No Need To Worry About A Recession!

[Music] You've got inflation fears out there. That is one of just many worries weighing on the averages. But in times of high volatility, you got to start looking around. Where can investors go for opportunity?

Let's bring in Kevin O'Leary. Kevin, you are always on the lookout for opportunities. If we are dealing with high inflation, first of all, do you think it sticks around? And if that's the case, where would you be looking?

"I'd like to look for businesses that are growing, their cash flows have strong balance sheets, and are servicing the demand at the time. And you know, it's true that we have inflation and there's a lot of concern about a recession. I don't see any of that in the short term. I mean, I'm living in the real world here with over 30 private companies in our portfolio. In almost every geography in the U.S. right now, things are booming. Sales are on fire, cash flows are better than they've ever been. And I know we should be pessimistic, but I can't get there right now because I'm trying to hire people, and I can't find them.

Try and find a server in Los Angeles for an operation for minimum wage 15. I have to pay 25 in some cases just to get them to come to work. So there's a lot of demand at all levels for employment. So I'm not that worried about the classic recession. Energy prices? Well, that was self-inflicted. We shouldn't have cancelled pipelines; that was bad policy. It can be fixed. Supply chains will be fixed as well.

So right now, if I were to buy stocks, which I am doing—because, I mean, you know, you can't time the market—Becky, today's a good example. If you were not in the market today, you don't know which of the 20 or 30 days in the next 12 months give you all the returns. Today was one of them. So trying to time the market in volatility is next to impossible.

But let's take something like Service Corp. Now, maybe people don't know it, but it's probably the biggest funeral operator in America. Guess what? In recessions, people keep dying. Who knew? Their business is recession-proof. They have strong cash flows and a good balance sheet.

BG Bungee, you talked about food concerns, 80 supply chains, all kinds of specialized grains and oils all across America—fantastic. Nestle, in Switzerland, European company in Swiss francs. You know, this new act Biden just signed, it's all nestled. All that stuff is coming from there. Nestle's supplying all the baby formula, and the baby formula 2002 act, or whatever he's calling it. Why not own that company when we're out of baby formula? These are big opportunities, Becky, all through the market that are going to perform very well, regardless of inflation.

You know, Kevin, I love the message, the real-world ideas, and just what you're seeing as somebody who's running businesses yourself. I think those are all incredibly valid points. I also think just this idea that you can't time markets—that really matters.

Of the company stocks that you're picking, does any of it have to do with stocks that have come down pretty significantly? I know you talked about Facebook, or I guess I should say Meta, and Google being two companies. Do you look at these things and say, "Hey, this is a bargain versus where we were a year ago?"

"Yes, I do. I say to myself, okay, what's happened here is in many cases growth rates have not slowed. They're forecasted to slow, but it hasn't happened yet. I think in Q4 we're actually going to beat the estimates that analysts have taken down. Maybe they're forecasting 5 percent; my bet is it's more like 7, 8, 9 percent growth for this calendar year. And then all of a sudden, you turn the switch into 2023 and say the recession hits hard. I don't think so. This is going to be an inoculated recession. It's already had a vaccine in so many ways.

There's so much of the four and a half trillion that was poured into this market still in the pockets of consumers, and they haven't had a chance to spend it yet because we have a disruptive supply chain. I've been through many of these cycles; this one is unique. And I'm not going to get too bearish, because if I went back to 2020 and looked at what happened in that year—the volatility, the thousand-point days, up and down in a matter of 23 days—the entire returns were found.

So if you're not in the market for those 23 days, and who knows how many will be in this cycle, you're not going to get any returns. So I'd argue to people, look, take advantage of this correction. A Johnson and Johnson, a Pfizer, Google or Meta—in case of the old Facebook—these are companies that are still cash flowing, have massive balance sheets. Technology is not going away.

Look at Zoom today; everybody thought, you know, that’s correct, they're over 78, and yet they beat their numbers. People are still using these technologies; they're just paying less for them on a PE basis, and that's a gift the market's giving you right now. If you like that video, wait until you see my next one. Don't forget to click right over here and subscribe."