflation reduction act will kick in next year. listen i give her a break, right? they give her talking points. they send her out there but you have got some smart people who have been around a long time selling an agenda, rather than giving a how does this help at all? >> it doesn't. they raised taxes on crude oil and look at the consequences. that along with the other policies, five refineries shut down since joe biden was elected. as a consequence, our distillate inventories are terribly low. heating oil season is coming up. americans are in for real sticker shock after the my terms are over. charles: you just brought up the distillates. i want to share with the audience how much of a crisis this is, going for climate has put everyone in jeopardy. distillates, jet fuel, home

heating oil, diesel fuel, this is how they get products from point a to point b. this is where we are right now. this is 2022. you see this range, folks? that is your historic range. we started the collapse last year. it picked up this year. we're in no-man's land. this is scary stuff. how do you heat homes when you don't have any oil? how do you heat homes, don't fly jets, peter, when there are no distillates? how do you transform products from point a to point b when going in this direction? this is nuts. this is suicide. >> simple we have to import more and pay much higher prices. you will see it ice cream cone or box of tide or what have you. one of the things we have here is that no matter what the saudis do, no matter what mr. putin does, the white house is manufacturing inflation by creating artificial shortages. charles: right. >> they think by pushing up prices somehow other we'll all magically drive more electric

cars next week when they can't produce them. charles: peter, let me ask you real quick, yesterday mohammed el-erian put out a very provocative tweet, maybe time not to consider having independent federal reserve. he cited four major errorses. analysis, forecast, actions, communications. does very a point? >> i think the federal reserve is roundly incompetent now. he is led by a lawyer. would you have me adjudicating constitutional law at the supreme court? likewise european central bank has politician lawyer. this guy is reading off of cliff notes. he relies a lot on the staff economists. the environment, fed doesn't look outside. if you look at the building, it is very insular. we're at a time economic models don't work very well, the kind of structural conditions worked in the past are not present. that is why they missed all the supply side inflation. it is very simple. the place needs windows.

they need to look outside. charles: yeah. you know, peter, maybe it needs windows so we can look inside. maybe at some point there should be accountability because they're making decisions that are crushing people! i mean absolutely crushing regular folks who get up every day, they punch a clock, they try their best to make it in life. now granted the job is lot harder when the white house is printing trillions of dollars. nevertheless i would like to see more accountability. peter, thank you so much, my friend. been too long. catch you next week. >> you betcha. charles: the fed, i talked about the things they're wrecking. the first thing they always wreck is the housing market. i got to tell you they're doing one heck of a number. this morning the national association of homebuilders sentiment report is out, plunging. 38 is the read. so you get context, it was from 46, street was looking for 43. what drove it down. six-month out look, perspective buyer traffic swooned to the lowest levels in 2012. i want to bring in katrina

campins. the new host of "mansion global," one of my favorites. i love the show. i love you. i can't wait for the new season. we'll talk about that in a minute. i have to ask you, golly, a lot of people look at their home. that is your number one investment. that is the american dream. just year-and-a-half ago people were buying 700, 800,000-dollar homes could only get them a 400,000-dollar house now. what is happening? >> it really breaks my heart because homeownership is very dear to my heart. i've been doing this for 20 years and the sentiment out there is not great. with interest rates rising it i, affordability is a huge issue. why you see builders they're very concerned about building. they slowed down on building, that much more expensive to purchase a home. so it makes perfect sense. unfortunately interest rates will continue to rise as the fed continues to attempt to fight inflation. i think that is the key word. charles: right. >> unfortunately it is an issue for the american people. i want homeownership to be attainable for everybody.

but i think affordability is a main issue. charles: this is frustrating this is the first line of attack. a guest saying earlier if they go after the wealth effect, figure out from the folks who have all the money out there. there are some pockets in the market are still hot. the florida market is still relatively one of the hottest markets, right? >> it is. florida, texas, tennessee. on mansion global we experienced the markets that experienced most amount of appreciations where have people migrated to with a better quality of life? we went to the markets with an inside look, it is very aspirational. everybody approaches me, real estate shows are the guilty pleasure. we work really hard to give people an inside look into these luxury mansions around the entire country and that premiers on wednesday. so i'm really looking forward to that. charles: tomorrow? >> tomorrow night. charles: one of the reasons i love the show, me personally, i grew up, we didn't have anything, right? then when i was in the air force i got out, my first year on

