The Compound and Friends - It’s Time to Buy Value Stocks Now

Episode Date: August 29, 2023

On this TCAF Tuesday, join Michael Batnick and Downtown Josh Brown for an all-new episode of What Are Your Thoughts and see what they have to say about: Grayscale's legal victory, Goldman selling its advisory business, earnings revisions, value stocks, Nvidia, the Instacart IPO, and much more!! Thanks to Tropical Bros for sponsoring this episode! Use code COMPOUND20 at checkout for 20% off on everything they have, Polo's, Hawaiians, Swimsuits & quarter zips: https://tropicalbros.com/collections/animal-spirits Watch this episode on YouTube: https://youtube.com/live/lrFYNYOTpKE Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com 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. Wealthcast Media, 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/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to The Compound and Friends. It is Tuesday, August 29th. Somehow, this is maybe the fastest summer ever. Do you feel that way? Maybe I feel that way every summer, but this one really seemed to have gone quickly. And it was a good summer, and it was a good summer for the markets,

good summer for bonds, good summer for stocks, great summer family-wise, got to do a lot of cool stuff, and I hope you did as well. Got my kids back, and they are in orientation already for school. So here we are. I wanted to do a little bit of housekeeping first tonight. First of all, there will be no new episode of The Compound and Friends this Friday. We are taking a show vacation. So Nicole will be off, John, Duncan, myself, Michael. I just want to give everyone a chance to catch their breaths, their breath, their collective breath. We have done some incredible shows over the last few weeks, few months. It's just been a wild run of just great guests and unbelievable content and

got to take a break every once in a while. But you'll have tonight's episode. We're going to play What Are Your Thoughts with Michael Batnick. We're going to get into the Grayscale News. They won their lawsuit against the SEC and it looks like SpotBitcoin ETF has just gotten that much closer. We're going to talk about how quickly Goldman was able to find a buyer for their personal financial services business. And we're pretty close to that story. We will talk about NVIDIA. Yes, again, we'll talk about earnings.

We'll talk about stocks, all the usual topics. We'll talk about earnings. We'll talk about stocks, all the usual topics. But if you miss us over the weekend and you wish there were more, this is what I would do. Go back and look at the last, I don't know, six, seven episodes that we've done, The Compound and Friends. It's just, it's crazy.

We had Darren Revell. We had Michael Semblist from JP Morgan. This is just back in July. We had Jack Raines, Sam Rowe, JC Peretz, Mark Fisher, Joe Terranova. Bob Elliott was on the show last week. Eric Balchunas, Jeremy Schwartz, Guy Spear, excuse me. That was last week. So we've had an insane run of guests.

And if you missed any of those shows, go back and make sure to catch up. And we will return the following Thursday. A couple of other quick announcements. If you are a financial advisor joining us at Future Proof, it starts September 10th, runs through the 13th. And I know a lot of advisors are coming there, a lot of firm owners, a lot of employee advisors, whatever your status is. If you want to meet the team, if you've always been curious what it might be like to work with Ritholtz Wealth Management or what we're doing with our

certified financial planners and their careers, talk to us. We are able to be reached hiring at ridholtzwealth.com. That's hiring at ridholtzwealth.com. The president of my firm, Jay Tinney, is personally fielding all of those inbound inquiries. And if it makes sense for us to say hello or have a conversation or whatever, I'm going to have about 40 people from my firm on hand at Future Proof, plenty of people for you to meet, everyone from your fellow advisors to traders to client service associates, research people. We're all going to be out there, so it'll be a great opportunity. I also want to bring up that on the compound media side,

we are still interviewing for the audio video role. So we're looking for somebody who edits audio, edits video, wants to work with the media team. It's a very strong team and growing, and we're doing more content than ever. and we want to give somebody a shot. And if we can find someone from within our audience, which is what we've been able to do up until now, that would just be incredible. So if you want to work with Duncan and John and Nicole and the whole team at The Compound,

the best way to get that interview would be hiring at redholtswealth.com, and we would be happy to talk to you there. Okay. I want to wish everyone a happy Labor Day. Stay tuned for an all-new segment of What Are Your Thoughts with myself, with Michael Batnick, and we will talk to you after the long holiday weekend. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion

of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. All right, gangsters. Who's ready for an all-new edition of What Are Your Thoughts? Starring me, downtown Josh Brown, and Michael Batnick. I hope you're ready. Here we come.

Duncan is here. John, Nicole, Sean, Rob, and a whole bunch of people in the live chat. Couple of shout-outs real quick. Michael Skyros is here. Dave Wilson. Rachel's back. Who else? MD is here.

Chris Hayes. Let's see. We got a whole crew here. Rooster. What's up, man? Ryan Blood. Good to see you. Nick Kaspersky.

All right. We got a full house in the chat. We have tons of stuff to talk about. We had some breaking news today. We redid a little bit of the chat. We have tons of stuff to talk about. We had some breaking news today. We redid a little bit of the show, but before we get into the biggest topics in the markets and investing so far this week, a word from our sponsor. Michael, take it away. Today's show is brought to you by, where am I? Here I am, Tropical Bros. There you go. So Tropical Bros is known you go. So Tropical Bros

is known for their summer gear. Yeah. Oh my God. Look at those shirts. I've got one. I only have one of those. Oh no, I have the pot up on the left

and I've got that, the sweet, what is that, a daiquiri on the right? I've got that. I was going to say, I've seen you in a bunch of these. Yeah,

I've got so many. I love it. Everywhere I go, chart off please. Do you know, when I went to Bahamar, I was rocking one of those things. Crushing it. And one of the security guards or something said, welcome back.

I said, did we talk? Oh, the shirt. She goes, yeah, I remember you from the shirt. I remember you. I remember you from the shirt. So Tropical Bros and Us, Animal Spirits did a collab. And they sold out like two or three times, but they restocked. So if you were in the market for that – oh, God, look at that thing.

It's gorgeous. This is the Super Stretch Animal Spirits Hawaiian shirt. And this is the third time they've had to make more. Look at that. It's got the noob whale. Oh, man, it's beautiful. If you got locked out, they're back. Restocked.

Check it out. Use code COMPOUND20 at checkout to get 20% off. That's COMPOUND20. Check them out. Shirts of fire. I got to give it to you guys. If you missed the summer, they've got you back for the fall too. So love it.

