The Compound and Friends - Why Valuations Don't Matter

Episode Date: August 1, 2025

On episode 202 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠ are joined by Adam Parker to discuss: earnings season, the Fed holding steady, R&D spending in big tech, Hulk Hogan's wealth, and much more! This episode is sponsored by Global X ETFs. Visit: https://www.globalxetfs.com/ and start exploring new opportunities today. 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/ Learn more about your ad choices. Visit megaphone.fm/adchoices

You know what, I noticed when I'm here, more than almost anything else I do, is how fast the time goes by. Like, we do an hour or whatever, we do, an hour, 10 minutes. I just feel like it races by. It does. Right? I mean, when I'm with my trainer, one minute takes so long. I mean, the guy's like killing me, but an hour in here flies by.

Love it. You know what I mean? What I thought you were going to say is that, yes, I do know exactly what you mean, but I thought you were going to say between appearances, because the last time you were on, Yeah. I think it was November. By the election, sell the inauguration. It felt like yesterday.

The title, I looked at and I thought, okay, at least that aged well. Because we told people, by the election, sell the inauguration, and that word perfectly, yeah. That aged pretty well. Because sometimes you say stuff that doesn't age so well. All right. So this is what Sean went back and said the top takeaways. Prediction markets beats polls. Yep.

Gross margins matter to the most. We're going to talk about that again today. Sentiment is a risk. Are I supposed to look at you and smile? I'm not particularly, you know, all right. So you said sentiment is a risk with nearly everyone bullish and now wallet where he left, overly optimistic. That was a good call.

Yeah. And then AI driven margin expansion ahead. Yeah. And then lastly, valuation only hurts when companies miss. We wrote a big note about valuation this last week. And Josh mentioned you want to talk about that. That's cool. Yeah.

I've gotten a lot of feedback. Were you afraid to hit publish? No. Not even a little. No. You know, there are like a, I did get some incoming. I got one old school value PM in a long-way firm who asked me to unsubscribe because he said he doesn't like being insulted.

And I'm like, look, I didn't mean to insult you. I don't know what you mean. And then he like unwounded. But you know what? You've been, this is not new, right? No, put these on, right? You've been saying something like this. Slide this way, gotcha.

We've been having this conversation for a decade. Yeah. We know he can't buy super cheap stocks. Here, let me, is there a right in the left? side. Yeah, the wire comes down the left. Yeah. All right.

Toward the end of the show, we're going to get a print from Amazon. Right. And Apple. I know. Jesus. I know. Adam was paying us a compliment before you walked in. He said, it's unbelievable how fast these episodes go.

Yeah. I was saying, it's really, you know, time flies in your event fun. And I was saying, I don't know if this happened to you, but you go to your trainer. And like, he's like, you got 90 seconds and like a wall sit. And that 90 seconds seems like two hours. It goes by forever. And this hour flies by. because it's so fun to see you guys.

Are you working out with a trainer right now? No, I try to work out every day. I just also eat too much, you know how that is. Oh, really? I don't know anything about that. So I'm taking golf lessons this summer. Nice. I started in April, and I can actually, I played golf when I was younger.

I stopped to raise my kids for like 18 years. Right. And then this summer I said, you know what? My kids are big. Nobody needs me on the weekends. I should pick it back up. Right. So rather than screw around.

for no reason by myself, which I did last summer. This summer I said, I'm going to get lessons. And, like, it's amazing. You forget how good it feels when you're terrible at something, but every, but you keep trying and you, like, improve. Because I'm already the best in the world at what I do for a living. So, like, this is an endeavor where I'm the world. I was waiting.

No, but this is something I'm really bad at. And I'm still really bad at it, but I'm not as bad as I was when I started. And that feels really good. It's a good feeling when you hit one, like, high and sort of straightened toward the green. Or just like... Well, it's in the air. That's good thing. Or just like, um, or just like you don't expect to do well.

Right. It's like, all right, this week we're going to work on, uh, chipping onto the green. And I'm like, oh, here we go. And then like, you can actually do it. And it's like, holy shit, I could do this. It's a really good feeling. I forgot about it. Um, because I haven't really challenged myself in a long time.

