As I travel the world searching for stock ideas, I occasionally take a culture break. This morning as my journey has taken me to Paris, I visited Musee d'Orsay. It is an extraordinary collection, especially of Impressionist and Post-Impressionist work, and lacks the mosh-pit feel of the Louvre and the incessant stampede of tourists heading for the Mona Lisa - I did that yesterday.
In one of the salons, I saw a very interesting piece by an artist with whom I was unfamiliar, Paul Sérusier. Entitled Lutte Breton, it depicts a traditional wrestling match in Brittany. Cool stuff. Google it. But, let's be serious, Paul is fighting for airtime with Manet, Monet, Toulouse-Lautrec and Van Gogh.
That is exactly what is happening in the Big Tech-bonkers stock market. Very, very innovative companies are being crowded out by the mega caps, like Apple (AAPL) , Amazon (AMZN) , Microsoft (MSFT) and Tesla (TSLA) .
One has to wonder if the answers to the world's questions - truly great tech companies offer solutions to common problems - are going to come from the Trillion Dollar Club. Spoiler: they are not.
Big Tech has the impact of stifling ideas. It has always been that way in the "Bigs". The Big 3 foisted a bunch of poorly-made vehicles on the American consumer for decades until Toyota (TM) and Honda (HMC) joined the fight and changed the world. Big Pharma basically exists to stifle innovative cures and Therapeutics and Big Oil is sorely in need of a talented PR guy these days.
Where will the ideas come from? Well, if you have been reading my RM columns, you'll know that I have been looking to the True North for smaller, smarter companies like Exro Technologies (EXROF) and Nano One Materials (NNOMF) . I used to style myself as the Microcap Guru, and I will always have a fondness for the little guys, Canadian and otherwise.
It is very difficult to constantly educate myself on new technologies and new sectors, but I love what I do. Physical exercise is a big part of my daily routine, and my Strava account currently reads like a Fodor's guide to cool running spots in South America, North America and Europe.
I do have a gym membership for those busy times back home in NYC, and that got me through the pandemic. One thing I never did, though, was spend thousands of dollars on an Internet-able exercise bike when the ones at Blink Fitness suit me just fine.
I am looking at you, Peloton (PTON) . What an absolute disaster. The stock was down about 30% today. In January the market was according a value to PTON of nearly $60 billion, which, if not Big Tech, is certainly not Small Tech. Today PTON is worth $17 billion. Barely.
I wrote about PTON in my May 6th column for Real Money, and advocated the trading strategy I charmingly refer to as the "death short." Man, it feels good to be right. That column was sparked by product liability issues following the series of unfortunate accidents with PTON's Tread+, including that horrible video with the toddler. That led to a recall and I exposed PTON's pathetic warranty reserve coverage.
But that's not what is making PTON shares crater today. People have simply stopped buying them. That's a gross oversimplification, but maybe it isn't.
The consumer is a very fickle being, and a torrent of negative press is mindset changing, much more so than the easing of inane COVID-19-era lockdowns ever could be. Peloton is a bad company now. Watch out. I have heaped enough scorn on Twitter (TWTR) to last a lifetime, and the recent revelations about Facebook (FB) , especially concerning Instagram and exploitation of female body-image issues, are nauseating to me. Corporate image matters.
People change minds much more quickly than Wall Street fund managers ever do. And sell-side analysts - I was one for more than a decade - are just as awful at reading consumer behaviors as they happen, or in PTON's case, before earnings are reported.
As I read this morning that Truist Securities analyst Youssef Squali lowered his rating from buy to hold and cut his price target from $130 to $68, my only question was... what is Truist Securities? Seriously, we are living in the golden era of Big Tech obfuscation and Wall Street apologism.
So be careful with your high-flyers. Make sure you have some Paul Sérusiers in your portfolio, along with your Manets and Monets. Fashions change.