In this podcast, Motley Fool senior analyst Fool Jim Gillies discusses:

  • Reports that lower demand for the iPhone 14 is causing Apple to tell its suppliers there's no need to ramp up production.
  • How history is an excellent guide on what today's short-term drop in Apple's stock means for long-term investors.
  • Why now is the time to invest (even if it doesn't feel great).

Plus, Motley Fool producer Ricky Mulvey talks with best-selling author Blake Crouch about gene modification, as well as a future that may be closer than most people imagine. 

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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This video was recorded on Sept. 28, 2022.

Chris Hill: We've got a closer look at Apple and a future that may be closer than you think. Motley Fool Money starts now. I'm Chris Hill, joining me today, Motley Fool senior analyst Jim Gillies, thanks for being here.

Jim Gillies: Thanks for inviting me.

Chris Hill: Apple has reportedly told suppliers to scrap pre-existing plans to increase production of the iPhone 14. According to a report in Bloomberg, demand for the new iPhones is not as high as previously anticipated. On a day when the overall market is up, Jim, shares of Apple are down more than 3% on this report. I think you and I had the same reaction to this news, it made us both smile.

Jim Gillies: It did. I will fully admit my reaction to Apple being down 3, 4% this morning on a production cut is, oh no, oh terrible. I'm being a little bit facetious of course, but the line from Battlestar Galactica, the reimagined series is, "All of this has happened before. All of this will happen again." I look at it a little bit like that. We have seen production shortfalls on prior Apple iPhone model or maybe the iPad wasn't selling as well as iPod. At one point I remember a couple of quarters where they blamed iPad for sales below what some analysts wanted. The stock gets smacked around. Then you take a longer-term, say 15 year. Go look at the 15-year stock chart because the iPhone was introduced in 2007-something. You're going to get one of the prettiest up into the rights you're ever going to see. I have very fond memories of the fourth-quarter of 2018. You may not remember off the top of your head, Chris, but I wrote a column about this in the last week of 2018 and I called it the column, the 2018, the year no one made money.

Because I went through and basically interest rates had gone up, so bond prices had gone down. I know interest rates not to the extent we're currently. Bonds went down, stocks went down, gold went down, silver went down, crypto went down. Of course here in Canada, the big news of 2018 was the legalization of marijuana. In 2018, pot stocks went down for Canadian. So in one of them were the bigger buy the rumor, sell the news style of investing events. Yet in the final quarter of 2018, where Apple suffered a profit warning, a slowdown of production warning much like this, I just smiled like you said, because you were staring at here is the preeminent cash-generating story of our generation. It was trading at 10 11 times cash flow. Now, we are not trading, Fools, we are not trading at 11 times cash flow today. We are in fact trading at about 21 times free cash flow, which is decent, yet also probably not a multibagger.

In short order as it was in 2018 at 10 times cash flow, even today's price of Apple, is still well more than a triple if you were a buyer at the end of 2018, early January 2019, which is not bad for the largest publicly traded company in the world to have done in in just over three years. But yes, the 14, sounds like they are going to have less uptake than they perhaps thought they were. I'm still willing to bet, and I'm doing so with my own money. I'm willing to bet that five years from now, number of iPhones they're selling is higher. Five years from now, cash flow generating from it is higher and five years from now, the number of shares outstanding will be lower and the dividend will be higher. So the further it falls, I'm all flat out stated, I hope Apple, 4% is nothing, Chris, I want 24%. Knock Apple to it. Let's go.

Chris Hill: They're still aiming to produce 90 million phones, which is in line with what they produced last year. Not that I've seen a lot of this type of commentary this morning. But these are the situations where you will get some commentary in the financial media about the ripple effect for Apple's suppliers. Whenever I hear that, I just think, who do you think is in charge of this relationship? Do you think it's the suppliers or do you think it's the largest company in the world by market cap? I think it's Apple.

Jim Gillies: Yeah, go back to your, what is it? The Porter's five forces, the competitive analysis from business school. The bargaining power here, Apple has it firmly under lock and key. So there might be some ripple effects, but again, I think this is a case of what is your investing mindset. Boy, right now everything is really negative, almost crushingly so. Historically though, again, the end of 2018, Q4, I write an article in 2018, the year no one made money. Apple is a quadruple from the buyout price you were paying them. Again, it was a better relative valuation thing otherwise. But it is during times when the world sucks investing-wise, that you will make your best investments historically speaking. Now, look, have the rest of your financial life ideally together. If you're running around 50K in credit card debt, stay out of the investing world. If you're looking to buy a house, please keep that money nice and safe. Look, there's some things Putin's going a little squirrelly with his stuff. I don't have, what's a guy -- I don't have a meteorite plan, I don't have a specific plan for if something truly negative happens.