wall street i made $13,000 a year. one of my guilty pleasures buying architectural digest. i would look through the magazine. i have all the issues. i have every issue from 1981 to 1988. it made me dream. now i have a home worthy of being in the magazine. >> it was like your vision board. charles: it is so amazing. to think you're hosting it, you are the perfect host for this show. >> thank you, charles. you've been very good to me, oh, my god over 15 years now. so i really appreciate you. like you said it is a vision board. it is aspirational. you can get ideas, trends in the real estate market. i'm looking forward to it. charles: we'll be looking, watching. thank you so much. make sure to catch katrina, new season "mansion global" premiers tomorrow 8:00 p.m. eastern right here on fox business. that is fox business prime by the way. coming up netflix is struggling. shares are down 60% for the year. will it turn around? there is not one person better to answer that analyst laura martin. she is coming up. first we have naps sy tengler

here what you need to understand about the market and also how to read a balance sheet, cash flow statement, how do you find quality stocks. everyone says buy quality. we'll show you how to find it next. ♪. ♪ allergies don't have to be scary. (screaming) defeat allergy headaches fast with new flonase headache and allergy relief! two pills relieve allergy headache pain? and the congestion that causes it! flonase headache and allergy relief. psst! psst! all good!

i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones ♪. charles: all right, folks, it's earnings season. it is early, but thus far better than all the whispers of doom and gloom. take a look. 45 companies reporting, 58% beat revenue. take out energy it is 6.5%. earnings have been better. 69% is obviously a lot lower than recent years but a lot higher than experts said. this is still early. this is the most intriguing

part, 2.86% blended return. take out the big energy companies earnings are down 3.5%. joining me laffer-tengler ceo, cio, nancy tengler in studio! great to see you. talk about your impressions so far, right? for me we didn't get, we got some big warnings but we didn't get a bunch of warnings. i always wonder if we don't get those maybe companies are not doing as bad as we think? >> i think you're right, charles. if you look who reported what they told us about guidance, it has been pretty positive. it is just like, last quarter we had the same thing. so companies did better than expected. that is almost every quarter. charles: right. >> this environment it is super important. i'm quite pleased what i have seen. j&j's earnings were good. goldman's guidance and earnings was good. those are in our 12 best idea portfolio. i was keenly interested in that. charles: i can imagine. what is interesting to me, everyone is saying so far it's early that the consumer is okay.

so far, they haven't run out of money. goldman says they still have 20% of their excess cash. i still don't know what the hell that is. savings is savings. there is no extra savings. nevertheless 20% left. they have money to splurge i guess for the holidays. you talked about a couple stocks you like. i saw your list. there are certain stocks you like for free cash flow. i have thought this would be a good chance to explain to the audience, a lot of guests say i like strong free cash flow. what exactly is that? i took a look at cash flow statement from microsoft, from the last quarter. from the income statement you have $16.7 billion. their net operating cash flow was 24 billion. you strip out of that operating cap-ex, right, what they invest in the business. the bottom line is, you are left with $17 billion, right? that is what you mean when you say strong free cash flow. they can do anything they want with the money, right? >> they can. they usually pay dividend and buy back shares. let's forget you can drive a

truck between pro-forma and gaap earnings. you saw that with j&j. revenues, earnings they beat but margin shrunk. free cash flow, what we do with our own households what do i have left to spend when i pay all my bills, what will i spend it on. charles: right. >> this company is brimming with free cash flow. they have been raising the dividend -- charles: but i also get the sense that knowing they have this cash you sleep better at night as investor? >> absolutely. it is there. it is not on a earnings statement. its cash in the bank, not just on the balance sheet. charles: there is 6.9 billion they use for property and equipment. we don't want to see them scrimp on this, right? >> right. charles: you want a free cash flow number they didn't get to artificially. >> yeah. charles: another area you like i find really intriguing, companies bringing older companies into the digital world. you think about it, that is where all the opportunities are, right? give us an example of some of the names there that you own? >> on the tech side?