All right. Very cool. So a couple of big news items that took place today and yesterday. Let's do Grayscale first. I think it's a big deal and I don't really care that much about crypto or Bitcoin, but this does not happen very often. So let me just read the actual announcement that Grayscale put out. GBTC lawsuit decision, and this decision is like years in the making, by the way. DC Circuit rules in favor of Grayscale. Today, the DC Circuit ruled in favor of Grayscale in our lawsuit challenging the SEC's decision to deny the conversion of GBTC to an ETF.

Here's all their fluff. This is a monumental step forward, blah, blah, blah. Basically, their fluff. This is a monumental step forward, blah, blah, blah. Basically, this takes us a gigantic step closer to an actual spot Bitcoin ETF. For those who have not been following this closely, very quickly, GBTC is a publicly traded trust. And like a closed end fund, it does not trade at its net asset value, meaning for a lot of its life, it traded above or at a premium to the amount of Bitcoin that it owned. For most of the last three years, it's traded at a substantial discount. That discount would go away if and when they got the ability to convert to an ETF, because then all of a sudden you would have market makers able to do arbitrage. As of tonight, that discount still

stands at 24%, which sounds huge until I tell you it was like 45% discount just a couple of months ago. Wait, Josh, one thing on that. The discount closed substantially today. I think Bitcoin was up like 5% and GBTC was up like 20. So that 25% you just mentioned is a day old. So we'll have new numbers, I think, in the next day or two. So maybe it's closer to 15 now? It's probably closer to 15, yeah. Closer. Okay.

So my big takeaway is, and I want to hear from you, Mike, this really does not happen very often. And the SEC has had absolutely no problem beating up on crypto boys for most of the last couple of years. This was a big one, though, because to some extent, it does legitimize digital assets as an asset class that can be owned by regular people in regular brokerage accounts. When you say this does not happen often, you're referring to the SEC losing a case? Yeah, and they lost 3-0. And if you read the language in the decision, it was almost like with extreme prejudice. They referred to the regulators as being capricious and arbitrary in their denial of the application to convert to an ETF.

I think I pulled that one out. They said, this is from the document. It is a fundamental principle of administrative law that agencies must treat like cases alike. The Securities and Exchange Commission recently approved the trading of two Bitcoin futures funds on national exchanges, but denied approval of Grayscale's Bitcoin fund. Petitioning for review of the commission's denial order, Grayscale maintains its proposed Bitcoin exchange traded product is materially similar to the Bitcoin futures exchange traded products and should have been approved to trade on NYSE ARCA. We agree. The denial of Grayscale's proposal was arbitrary

and capricious because the commission failed to explain its different treatment of similar products. We therefore grant Grayscale's petition and vacate the order. Credit to Bloomberg and the legal people. I think the guy's name is Stein, who's been covering this. Eric Balchunas told us on the Compound and Friends last week that this was very likely, this decision was likely to come soon. And Bloomberg was handicapping this in favor of Grayscale. At 70%, I think. Yeah, so they got that right. And BlackRock seems to have seen the writing on the wall when they did their filing out of the blue three weeks ago.

It was like, wait, all of a sudden BlackRock wants to file. They must know something. They probably figured out that with the Bitcoin futures ETFs getting approved, there were no legal grounds to say that this one couldn't. And I think that that was like – we were trying to figure out like why would they all of a sudden do this. That was why. They wanted to get in the queue not until it looked likely that an approval was near. They didn't want to spend three years fighting for this like Grayscale was willing to. So I think that was a big aspect of this.

So I think that was a big aspect of this. You know, if you're saying that it's an opaque market subject to manipulation and you're not comfortable with how that market operates, arguably those same flaws would show up in the futures pricing for Bitcoin. So like, you know, it almost it just got to the point where it didn't make sense anymore. And let's put up some reaction charts, John. So Mike, what are we looking at here? So the top is GBTC. The bottom is Coinbase, both up 15 some odd percent today. Bitcoin itself was up 6% or so. I'm surprised at the Coinbase reaction.

Maybe this is just like, this is not fundamentals. It's just like positioning and just buy everything Bitcoin related, which I get in the short term. In the long term, I would think that this is not bullish for Coinbase. I'm sorry. I think it's bullish short term for Coinbase because it takes a lot of the bearishness over legal outcomes off of the stock as an overhang. But long-term, I agree with you. Maybe that's worth 15%, the SEC overhanging. That's a fair point. Yeah, so it's not automatic anymore

that everybody in a lawsuit with the regulators is going to lose. That's what you're seeing in Coinbase today. But I agree with your bigger point, which is this is not going to add up to more retail usage of more retail trading volume in Bitcoin on Coinbase's platform. It's just not. 40% of Coinbase's revenue as of most recent quarter was through Bitcoin.

But revenue – but retail trading of crypto is like cut in half. Yeah, exactly. Retail trading of crypto is like cut in half. So we have the data. The trading volume in August of 2022 in the midst of a bear market was $57 billion. This August, it's $22 billion. I have a research report that came out today from Dan Dolev. He covers fintech for Mizuho. And Dan is saying the Coinbase rally is largely a knee-jerk reaction and short covering. However, the SEC losing a crypto case adds momentum to the prospects that

coin may prevail in its ongoing legal battle regarding altcoins and staking. He thinks that that's a bridge too far. And would be, it would be a mistake to assume that because this one went for grayscale, all of a sudden the regulators are on the run and all these plaintiffs and defendants are going to start triumphing, uh, over, over them. I do not think that you can read that much into today's decision. Um, but if there is a retail product, there will be 10 of them. I think the fees will be driven substantially lower. Maybe a Bitcoin ETF becomes a 25 basis point product inside of the

first couple of years, regardless of how much gets raised. A lot of the people involved with those ETFs will be people that would have, under other circumstances, been trading at Coinbase. You know what think on balance, it's not great for them. What Coinbase is still going to have, and if Bitcoin does go on another bull run, whether it's up against today or three years or I guess never as an option too, ETFs obviously don't trade 24-7, right? So a lot of the hedge funds, a lot of the institutional investors are still going to trade the coins on Coinbase. Absolutely. Until the exchanges permit 24-7 trading in ETFs, which I think is coming in our lifetime. Robinhood does it already.

Yeah. Not for all of their products, but for a lot of them. Until that goes wider, you're right. That will be the part of the market that they will have. And maybe that's worth the 16% rally today. But I think by and large, they're not anyone who's large and under regulatory scrutiny in the crypto market. I think that's fair to say. It's a positive. It may not long term be a positive. But today, these guys feel like, oh, my God, we got one. Like we finally won one.

