The Compound and Friends - Brian Belski Returns!

Episode Date: July 3, 2026

On episode 249 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by returning guest favorite Brian Belski⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to discuss: broadening market leadership, the tech stock rotation, small and mid-caps (SMID), more volatility on the horizon, the potential for no SaaSpocalypse, and much more! This episode is sponsored by WisdomTree. Learn more about the WisdomTree Quantum Computing Fund at https://www.wisdomtree.com/us/strategies/quantum-computing Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ WisdomTree Disclosure: Before investing, carefully consider a fund’s investment objectives, risks, charges and expenses along with other information contained in the prospectus available at WisdomTree.com/investments. Read it carefully. Learn more about your ad choices. Visit megaphone.fm/adchoices

We're on the record now. We're on the record. Okay. We're on the record. So, Brian, the last time you're here was November. Feels like a long time ago. It was three days after I launched, Teamless. Come on.

Yeah, man. You guys did a special live thing with me at noon on... Well, you can't have as long of a career as you've had without being right a few times. You've got to get something's right, and you have. Something's right. It's a lot of stuff wrong. So check this out. So, Belski calls.

Yeah. Reiterated his 20-25 S&P Parker of $7,000, but whatever. More importantly, pushes back on the AI bubble label on Mag 7. Increasingly uncorrelated earnings reactions among the group. You saw dispersion there. You expected the performance to broaden out beyond mega cap into AI into value, dividend growth in small and mid. Great call, Brian.

And you saw a regional bank M&A as mid-sized, banks, so whatever, you favored a barbell. Sean said, he actually nailed it. Yeah. Like, you... Oh, Sean, Mr. Anailk, guy? You fucking nailed it, which is important. You really did. That was good stuff. Thank you. Thank you. It's good stuff.

Do you want to thank anyone? You know, every time I say something on... There's still... And I try my best now when I'm on the show. I don't say thanks for having us. I don't say that anymore because I got so much crap from Wapner and... Why? Why this is...

Well, because it's a thank you. for having me. Yeah. Yeah. Well, no, but I am a collective of all this fantastic team that I have. So I always say thanks for having us. Oh, thanks for having us. Like, thanks for having our point of view on. It sounds weird. Am I, but you mean, you're a nice guy. You don't need it to be, you don't mean to be a douche when you say it. It sounds like, no, I don't mean to be a douche. I don't mean to be a douche. Um, so, no. Despite the tan. Dude, I had to, I went to Minnesota. I went to Minnesota the Friday of Memorial Day weekend. And I'm like, I had a change of life and I moved downtown in 2019.

So then I'm, in 2020, I was there for the George Floyd stuff. And then that really shook Minneapolis. And it was fun to live downtown Minneapolis for that. And then even the last six or eight months, things have changed there, man. Are they getting better? No, no. So I was there in 2023, I think, when the Giants beat the Vikings in the playoffs. And it was, I stayed downtown.

Honestly. And it was... I came in here and said, you're welcome for Kat as a Minnesota sports fan. It was very depressing. It's depressing. Yeah, it was tough. So I think I got to do something.

Well, Minneapolis sort of became like ground zero for the culture wars. Yep. Like both sides are growing increasingly... I don't want to say violent, but like aggressive. You have people... Another word for violent. You have like citizen journalists exposing the daycare centers. You have like all the protesters.

are still out in the streets. It's just an unexpected place to be the ground zero for the culture wars. But that's what seems to happen. So I grew up there and I love history. We're hopefully able to talk about one of the books I'm reading right now later in the broadcast here. But Minnesota has always been a place for kind of off-the-wall politics. Like Eugene McCarthy, you guys are too. You know, I remember.

Jesse Ventura. Jesse Ventura was a pro wrestler and it became. governor. Yeah. And so they've always been kind of goofy on the political side. But it's gone, it's gone way too far. And there's a lot of people leaving Minnesota. I mean, I, well, a part of that was I didn't, I think I love my twins. I go to the twins games. I'm not feeling great walking back to my condo from the twins games. So I'm like, I'm going to spend more time in Florida plus. It's a thousand degrees. It's a thousand degrees everywhere. It's, it's hot here in New York. It's 105 in Minnesota. Where would you rather be Naples, Florida, 100 degrees or Minneapolis 100 degrees?

So, oh, so you're, all right, so you're, but so you're going to be in Naples, but then you need like a summer place to live. Yeah, because a couple things. It is super hot in Naples. Yeah. The flights are prohibitive. Like when I'm in Naples right now, because I need to get out of Minneapolis for a little bit and hang out. But to fly up here to Delta flights, one at 7 a.m. and one at 7 p.m., that doesn't work for me. And so I fly United mostly. But the flights are very prohibitive. And if I want to go west, anywhere west of, Alabama, you're connecting through Atlanta or through Houston or something. And that's... Is it Fort Myers Airport?

For Myers. So if you think about it, it's an hour from my place in North Naples, it's an hour and 45 minutes to Fort Lauderdale. Fort Lauderdale, Great Airport. So if you think about it, like, it's going to take me an hour and I have to get to Newark after this, right? So I mean, you think about that on a relative basis. But still, every time you've got to go to Fort Lauderdale?

So professionally, where would it make sense for you? Is it Chicago or is it like New York? New York. Okay. At some point. I mean, let's, you know, baby steps. That's such a huge deal to like set up in New York. Well, this is an impossible place to live. I don't know if you know that. I think the company is always going to be incorporated, Delaware Corporation and then headquartered in Naples.

But you need talent. So where are those people going to be? All over the place. I mean, we have a distributed. Everyone works from home. Okay. So I have two people in New York, one in Seattle, one in Florida. Okay. And this is by virtue of these are the people that you, you want and they happen to be in those places. Very much so. So we built our firm the same exact way.

And then somewhere along the line, the thing that we realized is that in certain capacities, some workers are better off independent, like just work from home or in a we work, whatever, based on their role and their personality. Yeah. And then in some cases, it's like, you know what? We actually need to cluster a few places where we can get. multiple people together. And we have, so we have both.

But we built Chicago's 16 people. They come in every day. And the, and the roles that they have at the firm, it actually makes sense for them to be in person together. They're in the salt shed, which is, you know what that is? Yeah, I know the area. It's not too far. So, but it made sense for, based on the role,

Chicago's an operations hub for us. If you're just working at all day, task after task after task and you have very little in-person interaction, that's not the same as being an advisor and talking to clients. Like, I feel like the operations people, a lot of them, would prefer to be together. So that's like one example. And then Charlotte, we started to cluster. We're opening a new office in August in Charlotte. So we're always going to look like what you described for the most part, but then we're going to have like hubs. Well, you know, it's interesting. I think that's like how it's going to go for everyone, I think.

the first times I was on the compound, I said something controversial, shocking, that I believe that everyone was going to go back to work in the following fiscal year. And I got absolutely ripped in the comments. And I never read the comments. Why? Because like the health issue? Yeah, because people weren't back to, we weren't back to work in Wall Street. I think we're like two or three days then. And then it was in, I said within within 12 months, we're going to be back to work. And my son actually is the one that said, Dad, you got to look at these comments. on the YouTube. Yeah, never do that.

No, don't do that. No, don't do that. No, don't do that. So anyway. Well, I do think that we're going to get some big corporations who kick off the four-day work week. I think it's like inevitable. And I think it's actually going to surprise people. But Wall Street could be one of the first areas where they basically say, unless you're in a client-facing

role specifically and need to be in the office, we're not expecting you on Fridays. Wait, hold on. Four-day work week or in-person work-week or in-person work week on Wall Street. I think it's coming. But work on Friday, just not from home. I mean, just work-were four days in the office. Yeah, no, I don't mean, I shouldn't phrase it the way. I think you're working five days.

The thing is, on Wall Street, people are working seven days a week because nobody ever doesn't answer an email or return a call. So it almost doesn't matter. But I do think companies are tired of fighting their employees over Friday. especially in the summer. And it's almost pointless because all of these companies are more profitable than ever

and giving their employees more, giving their employees more latitude than ever. So it's just ultimately, as the next generation takes over, eventually someone's going to say, okay, you know what? Don't worry about coming in Fridays. Just make sure you're hitting your numbers.