charles: on tech side, drag them into the digital world. >> so i think service now is a classic example because they're sort of managing the data on the cloud but you could look at any cloud company and say they're adding value to the digitization of these companies. charles: right. >> so that would be a microsoft again. microsoft's in all the sweet spots, in cyber security, gaming, cloud and so that is a company you can just kind of put away. it is a workhorse kind of company. charles: i got less than 30 seconds, let me squeeze this in. i asked peter morici who is particularly opinionated he didn't really answer the question, should the fed continue to be independent entity? should they continue to answer to no one instead of have all the power to the change the economy. >> no. did i do it fast enough? charles: you did it perfect. >> i think it will be a political issue in the coming years. charles: you know what is interesting about it? for a long time it was an issue on the right with ron and rand paul. now you have someone on the left, a very powerful voice on

the left saying hey they're getting it all wrong. >> all the way back to the beginning of the country this has been a issue. charles: nancy, you're amazing. thank you very much. coming up i give my takeaway why the experts are making the dumb money look brilliant. we'll talk more about netflix. the stock has been hammered. wall street is warming up to the stock big time. a lot of buy recommendations. my next guest says hold your horses. the great laura martin, you want to listen to her before you make any moves on this stock. we'll be right back. ♪ ♪ ♪ ♪ ♪

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one of the best performing stocks in history. lately it's run into a trouble and many people are wondering if the company can really usher in, you know, that magic as they've ushered in a completely new way of living; right. we're talking netflix of course and how folks sit around and stream all day. now, they posted results after the close and my next guest has been, i got to tell you, one of the best track records with respect to following in name. joining me now senior media and internet analyst laura martin. laura, i was checking out how many if i weres in the last month or so have gone positive on this stock. a lot of people thinking maybe, maybe that the worst is over. maybe the coast is clear.

but you've got some reasons, just a few, why maybe they should hold their horses for a moment. >> i do. i think the common wisdom in order to upgrade means that it'll continue to trade on subscribers and that this ad-driven tier, which is half the price of the one in america right now is going to drive subgrowth, but we're very worried about can bill ballable -- canablization. >> charles: i hear people talking about different levels of solution and getting folks to sherpas words and for me it's tedious and like a treasure you want i don't want and going through all these things and i kind of get lucky when i find a movie i want to watch. i don't like the service personally. are there any complaints about the service itself? it's hard to find a movie.

>> well, i agree, and i think netflix really started by aggregating other people's, other studios 12-yearlong programs, gray's anatomy, er, murder she wrote, and once you found something, you could stay there and watch those episodes for three months and they don't have any of those anymore because those have all been taken back by the studios that own the underlying ip. now you're really stuck with stuff that was never in a movie theater and you've never heard of it and their ratings can be very unequal so it's hard to find stuff on net flick -- netflix now charles: is there an area for discerning fair value yet? >> the stock's down 63% so three times worse than the market performance today. but we're going to -- we believe that the reason they've accelerated the launch of ad

driven tier is they're going to miss the 1 million subguidance they put out and they'll announce today. we think they're going to undercome in under the 3.4 million subs that wall street is looking for for q4 so next quarter and we think that -- or if they hit the suspended ands they'll be at half the price, which will kill their revenue growth rate for next year outlook. i would just wait to see, you know, how many people this cannibalizes and how many trade down from expensive tiers to less driven tiers. charles: you have a hold on the stock and decidedly not a buy. everyone is buying because it's down so much, that gives you the luxury of waiting like you're suggesting rather than having to be a hero. laura, thank you very much. again, great stuff here. you're definitely the best when it comes to this. glad you took time to help us folks, we'll be right back.

the started the show talking about professional capitulation and maybe that's what the market wants to see and you hear about the hand ringing and talk that it's retail investors and they've got to fold their hands and get out of the market. that's the only way it'll go up. of course that mean that many would take substantial losses and just like someone on wall street, some experts are deciding they want to do and this morning, carvana was downgraded from neutral to outperforming and lowered target to $15. stocks down about 95%, a bit more than a year or so.

i'm not sure where web bush placed their buy on the stock and all the way down it looked intrigued and felt like it stopped going down. for me the main reason i want to point this out, this is no monopoly on brilliance, folks. no monopoly on acting good and this is something that i want everyone to sort of keep in mind as lots of people are now being advised, lot of individual investors being advised to take massive losses and load up on inflation protection and other strategies that may be a year from now will seem like it was an overreaction certainly in hindsight. as for today's session, i like this session a lot because we gapped open, knee jerk reaction, we give it all up and by all rights we could have been down a whole lot more. instead we found footing again and one session but i like the way it's going, liz. liz: that's so funny. i have a different take, charles. you ready? charles: yep. liz: this morning when the dow wa