Chit Chat Stocks - A Venezuelan Shakeup; Top S&P 500 Winners And Losers From 2025; The Return Of Small cap Of The Week

Episode Date: January 9, 2026

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (00:00) Introduction (00:56) Geopolitical Impacts on Investments (05:20) Venezuelan Economic Landscape and Investment Opportunities (11:04) S&P 500 Insights: Winners and Losers (28:36) Housing Market Dynamics and Institutional Investors (33:37) Small Cap of the Week: Owlet's Market Position (38:58) The Baby Economy and Market Trends (43:31) Defense Spending Insights (50:28) Streaming Wars: Netflix and Warner Bros (01:01:34) AI Bubble Watch: Funding and Future Prospects ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks, the podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined, as always, by the one and only Brett Schaefer. This is our weekly Power Hour episode. We do these every Thursday live at 5 p.m. Eastern time on YouTube, so if you ever want to get any questions to us live, head on over to YouTube, look up Chit Chat Stocks, and feel free to ask away in the comments. Thank you, everyone, for tuning in.

we have a full slate today we've got defense spending upgrades we've got massive news out of latin america very controversial geopolitical news that we'll discuss and we've got a number of other topics as well i'm going to go over some 2025 numbers from the s&p 500 and some of the stuff might surprise you uh but i'm going to go through some of that black rock in the news a lot of government news, which we don't typically do. But I'm going to stop there. I'll let you introduce yourself here, Brett. What are you most looking forward to talking about today? Well, Ryan, I have a new business venture to propose to you, and it is a daycare. Are you getting ready to start one of those? I think they're quite profitable from what I'm hearing.

Chit Chat Stocks Daycare. You ready? Is that the third leg of the business model? it's uh i i i try not to talk and most things political on the show just because that's not the kind of show that we are but it's becoming harder and harder to disaggregate the two it seems uh especially given the current administration so we got to talk about some of the stuff i i was thinking through all of this imagine if you're just like an actual daycare operator in minnesota and when people ask what you do now you have to tell them that and everyone just thinks it's a gimmick yeah exactly it's uh it's quite the story yeah and it is in our home state is home state of washington potentially i guess as well but yeah let's get back to

some other topics i have a fun small cap of the week i appreciate one of the listeners giving a really interesting company medical device company helping out the we call it the baby economy which is probably quite lucrative uh we have a little bubble watch obviously some updates on ai stuff and a lot of good listener questions with some stuff we may or may not be able to talk well on oil stocks asml rally netflix drop is lemonade a turnaround play i'll say hand up i've been completely off on that one at least i haven't we'll check the stock price live but i think i've been very bearish on them the stock's been quite doing quite well and then question maybe about the memory semiconductors and memory storage, although I don't know exactly how much we

will have any expertise on that. But the first thing I'll say is talking about government subsidies. There's news this week, Ryan, that may have saved my Oscar Health shares as well as the rest of the Oscar Health bag holders. The ACA subsidies may return. Here's a quote for you. The emerging framework would extend the expired, enhanced ACA subsidies over two years, while adding income caps, anti-fraud measures, and other provisions designed to draw GOP support. The legislation will require 60 votes to clear the Senate, where Republicans have a 53-47 majority and also need to be approved by the GOP-controlled House. It's important, I guess, because maybe they'll get some more customers out there, but I think this is all-in-all great news for Oscar Howe. There's more steps to be had before it gets finalized. But betting against the subsidies stopping, or sorry, I did a double negative there.

Betting that the subsidies are going to stop once they've already started, it's usually a poor sign. And, you know, I'm hoping this is good progress for the company. You might not like it politically, but hey, you got to invest in the world you see. And hopefully they can make some money on it. What is, without spoiling too much, what's your current return on Oscar? Let's see what the stock price is at today. It's not going to be crazy. Stock price is at about $17, I think.

My cost base is in the $14 to $15 range, but I actually don't remember. Maybe that's good or bad, but it's been all right. It's been kind of a wild ride. It goes up to $20, back down to $15, up to $20, basically on any news. surrounding the healthcare stuff, which has just been either we're getting rid of all government spending or we're going to add on all these ACA subsidies. It's been a whole mess, but I think overall, you know, Oscar Health will do just fine. We have a question here in the chat, Ryan, that can probably lead off the elephant in the room, the Venezuela discussion.

A question here from Tyler. Welcome back in 2026, Tyler. Any thoughts on South America and mexican investments given the situation in venezuela i'll let you go first ryan yeah so any takes that i have are going to be stolen probably from our latin american correspondent ian bezak but it seems like well generally speaking there aren't a lot of venezuelan companies that american investors can invest in directly so there's it's not like all of a sudden the floodgates have opened go find every undervalued security in venezuela type of thing however there are a lot of businesses that are american businesses had latin american businesses that have historically done a lot of business in venezuela