Yeah, I think everybody works different. I think some of us, especially Gen Xers, have to learn that the next two generations, they learn different than we did and they work different than we did. But I do believe that the next two generations, the millennials and the Gen Zs, they have a harder time with interpersonal skills. Yes.

And, you know, when you're growing up in the business in the 80s and 90s like I did, you had to learn when people were lying to you because you could tell by the, but you could tell by the questions they were asking, by the answer they were giving, and look in their eyes. And I think where analysts have all become lemmings, no disrespect, and they all kind of drop their earnings all at once, right? Or right, they drop their earnings all at once. They're all, you know, because of Spitzer and 2000, everyone forgets all this stuff. The good old-fashioned days is sitting down with a CFO or CEO and talking about their numbers.

I don't think that people do that anymore. Or they do it over screens. Nobody has time to do it. So they do it on Zoom. Yeah. Or they don't do it at all. And they were lying on spreadsheets and models. and, you know, looking at what other people are doing.

And I don't know, I don't know that we're even going to notice this change. I think it's just going to be this gradual thing. And then all of a sudden we'll all notice it. Like, but it's, I can't imagine it not coming. I still feel like I'm cheating when I'm home. And I'm home a lot. I'm home most days. I still feel like somebody's going to tap me in the shoulder to be like,

this isn't like get back to the real world. It's been, but this is it. It's not going back. My goal is once I have a certain asset level, I'm going to all have an office. I don't have people in the office because I just think you need collegial, especially with a small group. But, I mean, when you own your own business, I'm working eight days a week.

Yeah. Right. And 25 hours a day. It doesn't matter. So, and I don't expect my people. I've never expected my people to work like me. Even when I was at big firms, don't be like me. Please don't be like me.

But it's just the nature of the beast that we're in. Would you set up in New York or you're not sure yet? I probably would if I get the right asset number that I'm looking for. Okay. Which is one trillion. I hope. Let's go on it. Ladies and gentlemen,

whoa, whoa, whoa, stop the clock. Here's a word from our sponsor. Today's episode is sponsored by Wisdom Tree. You've probably heard the comparisons between quantum computing and the early days of AI. Big potential, lots of uncertainty, and technology that could fundamentally change

how industries operate. But here's something that caught our attention. The U.S. government recently invested in several quantum-focused companies adding momentum to this emerging technology. For investors interested in the space, Wisdom Tree offers the Wisdom Tree Quantum Computing Fund, ticker WQTM, which provides pure play exposure

to companies that it believes are driving innovation across the quantum ecosystem. Click the link in the show notes to learn more. Before investing, carefully consider a fund's investment objective, perspectives, risks, charges, and expenses, along with other information contained in the perspectives available at wisdomtree.com slash investments. Read it carefully. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnik, and their castmates are solely their own opinions and do not reflect the opinion of

Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. 249 on the 250th birthday of the United States of America. What do you think about that? I think it's amazing. Brian, a lot of people think you're secretly Canadian. Do we want to clear that up today?

I am an American with a capital A. That's right. People think that because you're from the north. Yep. And you worked for a Canadian bank for a long time. Yep, I did. But that should go away now. That chapter's over.

All right. All right. We're so happy. to have you, Beth. Thank you. You guys are in for a treat. A fan favorite, a host favorite, one of my favorite people on Wall Street, and he kills it here every time. We're so excited to have him back. Ladies and gentlemen, please welcome Brian Belski. Wow. Thank you so much. Brian is the founder, CEO, and CIO of Humulus Investment Strategies. Humilist Investment Strategies is an independent portfolio advisory firm

built on the principles of conviction, humility, and disciplined strategy. Brian has held roles in firms including Bimo, Oppenheimer & Company, Merrill Lynch, Piper Jaffrey, Dane Bosworth, and William O'Neill. This is his 36th year on Wall Street. Unbelievable. We got the shot? All right. You got the shot?

Hey, dude. Thank you for being here. We appreciate it. Thank you so much. Why are you tanner than me? I'm actively working on my tan. Is it just coming natural to you or how are we doing this? Genes. Okay, good jeans. Those Minneapolis. Those Minneapolis jeans. Those Irish and Polish jeans. No, I've been spending a lot of time in Naples the last couple of weeks. It's been hot in Minnesota. So where would you rather be in Naples by the water, by cool or in Minnesota? I'm going to Boca two days. Yeah. So I'll be there for Fourth of July. You guys are down there for a show.

Yeah. Was it May when you were there? Yeah. March. March. Yeah. So right during the peak. Oh, when we came to the Naples.

Yeah. February? February? Yeah. Of last year. I get excited when I pull into my parking lot of my condo and there's three cars in the parking lot. Oh, it's fantastic. I can get, I live in North Naples, so kind of South Bonita, I like to call it.

I'm not in the bougie part of Naples. I can't afford that. But I go downtown. in like 12 minutes. Yeah, do you go to the Blue Martini? No. Why not? Come on.

That's Michael. That's our favorite place. You took us there. I did. That's my new favorite place in the world. You know the place across from the Kava Lounge? I don't remember. I don't remember.

I want to say one thing about Naples that I observed. People there are having a lot more fun than in other places in Florida. Like, Miami is very, A lot of, obviously, partying, but away from that, it's like very serious, a lot of business. Yep. West Palm now looks more like Wall Street than anywhere else in Florida. Where I am in Boca, it's not a party atmosphere. It's more relaxing.

Naples is fun. Like, the people that I witnessed that live there, at least part-time, they seem like they're really enjoying life. You know, I principally fly into Fort Myers, and when I hit that exit to drive by, see the table, and then to my house, I take this deep breath. It's so relaxed. It's my happy place. I had to change of life six and a half years ago. And I moved to Naples. I've been going down to Naples for 20 plus years.

I was working at Merrill Lynch for so long. We used to do all activities and big conferences at Ritz Carlton property. So we're going there. And then the twins play in Fort Myers, Minnesota Twins. So I've been going there for a long time. To live there is completely different. And so tonight when I get home, I'm going to walk to the Gulf of America and put my feet in the water and just breathe. This is way too much job.

Can we talk stocks? Yep. What's that main drag called? Fifth Avenue? Yeah, Fifth Avenue. Yeah. All right. What a cool place.

All right. We're going to start with, first of all, just a little bit. Michael did the recap of all of the calls that you had made, which turned out remarkably well. Where do you think we stand heading into the second half in the equities market? Like, what is the big picture opening line you're giving to clients to kind of give them an idea of what you're thinking right now? Well, shocker, we're still bullish, but I think the headline would be beware of the second derivative less positive. So tell us what that means. Well, we've had this amazing earnings growth ride better than everybody thought, but what goes up must come down. And this, don't be,

don't take this for me to be negative because our work shows that in an earnings-driven market, when the market is driven by earnings versus multiple expansion or momentum, typical returns on an annual basis or something like 10 to 12% much less so than what we've seen the last couple of years, which has really been more about momentum in PE-driven.

But if you're looking at 20 to 25% growth for the S&P 500, whatever number you want to look at might be different tomorrow, are we going to be 25% for the next four months? Probably not. I mean, it would be fantastic.

Don't get me wrong with the AI revolution and all of that. But the chances are earnings are going to slow down a little bit for big-cap stocks, for large-cap stocks. for large-cap stocks. And I think people, given the fact that we're so innately focused on every little data

point, if there's any kind of slowdown, people are going to sell. But I think that ultimately drives what our broader trade is, which is the broadening out trade and more normalization and all this kind of stuff. So I think it's going to be choppier than most people think. I think personally, there's too many bulls out there. But it's funny because you have the bulls. Everyone's calling for a correction, too. It's not a correction.

Well, always. Yeah, it's constant. It's constant. And so you don't have to be a hero to try to time the market. I think stocks are higher. How about this? Stocks are at all-time highs at your end. I think in between there, we got some fun.

This year we had a handoff from kind of Mag 7-centric market where people wanted to own the data centers and the hyperscalers. And now they seem to be more, they seem to be more attracted to the companies who are selling products and services to the data center buildout. and they've been less excited about owning the hypers scalers themselves. I know this week there was a nice bounce for a lot of the Mac 7, but generally speaking, those stocks are mid-teens to mid-20% off of their highs. They haven't really participated.