And I know a lot of the ecosystem despises DCG and they don't love Barry and maybe they don't love Sound and Shine, but like they have to be like texting these guys like congratulations. Well, interestingly, so what is it? There's $16 billion in the product. Yeah.

At 2%. Yeah. That's a lot of money. It's like 300 something million dollars in fees, 320 million dollars in fees. At 2%. Yeah. That's, that's a lot of money. It's like 300 something million dollars in fees, 320 million dollars in fees. So it's funny they won. But their fees are going to go from 300 million down to a lot lower than that. Now they're going to, congratulations, you won. Now you compete with BlackRock and maybe if you're lucky someday Vanguard. Yeah. Yeah.

Yeah. That's the prize. Hey, congrats. You're an ETF now. Best of luck. Although I do wonder if the ETFs come out, how much money – how much of a first mover advantage do they have? I don't know. The first mover advantage is a myth.

The first mover advantages existed from the days where ETFs were born. Wait, hang on, hang on. The money that's in GBTC that has a gain is obviously not coming out. That's not coming out. You're not paying taxes to go. But on a go forward basis, I would venture that most people are going to choose BlackRock or something cheaper than GBTC. Doesn't GBTC, as per the language of the trust, have to give you your Bitcoin in kind if you request it? I don't know. If they're a certain holding, maybe that goes away when they become an ETF. I mean, that was a huge part of the trade, right? What would you say to people who are right now spending all this time and money for the last few years, trying to build like digital brokerage solutions for, for crypto assets. Would you basically tell them you missed

it? Like, like, like pencils down. I would. For the most part, there's, there's still a large crypto native contingent that is going to want to hold the coins. But large, large in real life or large, like on Twitter? No, I don't, I don't think it's large. I think that that's probably not a great use of people's time going forward. If this stuff is going to be really easy to buy and sell in a brokerage account,

we don't need digital asset based accounts. There already are a few. We don't need new ones. We don't need more. We don't need that. We don't need things with new connections to whatever. Like people are just going to buy – if they could buy it at Schwab Fidelity, that's what they're going to do. That's Morgan Stanley.

That's my opinion. All right. Let's talk about Goldman. So it only took like a week for them to find a buyer for personal financial services, which was the RIA business that was meant to cater to the mass affluent. And that was, I don't know, 100, what did we say? What did we say it was? It was like, it was like 230 financial advisors originally.

It's probably much smaller now, 23,000 clients, probably not that many anymore, but still a substantial business in RIA terms, maybe not in investment bank terms. But anyway, our friend Peter Malouk won the deal. I know you congratulated him earlier. I think it's pretty cool that he's the one buying it. He actually knows how to do the RIA business, very different operator than the people at Goldman who were, I think, guessing at it. And I would argue, like, if you think of the Mount Rushmore of RIA builders, he's on there. Like, it's him, Joe Duran, who originally sold –

Edelman. United Capital, Edelman. And who's for? Ken Fisher? I guess. He's the biggest. Yeah. I'm just saying, size, not – right?

So anyway, Peter Malouk's $245 billion firm. He really – here's what's interesting about Malouk. Here's how good he is. He is not one of these firms that's been rolling up RIAs for the last 20 years. He made his first acquisition I read in 2018. Did you even realize that? Yeah. And I don't think he has any private equity money. He does. General Atlantic. But I think that private equity money was- Was it in the last two years or so? Yes. He had 100% of the business. He didn't have employee shareholders and he didn't have private

equity. At a certain point, you have to take some of your own risk off the table. He didn't have employee shareholders and he didn't have private equity. At a certain point, you have to take some of your own risk off the table. So I think that's the role that private equity fulfilled there. And then also probably like, here's a whole bunch of growth capital. And since then, he's been buying accounting firms. He bought one last week too, another one.

I think the first one was Minnesota. Yeah, buying RIAs. So listen, I think this is a good situation for the advisors and their clients. Oh my God. This is so much better than, this is so much better

than like LPL or Raymond James. No, just because it's an RIA, not because I have any, I have no problem with anyone. I'm saying it would have sucked more if they were sold from one brokerage firm to another. Do you agree with that? Where there could be potential conflicts.

Yeah, of course I agree with that. Right. That's all I'm saying. I'm not disparaging anyone. This outcome is better because it's an RIA again like the original. All right. Anyway, we spent a lot of time on that. Just wanted to tie a bow around it. You're up. Okay. So congratulations, Peter, and all the advisors going and clients

going with them. All right. Willie Delwich had a good tweet. We're talking about earnings revisions. Willie said, if building a case that August equity market weakness is likely to be limited in degree and duration, then you probably like what you see from the earnings revision trend, which is still up and to the right. So on top, you've got the S&P. On the bottom, you've got the S&P 1500 earnings revision trend. I don't know what that yellow line is. It looks like some sort of moving average around it. But this is a good thing. Next chart is saying the same story. What do we got? Okay. This is the S&P 500 correcting in price as forward 12-month earnings estimates go up. This is about as healthy and as bullish as something that you would want to see.

Is there a danger, though, that price continues lower and then those earnings revisions turn around and follow it lower? Because I feel like that is a way that this could resolve. It's not impossible. I mean, yeah. You're so complacent. Super complacent. No, I like it. Actually, to me, I'm complacent.

You see where the VIX closed today? VIX closed at 14 and a half. I saw an amazing tweet before we hopped on from Frank Capillary. Within the S&P 500 today, technology, materials, and real estate, 124 stocks up. So again, technology, materials, real estate, 124 stocks up. So again, technology, materials, real estate, 124 stocks up, zero stocks down. So today was the strongest three-day rally since March. Did I miss something? Why were stocks up so much today? Was it just rates coming down hard?

I think the real question is, why were they down so much? I think we had to get through earnings season with all these sell the news reactions. And now that that's over, it's like, why were we selling? If earnings estimates going up, why were we selling the market down? Well, because I mean, it was just to sell the news. It wasn't very complicated. The Nasdaq was up, hold on, the Nasdaq was up 38% year to date going into earnings season. So it gave back what? A nickel? Big deal. I know we're going to talk about NVIDIA momentarily. How much of the revision upward in earnings is coming from that stock? Like, is it?