So some of the ones I'm thinking of are like Colgate, that was called out by Ian Bicek as well. Apparently, they have a huge market share in Venezuela and other Latin American economies. MercadoLibre, I believe, around 20% of their revenue came from Venezuela prior, that was in, I think, around 2013, 2014. and obviously it was a much smaller revenue base than they have today and then there's the potential knock-on effects of local economies around Venezuela as well so this is something that I hadn't really considered but once again shout out to Ian Buzek because he kind of raised awareness to this there's been sort of a big refugee crisis from Venezuelan citizens pouring out of venezuela to other countries colombia i believe as well argentina brazil yeah basically every country and it's put a bit of a strain on the resources for those countries that was something that was talked about was basically now keep in mind a lot of this is uncertain

there might still be we don't know what the government's going to look like in venezuela a year from now but in a world where the venezuelan economy starts opening back up again you see companies coming into venezuela and reinvesting a lot of money there and citizens pouring back in i think you can see you're probably going to see a benefit at a lot of the airports um you'll probably see a benefit for commerce generally i think mercado libre would be a beneficiary and you'll probably see benefits for the local economies uh local i mean other countries around there brazil columbia argentina i don't know what companies will be direct beneficiaries of that necessarily but i'll leave it open to you i i haven't taken any action

or invested at all since the news dropped yeah we're a long ways from them having their leader ousted to having a javier malay in in their country with a democratic election there's a lot of progress to me man i mean we don't need to get through all the geopolitical stuff where they have militias and terrorist groups and everything but i think the airport one that's probably one of the first beneficiaries, because you're going to see people have to travel to and from the country to start building up a capitalist economy. And then second, yes, the clear winners will probably be the same winners of every other country that are the multinationals in South America. Speaking of New Bank, MercadoLibre, if you can get 50 more potential customers in a country with a stable

economy, yeah, that's growing your addressable market. But how many years are we going to have until that happens. I'm not so sure the 10% bump in MercadoLibre share price was really warranted. Maybe the stock is undervalued anyways, but when are they going to reenter the market in a meaningful way? When is the economy going to actually recover? And is it actually going to be successful? That seems like a pretty low likelihood if we're going to be speaking frankly here. But maybe the oil front, there's some potential benefits here. I'm not sure. It's kind of, I think for me, an example of how the oil market is an absolute crapshoot. One interesting thing I'm seeing a lot of, and again, I'm stealing this from people,

but a lot of smart people said is that when you look at the United States oil production, it actually doesn't, and I always forget there's light, sweet, and heavy, and sour, whatever, all the different types of crude oil. But the stuff that the fracking and the Texas and North Dakota basins are producing is actually not useful for the Gulf Coast refineries. The Gulf Coast refiners are made for Venezuelan type oil. So that could benefit those companies, which I think are Valero, ConocoPhillips, stuff like that. But besides that, you know, is this another step into getting capitalism back in Latin America? Yes. but there's a lot more steps to go.

You know, we talked about this with Fizek about what was it in late 2025 about, hey, look, is there a huge trend here where we're getting from this kind of the socialist era of the region to capitalist? And he kind of gave a, yeah, maybe, but let's wait and see. And this is kind of one step in that,

but there's many, many other things that need to happen. And look, it's positive, obviously, for business so far, but let's see yeah i can't see how it would be a negative for business or businesses in the area but the yeah i don't see many actions i can take here as an investor because i'm not an energy investor to begin with i think maybe if you have like a very unique view it's an industry that you know really well you've spent a lot of time in the oil and gas space maybe there is some benefits to be had here and some trades you can make that'll be beneficial i've heard canadian oil companies uh especially in the calgary area could potentially be hurt by this

but that's not how i invest and i was actually a tough industry to invest in anyways yeah i was actually getting so this news dropped i think on must have been saturday yeah 7 a.m at my time it was midnight it was right in the crack of dawn when where you are wow the i was going to invest americano libre on monday regardless that was kind of my plan i wanted to buy some shares because i actually thought it was a good opportunity like ignoring all of this news and it was up like 12 when i checked monday morning which to me i just have a hard time buying anything when it's up 12 percent in a day honestly but this was i don't know if it's really warranted but i think it's easy to just say venezuela was 20 of revenue a decade ago well it was probably generating i

think around 100 million dollars in revenue which would be a fraction of today's business for mercado libre now obviously there's more angles more things they can sell more offerings that they can have to customers and they have a big employee base there as well but i think it's going to be a long time maybe it won't even happen before venezuela actually contributes significantly to the top line for mercado libre so mexico and brazil and argentina what matter more and probably the stabilization of the argentine argentina hyperinflation is what matters way more over the next five years we have a good point here though from the investing for beginners podcast was which is either dave or andrew so thank you for the questionnaire and

go listen to their show if you are a beginner investor and want to learn how basically this whole thing works uh they say someone said that they think mercato libra will benefit from from this particularly the pago segment so maybe along with the airport some of the first businesses that can enter just because they're more asset light from a physical infrastructure standpoint will be the mercato pagos or the new banks of the world to kind of get that banking engine going you know i like the thesis there yeah it's just i don't know all this feels super speculative we don't know what the government's gonna look like we have a comment here that says keep don't think too hard ryan just buy just buy 10 years you won't care might be right but still 12 percent