They've actually been a net detractor up until the last couple of days from the S&P's year-to-date. Oh, I know. So we have this handoff. So the question is, it sounds like you think the handoff will continue, but the choppiness comes in because these things don't happen in the straight line. Yeah, nothing's linear. And I do think that, well, first of all, you don't have to own everything, right?

You don't have to own everything. I think that you're going to see some rebalancing back into Microsoft. Microsoft's the one that I'm kind of focused on. You think 34% return on equity, $78 billion in the balance sheet, 25% earnings growth, quarter after quarter. consistent. So that one to me doesn't make sense in terms of being down 23 or 24% year-to-date. It does from- Well, and then that got stuck in the narrative. It's the biggest software stock in the world. Yeah. Well, exactly. So like full disclosure, I was telling you when we were walking

in, people are teasing me, Belsky, underperformed in June by 1%. Well, I don't know Micron. I mean, if you, come on. That's pretty good. Right. Anyway. By the micron is now down 21% from its high a couple of days ago. So you talk about... That didn't take long. No. So you think about... We were talking earlier about...

Never look at the comments. So I was on closing bell last week. And the day that Micron came out with earnings, and they asked me, and I'm like, you know, full disclosure, I don't own the stock. But I pulled the nothing's linear for long. And this is way overdone. Stock went up a little bit. It was straight down since then. But if you read the comments, Belskin was wrong.

I mean, you know, I don't own the stock. I mean, so anyway. For somebody who never reads the comments, sounds like you spent a lot of... the time reading the comments. He glances at the comments. Well, someone told me again. You got to read it. It was your son. Brian, let me ask you this. So you said that you expect earnings to the growth to not be as strong.

Obviously, you're not expecting negative earnings. No, no, no, no. If it goes, Michael, if it goes from 25 to 20, people are going to go, whoa. Right, right. Well, let me, okay, so let me put it to you this way. The earnings growth is in large part being driven by the hypers willing to go to zero on their free cash flow. Right?

Like, that is power on a large, part of the earnings because their spend is Micron and AMDs and everybody else's earnings. They have been steadfastly committed to higher and higher and higher spend. So do you think that's going to reverse itself or where do you think it's going to? I have to slow down. It has to slow down. It has to. They say it's not.

Yeah, they're telling you now. Okay. Well, of course they are. Because they want to go to the marketplace, right? If they're going to go to cash flow to zero, they're going to have to go get money in the market. And they have. Yeah. Google and video.

Why do you think Oracle's been hit? Why raise money, though, if you were going to slow down? So why would Google be selling stock after 15 years of, 10 years of buybacks if they're not going to accelerate spending? What would be the reason? I don't know. Okay. I actually don't know. But Google's one of my favorites, too.

No matter what, these companies are going to have to slow down. They have to slow down. What the hell is happening with Oracle? I know we have a lot to discuss in the dock, but it's like going straight down. I know. That's another one of my problem child. This doesn't look like the other one. I mean, it's going straight down.

I just, yeah, I'm still sticking with Oracle. I'm sticking with Microsoft. I'm sticking with Pounder. Do you think Oracle is trading? Because I think in the, in the late winter, early spring, when everything else was going down, it made a lot of sense. It was linear. It was, wait, what did the same moment just say to on that podcast?

Everybody's antennas went up and he was acting very defensive. And Oracle just said, like investors said, there's no way that five-year, $300 billion contract is money good. No way. And that- Oh, the Open AI business. And that announcement was responsible for Oracle's 30% gain in September 20, 25, or whatever it was. Yeah, yep. So do you think it's still trading on AI fears?

I do. Okay. I do. I do. So you think about, too, them going out in the public marketplace and taking all that money, but do you think about how Oracle was a value stock in tech for a long time? And they were early adopters into investing in the AI. And so then all of a sudden all the relationship with open.

AI and the stock took off. So I think that's unjustly being punished. So I'm sticking with Oracle and Microsoft. I am. What do you think about whether or not the meta news this week, where they're now going to be like an outsourced cloud for other players? The market rallied the stock and then gave almost all of it back today. I'm not a believer. I'm not a believer. Is that even makes sense if you're a meta shareholder? Is that what you would want to see them investing in? How is there access compute? I don't understand. I thought all we heard about is just shortage. Right.

They're going to start renting out their excess. Look how fast that game went away. Yeah, two seconds. Two seconds. Like 24 hours later, people are like, eh, what are they doing? Wait a minute. These are the same.

I think the, I think the market has said, wait a minute, are these the same guys that were doing like sunglasses and stuff a little bit? And now prediction markets? They seem very, just very not focused. They call it flailing. Yeah. They met a, now I don't know shit.

And I could be totally wrong. and they could surprise everyone. Meta, just the way, like I think about it, they're the best user of AI on Earth to generate revenue. Because of the ads, Ben. The product is you cannot put your phone down anymore. If you're on Instagram, you literally cannot put your phone down. It is just so good at holding people's attention.

And getting people to send it to their friends and getting people to engage with it, They have perfected reels. It is completely addictive. Nobody saw him at TikTok anymore. And I have a physical device. It's called a brick where I literally have to stop myself. I have to lock myself out of my phone because I am addicted to Instagram.

I tap on and I tap off and I try and leave it tapped off. Right. So that's AI. AI enabled them to not only make the world's most addictive product, but that's not nicotine, but also the monetization of it. It's perfect. So they have this thing. It's the best in the world. And it spins off a ton of cash.

But I don't think people would look at the way that they reinvest that cash and say that they are any good at that. He seems to be really bad at it, actually. I have a sorted past with meta. Say more. How sorted? Well, in the fourth quarter of 2018, I sold the stock. I blew the stock out completely. That's when they changed the name of the company.

To meta. To meta. Was that long ago? We're going into the metaverse. And we're going to push aside WhatsApp and Instagram and Facebook. And we're still going to own it. But we're going to try to go in this other direction. I'm like, hmm, they don't know what they're going to do.

And I took all my meta position and put it into Google. Haven't owned it since. Now, Belski, he doesn't know he's talking about. So you know what the ROI was on that? They spent $80 billion and lost $80 billion. It's the most amazing. See, there you go. So then, so I'm like, okay.

And then during the vid, they came out and said, wait a minute, we're going to come back. We need to focus on our core competencies. Good idea. Which are WhatsApp, Instagram, and Facebook. Now they're doing this. And now they're going to build a NeoCloud. Yeah. So I think the pick-to-click is Google.

I still think Google. And if you look historically, except for the, you know, since really historically, Google and meta from a price performance basis, they're very correlated, right? But I think they're going to, something that we talked about when we're here last, we're going to have more stock picking, more differentiation. Yeah. And look at communication services in particular, terrible performing sector year today. You know, AT&T.

And Verizon, they're crashing. Verizon, Netflix. Wait, one thing on Meta before we get off this topic, it seems to me, and I could be totally making this up, that in between every quarter, we talk about what a bad job meta is doing, and they're doing all this bullshit and they're not focused. and then every 90 days we say,

holy shit, they made how much money and the stock rallies? Because they have the best advertising business in the world that's not quote. I really feel like every 90 days we're like,

wow, this is the best business in the world. And then in between how is he going to like that cash flow on fire this month? Yeah, maybe, I mean, full disclosure,

I was looking at the stock hard because we've talked about it on the show. You were talking about Nike and about how I like to buy companies in my value portfolio. Brian, that's Meta and Google over the last year.

Holy shit. I didn't realize it was that bad. I'm sure of this. Yeah. So this was really said... Met us down 18, Google's up 100. Yeah. Yeah, since liberate...

Right. My God. Anyway, so in my value portfolio, I love to buy companies that operationally have tripped. Nike for a while. bought Starbucks a couple years ago. Netflix is in there now. Lulu's in there now.

I'm like, man, try to buy what meta? It's time to buy meta. 16 times earnings. I know. It probably is. It probably is. But let's see how. How cheap is the stock?

It's like 1617, I think. It got a little, yeah. That's too cheap. Who cares? Nobody likes Facebook. Everybody here. No Facebook, no Insta ever. I'm not on.