So, I think you are great at what you do, by the way. I didn't, I didn't, I didn't, I didn't need to correct that. I think this is... I'm not even sure what I do, so I appreciate you saying that. I'm not like, I feel like when people meet me, they think that I'm going to have that, like, sense of humor where I like to make fun of...

I'm more like a lover. Like, I'm like a... When people ask me to speak at stuff, I don't like doing the whole, like, insult thing. I like to do, like, the compliment. Positive vibes. Yeah. I like people.

I like people. I was saying to Josh and Ben earlier, have you... Can you recall a stock in the Dow that is crashing talking about United Health. It's down 60% while the index is at or near an all-time high. That's got to be rare, right?

I think Intel, while it was a Dow component, looked that way, maybe not as fast, but as damaging. I can't think of a lot. The speed of the decline, you know what I mean? Like a GE, GE was crashing. Maybe, maybe Boeing. I looked at Boeing. So Bowen was falling, and then 2020 happened.

It's rare. To your point, it's totally rare. Because usually by definition, to be that, that big. You're like a barometer. You're a blue chef. You're a blue chef. I think as a Dow 30 stock, it's more likely that you'll have a gradual decline a la IBM for 15 years. Right. Like a melting ice cube, not. Yeah. Usually it's because debt and arrogance cause massive declines. And like, this one doesn't have a debt issue. What's the story with the United? I don't even know what the stories.

Look, if you, if you plot, yeah, if you plot, um, look, I, I complain about them all the time because I run a small business and we use, we use United Health. And United Health, you know, if you're with kids. It's around $4,000 a month for their plan. And they raise it, like, they raise it at an average of low double digits per year. So, you know, it's going to be $4,500 a month next year. Well, when you run a small business and you have nine employees and you add all that up, it's just, it's a role in our P&L as health care. And as you guys know, you don't get a lot for that service. So, but I'd say backing up in is plot like drug stocks the last 30 years, Pfizer or whatever. It's kind of hunch, right? We all have good buddies. I assume that are like

general practitioner doctors. And honestly, like, it's really disappointing, but they're kind of middle class. What's really captured all of the money in the system is UNH is up 10,000 percent as a stock last 30 years. It's so funny you say that. It's so funny you say that. Like when we were growing up, like the biggest, the most like honorable thing in the world in like a Jewish family in the suburbs in New York, I'm going to go up to be a doctor. Right. This is like. It still is honorable. It just unfortunately doesn't, in some aspects of the, of the profession just doesn't get paid what you feel like it should, given the education of the effort it causes. This is XLV divided by SPY.

It's at the lowest level since 2001. Right. It's just crashing. Yeah. I think UNH is interesting, you know, just to finish in that one question, is just, look, I have a buddy who's like a accounting-based short guy. He's a total, like, ninja. And he told me, I've been trying for 20 years to actually understand how they make money.

It's like, every time I get down, like, a hallway, they, like, close the light off and tell me to redirect. So I think it's getting a light shined on it for some awful reasons. The CEO has killed some other stuff. And I think people are sort of saying, oh, this is a value stock and it could double. And I'm just not so sure. I don't really know that you want to dive. Well, that's the answer to the question is they make too much money relative to what the average household can afford to pay. And the amount of denials of claims is the reason why they've made too much money.

Right. It's hard to get. They don't deny everything, but they deny too much preserve the proper margin. I'm sure you know this. Probably some of your viewers know this. But there's a whole cottage industry. born out of this where, you know, idiots like me can say, you know what, I can't figure out how to get down getting those payments and you can pay a service to capture someone for you and just give

that person to percent. So I say, hey, yo, you know, we, we owe 10 grand in various things for, you know, my wife and my kids and me and like, you know, and they'll battle for you. And it turns out that a lot of the way you get your money back is you just have to keep going. So our, for an answer. And then that person takes 15 percent or whatever she takes. And you're like, all right, I'll take my $8,500, $500, $500,000, that's better than me not have a $10,000. And that's just how hard it is. You need to actually hire people to berate them. So our health insurance comes to the PEO, and that's their Trojan horse.

