What are the two words that most infuriate investors these days? "Long term."
When you put long term together with earnings you get smiles, you get nods, and then you get selling. Monday's a day where declarations of long-term investing were derided in deeds -- it's never by words, too sacrilegious -- and those who discussed it saw their stocks go down, while companies delivering breathtaking performances now, companies like those in FANG, took off in an otherwise pretty ugly day.
Exhibit A of long-term investing came when JPMorgan Chase (JPM) CEO Jamie Dimon spoke to me about opening 50 new branches in the Philadelphia area, including some in neighborhoods that have been hardscrabble for ages. He talked about how he would lose money in year one for certain, but when you watch our interview later, you know that he's optimistic that there will be a payoff down the road. Phrases like down the road, and the need to invest are alien to growth stock pickers who want instant spend payback.
However, if you want to see the true perils of long-term investing, take a look at the stock of Comcast (CMCSA) , parent company of this network, which won the bidding for Sky, the gigantic European satellite company, and then promptly saw its stock fall the most in three years.
Now, I am not denying that Comcast paid a pretty penny for the company, $39 billion, prompting some analysts to downgrade the stock and one influential follower and champion of the stock, Craig Moffatt of Moffatt Nathanson, to be particularly harsh in his buy-to-hold downgrade, saying that Comcast "grossly overpaid" and it simply could not be justified.
But let me take the other side of the trade here.
Investing is a leap of faith. You either believe or don't believe. When it comes to Jamie Dimon, call me a believer. JPMorgan Chase came out of the great recession with the strongest balance sheet of all the major banks and with the best global franchise. If Jamie Dimon says that investing for the long-term in inner cities like Philadelphia is a good bet than I am going to believe him. It's not a lot of money for the world's biggest bank, but Dimon's planting seeds in neighborhoods that are underbanked. As I drove away from the location of the shoot, just a few blocks from where my mom and dad went to school in a once thriving neighborhood, all I saw were shuttered store fronts with the only alive operation what looked to be a thriving check cashing business. That's the definition of underbanked and Dimon knows that his company is so big that its fortunes are now linked hand and hand with the fortunes of our nation's neighborhoods including not just its commerce, but its education and its safety, all of which his branches and his institution's philanthropic activities can benefit.
I remain a steadfast buyer.
Now, how about Comcast and the market's verdict.
First, I know it seems that Comcast was pretty darned silent about the bid, but there are some real tough rules in Britain about explaining or even talking about an ongoing takeover so do not take the lack of a real-life press conference about the deal as some sort of hiding out.
Second, here's something uncanny. Comcast has done two gigantic deals over the years, buying ATT Broadband back in July of 2001 and NBC Universal in October of 2009. What was the result of each. Instantaneously its stock was shelled 7% as the acquisitions were viewed as too expensive with too much debt taken down and way too much risk.
Since then what's the verdict: Comcast's stock gave you a total return of 411% versus the S&P 500's 345% after the ATT deal. NBC Universal? How about 446% versus 216%.
How do you spell trust? Why don't people remember these things? I think it's pretty simple: long-term doesn't cut it in in the day-to-day. In fairness, long-term can be a canard for "We don't know what we are doing so we are throwing money at the situation." In this case there's an even more pernicious storyline: Comcast doesn't like its current business because of cord cutting. In fact, CEO Brian Roberts told us directly that the cable business is enjoying a renaissance from new connectivity initiatives and from an urgent desire for more broadband because of voracious consumption of the internet.
The renaissance has given Comcast such huge cash flow it will be able quickly to pay down all the money it is borrowing to buy Sky -- the company will most likely have $100 billion in debt on its balance sheet when this saga ends -- so I do not think that there is as much risk as the market seems to have judged.
More important: Comcast wasn't getting much credit for all of that cash flow. The company's stock is trading for less than 14 times next year's earnings. It used to be regarded as a growth stock with a premium multiple. So, despite all of the technological advantages it might have, and all those broadband customers, it hasn't mattered particularly because Comcast has maxed out on buying any other cable companies in the U.S. when the Justice Department let it be known that it would block Comcast's attempt to buy Time Warner cable for $45 billion in stock.
Which brings us to Sky. Here's the premier cable asset in Europe with a footprint that effectively doubles Comcast's households and is growing much faster than the U.S. It's got some fabulous assets, including the rights to the Premier League, European football that's regarded as much watch in a host of countries.
Yes, satellite may be inferior to the internet, but it doesn't matter if you have the customers and the growth.
In other words, if you aren't getting any credit for doing what you do well no matter how much stock you buy back and how often you tell people how well you are doing, why not go to where you can expand fast and hard? And that's what Sky does for Comcast.
Call me a buyer.
Now the overall market seemed to drift down all day in part because the tit-for-tat tariffs proposals with China are now a reality. Dimon reiterated to me that this is really a trade skirmish, not a trade war because the tariffs cover $200 billion in goods and we are a $20 trillion economy. He did indicate that it could counteract the tax cuts and deregulation if things get hotter.
It seems that whenever you get to a moment where there might be a slowdown, something that's the perception now as tariffs kick in, there's a revulsion to the stocks that need worldwide growth and a renewed love for the fast-growth companies that don't buy back their stock and don't need more trade with China.
That means you want FANG, which had a rebirth today of sorts. Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) , formerly known as Google, all managed to buck the prevailing downtrend.
In a twist of irony, investors fell back in love with another FANG, the symbol for the fast growing Diamondback Energy, as it and its cohort took off with Brent crude trading above $80. Last time it got here the analysts were boisterous in their belief that oil was about to soar. It collapsed. This time there's no hoopla, so it probably goes higher.
You know I think tech's still the best place to be if you want growth. But not every company can pivot to become a FANG. Some companies can take a long-term view and make little and, yes, big bets, to improve their futures. A diversified portfolio has room for both even if there's instant antipathy for the initiatives, antipathy that, in the right hands, turns into grudging praise and plaudits and longer-term outperformance if the stewards of capital know what they are doing.