of the day yeah i'd have the same feeling just wait it's just a good i can't do it the honestly as sort of as big as the venezuelan news is it kind of means nothing for my investments at the moment like i can't i still haven't found anything necessarily actionable about it it's certainly not a like if you were thinking about investing in mercado libra anyways this news is certainly more positive than a negative i would imagine sure but yeah i'm not investing in anything specifically based on this news maybe send an apology form to lockheed martin and the f-35 seems to work well given that high budget but yeah from an investing perspective not so much uh maybe if we don't want to talk more

government stuff? Do we want to do your roundup, your list, your fiscal AI-based list, S&P 500 winners, losers, and cheapest stocks? Kind of a fun thing to do at the start of every year. Sure. And I will, if you had to guess what percentage of the S&P 500 companies, if I just started listing them all off and I said, do you know what this company does? What percentage do you think you would get right now? This reminds me of there was a Jeopardy viral clip, at least on Fintwit, that none of the contestants knew what ETF stood for, which I got to say, that's quite a shame. I think there should be a investing slash finance focused Jeopardy game. I don't think we have the chops to put it on, but it would be a very, very fun thing to do.

If you said the 500 companies, I'm going to go through, look at your list here. And just based off of these companies, I think I could do half. I think I could get half. If you're generally like, all right, well, you have Seagate on this list, they do hard drives. Like if that's all I need to know about the business, I don't know much besides that. Yeah, I think I could get half on that level. I think that's probably a fair guess. I would have, going into this, so just for context, I put together a full dashboard on Fiscal.ai of every single company in the S&P 500.

I just wanted to basically be able to quickly, like, if I want to figure out the cheapest stock in the S&P 500 on whatever multiple, most expensive, whatever, I want to be able to pull it. So I built a dashboard, and I went one by one with every single company, adding them. and i was blown away how few of them i actually knew and obviously the majority is weighted towards big tech but when you if you were to go through an equal weighted s&p 500 i wouldn't know half of the businesses probably so much energy like a ton of energy companies um i just found it very surprising if you asked me like what percentage of u.s large caps would you know i would have guessed much higher before i started doing this list but let's go through it this is the top five biggest winners in the sp500 from 2025 the biggest losers and the cheapest stocks

on a forward ev to ebit basis so the five biggest winners sandisk up 790 percent It's all memory. 80% of this is memory, right? Western Digital, Micron, Seagate, all those memory. Robinhood is number five. All of those are basically above 200% returns. AI, AI, AI, AI, degenerate economy. Not surprised.

Yeah, honestly. Yeah, it's – none of those interest me, frankly. We can talk about the memory segment here in a second, but yeah. I'm going to give you a potential to have a hot take. Are you worried about Cal Sheehan Polymarket with Robinhood's market, with Robinhood's business? I don't think so. We're in the hype cycle.

You think we're kind of in the little mini bubble with the prediction markets? Robinhood might be expensive anyways, But I think it's just a matter of time until there's heavy regulation on the prediction markets. And I think it's going to really hurt calci and polymarket. If I had to rank the companies that were at a risk, one would definitely be the sports bettors because they're kind of doing the same thing. And it's also the degenerate economy that maybe it's slowly getting into the mainstream. But anyone our age knows that it's really ruining a lot of young guys' financials. And it should be probably regulated more.

Second, maybe the Robin Hoods of the world, kind of those day trading apps. And then the rest would be the traditional brokers. And I don't think they have any threat to that at all. But I was derailing you. Those are the five biggest winners. who are the five biggest losers the five biggest losers are the worst loser was the trade desk second biggest was pfizer which is probably most known for their clover point of sales system yeah they got clover down here i was shocked for cata libra and clover well i'm pretty sure

their heart in time business is the one of the primary reasons that the stock has collapsed Because they were kind of faking the same store or the growth because it was constant currency or maybe not constant currency. Yeah, they weren't disclosing that it was just primarily due to hyperinflation in Argentina. The third worst was Gartner. That was maybe the most surprising one from this list. I didn't realize they'd been crushed so bad. Considered an AI loser. Fourth was Decker's, which is home to the Hoka brand.

Which kind of surprises me because if you look at like just sales, Hoka is still kind of on a tear and the company is doing quite well. And then fifth was Lululemon. So here's my question to you. Which cohort here, the biggest losers or the biggest winners, do you think will have a better 2026? That's a great question. It's basically memory versus retail. Almost. Here's a question for you. Will Bitcoin's price be above $105,000 by the end of 2025?

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this contract is december 31st 2025 sort of the trade desk did you know it's still trading at a 44 times ve pretty rough uh pfizer just looks cheap gardner is probably it's overrated how much they're going to get hurt but who knows this yeah stuff could disrupt them i do think deckers and lululemon probably do fine and i would bet that memory like it has for the last 30 to 40 years it always booms and busts even more in a more extreme manner than the rest of the semiconductor markets so maybe the boom continues in 2026 but i would bet eventually on a bust happening it's just look at micron stock chart this almost always happens and it makes sense like what are you going to do it if micron's revenue starts growing triple digits it doesn't