I'm sure it's- You know what I mean? Yeah. You know, people were like dunking on NVIDIA. Oh, that's all you got. It blew out and it was flat on the day. Yeah, listen, I get it. See, at 500, Papi Chulo.

I get it. So I don't know. So, okay. Anyway, but it closed at all to mine today. So speaking of NVIDIA, here's why value stocks are poised to outperform. So I have not bought into a lot of the value rotation hype over the years.

It always fails. It always resolves lower. I'm probably going to say the same thing again after going through this, but it's worth considering. There was a lot of excitement in Quantland when Vanguard put this out. Vanguard does not do this value versus growth thing often. They're an index. They're predominantly a low-cost index solution. And the DNA is Jack Bogle telling you to own the market,

not own slices of the market. So this is not their religion. But they point out that the degree to which growth has outperformed value, coupled with the degree to which the fair value of growth stocks has advanced versus the fair value of value stocks. I'm sorry. You have to put an air quotes around fair value anytime you say that. Yeah, fair value is most, by the way. I don't make the rules. Right. So let me give you the footnote right in the middle of the text. Fair value is fake. Everyone's got their own definition, but it's a way to try to calculate. Let's say nobody was

buying and selling the stock. What would it, like, what should it be worth? But it's very subjective how you run that calculation. But anyway, let's go through this stuff because I thought it was interesting. So the first chart I'm showing you here, this is Russell 1000 growth ETF, obviously in purple versus Russell 1000 value ETF since the start of 2023 growth up 31%, value up less than 6%. It has been a route, an absolute route. Next chart, please. Wait, how are growth stocks up 31% when I could get 5% of my cash? Yeah, right.

I asked Sean to take this back to the bottom in October. So same story, growth up 36%, value looks a little bit better, up 17%. So value had this really big recovery off the October lows, as it always does. At the start of, you know, when people start sniffing out the next expansion, value tends to outperform. At least that's what the literature says. So we did that part. And then like it never happened, the banks went down for the count in March. Big part of the value indices, oil stocks sold off too. And then before you knew it, Apple, Amazon, Alphabet were breaking out again. So that's what happened there.

But let's get into what Vanguard says. This is Kevin DiCurcio, who is the head of Vanguard Capital Markets Model research team. The value growth relationship is at an extreme, very similar to 2020. Now, as then, investors in aggregate are very enthusiastic about growth, notably tech, seem to have limited interest in value, including financial, industrial, and healthcare companies. Not that those sectors always have to be value stocks. They just tend to be. Kevin says, when the historical actual ratio exceeds the upper limit of our estimated fair value range, the chance for market beating returns appears to be larger in growth stocks. When that ratio is below the lower limit of the range, such opportunity appears to be larger in growth stocks when that ratio is below the lower limit of the range.

Such opportunity appears to be larger in value stocks. Let's put that chart up. Mike, do you understand what this is showing here? Just like the low, the high, and the prediction ratio and how much we've deviated so right now the deviation from fair value is 51 percent uh for for value stocks uh versus growth stocks so it's it's as low as we can see going back this is i guess almost 45 years worth of data this is as as oversold relative to fair value as value stocks are relative to growth stocks, which is a fancy way of saying that these stocks are even cheaper than they are normally cheaper than the overall market. Is that the best way to explain that? Yeah. So in 2020, based on various metrics,

glamour stocks, meaning like the top decile of expensive stocks, were even more expensive relative to the bottom decile than they were in the top in 2000. So that corrected, right? We had a pretty nice snapback rally in value. Well, here's the number. And it's since rolled over. Right.

So you had this record undervaluation in 2020. Everybody wanted to own the stay-at-home stocks, which were tech growth stocks. They sold everything else. In 2020, that preceded a return advantage of 46 percentage points in 20 months. So value stocks had quite a rip from there relative to the growth side. The same thing happened in 2000, where I don't know if we still have that chart up, 2000, where I don't know if we still have that chart up, but we had an instance of value outperforming growth by 59 percentage points a year after this moment in the year 2000.

And then the other one was 1993. Value stocks had underperformed growth by eight percentage points. And then on the way back up, it was a three-year rally for value. So, but here's what I want to point out. It looks like lower lows. Like value stocks have these raging rallies versus growth. Well, definitely lower highs. Lower highs. Lower highs. They never quite get back.

So, this is now 40 years of value, I think, declining relative to growth in overall terms, despite these big rallies, which is why you were, uh, chart off. You were joking with, um, with Guy Spear on the podcast last week. Like what is a value stock these days? And you're like somebody who underperforms like convince me this is going to change anytime soon. It's like, it's decades of this, of, of this, uh, underperformance. Well, it's not, it's decades of this, of, of this, uh, underperformance. Well, it's not, it's not decades because value stocks did outperform in the aughts. Not the aughts, the zeros. 20 years ago. Yeah. It's 20 years ago. Shit. We're old. We're old. I'm just saying, uh, anyway, I thought, I thought I would throw that up. All right. Here's one last

thing. Let's get this table up. So Vanguard is saying like there is one type of situation where value historically shines. If you break the state of the economy into four buckets, expansion, slowdown, contraction, recovery, it's recovery that value tends to put on its best, has its best return advantage, I guess is the way to say it, versus growth. But in all three of those other phases, it's really either a push or not as good as growth. And to me, that's like should have been the real message. Like, yeah, you might make money with a value bent for a little while, but overall, growth stocks are just trouncing value stocks in most economic environments.

John, throw up the chart that I have on the bottom, please. So the one before that. Thank you. So the top pane is showing the Russell 2000 value divided by the Russell 2000 growth. Russell 2000 value divided by the Russell 2000 growth. This had a massive rebound off the 2020 lows and gave back some, but not nearly all of it. The Russell 1000 value divided by the Russell 1000 growth gave back almost all of that. Chart off, please. This is not complicated. I don't care about the economic environments and this and interest rates that, and inflation. It's very simple. It's Apple. It's Magnificent 7. It's not complicated. It's really hard for value stocks to outperform the best companies exceeding the most wild expectations that we've ever seen. That will not continue

indefinitely. It just won't. So I can't tell you when, how, or why that's going to change. But the next chart should give you a clue that it can't last forever. or why that's going to change. But the next chart should give you a clue that it's not, you know, can't last forever. This is- Look at this. This is the Magnificent Seven percentage of total US single stock net exposure.