Well, if you were, you would be as addicted as everyone else. They're really good at what they do. The problem is these initiatives in AI make no sense to anyone. They're going to build open model LLM. Nobody wants it. Okay, fine. Now we're going to build productivity tools. for the workplace.

Is anyone asking for meta at work? Like on the planet? No way. Nobody trusts them. No, it's interesting about this, though. So yesterday meta popped 10%. Oh, so now the new thing is we're going to build a data center and rent out compute because we saw Elon Musk do it with XAI and they got appreciated, like maybe we'll

be appreciated as a company that could deliver this. It took alphabet and Amazon like 15 years to build. these businesses. Meta's going to spin it up to get the stock price to go up. But so listen to this. So Meadow was up 10% yesterday on the news. CoreWeev got killed, naturally. Meta is giving back a lot of the game today and CoreWeev is still going down today.

And Oracle is going down. Which is, I mean, the market is saying, like, we don't really like any of this. Yeah. Anyway, all right. What's this chart on Smid? Can we move to like where? Anyway, what's this bullshit? No, no, no, no.

What are you spinning here on Smid? What does Smith stand for? Let's get into the Belsky charts. Let's go. All right. This is the first one. Smit for people who are unfamiliar is small and mid-cap combined. That's how you think about that market.

I do. Okay. So the S&P-1500 is the S&P 500, the S&P 400, the S&P 400, and the S&P 600 small-cap. So we run money called a Smith portfolio relative to the S&P 1,000. And so if you take a look at the S&P 1,000, with respect to, performance in June was a was a they flip flop they've completely gone off but what's interesting if you take a look at the s&p equal weighted versus the mag seven same kind of thing so our call all along has been that you always want to go to where the you always want to skate to where the puck

is going everybody well you're a genius it's a good idea I like to skate to where the puck was 10 minutes ago and wait for it to come back or you can you know or you can Stick handle. Yeah, yeah, yeah. You can stick handle and then get your ass kick because you have your head down, right? Right. Anyway. This is why they think you're Canadian, all these hockey analogies.

Yeah, I know. Minnesota, by the way. Gordon Bombay. Gordon Bombay. We're like a Hanson brother. Who, by the way, are from Minnesota? Hmm. Anyway.

Believable. Believeable, right? Yeah, yeah. So we've said all along that, that from a fundamental perspective, if you take a look at earnings growth, price to free cash flow, and actually, next 12 months earnings. You look at the small cap market, SML versus the S&P 500,

amazing, amazing. Is it? Yes. What's the expectation for a small cap? 28%, something like that. Earnings growth for when? Next 12 months. Yeah.

So what is it for large cap? 23, 24, something like that. Is that small or a smid? Small SML. Okay. What is driving? I don't mean like the narrative, like, oh, rates, whatever.

Like literally at the sector level. Yeah, where are the earnings? Like, where are the financials? There's a lot of big financial presence in there. consumer discretionary and their tech. So why regional banks? Because you spoke about this last time. They're on fire.

Like, what's the story? Well, our theme for financials and regional banks has been in the regional bank side of things consolidation. I really think consolidation is coming. And we've had some decent consolidation from that. But the theme is the big and the small. The really big guys and the really small guys are going to benefit. Small guys are going to benefit because of the relationship side of the business.

And oh, by the way, the smaller banks in regions of the country that are growing, like let's say Montana or Wyoming or Idaho or the southeast. Growing meaning people are moving there. People are moving there and companies are moving there as well because of tax advantage or whatever. Those companies are winning business away from the big banks. So whether or not it's Glacier Bank or which we own is winning business from Chase, let's call it in Bozuma, Montana. Or we own this company called Cinovus that got bought out by Pinnacle.

They're in the southeast of the U.S., right? So we're moving to the southeast. We're moving to Alabama or moving to Georgia because of cheap taxes and all that kind of stuff. And cheaper to cheaper payrolls. So those banks are winning business from the really big guys. From a relationship standpoint, they're having a beer, they're playing cribbage on a Friday night, all that kind of stuff. Where the regional banks don't have the capacity to be able to take on the big banks and they don't have the relationship power to take on the small banks.

But they are becoming super regionals. Well, they're going to have more. I think they're going to become, I think they're going to have some super, combos. They're going to see some consolidation that... Like PNC is aggressive now. Citizens is aggressive. What's the super regional? Like a big small... Like truest? Like when two regionals merge.

And all of a sudden, they start to get some of those benefits of scale, but they're not quite Bank of America. So they don't have capital markets business, let's say, but they become powerhouses and middle market lending and... Commercial banking. So I'm in Citizens Financial. They're the number one Helock Bank. I think in the country or something. Like, that's their specialty.

And they are a conglomeration of a bunch of smaller banks. And I would argue it's not really a regional anymore. It's like a super regional. And you don't think that's a sweet spot, though, because they're stuck in the middle. You like the smaller and the bigger. I like the smaller and the bigger. Just pick it from a fundamental perspective. The scale of the scale of the large ones make sense to me.

The small ones make sense just from the fundamental side of things. And if you look at balance sheets, too, and cash flow for that you have to, You have to kind of roll up your sleeves and do the work and look at some of these banks' balances to make sure to see what their loan quality is. I think, and I don't build strategies around consolidation, but I think you're going to have some super consolidations. Like, just throw it out their truth. The White House is allowing it, all of it. Truest buys U.S. Bank. I mean, or they can buy something like that.

I don't know. I don't know anything, but you're going to have more Midwest banks combined. I really think you are. Who is Truist? Is M&T bought Comerica? I forget. No, it was SunTrust. and bank out of North Carolina.

Okay, not important. But that's the kind of thing that you think we'll say. Yeah. Okay. Away from banks, but within financials, what else looks good to you right now? Like some insurance companies,

like Unum is an interesting company. I don't, I want to like Blackstone again. I want to go back into there. My contrarian hat wants me to go back in there. The headlines are not going to be good for a while. No, I can't do it. do it? But Blue Owl rallied a little bit today on less bad than expected. Redemptions. Redemptions were 19 instead of 25 last quarter, whatever it was. Well, okay, let's,

let's think about this. Why not just buy Oracle? What do you mean? Well, instead of buying a troubled financial one. Because financials are trading on software distress too are perceived. Yeah, that makes sense. Right. Right. What about any take on, so I bought CME today. These stocks have, so CMEE, CMO, ICE, ICE. they're all down huge. And a little bit different, a little bit away, but S&P and Moody's also got crushed. But what do you think about, like, the exchanges? Schwab.

Schwab looks interesting. I like the exchanges. I think they're cheap. I think they sold off. I'm not even kidding. On the Cal She perpetual listing news. And fine, it may be a threat, but are they that big of a threat to someone start crashing? No.

Let's do this earnings chart, chart three. Chart three. The first quarter reporting season was historically strong. I'd also point out, I think this was that. the best quarter ever for the stock market? Did I read that wrong? No way. Or one in the best?

What did I read? It was very good. I read something. Maybe it was the best earnings quarter ever? I think it was earnings. Okay. All right. So that's what you're showing.

It was the most fun quarter ever between the Knicks and the men's national team. It was a lot of fun. The Knicks really took it right on the top. So when most people look at this chart, they say, all right, when does it mean revert? Like, when do we give all this back? Or how many quarters worth of earn? growth are we pulling forward to get this result? What do you think when you look at a chart like this? I look at the big, I look at the big bottoms and tops, right? I look how bullish you should have been

in 2020 when the bottom fell out. And then you had a little bit of a recession in 2022, but man, earnings came back. But look at how the recovery from 2022. It's been pretty steady. And then I'm, you know, you could see 80%. You could see. You could see. see that, you could see that number. What if I'm wrong, right? What if I'm wrong and you see 30% grow? Yeah. Then I'm, I could be wrong. What if you underestimate it? Then the S&P is 10,000 next year. Yes. Yeah, you could look at a Dow 75,000, S&P. I mean, I'm still on board with my 25 year secular bull. I'm still on board. I think we have seven to 10 years left. Let me ask you this. I'm glad you mentioned that. A lot of people think about the stock market, you really use

analogies for shorthand. What inning is it? What time is it? What if, or what What do you think about this? The AI-powered revolution, the economy that we're coming towards, it can be the top of the second inning. We don't have robots. We're still very early. Basically, nobody's using it. It can be the top of the second inning as far as this whole thing is concerned.