make sense for the stock to stay at the same price so like even if you know that a downturn could come it isn't surprising that you see the memory chips kind of trade in tandem memory chip businesses trade in tandem and have big years up 300 percent and big years probably down 30 or 40 percent but yeah i would probably bet on the losers honestly here to have better returns on average the gartner gartner is the one that i'm maybe the most interested in honestly from this list i i don't love like we kind of talk poorly about consultants all the time but they have a lot of recurring long-standing relationships with businesses that i don't think are going away necessarily and i i would guess that the ai risk is overstated

i mean the the gartner's magic quadrant right how how is the world going to disrupt that yeah uh it's kind of hilarious that they can just like they just basically ranked companies and now companies are like we're ranked number one i don't even know what they do they deliver it's kind of they're kind of a meme company we deliver actionable objective insights to executives all right well p is 21 price to free cash flow 14 and a half it's all right three year revenue growth seven percent 10 year revenue growth 12 percent they've had a little bit of a slowdown here you're right we don't love consultants ethically but it's a good business uh did you see you probably didn't see this very small piece of news jp morgan got

rid of all of their uh the outsource proxy voting services i forget what those things are called icc i think for their asset management so anyone so they're all doing it internally now that's a good step you know trim the fat save save a little cost yeah none of the all the biggest losers and all the biggest winners neither one interests me now the top five cheapest stocks here's the part where i basically realized i i don't know half the u.s economy omnicom group is the cheapest i have no clue what to do apa corp allstate viatris principal financial now it's hard for me to say am interested in any of those they all trade at less than seven times forward operating income but let me give you the most expensive here actually maybe i'll let you guess it can you

guess expensive in the s&p can you guess robin robin robin in there i'm gonna go on a forward ev to okay what do we leave it sure forward has to be in there palantir has to be in there I don't think Rocket Lab is going to be in S&P because they're not profitable I'd say Palantir and Robinhood are for sure in there Robinhood is not in here I don't think they

I don't think analysts guide on EBIT for them so they can't qualify here but probably on a free cash flow basis they would sure Palantir though correct? Palantir is in there Palantir is the 4th most expensive

Oh, who's above Palantir? Keep in mind this is non-GAAP because it's analyst estimates. The most expensive is Axon, Tesla, CoStar Group, Palantir, and CrowdStrike. Yeah, those are some great picks. Would you short this basket in 2026? yeah maybe i think i won't i won't i don't but if i were to i would not have a problem shorting this basket if you had the short or go long or the cash i think i go short my entire portfolio obviously omnicon group is a marketing agency advertising agency so

think mad men and i guess that makes sense they're trading at five times earnings because Because I bet the entire industry thinks they're going to be replaced by AI. Who knows if you're an AI, if you think that is, well, if you think that's not going to happen, five times earnings, well, pretty cheap. All right. We've got a couple of people that guessed some of the companies on the list, but that's it for S&P 500. Again, I think it's fun to do this every year and just see the best performers, see the cheapest, most expensive stocks. And it's kind of a fun way to potentially get new idea generation is it's old school, but just go one by one, look at a quick business description, face multiple, face forward multiple, and it could at least maybe inspire some future research. Do we want to talk about the housing market?

Yes, Ryan, I'm going to save you here. you got almost i don't know what to call this maybe pompliano uh you're you're mistaking black rock and blackstone oh yeah this was more so just uh oh you're in on the joke you're on the joke yeah all asset managers are prohib well in theory prohibited uh but black we'll see what happens illegally yeah uh i've got nothing to say on that one the defense stuff would be are you you want to talk defense or this well i i am curious on your opinions here so real quick for anyone that didn't hear here is a post from uh the president of the united states also by the way i don't know if we ever talked about it but did you see truth social is merging with like some

i mentioned it on budget bubble watch i believe unless we didn't have time for it on an episode yeah merging with a fusion energy company two fake businesses coming together for have we ever had like such blatant like i don't know promotional activity out of the literal president of the united states two promotional companies coming yeah it's it's it's interesting let's just put it that way uh all right back on topic what was what was what was the tweet he says for a very Some of that is accurate. on congress to codify it people live in homes not corporations i will discuss this topic and more in davos whatever um what do you think of this it's it's pandering to

give votes it's not i think the stats i see is that it's 0.5 percent of the market now i believe some of the highest numbers i've seen out there is during i think it was maybe the 2021 2022 building boom or that the house whatever house price appreciation boom some of the sunbelt areas had 20 of new builds go to these asset managers which is high but that these are the places that are seeing the highest level of price corrections i mean your market ryan was one of the cities mentioned and it has the sharpest correction in the whole nation it seems a lot cheaper now so would banning them help with this i don't think so like in what scenario is reducing supply going to help i mean sure maybe more people will rent but reducing supply or

demand supply because the home builders build stuff directly to sell to these asset managers i would think it would reduce supply of homes because i didn't realize a large corporate buyer i did not realize that some of the like builds were intentionally yeah it's the builder rent yeah okay yeah it i mean it would suck to get outbid by blackstone if you're both like if you're looking making an offer it's a bad story yeah doesn't play well like just hilariously sounds just awful but yeah i don't know if yeah does it solve anything is the right approach yeah it kind of we'll see what comes of it dr horton traded down on this news which i am a dr horton shareholder still it i honestly didn't i think a very small percentage