This is the names that everybody knows and loves. What is it? It's 20% of total US single stock net exposure. So if you own, I don't know if I'm saying this right, but if you own a stock, there's a one in five chance that you own one of these seven names, which actually kind of sounds low, to be honest. Like who, so, all right, let's blend this into the next topic.

We're going to talk about NVIDIA. This chart blew my face right off my face. Try it on, please. I mean, holy moly. Yeah, look at this. What is going on? All right. So this is NVIDIA's data center revenue per quarter.

All right. So this is NVIDIA's data center revenue per quarter. And up until 2021, it was about a billion dollars, half a billion to a billion dollars. And this is data center revenue alone per quarter. Is that the GPUs? Is that like in video games. That's another segment. The data center is cloud or Jensen Wang calls cloud computing accelerated computing. But it's basically data center is Amazon Cloud, Microsoft Cloud, Google Cloud. But it's their chips. Sales of NVIDIA GPUs. Yes, but the chips go elsewhere, not just data centers. Sales of GPUs to the data center went from a billion to 10 billion per quarter overnight. Unbelievable. So I recreated this chart from Visual Capitalist. Next chart, please. We're looking at NVIDIA, AMD, and Intel. AMD and Intel are competitors,

Intel not so much, I guess. But just look at the blue. And then the next chart, the quarter over quarter growth, it's truly absurd. 140% quarter over quarter growth for data center revenue at NVIDIA. It's like a brand new business that just exploded out of nowhere to become most of their business. So what's so interesting is that NVIDIA went through like a – NVIDIA blew up in 2022. It was down like 60-something percent. Remember what happened to their gaming revenue? Next chart, please.

Their gaming revenue got demushed. So the gaming revenue is in green. And look at that data center coming up at the rear. Holy moly, it's eating everything. So I want to tell you that the- This is from Ben Thompson, by the way. Baked into that gaming revenue is blockchain bullshit, which was a really big customer for NVIDIA GPUs. Huge, huge. Because linear processing sped up the mining process faster than CPUs, which is inline computing. All we're talking about, we talk about GPUs and accelerated or nonlinear computing. With a traditional CPU, the chip is carrying out one operation, then the next operation,

then the next. NVIDIA, through creating the images for video games, had to be nonlinear. A lot of things had to be happening at once to produce the images that you see on your screen when you play Grand Theft Auto. And that is the difference between Intel and NVIDIA, GPU versus CPU. Listen, when you're explaining something that's a little bit complicated, here's what Eddie Elfenbein taught me. Here's what you say. It's very tactical.

You probably wouldn't understand. It's not. So if I understand it, it's definitely not tactical. I think you know I've never been in a clean room before. I have not been to Taiwan. If I'm telling you how this stuff works, it's really not that complex. What's his tweet? Next chart.

All right. This is from Wasteland Capital. NVIDIA, never such insane upward revision forecast revision in my entire life. At the end of January, analysts predicted NVIDIA revenue for fiscal year 2026. Their fiscal years are weird, by the way, of $38 billion. Today, eight months later, they forecast $90 billion. That's insane. Current year has gone from $29 billion to $49 billion.

So, I mean, you don't see this. In fact, you've never seen this. So here's from Adam Parker at Trivari. Unprecedented. It has never happened. This would never happen at almost any other publicly traded company. How? How would it?

Has never happened. Listen, Adam Parker says, over the last six months, the consensus expectations for calendar 2024 revenue has risen from roughly $35 to $75 billion, the result of their May earnings,

which yielded, quote, the largest upward sales revision of any mega cap company ever. Ever. NVIDIA is forecasted to generate over $35 billion in 2024 free cashflow, meaning the company now has an over 3% free cashflow yield. This is in line with or better. So people talk about, oh, NVIDIA is so expensive based on price to sales ratio. But if you look at forward earnings, it's like 40 times, not egregious. So 3% free cashflow yield, that's in line with or better than 80 other mega cap stocks, including Texas Instruments, Microsoft, Walmart, Lulu, Costco, Oracle, and Chipotle, to name a few. Would it be fair to say that I'm a stock picking genius?

Would that be a fair characterization of what you've witnessed me do with this stock over the last eight years? No, you bought the gold miners a couple of months ago, but this is your best call ever. They don't all work, but is this maybe the greatest stock in the history of stocks? And we'll never see anything like this ever again, as long as we live. No, it's not. It's not the greatest thing you've ever seen in real time in your life? Not Berkshire Hathaway in the seventies. I'm saying, since you've been following the stock market, you have never seen anything like this.

I did a post today asking, is NVIDIA the next Cisco? And if you asked, the answer is no. In the five and a half years, so from 1995 through March of 2000, which is a five and a quarter year period, Cisco was up 4,000%. In the last five plus years, NVIDIA is up like 700. So it's been great. It's not even at Cisco levels. That's crazy. That's wild.

But I've never seen revisions like this. I watched the Cisco run too, just not the whole thing. I kind of came in at the tail end of it, but wow. Look at this next chart. So this is, again, from Adam Parker. So he's looking at 2024 expected revenue versus 2022 revenue. And NVIDIA is expected to go up 140%. I mean, this is crazy shit. But what's interesting, Josh- The next closest is Tesla, 49% two-year growth.

What's interesting is that the people, like mutual fund managers are not going gaga for NVIDIA like at all. So next try, what? They're all trying to find the next one because they can't buy this. I talked to these people on TV. They think Broadcom is the next NVIDIA. They think AMD. That's what the game that's being played right now. So only, this is interesting.

So only Apple and Tesla are underweight by active funds. But look at the relative weight of Nvidia. It's not like they're going nuts. They're more overweight Google, Amazon, Microsoft, and Facebook. Yeah. You know, you don't hear a lot of people screaming Nvidia is a bubble. You really don't. And the reason why is because there's a shitload of earnings and revenue growth to go along with the stock price growth. And people don't think they cheated. People don't think

that they like are issuing press releases about nonsense. They have been building this ecosystem since 2006, their software platform, CUDA software platform, they've been building this for 20 years. So you don't have people screaming about short NVIDIA. They didn't get the same scrutiny that Tesla got on the way up. Well, because they're delivering. I'm not saying Tesla did it, but they're delivering just massive, massive. No, but a lot of aspects of Tesla look like a trick. They were using these tax subsidies to sell more cars than they ordinarily would have.