But what if the stock market's in the eighth inning? And how do we know? And it wasn't that too dissimilar in like 99, where the, it was still early for the internet. I understand what you're saying. But the stock market had already discounted all of it. So the internet was in inning one. The stock market was in inning 11. Could be.

Because I think, so, man, I'm sounding bearish. I think we're going to have a recession. There's sounding nuanced. Whoa, whoa, whoa. What are you just saying? I think we're going to have a recession at some point. Oh, okay. Yeah, at some point.

Me too. No, but think about it. I thought you're going to give us more than that. Think about it. So let's say we're in the second or third inning of the EIA Revolution. And Marcus getting a little tippy. We haven't had a normal recession. for all intents and purposes since 2001, really?

What do you mean? Like a normal two-quartered. Like a run-in-the-mill plain vanilla recession? Yep. Okay. Are we still capable of having that where manufacturers get over their skis on inventory? The inventory stops selling. All of a sudden, they stop ordering.

No, it's a different economy. And we just sort of have like a slowdown as that gets worked through. Could we have a, could we? I don't know. Was that what 2001 was about? Well, 2001... Like what you're describing sounds like something that would happen in the 80s.

2001 had overcapacity of technology, right? Well, we had a pull forward. So everyone had machines that they upgraded at the same time because they literally thought the planes were going to fall out of the sky. That's the Y2K effect. Are we not doing that now? Is there too many data centers?

So that's my point. The question might be what happens when these KAPX trends go into reverse? What does that do to corporate earnings for all the companies that are feasting on this spending today. Nukes it. Yeah, I think.

And then it hits multiples at the same time. It could be horrible. And then what is the externality of a stock market in reverse? We know what the wealth effect is when the stock market is hitting highs. What does it look like when it's down 20, 30 percent? Is everyone paying Delta for the Delta one? Is everyone paying Netflix for the ad-free experience? Like, is everyone still spending the way they were when the market was going high?

So for me, That seems plausible. That seems like it would be the bare case. So when could that happen if... As long as the labor market is good, they'll keep spending. But the reason it's not going to happen is because we are seeing the demand for AI rise as quickly as they can build it. I don't... Maybe that stops.

The number one thing is the cost of a token. The cost of a token is declining rapidly, like 90% over the last... which is great news. The problem is token usage is like growing 5X more quickly, the adoption. The spend. Until the adoption stops, it's hard to understand why all of a sudden this CAPX will like stop on a dime. I know people think that's how it's going to end. Maybe they'll be right.

But now it's tied to revenue. Now it's companies that are like, this is AI revenue. So I just, I don't know, I feel better about it than maybe I did a year ago. Did you just get bullish again? I just saw a twinkle in your eye. I think you... Well, demand, demand, demand, scarcity, scarcity, scarcity, scarcity, scarcity.

You never doubt scarcity. Always trade on scarcity. Always buy scarcity. And if there's that demand there and there's a scarcity for memory and there's that still scarcity on the AI, if we're still... It's compute. Then this thing's going a lot higher. And we are at 10,000.

And the thing is the token economics are being rationalized right now. Companies are looking at their bill. And yeah, the bills are expensive, but then they're looking at the amount of demand and they're saying like, well, we're now like reorganizing ourselves around this technology. We can't not buy it. We can't not use it because it's doing X. It's doing Y. It's doing all these things for. So I know like the bears are like any minute now, this whole Jenga tower.

Someone's going to pull the wrong piece and the whole thing's going to collapse. I don't believe that for one second. Okay. I don't believe that for one second. I like hearing you say that. I don't. The thing that bothers me as being a sector analyst for a long time and a strategist that what is what do the indices look like in four years? Are we going to be 50% technology in the SB 500? And then do that. We would look more like the rest of the world if that happened. Because most countries are dominated by one industry. Well, look at Canada has got dominated by three. But let's take this back. I actually think within two to three years that. Russell, S&P, MSCI are going to break apart the technology sector. Again? Again? Yep.

Because they did it already. Into what? Semis could have its own, maybe they should be their own sector at this point. Hardware software. Ooh, that would be interesting. If software got its own, if software got its own sector, will it still be big enough? It's like 7%. Will there be enough market cap left in the software sector?

Brian, look at this. So this is the top 25. stocks. Yeah. All right. So we spent a lot of time talking about the max 7%. It goes so, it's so much bigger than that now. The top 25 stocks were 35% of the index when this series starts in 1997.

And it was like around there, a little bit higher, a little bit lower for the next 20 years. It went from 35 to 54. 25 stocks are half the U.S. stock market. Why? And if you don't own them. Well, that's the thing about, that's the thing about Smith. Let's go, right? Right.

The smid, the smid category, if you take a look at all publicly traded companies in the U.S. that are smid, small and midcap, they add up to the weight of Apple. Put up chart six stand. S&P 500, CTR has been top heavy. What's CTR? Okay, got it. Contribution to total return. Correct.

Which has worried some investors. So the question, based on this chart, is like, can you outperform in smid for longer than a quarter? Like just the nature of the market of the last 15 years has been like, all right, you'll get that annual small cap rally. Knock yourself out, have fun. And then before you know it, meta, Apple, Microsoft, they start going up again and erasing all that outperformance. This is a nice shot. This is a nice shot. I don't think it's different this time.

We've had a heck of a June and second quarter for small midcap. But this is also at more elevated 10-year treasuries. If you get 10-year treasuries to go down, then Smith's really going to rock it. Okay. And it's going to be helped along by the banks. So you can outperform for the rest of this year in this smid trade? I think you can. I think you can.

The other thing, too, is that if you look at the Russell 2000 versus the SML or the M-I-D, right, Russell-2000 outperformed both those. But there's a lot of companies in the Russell-2000, Josh, that are, they're not making any money. So you have a lot of fuel in there, a lot of beta. and that's where a lot of the returns came from. You strip those out. That's why I go back to if you take a look at price of free cash flow and just earnings discernibility and consistency within the small SML and the mid, it's much better than the Russell overall.

You know what's so interesting about what's happening right now? I would expect if you know that the Russell 2000 is outperforming the large, then you would expect looking inside of the S&P itself that it would look similar. That smaller stocks of the S&P are outperforming what you just heard. It's the exact opposite. It literally is the top decile. Forget about the hyperscalers.

It's Micron and San Discs. Probably not. No, it's not top. Intel probably. But it's the gigantic stocks in the S&P that are driving the index. And yet the Russell 2000 is kicking the crap out of the equal weight S&P. So it's not a size thing. It's a sector thing.

It could be a sector thing. It could be a fundamental thing. Ooh. Right? Interesting. You know what just came to mind? I remember back when I was a young strategist, 1998, 99, something like that. And I was on a market.

marketing trip to Boston. And I was visiting one of the portfolio managers at Fidelity. And he was literally having like a breakdown. He was a small cap manager at Fidelity. This is an audio medium. I don't know if you know what we're doing here. Oh really? Okay. Okay. Here we go. I'm like Ricky Bobby. What do I do with my hands? Anyway, so I'm in Boston. You're welcome, John. John was about to get up from his chair. And so he was literally like, Belskine, what to do. I'm a small cat manager. I'm a massively underperforming, I'm buying Microsoft. Oh my God. Like, that was the answer?

Yeah. So I was talking to some people that run small, they're completely gone. Remember, there's no value managers anymore. There's no small cap managers anymore. There's no dividend growth managers anymore. You got knocked out of their chair. They're all gone. They're all gone.

Okay. So I like that setup. Let me do chart eight. This is the broadening. The chart on the right, figure five, the number of year-over-year gainers has risen, which runs contra to trends before prior drawdowns. Explain what you mean by that and why should we take note of that? Well, more companies, more companies are actually seeing a year-over-year price gain and over the average.

And look at that number beginning to go up. And especially coming out of the bare market. Yeah. It's really interesting. And it's still very, very early. And so again... You're saying this is good? This is good.