I'll deal with that on that day because I don't care what your emergency fund or how much cash you have set or how you have your financial life set up. If Putin launches a broader war in Europe, we will deal with that when it comes. But in the, assuming that the crazy volatile world of the stock market is, as it ever has been with alternating periods of despair and euphoria, we are in one of the former right now. Certainly, the markets are not happy. I'm just going to say, if you've got cash on the sidelines at a time when the markets are not happy, when the news is almost overwhelmingly pessimistic, that is a great time to start adding to your investments, even if you're just an index fund investor. Especially if you got a free trading account, dribble some money in the index funds, find some companies that you know and you like, you're willing to hold for five years. I am an Apple shareholder. I have added to Apple many times over the years. We'll see where I am in terms of how far this goes down and if I have a window that I'm allowed to trade and maybe I'll add. But these are the times you want to be an investor, even though it doesn't feel like it.

Chris Hill: Jim Gillies, always great talking to you. Thanks for being here.

Jim Gillies: Thank you.

Chris Hill: When we want to talk about the future, we like to check in with industry analysts, but sometimes we like to mix it up and talk with a science fiction writer. That's where the motley part of our show comes in. Ricky Mulvey caught up with Blake Crouch, author of Upgrade, a sci-fi thriller about gene modification that's set in the near future. While he writes about science fiction, Crouch believes this story is about a future that is actually very close.

Ricky Mulvey: Writing a book takes years, you've been involved in dark matter in some capacity, I believe, since 2014, so why take the dive into genetic engineering, CRISPR, or in your book, Scythe?

Blake Crouch: Well, what I've been doing lately with my work realized recently is taking well-worn sci-fi tropes and putting my spin on them. There's been no scarcity of multiverse stories since sci-fi started getting written or time-travel stories, which Recursion basically is. The big next one for me seem to be genetic engineering. What else is more relevant to the times that we're living in what it means to be human? That's what I'm looking for when I start thinking about what my next book might be is what is this: A, something that genre may have done, things that's done well, and B, what is the emerging tech that is relevant to our lives in our world right now. Nothing seems more relevant to me than the gene modification potential that CRISPR affords us.

Ricky Mulvey: In my mind it's straight, it is a phase change for humanity in line with what the atom bomb and the internet. Do you see it in a similar way? Is that why it's more relevant to you than most other topic?

Blake Crouch: Not similar. Unless we end up destroying ourselves with nuclear weapons, which is entirely possible, CRISPR genetic modification maybe not in our lifetime, but maybe in our lifetime is the greatest invention of humanity, period. There's literally nothing. What's bigger? It's wizardry, it's rewriting our own DNA. It's magic.

Ricky Mulvey: You've mentioned in other podcasts that you see two paths for genetic engineering and your book touches on it. What do you think those two paths are and how do you think we avoid the darker one?

Blake Crouch: We avoid the darker one by talking about it, by making the public aware of it. When this book really started, when I was doing some press for Dark Matter and I was on Science Friday and said he knew what my next book should be and he was like have you heard of CRISPR? I'd heard of it, but I really didn't have a full awareness of what it was and this would have been back in 2016. I definitely didn't have enough of an awareness to try to just wing it on Sci Fri. I think that a lot of people still don't really know what it is. I think your average person. "Yeah, it's like gene modification, it's like what they do in the movie sometimes, it's like limitless."

I think it is a real responsibility of scientists, of tastemakers, of entertainers to help educate the public about this stuff because there's such a distrust from the masses I think right now with regards to scientists. I think some of that is the hangover from the way that COVID was rolled out. I understand why it was rolled out that way. I don't think it was a conspiracy, I think it was an evolving situation. People had no idea what was happening and they were reacting in real time. But the public wants science to be exact and accurate and I think there's a little bit of a distrust there. I think that the public needs to be made aware that this technology exists that right now we can edit, it's technically illegal. Embryos can be edited right now. It's highly illegal, but it can happen. This exists.

Ricky Mulvey: It's already happened. Scientists in China, I believe, edited embryos to essentially be less susceptible to getting HIV.

Blake Crouch: Exactly. Successfully and it also weirdly lowers the longevity. People aren't sure why, but that's the thing. You get an added benefit but there is a takeaway and what these are we don't know. It's not one-to-one, it's so unbelievably complicated.

Ricky Mulvey: You researched genetic engineering quite a bit and it is, there is a heaviness with talking about it that makes it intimidating. You worked with a scientist named Michael Wiles. From my understanding, he really pushed you to even go further with what CRISPR could do. How did he do that? What were your conversations with him like?