And then like earning – they were getting earnings from trading tax credit. There was a lot of aspects to the NVIDIA story where they were getting money from the government for facilities that people just – and people hate him. Well, guess what? You don't hear that with Nvidia. Nvidia stock is not going up 15% because they're issuing more shares or doing a stock split. This is not like any trickery going on. And what are they trading at 25 times earnings? Like legitimately. Let me get this in. Is it 20 times? What is it? I'm going to tell you now. This is Barron's, expert trollery from Barron's. This is the headline, which you know is designed to trigger.

Nvidia stock hasn't been this cheap since January before it rallied 250%. If you liked Nvidia then, you should like it now. Shares have surged this year, blah, blah, blah. They say the forward price earnings ratio, which measures a stock's current price value to earnings in the future, shows NVIDIA shares are now cheaper than they have been since January 5th.

Even though the stock's up 250%, this is the math. Given the outlook and the company's earnings, the forward PE as of July 31st is for earnings of $7.95 a share and $11.53 in fiscal 2025. Those numbers were $7.95 and $11.50. Then they reported earnings. Right after reporting those earnings, those numbers went to 1060 and $16.50 a share for 24 and 25. So Nvidia's forward PE has moved lower. It was 43. It's 33 now. So that's 30 times. Right. So it is. It's cheaper. The stock is cheaper than it was in January after going up 250%.

That's craziness, but it's true. One more thing. Wait, John, throw this chart up. The percentage of large cap long-only active funds owning each ticker as of the end of July. So more people own Google, Apple, Tesla, no, I'm sorry, not Tesla, Google, Apple, Tesla, and no, I'm sorry, not Tesla. Google, Apple, Tesla, and Amazon than they own NVIDIA. That makes sense to me.

They've been larger for longer. Yep. Talk to me in three years. We'll see what that looks like, right? This is from Gunjan Banerjee. We reference her a lot. She's one of our favorite reporters at Wall Street Journal. She says it's lonely being an NVIDIA bear. And she says, equity analysts have an increasingly

sunny outlook on the stock. In fact, none of the stock analysts tracked by FactSet have a sell rating on NVIDIA. Quote, for the first time in the stock's history, there are zero sells. on Nvidia. Quote, for the first time in the stock's history, there are zero sales. And for the first time in the stock's history, more than 93% of the analysts have buys, wrote Michael Purvis of Taubakken Capital Advisors in a note to clients today. So not only are there no sales, there's almost no holds. 93% of analysts calls are buys. There's also no shorts. 1% of shares outstanding are sold short. There's no holds. 93% of analysts calls or buys. There's also no shorts. 1% of shares outstanding are sold short.

There's no shorts. I mean, be my guest. Step right up and short it. But they weren't blown out. There was never any shorts. There was never more than 2% of the shares were short. This was not a short squeeze. That's not right.

That is not the story. The story here is massive upward revisions to earnings and revenue multiple quarters in a row. That's the story. All right. Let's talk about Instacart. Are you excited for this IPO? I am because it's the biggest tech IPO we've had in a while. And how the street responds will dictate what sort of IPO activity we have going forward. I think it's very important. I thought we owned it through that fund that we have at EquitiesN, but it looks like they sold it. So we do not have any position in Instacart at all. Flat, flat. So for flat Instacart. All right. For people that are not aware, Instacart is a, basically,

they have their own delivery people and they have an app and their delivery people go into grocery stores and pick the items off the shelves and then bring it to you. And they make no money on that at all. All of the money Instacart makes is by Pepsi and other consumer packaged goods companies buying advertising space on the app to try to push consumers to their soda before they pick a different soda from the menu that's like most of the profits at instagram according to their s1 so it's i wouldn't call it an advertising business you just called instacart instagram but you might yeah i wouldn't call it an advertising business because it's – and this has been written up better than I can explain it. But it's a four-sided network. You have the supermarkets, which Kroger, for example, they love this because it's just more sales at their store.

Then you've got the users, people who are too lazy to go to the grocery store, which I'm sorry, I have to say it's very sad, but fine. And then you've got- You definitely don't go to the grocery store. Who are you kidding? I go all the time. And actually sometimes I insist because I like to look the butcher in the eye. Like I like to have a conversation about what's going on with the meat that I'm buying and I cook. You don't realize this. Of course I go to the supermarkets. I'm the one that cooks it. Nobody in my house cooks. Nobody in my house. I cook, I cook for me and the nugget. What do you mean nobody in your house? What, Justin's going to cook? No, I'm saying my

wife doesn't cook. My wife orders in, she picks up salads. She just, she doesn't eat anything. wife orders in. She picks up salads. She doesn't eat anything. And so it's me. So it falls to me. So I go. But anyway, it's not a small business. They are going to come public in September. I think they could raise 10% of the company's valuation. So if it's a $10 to $13 billion IPO, they could raise a billion dollars plus if they sell 10%. We have this chart. John, throw this up. This is price-to-sales ratios of the most similar companies to Instacart. How the hell is Airbnb similar? DoorDash certainly is.

Well, no. Airbnb doesn't deliver anything, but it's a similar business model where Airbnb is providing space and Instacart is providing the convenience of somebody delivering things to you. I don't – dude, I don't fucking know. It's a nine-time sales. DoorDash is four-time sales. Uber looks like it's two and a half. And Lyft is a little bit more than one-time sales. So those are, I guess, the closest publicly traded comps. Maybe it's the size of the business that makes it a comp.

Pepsi, I mentioned, is a user of the ad platform. How much are they buying? $150, $175? They're going to buy $175 million worth of stock and not just be a customer, but actually be a shareholder, which I thought was interesting. They've been profitable for five straight quarters, but orders are barely growing.

Yeah. So that's the – like the way it was framed, the way it was framed, I forget who framed it this way, maybe a Bloomberg reporter. It's like, well, this is going to be a referendum on what do we care more about, profits or growth? They don't really have growth. They're not growing.

They're not growing. out profits or growth. They don't really have growth. They're not growing. They're not growing. Burn Horbart at the diff said a great sub stack says this is the best and worst grocery business imaginable. So this is burned. You can think of Instacart as being somewhere between two different businesses. It's the worst grocery imaginable because it takes a large, but invisible costs. The cost of physically going to a store, loading up a cart, and getting it home with an explicit cost that shows up in the prices of individual items and delivery. So they're marking up the prices of the items. They say that that's 8.2% of the gross transaction value, excluding tips. of the gross transaction value, excluding tips.