Okay. This is good. Okay. You don't have a market top as it's broadening. You don't have a market top as a broadening. So, so long as we see- We did in 2021. Silence.

So as long as- We literally did. I know. Asterisk. As long as we see that broadening, though, it's a, go ahead. Yeah, but look at, dude, look at the spike, though. Yeah, no, I know, it's crazy. It's not that.

Very consistent. It was the same thing with that prior earnings chart. Just chug a chunk. a chug, a chug, a chug, and you see something linear like that? No, 2020 was, we've never seen anything like that. That was just the government giving people money to buy stock. Every single stock was up year over year. Right.

That's the same thing like people saying about inflation. They're comparing inflation now to 2021. Completely different. Right. 2020 different. No, this is healthy. So when people say it's only this work. It's just not true.

You have almost 350 stocks are up year over year. Can I have the next one, Dan? When segmented by market cap, about half the index has delivered double-digit gains. this is super bullish to me too. Yep. It means that people are making money everywhere. Not in every stock, but all over the place. Per Michael's point, though, look at the 10th one.

I know, this is so bizarre. I'm having trouble square in the circle. How is the bottom decile the worst performer and yet the small cap stocks are winning? It has to be a sector thing. Because otherwise, you would expect this to look opposite. You would expect the smaller deciles to be outperforming, and they're not.

Not even close. Well, go to 10. Go to chart 10. Many market cap segments have a significant number of outperforming stocks. That's the answer. It's like the AI winners in each sector. I don't know what's like take industrials. You got tons of stocks in there that are not going up right now.

What's so many that are. And the ones that are all have one major thing in common. They're selling something or making something for AI. But this is saying the same thing. Because there's no information on this chart. It basically says that, Half the stocks in every sector and every decile, for the most part, are outperforming, which tells you nothing?

No, but the point is, well, which are those stocks? Fine. Dude, but it's half. So go to Decile 5, it's literally half, half are outperforming, half underperforming. My point is, look at bar 10. Only 18% of the smallest 50 stocks are outperforming. What the hell is in that group? I'm sorry, I apologize.

I don't know those 50 stocks. It's got to be software. No, it's got to be, no, seriously, it's got to be into it. I think it could be. to the bottom of this. Maybe it could be a home builder. Maybe it could be a consumer discretionary stock. Maybe it could be a consumer staple stock that have not done very well.

Yeah. That's what I'm kind of thinking. I don't know. But there's a lot of one-offs. There's a lot of weird companies that are probably... A lot of weird companies. There was a company up until recently called Dover. You know what they did?

Yeah, Dover. I owned it when I was at Maryland. Of course you did. They made harnesses for horseback riding. Yeah. It's a fucking public company making literally, literally horse equipment. Like, there are a lot of one-off cases.

We shouldn't get bogged down in the 18% that are outperforming in that last desksile. We should just think people are making money in almost every sector right now. Except for these pieces of shit. Here we go. The trade desk, Moulson Coors. These are specific problems. Yeah.

Domino's. What else is the name brand here that's getting beat up? Oh, Paramount. Shake, Shack. GoDaddy. There's a lot of shit. A lot of, I mean, whatever. There's no theme that I could see just eyeballing it.

So wait a minute. Stock-specific, isn't that? Yeah. What's what this is all about anyway? That's what we're trying to say. Stock market is a market of stocks. That's the way that it works. That's what we're trying to say.

And then also, almost maybe by definition, the bottom desile in the S&P, it's always got to be the lousiest performances. Otherwise, they wouldn't be in the bottom desicile. Well, then they get kicked out and they go to midcap. Pull up the small cap. Daniel, can I please have chart 14? Small caps had an explosive first half of 2026. I mean, this, this, not just because we changed the color to red for that last bar, but to really make you notice it, but you would notice it.

You could see this matter space. Wow. This is a really big deal for this part of the market. It's been a very long time since they've been able to party this hard. I wonder, though, is it even possible? I mean, you seem to think it could continue. What's the longest small cap rally versus large caps we've seen in the last 10 years? 10 years?

Yeah, like six months at the most. It's been three to six months at the most. In the last 10 years, no, it's been, it's really been the 90s. So it's a sector thing. It's 20% health care, 19% financials, 15% industrials, and then 15% technology. Yep. So there's not a lot of consumer stocks in small midland. There's not.

Very small communication services sector. Healthcare is worthy of biotechs, because biotechs have some pretty good growth numbers. And it's the financials. I was going to say there are tiny amount of materials in there. Tiny amount of materials. Okay. Can we talk about the bull cycle itself?

You say year four of the current bull cycle likely to be the most volatile. Chart 15. What do you tell people about? Not it's year four, how many more years will be left. But we know you're thinking about this as a much bigger, longer, secular story. So year four, if we get more of. volatility, it wouldn't surprise you, in other words. No, not at all.

And I think... What is it about that fourth year? Well... Four! Josh has been into golf these days. It was really supposed to be three. But I think, given everything that we saw last year with Liberation Day and the goofiness of the market, and that was kind of manufactured, quite frankly.

And this year is more kind of... We had the war in the Middle East. everything like that. But I think the market's been pretty resilient through the war. I mean, let's be honest. I think if you go back historical year three is usually the most volatile. I think we just could have pushed it ahead one year. And the dominance of earnings, right? So again, going back to earnings-driven markets are more volatile than momentum, multiple-driven markets. And that's why. Because I do think the second derivative's going to freak people out. It doesn't matter if you go from 25% earnings to 23-per-earnings. They're still going to, well,

Guy, those are guys. Still coming off the high. Yep. People don't like that. People don't like that. Okay. And understandably, because as the estimates come off the high, you start to think about worst case scenarios.

What if they keep going? What if they keep dropping? And they don't have to. That's sufficient to scare people. All right. I totally get that. But the summer is pretty typically a quiet period for the stock market. It is.

The other thing, too, is that traditionally technology companies, seasonality from the earnings perspective, that third quarter is usually a little bit slower, too. So, who knows? Okay. Here's another question. Yep. What if there is no SaaSpocalypse?

What if we just call it off? Let me set this up. Is an analyst at Guggenheim? Do you know this guy? Do you read this? No. It's an analyst at Guggenheim who wrote, I think he saved the sector this week.

Guggenheim analyst, this is Barron's. John DeFucci says... Cool name. Yeah, totally. Says there... Where was I? Okay. Guggenheim analyst, John DeFucci says,

now is the time for Wall Street to take advantage of the deep software sell-off, despite those AI fears, historically low valuation. You could write the thing with yourself. Quote, we believe traditional software companies will at least persist, if not continue to grow at reasonable rates in many instances. but they're trading as if they will not

making one of the best opportunities for patient investors in our careers. We view AI's technology paradigm shift. The leaders of the new paradigm are typically not the leaders of the last one. At the same time, there's significant staying power in enterprise software. He upgrades, what are the upgrades?

Service now, maybe work, I want to say workforce. I know there's a whole bunch of upgrades that came with that. The IGV is up 11% off. its lows from last week, I think, outpacing the bounce in the mag seven and obviously going in the opposite direction as the semi-NAI trade, which has been negative. Could this be the start of something more meaningful? Are we going to bring these stocks back to life from the dead? What do you

think? I hope so. And Oracle's not going in our direction. Besides Oracle, which of these do you like? I don't know what the other ones. I don't own service now. I don't own a work day. I worry that the feasibility of Salesforce and Adobe going forward, do you need that stuff? And the answer is I don't think so. I think Salesforce Workday and ServiceNow, in my mind anyway, the three big, big, big SaaS teams that trade together. Adobe's a little bit different, but same idea.

But Salesforce, I don't know, man. Well, here are those discounts. Service now, 22.9 times earnings expected over the next 12 months. You can get to Microsoft. It's the same time. The five-year average had been, It's a different five years. The five-year average had been 55 times.

Salesforce 11 times forward. The five-year average had been 30 times. So how about this? What if this is nothing to do with the SaaSpocalypse due to AI? It was just a reminder to people that they were paying too high multiples for these businesses. And that's the thing that's getting normalized. Maybe there's too many of these companies, too. Maybe there's too many of these companies.