of their homes are sold to asset managers for build to rent but it would like you said it would potentially uh curtail their building efforts right because if you can have a large corporate buyer out there to kind of be the bottom level, D.R. Horton, the big home builder, can say, all right, if we build this, maybe we sell it at a cheaper price. But if we oversupply the market, we'll be able to sell it to these asset managers who will rent it out. I don't think. Whatever. I think it's going to affect nothing. Just as what's going on now has nothing to do with the price, the unaffordability. All right. Let's shift gears here. what do we think of a small cap of the week you you prepared one this week for us and actually

listener gave me a lot of the notes here this is also a recommendation from uh i was talking offline with uh travis holland recurring guest about this stock he's been talking about this on his channel and although i didn't prep the notes this would have been my next probably small cap of the week all right all right a lot of people have interest it is owlet owlt is the ticker here's what a listener said sorry to the listener the subsection i don't have your name but regardless thank you and if anyone wants to contribute to our offline conversations well not on the show but they are online and subscribe to the sub stack be part of the free tier. I think if you follow us on StubSec, you can also join, but just join the chat. It's very

fun. We have a lot of lively discussions. Here's what they said, quote, small cap of the week outlet. They are a small company that makes anklets for babies that monitor their oxygen, heart rate, and other vitals and sends that information to an app that can be downloaded to monitor a newborn's health while they sleep. Currently, they're the only FDA approved device of their kind. Parents love their children and want to protect them as much as possible. And outlet dream sock helps protect their children there are any abnormal readings and notification is sent to the app that will alert the parent to go check on their child first i like the pitch nice little elevator pitch there and second it makes complete sense especially because

let me just imagine it you're a family you're with another family and they go oh you don't have the outlet sock i couldn't live with i couldn't my baby wouldn't survive without it you have to get them the outlet sock um kind of that you know what what do they what do they say that uh not the billionaire next door but keeping up with the jones is you know oh they they're using this is my baby going to be safe if i'm not using this kind of that competitive arms race there if we look at the numbers revenue growth from 2019 has been choppy and that's probably because they got their device um taken off the market before it was fda approved so before it was just a direct DTC offering. Now it's fully FTA approved and they're working in the insurance

market. We're not going to talk the details on that. I don't know the full details on that for this episode. But if you're going to research this stock further, this is something you'd want to look into. But since they have been FTA approved, it's doubled. Revenue has doubled the last two years. We have 50% gross margin, negative 11% operating margin, but it is improving and in the last quarter, they're operating profit positive. Negative the last 12 months, free cash flow, but just barely. And I'd say it's steadily growing. Stock trades at four times gross profit. Probably need to make some assumptions on what you think the operating margin will be, but that's not screamingly cheap on a top line number. They brand themselves as smart infant

monitoring. Other news, I guess they're moving internationally. You know, there's babies all over the world, I guess. They have 85,000 subscribers, which I think is probably to their premium subscription tier. I'm not sure exactly what they're doing. They're also making a telehealth product, which I don't necessarily like because that's an extreme commodity. We've seen none of those businesses actually turn into

good ROI. I mean, Teladoc's the most famous example there. So, got to check. I don't like that part of the business, but seeing the growing subscriber base moving internationally, that looks nice, especially with this FDA protection being the only product out there at the moment. Balance sheet

It looks fairly clean. A little bit of debt. Some common stock warrant liabilities. And I think parents will definitely want to use this if other parents are using this. And if it's useful. So, yeah, pretty interesting. And a lot of good, I will say, doing the research for the small cat of the week. A lot of use of the fiscal AI data and charts.

Use our link, fiscal.ai slash chitchat to 15% off any paid plan. ryan what are your thoughts i'm interested uh you got one number wrong there you said four times gross profit i think it's eight or nine times gross profit uh it's about four times revenue four four to five times revenue the it is interesting where if you look at the sales for the business they peaked in 2021 and then as the fda forced them to pull it off the market you saw this massive drawdown but the fact that they've been able to kind of reinvigorate demand and i believe they have uh fda clearance now as well on a couple different products it it does look promising the the stock is up i think almost 300 percent over the last year

let me double check this total return 242 over the last year so it isn't that there aren't returns in front of it i think medical devices can be decent businesses i have not usually had great history investing in medical device companies but what uh what history do you have um i guess evalus would not really count as a medical device but remember uh the dental one vivo therapeutics remember that one the microcap oh the one that was like blatant insider dealing yeah like we never invested i guess yes i i do i do remember that uh that was terrible i i don't know i sometimes just worry that it feels like especially for the baby economy there's new stuff all the time and it like what's trendy with kids and monitoring babies seems to

constantly change but i don't know i honestly haven't paid a whole bunch of attention to the baby economy i imagine there is probably probably some pricing power uh for people that use your devices because it feels like essential but all right folks before we move on we need to tell you where we get our data fiscal.ai fiscal.ai is the complete stock research platform for fundamental investors. I use the platform pretty much every single day. You'll see the charts in our podcast. You'll see it in our newsletter. This is our one-stop shop for stock research. They've got up to 20 years of financial data on all companies globally, including the largest company-specific segment and KPI data set on the internet. That includes metrics like Duolingo's daily active