They offer you a teaser rate for your firm, and you say yes, and then they boil you slowly like a frog. And then it comes time for renewal and all these other PEO. How does a 17% increase sound. Right. So all the PEO providers, they're like, looks like you're up for renewal next year. And then they offer you. a teaser rate. But we learned, like, it's always fake. It's going to eventually, it's going in one direction. And we have only nine employees at Tibera, and we had a bunch of outsource

relationships. And, like, it really helps if you have scale. Like, once you get to 50 employees, you know, there's, you can really lower it. So yeah, I don't know what's going to happen, but I'm not that tempted to think it's a value, a great value there. And look, if there's a recession, obviously small and medium business, go out of business, whatever. But, you know, like everyone else, you know, I'm going to be a Florida resident. you know, next year and move my business there. My kids are, we're empty nesters now. And so, you know, when I try, yeah, thanks.

And I travel all over anyway, so it's not that hard to spend 200 days outside of New York. And, you know, the prices, you know, are more reasonable for insurance and health insurance in Florida. You're going to have to move your business. Yeah. Like the paperwork is going to have to say Florida. Yes, right. Because they don't want to hear about six months in a day anymore. New York State now wants to know, but where do you get?

paid from. That's true. And it's a very complicated process. You have apps that track the cell tower where you are all day. You have to report. It's, it's, um, there's too many people. New York is incredibly diligent at like that one thing, which is going after people, uh, for taxes. Nearly everything else, they're an abomination. I would say so. Yeah. Uh, what do you think Hulk Hogan's net worth was when he died? I have no idea. Take you this. 13 million. I'll take, I'll take the over. I'll take the over. I think there's been a lot of stuff. This is one of the most famous people in the world. I'll take

the way you set that up is probably lower than he's guessing, but I feel like he's gotten a lot of and I wonder how that count now worth is that like everything like the... I'm picturing the Zach Aliphonakis. Yeah, for God's sake, just give it the damn number. With the calculations running past your face

with the formulas. I think the other thing is people got paid less back when he really ascended, right? That's a good point. Yeah. What do you say 13? Yeah. Can we go prices, right rules? I'll just take the over. Okay. Over. I'll take over 13. Double that. Triple that. 13 million. 13 million. I'll take 40 million. Okay. You're close. 25 million. That's, so that was very surprised to me. Died at 71. Which part? Which part? That was that only 25 million. This is one of the most famous people in the world.

I think that, you know, it's like what. Like, I think if you showed a picture of him to people on every continent, more people would know him than would know Joe Biden. Probably more Americans You don't need every content I think he's one of the Maybe famous is the wrong word Most recognizable Characters in the history of America

One of my best best friends Was the head women's tennis Go to the University of Florida For like 25 years Slapped with Hulk Hogan? No, I'll try to make the bridge This could be a bridge too far But he tried to convince the players

Not to turn pro And the way he did is he showed them Like earnings from that career And I went back and looked at like 80s and 90s when Hulk Logan was, you know, and like Navratilova, whatever, she won like nine Wimbledins. Like her career earnings are so much less than yours. Yeah.

I mean, you know what I mean? It's like, so I just didn't pay that much during maybe his assent, maybe. Yeah, I think that's definitely part of also had a bad divorce. No pre-nup. But 25 seems hard. Like, to Adam's point, he wasn't making that much in the 80s wrestling. I'm sure he's making fine money, but where did all that come from? Movies and other stuff.

Yeah, so like most, I would bet half of his net worth was earned in the last, five or ten years with licensing stuff. So he died, 71, it's under Florida's spousal elective sheriff statute, the surviving spouse, he has a new wife, is entitled to a minimum of 30% of the deceased estate, even if the will was not updated after they got married. So a third is going right to the new wife. Then there's the ex-wife. That's eight point, eight-two ex-wives and an estranged daughter. he left behind an $11.5 million mansion in Clearwater, Florida.

So if you're moving down there, you might want to look at the Hulke Mansion. Is that not part of the 25? I assume it is. I assume it is. This is crazy. By the way, it's now worth 9.6 because the people, that's worth less because the people who got the money. But that could be, you could position that property as like the grace land of professional But didn't, like, Michael Jordan's house stay empty for like 15 years?