Blake Crouch: I've had subject matter experts on all my books, but I've never needed one so much and so involved as with this one because the sciences and you punch in and out of it, it's on every page. I would send them a manuscript he would redline it. What I would basically say is, "Hey, this is what I want to happen." Here's the thing. When you're a writer and you want professional scientists to weigh in your stuff, typically what they do is they try to pull you back because they want it to be accurate, they don't want you to break the test tubes. But the stuff with CRISPR is so potential laden and I found the complete opposite was the case here. Dr. Wiles was always like, "Oh, let's go bigger here. Oh no, it could actually do this." The things I didn't even realize we're already doing. It was the complete opposite of almost every other experience I've had.

Ricky Mulvey: There's possibilities where we have tiny pink gorillas, we can change our bone density possibly with CRISPR. You can even edit genes essentially to replace painkillers, to edit the sense of the pain we feel. That's the one where I see the second-order effects being particularly optimistic and dangerous.

Blake Crouch: Yes.

Ricky Mulvey: What are some of the possibilities right now from CRISPR that we're close to that you're excited about or that you're mixed on? That might be a better way of putting it.

Blake Crouch: Well, I'm really excited about the cancer treatments. I think that's hugely exciting. It's obviously a horrific disease and if that could be targeted not through chemo which often kills the subjects as much as what we're trying to eradicate. That could be a massive win and it could also be a win that gives the public a comfort level with this technology. There's still a huge backlash against like GMOs. There's a real hurdle to overcome. We can't even agree to eradicate polio still apparently. You're going to sell the public on rewriting their DNA you can imagine the conspiracy memes that are going to emerge out of this. I think knocking down cancer will be a huge win.

Ricky Mulvey: For me, it would be through epigenetics as my understanding, but you can affect the way that one experiences pain. The clinical application of that would be, hey, let's say you have a surgery. We're going to make a temporary change to your genome so you don't feel pain and then that way we don't have to prescribe you painkillers.

Blake Crouch: That's right.

Ricky Mulvey: The optimistic river of that is that, great, fewer opioids. But there's also the pessimistic part of my mind is that now you have a way of making it so people don't feel pain. I think there might be second-order effects to that that we don't know and what we don't know is what scares me about that. When you hear about a lot of these applications, I was wondering if there was one that was sticking in your mind where you felt extraordinarily mixed on.

Blake Crouch: I'm mixed on all of it because the human genome is such a miracle of complexity. It literally adapted over billions of years to combat external stimuli to survive and to work as a system. It would be us going into the source code of something like the Call of Duty and just changing a few of those ones and zeros, it's not like that, it's not actually ones and zeros. But for the metaphor, I'll go with it. The whole thing just crashes because it's so interconnected. Gene systems are not one-to-one, there's not a pain gene that we can just up or down regulate. It's 40 or 50 or 800 different genes and gene networks all working together to regulate how we experience it. The thing that's really holding us back at this point from truly mastering genome manipulation is really processing power because you need a computer. The same time we have a computer that's powerful enough to really game out our genome and to map genotype to the way it expresses. At that point, you will also have the computing power probably to solve all other things and probably invent super intelligence. It's going to be like a threshold moment.

Ricky Mulvey: Well, I think it's not just processing power, it's also stakes in the case of a lot of CRISPR treatments, you're making a permanent change to one's genome. It's not like you get a do-over I think if you screw up.

Blake Crouch: That's right. Well, there's a couple of layers of editing and the one that's really off-limits is embryonic, it's like editing human zygotes. But that's where the changes are much easier to make and much more long-lasting, to do somatic changes to adults. It's adult specimens. It's really difficult, we're already well on down the path. Yes, some things can be changed but I never read terrible sci-fi, "Oh, we're using gene modification to change the way our face looks." That's actually not the way it works. A lot of times when these experimental gene therapies are attempted out at the somatic level, there are millions of unintended consequences. Again, just complexity. We are far more complex than the most advanced quantum annealing processor that exists out there. We're a biological machine and we definitely don't have the expertise or the understanding to know how each gene system truly expresses in what we see when we we're walking around looking at our fellow human beings.

Ricky Mulvey: You and John Scholes, you have something in common when you write about fake meat in the future and that's that it's never going to taste as good as the real thing. Is that artistic license on your part or do you not imagine a future where let's say a lab-grown steak passes the meat Turing test?

Blake Crouch: The meat Turing test, I love that. I don't know, maybe it will be proved wrong, but I think it's like the uncanny valley of tastes. It's not going to taste exactly the same, I just feel like it won't. I don't feel like it's going to be the matrix when Neo is sitting there, not Neo, but the guy who turns and say, I can't tell. I know it's different but I know it's not real but just tastes through. I just don't think that's going to happen but who knows?

Ricky Mulvey: Blake Crouch, his day job, he writes philosophical thrillers. His latest book is Upgrade. Thank you for coming on Motley Fool Money.

Blake Crouch: Thanks so much, everyone. 

Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.