Bob Olstein Makes A Case For Selling Amazon And Netflix, Buying Macy's

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Revered investor and Chairman & Chief Investment Officer of Olstein Capital Management, Bob Olstein, was on this Sunday's edition of Wall Street Week. In the interview, Olstein discussed the current valuation of the stock market overall and his views on stocks like Amazon.com, Inc. AMZN, Netflix, Inc. NFLX, and Macy's, Inc. M.

Concerned About Rapid Trading

"We are market agnostic," Olstein said. "But I will tell you 80 percent of the people in the market, okay, are rapid trading. They have no idea what the valuation of a security is. I am concerned, okay, by the fact, well, there has always been speculation -- speculative bubbles in the market -- just not as bad as it was in 2007."

Bubble Segments

On whether we are currently in a bubble, Olstein said, "No, we're not in a bubble, but there are always bubble segments. And the bubble segments are in the social media, the biotechs. There is a disregard for free cash flow, et cetera."

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Netflix

On Netflix's current valuation, Olstein said, "You're talking $45 billion to buy Netflix. You have to come up with money every year if you own this privately to put more money in. There's $12 billion of capitalized costs and future costs for programming. 90 percent of that programming is going to be written off and every day analysts are tripping over each other."

Choice Between Amazon And Macy's

Olstein was asked which companies he thinks are not going to grow into their valuations 5-10 years from now. He replied, "It's the social media companies, 95 percent of the biotechs, okay, and some of the crazy technology companies that are running the cloud like Salesforce.com and some of these things. That there is no way to justify."

"As public companies you want to buy them, but if I walked up to you today and I said, do you want to buy Amazon, give me $200 billion and I give you nothing for the next five years or I will give you a Macy's at $22 billion and I'll pay you $1.5 billion a year. I know which one you're going to pick."

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Posted In: CNBCTop StoriesMediaBob OlsteinWall Street Week
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