You want to stay away from tech. I get that. You don't want to be part of the mob that owns nothing but Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Google, now Alphabet (GOOGL) , I get that, too. They are what's called "crowded," meaning that "everyone who is anyone seems to own them." But on a day where the averages meandered, it might be worth remembering why we like tech in the first place and can't give up on it so easily.
First, despite the fact that so many people are worried about the valuations of technology stocks, let's take a look at what else is out there.
First example, Nike (NKE) . I love the company that is Nike. It has always fascinated me. I think "Shoe Dog," the autobiography of Phil Knight, who founded Nike, is the best business book of our generation because it reads like a novel. It's an unbelievable story about how a little company from the great state of Oregon, took on all of the big guys and through sheer grit and good old fashion ingenuity, won. It vanquished everyone in its path.
But along the way a new competitor came up to compete on price, the price of endorsements, Under Armour (UAA) , that, until recently, seemed to be able to spend like Amazon, to lock up talent and take share. At the same time, somehow, Adidas (ADDYY) came back to life, reincarnated with a Stan Smith shoe --most people who wear it probably don't even know that Smith was a legendary tennis player -- and the business became crowded and cut throat.
Nike is so well run that for a while it didn't even matter. Its expansion in Europe and China was so flawless that you knew you could buy and hold this one.
But you know me, I preach buy and homework and the homework in the last few quarters showed that Nike had lost its edge in the U.S. Today Nike announced layoffs, something that shocked me when I saw the news when I was on Squawk on the Street. What's the story here? The lean and mean Nike was now neither?
Entirely possible. The 2% reduction of a staff of 70,000 isn't much. But it's a recognition that even the best in apparel are now stumbling.
Or how about Kroger (KR) ? Here's the best in supermarkets, best by far, cutting its forecast gigantically, and acknowledging that the competition is going to force them to have to compete any way they can which, to me, says price. That means the razor-thin margins of this company just got that much thinner. I will have more on Kroger later, but there was a time when Kroger was about as reliable as a company could be.
Then there's Nucor (NUE) . When we speak of steel companies we are always speaking of two different kinds of steel companies: Nucor and everyone else. Nucor's been a continual guest on Mad Money no matter who runs it, and I hope it stays that way.
But today it preannounced a weaker-than-expected quarter and from the sound of things the weakness just started. Now I know Nucor as conservative, a true under-promise and over-deliver company. I hope that when it talks about a hotly competitive environment it is about the endless dumping that we see from the Chinese and Koreans and that our embattled president will do something about it. Nucor could be a big winner if President Trump would become a little more like candidate Trump for more than just coal.
Plus Nucor is the ideal infrastructure steel company if we ever see our way to some sort of relief there.
That said, my charitable trust, Action Alerts PLUS, owns some NUE stock and it hurt even as we bought more today because it is now so cheap. That said, a shortfall is a shortfall and this one really stung.
Now on any given day we have shortfalls. We have stories that resonate negatively and give you the sense that things are falling off a cliff, including tales of trading woes from the major banks, stories of brutal price cutting in the mall, and of still-lower numbers for the department stores then they were, seemingly, last week. We got a shortfall at the almost always reliable Cheesecake Factory (CAKE) , which, while I know sounds like a place you need to book a coolsculpt session immediately after, actually has a low-cal menu, not that it is known for that. Buffalo Wild Wings (BWLD) recently reported weak numbers as the stay-at-home eater seems to be going there less and less and I don't think, with a shortened NBA Finals, things will be any better this quarter.
But you know what? You know where those shortfalls don't seem to be coming from?
Tech. That's right, technology.
We know that the high-growth tech stocks have gotten a bad name of late, and I don't mean FANG, which is a name I am sick of even though I founded it, or any of the other funny acronyms that others have tried to create that aren't as good as FANG, he said in still one more moment of pure conceit.
But I have to say that the one thing tech's delivering on is the numbers.
Today, for example, there was a peewee downgrade of Alphabet. I call it a peewee downgrade because it seemed a little bush. Sure it had some questions about whether margins could hold up but I would say the whole thesis of the downgrade came down to "stretched valuations." However, is a company that's growing north of 18% really expensive if it sells at slightly more than the same multiple as a Clorox (CLX) or a Coca-Cola (KO) ?
I think if you ran a hedge fund you might be able to make some money off this downgrade. You might have been able to get some off at the start of the day --meaning short the stock -- and cover at the low. Maybe someone else does a peewee downgrade tomorrow.
But if the stock market sentiment switches then I think you will recognize that you are buying the consistency that Nike or Kroger used to give you at a very inexpensive price.
I feel the same way about Facebook and Apple. My partner Carl Quintanilla and I spent some time this morning with DJ Khaled on the floor of the exchange in what was one of the most fun times I have had in all my years down there. We discussed, among other things, the major keys to success and happiness, and two of them involved broadcasting the word out via Apple and Instagram. We are talking about two companies riding so many different trends that I think they are reliable in their own right'
Finally, we got some wayward fellow who has hated Nvidia (NVDA) forever come out today and say he expects there to be competition for one of Nvidia's product lines. Ooh, really scary. Well, no kidding. Even mighty Intel (INTC) has competition during its heyday from Advanced Micro Devices (AMD) . It happens. No matter, say what you want about Nvidia's stock price, it's producing earnings blowouts that leave the entire rest of the market in the dust. It is at the heart of so many different hot trends.
So remember that while tech has become a curse word of late, there is a reason why so many clamor for it: earnings, solid, raw, organic earnings, the type you don't get shortfalls from, the type you get upside surprises from. That's why they are owned. That's why people will come back to them. That's why, unlike what seems to be the majority of my compadres, I am not abandoning them. They may not be the only game in town, but at least they know how to play it.