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The thing with baby stuff is you churn out, by definition, within a couple of years, and then things seem to get popular and then not popular. yeah exactly so that's the one downside of the market well this company looks interesting yeah these aren't subscribers for life that's for sure maybe they can move towards adults the adult dream sock new it's whoop for babies yeah um we have someone in the comment says have we officially locked in the pigs for the 2026 stock competition we have then we had it between 40 and 50 so it's going to be a tight race i have ryan and i there as well i think i put down i had to pick between one of our we had multiple on our show i believe i gave myself um this is before the venezuela i believe i gave myself ricotta libre so good start good start there

uh i did pick that before the news so it's been a good start but i forget what i gave you ryan i think it was either adobe or someone else the sass apocalypse is is back so you gave me it started jay i picked one of your three one of your three you can also switch it to any of your three but i figured if it was one of your three yeah um but we have 40 to 50 on there ryan and i have i guess through 2026 to decide what the prize is going to be besides bragging rights but any of the listeners that joined a lot of interesting picks and kind of deep value stuff smaller stuff, larger stuff, momentum stuff. It's going to be fun to see

who wins. Alright, do we want to talk defense spending? We're going to do a whole episode on this by the way. Tease there. There will be a full episode for defense spending, but We have two pieces of news this week.

Let's go through the news. Alright, do you want to do another tweet? A lot of tweets this week or truths. um and then we can talk the budget proposal as well sure yeah let's go through the truth post i don't know what they call it i think it's called truth is it like when you put is it when you post it is it called a truth like you're uh i don't know i don't know i've gone on there once

to try uh i think i went on there yesterday to see if something was a real post um but yeah well What did our dear leader say? Oh, okay. I thought you were going to go through it. No, all I have is a quote here. I'm sure you can look it up while I'm reading this, but this is from someone quoting the post. It says, President Trump says executives of U.S. defense contractors will no longer be allowed to make more than $5 million unless they build new and modern production plants. plants he also said that lockheed martin and other government contractors shouldn't be buying

back stock if they aren't spending enough on research and development i'm gonna let you talk first i have a hard take against this but yeah i mean that sums up the post i tried to look it up the site's littered with ads so i couldn't get to it on the one hand yeah you could argue that these companies are a little stodgy but i would argue on the other hand there's competition coming from the likes of palantir and andrew to kind of get their behinds and in gear so to speak um bring a little competition back to the space the legality of mandating whether whether some companies should be able to buy back or dividend the stock or not i guess in almost any other circumstance 100 yeah i would say the

government shouldn't be able to do this but the fact that they are the customer or the the contractor with the government maybe there's a way they can legally say like look your contract you're not going to win any contracts since they are like 90 of the business so that in this case Like there might be some validity to the, not that I believe it's the right way to go about it, but there might be some legal way to actually take action here. Yeah, it's, it's interesting. It relates to, again, I'm having trouble having coherent thoughts because I'm not sure exactly what's happening there. But one thing that is clear is that at the same time, they're throwing out the first number for the 2027 defense budget, which is next year, as $1.5 trillion. It's not locked in yet, but that would be up $500 billion in a single year.

I would like to know what exactly is going to be allocated here. Is it shipyards, UUV software? I would say this is not a bad time for Kraken Robotics to try to win some contracts. But I feel like for the companies that can reinvest with a good ROIC, it's a good time for that. The funny part here is that a lot of these contractors operate on a cost plus model or at least a portion of their business. so if you're like you need to be increasing spending it's basically the government increasing spending because they're just billing you for the cost plus i think a certain margin so maybe that's why the budget needs to go up is they walked right into that one that i get what you're saying where

if they are if they have a contract to be the exclusive provider of a certain product and and they're like wasting money on it or something yeah and they are paying themselves out big sums or you feel like you're not getting the level of innovation that you want it makes sense salaries yeah but you can try to just go to someone else maybe i don't know but this is one of those weird almost pseudo-nationalized businesses where it's like Like Lockheed Martin and other defense contractors are obviously their own independent companies. But when your biggest customer is the U.S. government and it takes significant clearance in order for anyone to actually compete with you, like if people can't really compete with you, I don't think it's so wrong that the government has a big say in what your unit economics are allowed to be. Yeah, that's fair.

but let's not get too crazy about it but on the other hand that's different from capital returns true because that's the opposite side of the equation like if you say hey look you got to research invest in r&d and what have you i did a little in just unlocking martin i'm sure the other ones are similar i believe if you and some of the r&d might be messy but their average r&d versus average spent on buybacks and dividends. I think they spent five times as much on buybacks and dividends versus R&D on average over the last five years. So there might be a case there that some of these large dependence contractors are underinvesting. I think what I saw was Lockheed does like 70 billion in revenue and does only a one and a half billion in R&D, which felt a little

low to me. But hey, they're getting their performance they're getting. I mean, it feels like their capabilities are quite strong at the moment i thought their i thought reactions to all this was kind of funny where initially he's like president trump said like we're going to prohibit them from buying back stock investors were like whoa that you know that's ridiculous and we're not going to let the executives get paid more than five million yeah all right well now we're getting somewhere and then the defense budget's one and a half trillion dollars so okay okay so i guess this is all good news all right yeah i think it's gonna wash out positive as a little tease for our episode it's gonna wash out positive for the defense industry they're gonna let them