Operating an industry where mid-single-digit margins are a sign of success, starting with a high single-digit cost disadvantage makes for a difficult path. All right, that's why it's bad. It's good, though. This is burn. It's the best imaginable grocery business because it can offer more breadth

and can present every customer with a set of offers, perfectly customized to get them to continuously shift more of their shopping onto Instagram's platform and get consumer package goods companies to pay as much as possible for ads. Am I explaining that well? You called it Instacart again. Yeah, yeah, yeah. What am I calling it? Instacart. Whatever. It could be a big – it could be a hot stock. I wouldn't be – I wouldn't like be totally shocked. It's profitable. I threw some charts here.

Let's go through the charts. All right. So this is from Thomas Reiner. Thomas works for Altimeter. And he compared Instacart to DoorDash, which is a good comp. DoorDash obviously is food delivery. Uber does too now. Uber has grocery delivery now also. Uber eats. Wait, not just Uber eats. Uber is a competitor of Instacart. I know, but in this, he's only using Uber eats for this. This is gross transaction volume. Yeah. So growth is not

quite what DoorDash is. EBITDA is not bad. Yeah. These are thin margin business. Next chart. So they're spending a buttload on customer acquisition costs, which that's like any other company that's trying to get to scale. We mentioned that they're not growing very much. Next chart, please. I mean, look at the orders. This sucks. Look at this. This is the orders quarterly. It looks like they're stuck at,

is that say 66.3 million? Yeah, it's not great. And if you look at the dollar amount, it's the same chart. So on an annual basis, it looks better, but quarterly, it's not great. So credit to them to see a company of, you know, a pre-IPO company like this generating positive cash flow is a good thing, obviously.

The street is going to like that. Look what happened. Look at COVID. Look what COVID did to this company. Next chart, please. This is all from their S1. Do you know what this company was worth in the private market during COVID? I see 30 billion.

39 billion, almost $40 billion. And that was pre-profitability. That's how insane we all were. Yeah. We were like all insane. Yeah, we're all very drunk. Everyone was drunk. Everyone was drunk and eating edibles and just valuing things on nonsense. Now, Instacart is, here's what they've got going. They are the clear market leader Now, Instacart is, here's what they've got going. They are the clear market leader in delivery. Next chart. The one on the left shows share of sales in the zero to $75 basket order size. And they're dominating there. But on the next chart, $75 plus. Now, their average order is $110. So at that level where people are doing real proper grocery shopping, they're dominating. $110, what's that?

One dozen eggs? Dominating. All right. And this is what Josh is talking about, the advertising part. So this in and of itself could be a pretty decent-sized business. Thomas Weiner, here's what he said. Instacart is now at an $825 million a year advertising revenue run rate. That's not nothing. That's a lot of money.

Growing at 20% a year and 2.8% as a percentage of their GTV. So they're ramping that up. Compare that to Uber, who is at a $650 million run rate despite having double the GTV for delivery. So this is a really, really effective way. And they said that their companies are getting, I think it was like a 15% benefit, however that's measured, to their advertising. So it's a massively powerful advertising platform. I think Byrne's sub stack is really well done. And he gets into this.

We're not going to get into this now. But just this idea of like the supermarkets kind of like have to play nice with Instacart. play nice with Instacart, even though they know, like Instacart gradually over time, the more consumers they have, the more they're going to eat into the supermarkets piece of whatever profits there are. So here's how it works. They're almost like damned if they do, damned if they don't. Well, supermarkets are a tough business. The margins are like razor thin. So I wonder if Instacart is pushing down that. I mean, I assume that they are because they're bringing customers there. So if the average order is $110, again, this is from Thomas Reiner. He said 86% of it. So $94 goes back to the gross retailer. So for the retailer, that's

great, right? They're getting big orders. 8% of it goes to the shopper, like whoever's physically going to the store. And then Instacart takes 6% of that. So not bad. It's so hard. They're in such a hard business. It's a hard business. It's just like what they are pulling off is really commendable because it just, it sucks to have to do what they have to do. Think about all of the people in this ecosystem that they have to make happy in order for this to work. It's, it's like really a tough, like the degree of difficulty here is high. And I hate, I hate invest, investing in companies that it's this difficult to do what they do. So yeah, I would not, for that reason, I'm going to pass.

I'm not interested in it, but I, I'm, I'm not interested as a buyer, but I am interested to watch it for sure. All right. You're up. We've got last, last topic. we're going to make the case. I know we talk about this a lot that like stocks are actually businesses, right? Like they're, they're, they're just not just numbers flashing on a screen. And I wanted to show some charts that illustrated that. We'll just roll through them. All right. Walmart and Target are in very similar businesses, obviously not identical. Walmart's beat the crap. This is just share price. This is just over the last year. Walmart's beat the crap out of Target. Well, look at the fundamentals. Look at the free cash flow. Next chart, please. Walmart is a much, much, much bigger business growing much more quickly than Target is. Incidentally, Walmart is better at grocery than Target. And I think that's a

really big part of their business. And it's not a big part of Target's business, at least not currently. JetBlue used to be like a great airline and it's just not anymore. Sucks. I fly Delta. So this is a long-term chart. Delta has beat the crap out of JetBlue. Next chart. Dude, JetBlue, do you find that like the planes are grubby?

Like they're like in disrepair and dirty more frequently than the planes for another airline. Where did we just go together? Oh, wait. Was I with you? No. We were on a JetBlue plane and the TV was from like- Did you come to Texas? I don't know where we were.

No, you might have been flying with Chris. No, no, no. We were going to Florida. I can't remember. The TVs were from like 1986. Do you remember that? Oh, yeah. We went to Tampa.

You're like, what the hell? Yeah, it's a piece of shit. It's a piece of shit. It's a piece of shit. I really don't understand it. And everyone from Long Island, like, oh, JetBlue. Not anymore. What are you idiots carrying on about? It's the worst shit I've ever seen.

All right, a few more. Wait, even their terminal at JFK sucks. There's like a Shake Shack and then five like made up restaurants that don't exist anywhere else on earth. I flew Delta out of JFK two days ago to Miami. They have everything. I only found out. Like people actually want.

Yeah, it's great. I really don't understand what's going on with this JetBlue obsession. All right, Netflix versus Paramount. Again, not identical businesses, but you know, I think we skipped one. Meta. Do we have the Netflix one? Oh, Meta Snap.

I mean. We have the Netflix one? All right. Maybe we don't. That's fine. Okay. So this is obviously Facebook has destroyed Snap. Next chart.