And maybe we're going to see some consolidation there. Yes. Oh, right. If growth for a decent number of software companies starts to stabilize and then perhaps accelerate into the end of 26 and 27. Salesforce growths will not accelerate. Then the AI death knell will not be as loud, even if it doesn't go away. We expect names currently trading as if they'll decline into perpetuity to start to trade as if they'll at least be stagnant, if not grow modestly. It's not going to end well from a lot of these stocks.

What about, do you think, are you hearing anything about money, maybe some of the accelerated downtrends in Microsoft, because it's easy to trade on Microsoft because of liquidity, because they're chasing Micron, chasing Intel. Don't you think that could be some of that? Totally. Josh has a big money comes out of things goes into other things guy. Oh, anytime I see something going up, my first instinct is... Where the money come from?

What did they sell? That's just the way my mind works. Well, you have to, right? versa. When I see something selling off, where's that money going? I just, I know it doesn't work that way, but I think that way. No, I understand conceptually the money could literally do anything. Right. It could go to pay the plumbing bill. I'm just saying, I think that way about when I see everybody piling out of software, of course the semis went up. What were they going to do? They're going to go buy regional banks. He's right. In 26, it's binary. And the best hedge for,

If you're worried about the AI trade, buy software as much as you want. Wait, if, oh, if you're worried, right, because... Anytime the AI trade has a hiccup. And I'm talking about the now out of the price, whatever, software rallies. Every time. Now, software is rallying less and less and falling more each time the trade reverses. Yep. But...

What do you do with Netflix now? I'm in this, I'm in the stock. Hold on. My average plus 93. Let me set this up. This actually happened this week. I swear to God, I'm not making any of this up. All right.

said to Josh and Ben, Netflix, Netflix, Netflix. So Josh and I both own Netflix. You like to reveal my private slacks? No, it's mine. It's mine. So I bought more when it was up 5%. I sold it the next day.

So a day later, it fell 3%. I said I'm taking my other half off. Good trade. And I'm going to buy it back if it rallies 3% tomorrow. The next day, playing it like Buffett. And I swear to God I did. I added more. I said, never mind them selling it.

And I added back, and now I'm back. Full position, let's go. It's the bottom. Do you want to hire Michael as a trader? Yes. Listen, when I'm wrong, I admit it. And I can be wrong every single day. I don't care.

I own it. What do we do with this thing? I hold it. I hold it. Cowards. You buy after it goes up and you sell after it goes down. Do I have to teach you guys everything?

We own it in three portfolios, four portfolios. We've owned it all the way up and all the way down. We add it to value two months. ago because I think... This stock gets killed every four years. Yep. This is just one of those times.

It always comes back. Better. Could that, well, that, could that be different this time? Cash content and consolidation. Cash content and consolidation. This is what that whole sector is about. And I think now given what Comcast is doing

and you're going to spin out, I think there's going to be more consolidation the next couple of years. Netflix is going to be the winner. Oh, wait. It already won. This is different. The threat this time is way different.

They don't think that they won because they think this. HBO combined with Paramount is a more plus sports rights is way more committable than anything Netflix's face. Netflix one. If you look at the viewing time, nothing is close. YouTube aside. So in 2022, when the stock got killed, subscriber growth went negative.

And they had a very easy lever to pull, which was, okay, let's just make people actually pay for their subscription. Add support plus password share. Okay. They did that and it worked. but now is like the dragon like YouTube is the final dragon and I don't know how they beat YouTube

like so I own the stock but I think the challenge this time is way harder than any previous overhang the stock has ever gone through because they already did win like they are they did win content so they like HBO and Apple give me a break I don't think they beat YouTube

nobody watches Amazon they're not going to beat YouTube but YouTube is the one when they when they made the bid for Warner all of a sudden in the narrative around Netflix having won the streaming war changed to, wait, why did they think they needed to do that? Because they're not an acquisitive company. There's a billion, there's a million different film libraries that have been floating around out there. Netflix never bought anybody.

So now all of a sudden, they're going to do it a massive, one of the biggest media deals ever. And I think people said, why do they even think they need to do this? The stock falls. Then they lose the bidding war or they pull out of the bidding war it just gets too intense warner's going to win anyway because ellison his best friends with trump blah blah blah blah blah so they pull out the stock bounces yeah and everyone says myself included because i'm another asshole finally they pulled out of that dumb deal that they should never have been involved in the first place same stock bottomed had a furious rally and then that whole rally falls apart because i told him at second derivative. I think there was

a later reckoning on the part, because nothing fundamentally has changed with Netflix since then. This is all sentiment. There was a later reckoning where people said, oh shit, they lost Warner. Now, they're facing Paramount Warner plus YouTube, plus Disney, and

what are they going to do for growth? What are they going to do? I think the street will react differently when they make a run at NBC. universal, which they will. I think the street likes the idea of Netflix getting into parks. It's a great

business for Comcast. Great business. And that film library is top three film libraries on Earth. And there's a lot of things that Netflix can do to extend those brands within it. So I actually think the stock could rally if they make a bid and it looks like they're going to win.

But they're not going to grow subscribers. So that phase of the life is over. And Netflix... Add the peacocks subscribers. I'm saying. Okay. But this is a message, this is what happens. The investor base is transitioning from growth to value to people like me who buy it and sell it and buy and sell it. You're the new investor base.

But that's what's happening. The story is changing and it's a new investor base. And yeah, the stock is like cheap, but because it's not going to grow the way you used to. Do you own in your value portfolio? Yeah. Okay. Yeah, I added it. Is that where you first bought it or transitioned into value?

So it's Michael's right. Yeah. Like that's the process. No, we own it in our tactical, our focus portfolio. And then we also, we added it a brand new position in our value. One of the other issues with it is too big to get bought by anyone else. So it has to be an acquirer. Anyway, Brian, I know you don't care about this.

J.C. would. Look at that false breakdown, hopefully. Yeah. Hopefully. See how false it was. I just think, I think communication services are going to be the surprise sector, the second half of the year. I really do.

But which ones? Netflix, AT&T. Nobody likes Disney. Spotify. Spotify. I love Spotify. It's a great product, too. But it's the same thing.

It's YouTube. Spotify and Netflix have a very similar chart. They tend to trends in the same direction. Both great businesses with huge subscriber bases. Do you think Google breaks up and YouTube being on its own? Never. No. Why would they?

No, there's a better chance that they spin out Waymo. They're not going to spin out YouTube. It's a cash cow. It's just Waymo. Waymo should have its own board of directors, its own CEO, its own. its own capitalization. But what they'll do with Waymo, which will be really smart, is they'll bundle it with Google Maps for the consumer. Oh, I like that.

So that. Yeah. Yeah. So because Google Maps, I'm guessing it has a billion users. I don't know. Let me ask you this. Mr. Belski. Worst stock in the world.

So in your value portfolio, would you ever? Nike's the worst stock in the world. No, it's not. Charter Communications. Oh. So charter. Bounced. Charter had a very good bounce the other day when Comcast announced that they're doing what they're doing.

And the stock gave it all back four days later. And this is a stock that isn't, I mean, obviously, obviously the cord cutting, it's in a secular decline business. What is the future? What is the best possible future for Charter? There's no. There's no bottom. So you're shaking your head, no. You wouldn't do it.

No. Too much debt, too much secular decline, just no. No. At no price. No price. It reminds me a, I'm not. This is the worst stock in the world. It reminds me of Boise cascade.

Oh, I remember that. In the early 90s. What is that? Oh, it was just a shitty chemical. Ended up. Ended up shitty. Yeah. Yeah.

Why does it remind you that? I just, I'm a hiccup thing. What's it going to do? I mean, in a value portfolio, you can look at, okay, debt to equity below one, earnings below them are. A lot of debt. Right? Yeah, that's gone.

So there's no PE to the rescue. Yep. No PE to the rescue. Where can they operationally turn this thing around? And then demonstrate operations. operate operationally that they can turn it around. You can blow up, blow up management, come in, say, you know, we're

going to focus on broadband, we're going to do this, we're going to go. I don't see that coming from that. I don't think they're smart enough. I don't think they have the right product. I don't, it's... And the people running these businesses. Well, the hypers are buying the satellite providers, and all of this is going to come from space.