eventually okay look just maybe just the cash piles up in your balance sheet eventually you'll be able to special dividend it this is it's not going to be a concern um but yeah i think that'll be a fun episode especially looking at some of the smaller players in the space that crack on robotic types you know looking for the next palantir right uh although that one obviously is a little overvalued today yeah but i think that's that's really it on it it's always it's confusing given that the chaos uh coming out of the government but maybe we get at some of the listener suggestions what stands out questions from the substack chat yeah asml rally have you seen them they're in all-time high yeah and it was all from one analyst upgrade like it all stemmed

from one analyst upgrade which made that shocked me the power of one someone in their 20s just putting out a little research note it's wild it is it's a massive moat i know that's i'm not charting new territory there when i say that but you're going to get lumpy revenue growth it kind of to me feels like and maybe i'm wrong for thinking this and maybe this is like a flaw in my investment approach but it feels like the cat's out of the bag with asml like it's when everyone is considering when you go and you rank moats and you see investors rank the widest moats in the world and the companies that are at the top the the cat is obviously out of the bag that right i'm gonna give you let me give you a little pushback here 2025 you could buy twice

two points in 2025 you could buy them in an ev to ebit of 20 we're now 36 unfortunately but hey trailing on trailing really i'm using your i'm using good old fiscal ai right now well shame on me but it just i don't know 30 well right now yes i mean 36 times earnings they're not an aggressive grower let me put it this way do you think they get above 15 percent annual earnings per share growth over the next decade that's a good question i think it could be around that it could be around 15 yeah i would say i would comfortably say 10 to 12 but the thing of what gets people excited about

this business as well so gets people excited about the ferraris and the air messes of the worlds is it feels very predictable that's true i i guess i'm waiting to come out to the other side of the ai boom and bust if it doesn't happen it doesn't happen but that's that's what i'm waiting for if i really slammed up a opportunity to buy asml or tsmc i'd probably favor asml just given the taiwan stuff uh because asml would honestly benefit if taiwan was destroyed yet we need more machines uh in other parts of the world but i'd wait for that if it doesn't happen you know just leave it on the sideline all right let's let's pull this up now taiwan semiconductor asmr ev to ebit look at that you're looking at the speed of fiscal ai in a live stream so

would you rather own oh boy bugged out it's hard to see uh would you rather own asml at 35 times ev to ebit or taiwan semiconductor let's go straight to the company page then if it's not going to populate for me at interesting something's bugged out well forward ev to ebit 19 i'm guessing it's probably low 20s trailing low 20s trailing taiwan semiconductor or mid 30s asml yeah which one is more exposed to the ai cycle i'd rather buy my gut says asml over the long term but it seems pretty equal tsmc i think i'd go tsmc yeah but they have competition and it's going like

asml is none china can't even um they're like a government mandate to try to compete with them and they can't yeah i don't know why i have this prejudice against asml but for some reason you hate the dutch yeah i don't know i just feel like it's so i gotta get rid of the bias of like other people own it so i can't um yeah that's fair all right uh let's see memory stuff we can't talk about that except for that the stocks are up netflix drop and a Warner Bros. update. It looks like Warner Bros. really wants to go with Netflix, according to the reporting.

Netflix is now in a spicy little drawdown. It's not bad. I think they're down to 30 times earnings. Let me pull up their EV to EBIT, or preferred metric for talking about stuff on the show, 32 times. No, 31 times. Trailing figures, Ryan.

Any interest now? During this run, did you know you could have bought them at 10 times in 2022? Did we buy? No. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business,

your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivateWealth.com. Hear that? It's your money calling. It wants a promotion. Elevate your savings with the Scotia High Interest Savings Account. Always earn high regular interest rates that grow the more you save and invest.

Conditions apply. Visit ScotiaBank.com slash H-I-S-A to learn more. scotia bank you're richer than you think it was 10 times trailing in 2022 let's pull out the graphing line right now uh 13 13 wow that is so okay i have i have quite a bit of thoughts on netflix i listened to the interview with reed hastings which by the way that was he's doing ski resorts now it doesn't matter it was the most outrageous ad load i've ever experienced on a podcast that's a pitch for ours yeah blown away no pre-rolls for us yeah yeah and then he introduced mid-rolls too for

i guess that was new um anyways i i do like netflix i i think they're in a fantastic position to probably continue to increase margins and grow revenue at an above average rate i think warner brothers makes sense under their umbrella and if they're able to do any sort of bundling with hbo or at least like cross post the content that's great it the ev in that ebit ev to ebit calculation is going to look very different after this deal that's fair that's fair taking out a lot of debt to do it and the other thing that i find interesting and i'm sure netflix is probably aware of this but it appears i've been doing quite a lot of streaming on flights and stuff for like watching you've been a traveler yeah