Now, I know I'm only showing absolute numbers. I'm not showing changes. But I mean, you all get the point. Snap is not a great business. This is free cash flow. Meta is $24 billion. Snap is $81 million. Yeah. So much smaller and not as good. This is free cash flow. Meta's 24 billion. Snap is 81 million. Yeah.

So much smaller and not as good. Yeah. And not growing. All right. Let's do make the case. I'm going to make this really simple. Do I even have anything to illustrate what I'm about to say or not really? Illustrate it with your mind.

All right. Whatever this VinFast thing is. What is it? I was just learning about this yesterday. Okay. This is the dumbest thing you will ever hear for as long as we're doing this show. This is a Vietnamese – like already, it sounds like I'm joking around. This is a Vietnam-based electric vehicle stock that went up – let me just give you the number. VinFast's market cap, this is yesterday,

is now 10 times as big as Rivian's. VinFast lost $2 billion last year on sales of $634 million. This stock, because of the SPAC structure, which I'll get into in a second, which I'll get into in a second, went up 385% in five trading days after de-SPACing. It is one of the most perverted versions of free market capitalism I have ever seen. Basically, because this was a SPAC – are we still chart off? Okay. Because this was a SPAC, 99% of the company was in the hands of one person, and his name is Pham Nat Vuong, and I have no idea who that is. I suppose it's somebody in Vietnam.

There was a float of 16 million shares that could be traded publicly. The average trading volume was 8 million shares, and this one person held 99% of the float. So half of, or 99% of the shares outstanding. So half of the float was being traded each day. And most of it was being held by this guy. The market cap got to 190 billion. Think about how ludicrous this is. All right, put that tweet up now. This is Sawyer Merritt. VinFast became the world's third most valuable automaker today. This is yesterday. After its stock value, 20%. Despite the company having sold a little more than 100 cars in America,

it now has a market cap of $191 billion, more than Ford, GM, and Volkswagen combined. And then you can see where it stacks up, only smaller than Toyota and Tesla. That was yesterday. We have a chart of what happened since then. So today the stock fell 40%. This is what's going on. Why are we, what does this do?

Tell me the good news good news and still not Bitcoin ETF although it seems like that's coming tell me why we're doing this why we're permitting this so here's what I want to say I'm going to make the case just through this one example that because this even is a possibility even though not a lot of people are involved in this I don't think people like lost their retirements over this Just because of the fact that structurally this could happen, we need to shut down all SPAC issuance immediately until we can see what's going on. I agree. It all has to stop.

Let's just start from zero and go one by one and just ask ourselves, okay, Vietnamese EV, does this have to exist? Does anyone need to trade this? If we just started making decisions that way, we could probably put an end to this inside of one year. Yeah. If you value Toyota on the same metrics, it would be worth $900 trillion. Which of course it should be.

Okay. Anyway, enough already with the SPACs. There is no positive use case for anything SPAC related. Let's stop it now. Okay. So I'm going to show you some mystery charts. This is a stock that I do own. So it's a quasi, it's like a make the case mystery chart type of a thing going on here. All right. John, chart on please. All right. So this is the drawdown over the last 10 years. And this stock is in a world of hurt. As you can see, it's in by far the deepest drawdown that it's been in the last 10 years.

Now, Josh, put this in the back of your brain. Wait, what hint? Did you give me any hints? Or are you just showing me the price? I'm going, Josh. Let me go. Let me cook. Well, you said, now, Josh.

I thought it was my turn. Put this in the back of your brain for later. You could see the drawdowns prior to this disaster have been pretty shallow, which should give you a clue as to what type of stock we're talking about here. You got it? Pretty shallow. Okay. All right. So put a pin in that.

Next chart, please. This is the dividend yield. Okay? Ooh. So it's, it's hovered between, you know, four and five for most of the last decade. I know what this, I know what this is. Hold on, hold on. All right. Let me finish. Let me finish. I'd like to solve the puzzle. No, no, no, no, no, no, no. Next chart. This is the dividend. So not only is it an accidental high yielder, but it's also a dividend growth stock. It's also raising its dividend every year. All right. And then I think we've got one more. No, we got two more. This is the price to earnings

ratio. Just smushed under seven now. And the next chart is showing the daily stock price. You saw that gigantic red candle. That to me, reeks of capitulation. I bought it on the higher low. So what do we think? AT&T. AT&T. Close. That's the other one. Verizon. Verizon.

Do they look the same? They must look the same. Yeah, Verizon's a little less crappy. I follow Verizon. Yeah, Verizon's a little less crappy. What do you think? Do you know what the CEO salaries are for these companies i don't think i want to know 90 million i i think like i think like the ceo verizon i think his name is ivan i think this guy pays himself like 60 million dollars a year i could be i could be wrong so if you're a if you're an attorney for uh verizon't just – I apologize.

I think it's something stupid like that. This is one of the biggest investor capital incineration machines that currently exists today. It's really remarkable. Over the last 10 years – It's not even their fault though. It's up like 15% over the last 10 years. But what are they doing wrong? Should that be like a 12% yield?

A lot of it was the hangover. It was trading in concert with AT&T from the lead shit. Fine. I think they burned a lot of cash buying media properties. Like, didn't Verizon buy Yahoo and all kinds of stupid shit? Terrible. And AT&T tried to make TV shows. But then also 5G.

Like, everyone's like, ooh, 5G, I'm super bullish. Are you? It sounds like a huge money suck that there's not a lot of beneficiaries on the equipment side or the transmission side of 5G. It seems like we're the winners and the businesses are the losers. Is 5G a scam? I still don't have service. 5G caused COVID.

All right. We don't have that much time to get into that. I want to thank everybody who came out to watch the show live. For those of you in podcast land, thank you for listening. We will be back with another all-new episode of What Are Your Thoughts next Tuesday. But at the end of this week, sadly, there is no new Compound and Friends this coming Friday. So please, if you listen to this episode, check out some of our friends who also have great podcasts. Anyway, I want to wish you all a happy Labor Day.

Thanks for rocking with us, Michael, myself, Duncan, John, Nicole, the whole gang. We will see you after the holiday weekend. Enjoy. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ritholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your

favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening. Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as

and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or an investment product. Past performance is no guarantee of future results. Investing involves risk and possible launch of principal capital. No advice may be rendered by Ritholtz Wealth Management

unless a client service agreement is in place.