And if Starlink in two years is offering broadband from space at competitive prices, that's the, that's the last nail in the coffin for all the companies that, quote, unquote, used to own the last mile. But no, it's interesting about these names and not to twist, you could twist your head in a pretzel. Somebody's buying these stocks.

I mean, somebody has to own them. So what's going to happen? I mean, you think about this. So what's going to happen with T-Mobile, AT&T, Comcast, and the new Comcast, right? Yeah. And Verizon. What's going to happen? Look at AT&T.

What the hell just happened? Somebody will eventually let there be more mergers, but, There might have to be a lot of damage first. A lot of damage. Because Team Mobile was eventually allowed to buy Sprint. Yep. And the regulators stopped that for a decade. And then finally, they realized either these companies merge or they won't make it,

and you're going to end up with a duopoly anyway. That's, I mean, that's now. That's where we're going. And maybe that's what our airlines are going that way, too? They sort of have. It's Delta, United. And Americans are great. We own American in our small midcap because I think.

Well, they start. So this is what's. funny about the airlines. They stopped JetBlue from acquiring or merging with Spirit. Then it went out. Then Spirit just goes away and you know what happens? Delta. Delta takes all the routes. So what did you accomplish?

By stopping, I don't even understand the logic. So you don't have an extra airline. That's not what happened. No. What happened is those routes went to a bigger player. Brilliant. Great practice of antitrust law. So

at a certain point, if these If these cable companies shrink, the users shrink, yeah, I guess they'll all be allowed to merge. And then somebody might want to be the buyer of one big, fat cable company. Maybe. John Malone. Yeah. All right. Nobody wants this sucks.

All right. So before we, in conclusion, in conclusion. What opportunities did we miss? What else you excited about for the second half of the year? What names have you been buying lately? Tell us what you like. You know, you're not supposed to have a favorite child, but I've got one of, I love the smid because you can play themes and play fun kind of stories. Like, I own this company called Acuity.

Acuity makes the tiles. Hang on, Michael just bought and sold it. That's true. For data centers. That's good. Well done. So they make the, on the ceiling, between the ceiling and the top, very top of the building, that's where the wires are. Oh, okay.

So the acuity makes the tiles that keep everything cool so your wires don't... The wires are in the ceiling. Yeah. And acuity is cooling them. Yeah, from the tiles. Oh. Okay. Yeah, there's stuff like...

There's a lot of stuff like that. It's cool stuff like that. Just, I mean, thematically. Or like this, we bought this small cap bank in western Pennsylvania called FNB. Another regional thing that, you know, takes advantage of where people are moving to. Right. Yeah. Names like that.

So we do this. We do this column for CNBC called The Best Stocks in the Market. I heard of it. They might have mentioned it a few times. But one of the things that I love so much about it is it forces me to look at names like what you're describing. I would never come across because other people on TV don't talk about them. Their charts look great, which is how they end up on my radar. And then as part of doing the column, Sean and I dive into the story.

And it's like, oh, shit. Is a company that actually makes that? a company that made janitor suits or something like that custodial suits oh uh uh ventas um there are businesses there there are like businesses that do things that you're like that's a public company holy shit all time high vtr yeah yeah umphanol is one of the biggest winners of the year yep aph i would never have heard of that if i weren't writing it up last summer it's just like a a signals company that had so many lives before i was even invented i think i It's like a hundred-year-old company.

Wait, hold on. Give you some credit. When's the last, first time you spoke by this, this Ventas? A year ago. Dude, that's all that. That's all that's, that's my point. And these are Smiths. There's information. They're all Smiths.

There's information in price. A lot of it. So, Michael, how many publicly traded companies now in the United States? 3,500? 3,800? Okay. So when we're basically talking about five or 10 all the time. Yeah.

Think about the others. Yes. Right? This is like we were talking stories. That's how I grew up in this business. stock market is the greatest country in the world. We've got the greatest companies in the world. Right here, all these amazing stories that people don't even know about. And so that's where I'm excited about still being bullish about the United States and bullish about the markets and there's

different things. But yeah, we have to address what's happening in large-cap land. But we also have to think about, you know, dividend growth investing and value investing and small-cap investing because I do want to think differently, and I want to be positioned where people are not, but you're not going to be different or contrarian to be an asshole. You can be contrarian if the analysis backs it up. So that's why if you take a look at these stories or these

companies or these themes or the regions that they are, I don't think people think like that anymore because we're so focused on invidia. Yeah. All the time, which is in an 18% drawdown from the tie. Thanks. I'm long. Life of life. I am too. I'm there.

Belski, do you have fun on the show today? No, it was terrible. I mean, it's terrible. Every time I come here, it's terrible. You know we do our best. Thank you so much for the score. You guys. How do advisors find you if they want to loan?

Yeah, so I want to sell your, I want to sell your stuff now. So catch us up because we had you on as you launched the new company. Day three. It's amazing. And it's been eight months. You guys are launching things, announcing things. I'm so excited for you. Tell the audience if they want your research, your product, your asset management.

How does it all work? So what we do is different than everybody else. We are a model provider. You skate to where the puck is going. Exactly. No, we know. Thank you. Thank you so much.

Just like Wopper gives me shit about. Humulus. Humble. Anyway, so we provide a model. We do not compete with our clients, meaning we don't compete with X, Y, Z, brokerage firm. We provide XYZ brokerage firm or XYZ RIA with our model on the Focus portfolio. And they trade it?

And they trade it. They trade it themselves. You give them the buys and sell. and they enact it. Correct. And if they say... It's a great business. I don't agree with your 2.5% position in Spotify.

I'm not going to buy it. Well, that's your description. Oh, so they can customize. They have ultimate discretion. All right. Okay. And so we've got great partners in Canada where we have three North American ETFs and one mutual fund.

And then we have three North American portfolios in Canada. Basically, they're combined to the U.S. in Canada. In the U.S., we run five separate S.M. A is a U.S. focus, which is 46 stocks to beat the S&P 500. We also have an ETF under that, too, ticker symbol HIS. And we have a U.S. large cap value. We have a U.S. dividend growth, U.S. smid, and then an all cap, which is the best of the $1,500.

So the best focus of the best smid. So it's mostly, it's mostly models, and then a couple of ETFs where people that are not in the models can buy that. One EF in the U.S. and three in Canada. Okay. And we'll have more coming in the U.S. as we continue to grow. We're very blessed and fortunate we have, I think we're going to be close to 500 million AUM. Amazing.

And then we've got, you know what the funny thing about running around? You did that in under a year. Yeah, but you know what the funny thing is you always want, you're talking to these people, I'm going to give you $100 million, $200 million. Okay. Yeah, no, they're not. No, they're not. I mean, come on.

That's where you wake up at three. You need a three-year track. You know what you know. I know, I know. It's a long game. Chugga, chugga, chugga, chugga, but we, I've got an amazing team. But you have fans at brokerage firms and at RAAs all over Canada, all over the United States, and they have been waiting. They've been waiting because...

For the BELSI model. Yeah, because I was in... I was at BMO for 13 years, and I was in... But I was a strategist and analyst in the United States for 23 years before I went to BEL. So they kind of kept me under tight corners at BMO. So we've been really excited to be out in the U.S. marketplace. Are you having fun? Yeah.

Okay. It's fan... I mean, it's... Because you're building your own... thing now. It's mine. And it's kind of like that line from Braveheart when the guy, the Irish guy goes, yeah, it's my island, it's mine.

Yeah, yeah. It's, um, it's part exciting and excruciating. And you wake up at 2 o'clock in the morning, am I going to make payroll? Don't have to tell me. Look at me. I mean, come on. When you were naming, when you were saying my bio,

CIA, founder, CEO, like, I'm chief bottle washer too. You don't know you're everything, but not forever. Yeah, it's amazing. And I have a great team. and we've got some great platform partners here in the U.S. and Canada, and we're really starting to climb on the assets and performance is helping. So we're rolling. I'm so proud of you.

Thank you. So happy for you. Ladies and gentlemen, Brian Belski. Thank you guys so much for listening. Thank you for watching. Have an awesome weekend. We'll see you soon.