you've been a busy traveler back back two days ago yeah it appears that warner brother warner brothers discovery has been licensing their content to pretty much every platform out there and i wonder if they juiced earnings and revenue before this by just letting every single platform have their content it could be could be right i'm not i'm not sure i don't follow the i don't follow the space well but yeah netflix we'll see i i looked up talking about that debt load i looked up their free cash flow they're generating nine billion so just say maybe they'll be on a 10 billion run rate within the netflix core business you add on the cash flow coming in from warner brothers discovery probably a little bit higher they'll be able to manage that whatever debt load

they take in pretty easily but you're right that's going to take away from capital returns for a long while and that is debt yeah still doesn't interest me the stock is coming down but it is from a very premium valuation a lot of people keep asking hey what about this netflix dip what about this netflix dip that's not it doesn't it doesn't do it for me no it's got to come down more i also thought it was very like from a shareholder's perspective uh listening to reed hastings made it seem like wow you know great what a great operator it sounds like him though it sounds like hell on earth to have worked there 20 attrition every 20 attrition and i was 10 do you remember the open compensation policy everyone could see

what like i mean you just you were just like bound to have petty conflicts yeah it got results but yes definitely a hard place to work it's kind of uh i guess i've used two mad men references today it's uh what that's what the money is for company it's funny that they they licensed mad men and that that's what made it popular but yeah if you had to buy one company around the streaming sector no not let's look at disney let's look at disney's uh evaluation right now right disney's would be your only other choice it's untouchable i i honestly as long as i goes around it's untouchable the king the king the mad king yeah seriously oh let's see

we'll just use efi to ebit that seems to be our one of choice for uh live streams even for net or for disney is 19 it's all right did you know if you invested ten thousand dollars in disney it'd be ten thousand dollars right now it would be let's see come on work with me fiscal uh ten years ten thousand dollars would be uh twelve thousand today good yeah they've had a little bit of a comeback someone says comcast tyler says comcast sure sure nintendo that would be my bet no they don't count yeah they probably don't count what other ones are there paramount comcast disney netflix roku sounds a lot better let's look at that no man's land yeah let's see with their stock prices.

I think along with the trade deaths, they're probably getting hurt by Amazon's DSP. I don't know. It's a tough space. YouTube's eating everything. It's so competitive. Yeah, YouTube, there you go.

If you can own one, Google, I guess. The spinoff, the spinoff there. All right, do you want to do a little AI bubble watch update? Anthropic and XAI are raising money. $30 billion, just a little tiny $30 billion this week. Okay, Anthropic Funding Round, quote, Anthropic, the developer of Claude, plans to raise $10 billion at a valuation of $350 billion,

according to people familiar with the matter. GIC, Singapore's sovereign wealth fund, and KOTU plan to lead the new financing. Am I saying KOTU correctly? I think so. All right. The funding round, the third mega deal in the past year, follows a $13 billion investment in September that valued the company at $183 billion.

I think they want to shore up this balance sheet in case the AI bubble bursts because they are burning a lot of money right now, although it's not as bad as OpenAI. And then I'm going to read off another one here. XAI, which I should say is how many years old? Like three years old? XAI, Elon Musk's artificial intelligence company,

completed a $20 billion Series E funding round. 20 billion dollars series e and this company how old are they it's coming from qatar valor equity group stepstone mgx baron capital group and fidelity what is it it's funny that like it's grok oil money is just i guess yeah the thing being poured into the tech world right now the it's all grok grok i know it feels like Yeah, I don't understand it because it feels like it's a three-horse race. Claude, Gemini, ChatGPT. I don't see the real commercial use, frankly, for Grok other than tweet replies and people asking,

hey, Grok, make this person into a bikini or something, which seems to be a trend lately. Need more data center investments for that. Going to get a really good ROI. why claude makes the most sense yeah they're growing like crazy that's the amazon pitch right the short-term amazon pitch little catalyst coming in 2026 huh this will be a markup on operating income will look good for amazon that income that income that income sorry yeah um which will make the earnings multiple look real cheap oh oh yeah they're gonna people are going to love that the all caps tweets earnings per share beat expectations blah blah

blah everyone's gonna go nuts it will it will yeah it will be a lot uh all right we're long uh maybe we'll save the lemonade one for next time because i don't want to look bad so if it drops in the next week you'll be validated yeah well i'll i'll i'm not afraid to talk about it but yes i said some bearish things online and people have bookmarked it apparently and i've been replying to my tweet from like two years ago in the last few months that's the best of us that's commitment to yeah let's talk in two years they they call them the lemon um the lemon apes that's a good name it's a good name it is a good name all right i think that's what i want to do at some point top meme stock contenders

like if we thought what companies do we think yeah that's fair point although right now a lot of companies have been memed so maybe we have to do it during a during the bear mark if a bear market happens this year a little little drawdown i feel like the future most ripe when everything's getting memed that's true that's true you can't do it when the capital flows out the i don't know it's maybe we next uh next power hour could be a fun power hour segment i agree all right i think that's gonna do it thank you everyone for joining uh thank you everyone for joining the live stream we kicked it off strong in 2026 as a disclosure we are not a financial advisor anything we say on this show is not formal advice or recommendation right i or any podcast guests may hold security

discussed in this podcast may have held them in the past and may buy, sell, or hold them in the future. Thank you everyone for tuning in, and we'll see you next week.