I don't know what that's right. If there's hope, nobody could buy it. If there's whole crap all over it, my baby boy, I'd not want it. According to the Trust and Will's 2024 probate study, only, this is crazy. Only 2% of American adults realize that probate would take 20 months, which is the average time needed for the process to run its course. 56% majority are totally in the dark about the associated costs. 10% expected would cost less than $1,000.

Only 4% of the survey participants are prepared for the probate process to cost more than 10 grand. So a lot of people are just not prepared for this kind of thing at all. This is a big thing. I mean, we're all over the point. This is a big thing with the NIL money. These college kids are getting where they actually don't realize they have to pay taxes on it. Yeah. So they don't call them that until next year.

Right. So in April comes around and they got 400 grand for being a third string offensive tackle. And April comes around and, you know, they owe, they. They don't have it. He won $140 million judgment against Gawker Media. Oh. In 2016, Gawker Media is a website, a gossip website. They published a sex tape of him with his friend's wife.

And Peter Thiel backed that case. And then Peter Thiel, like, secretly, and then he came out and said, I did this, backed Hulk Hogan's lawsuit, and they won. And he put them out of business. Oh, yeah. Yeah, I remember that. I don't... I forgot that.

I don't know that we need the media to be doing stuff like that. All right, we were ready for the show? There's a lot of adjustments being made. I like that. A lot of preparation. I didn't know we hadn't started. Three bucks coming in. Zero percent.

Friends, episode 202. Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Today's episode is brought to you by Global X ETFs. Navigating today's markets can be complex, but that's where Global X steps in. They offer ETFs designed to help investors access a broad range of asset class. and investment themes from the AI ecosystem and defense tech to income strategies that are built

to perform across varying market conditions. That's all right, Josh. With over 15 years of experience as an asset manager, GlobalX is here to meet your investment needs. Curious about how GlobalX offers investors a portfolio of possibilities? Visit GlobalXETFs.com and start exploring new opportunities today. 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 Riddholt's wealth management.

This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Holy shit. Episode 202. Ladies and gentlemen, you are now rocking with the number one investing podcast in the world. I only have that data because John told me that. Do I have that right? All right.

Nicole's dancing in the studio. A lot of enthusiasm. Duncan is here. Welcome back, Duncan. Yeah. Were you here last week? Oh, well, good to see you again. We have a special guest in the studio, my friend Max Frank, who's helping us out.

out with a special research project this summer you having fun yeah best special project ever all right i wish i wish i looked like him yeah well this this kid this kid is uh he's living the life uh binghamton oh binghamton okay and this summer working on the docks filling up uh boats and jet skis with gas could there be anything better do i want to be taller thinner and work out work out sports okay it's a called a crowded long yeah no doubt all right max welcome to the studio All right, let's start with the Federal Reserve. So we had a kind of non-event FOMC this week, but not really a non-event because I think the narrative coming from the Fed

has now gone to a new place. So this is my take on what happened yesterday. Obviously, no cut. But what he said put the September cut, which we thought was a done deal in doubt. The Fed is now using this term efficiency. They don't want to make too many adjustments they want to be efficient with the adjustments they do make,

which sounds a lot like higher for longer, but they would not say that phrase higher for longer any longer because that'll piss off the White House. So immediately, we have a chart on this, immediately the Fed Fund's odds changed. And I think, I didn't look at it today, but immediately what happened was they went to like 45% odds of a September cut, which I think was down from 80-something

percent odds. And the efficient Fed monetary policy is now the new hire for longer. What are your thoughts? First of all, congrats on having the number one show. Yeah. It's amazing. Well, you make that possible. We also have the best cup of coffee in the kitchen.

No, I'm serious. Like, let's just face it. Like, you're competitive people and they rank stuff who does number one's good. Yeah. Everything else is not as good. Agreed. Totally great. I'm just, you know, somebody just asked me to smell the roses out there and I did.

Yeah. So I'm bringing that in here. I love that. The second thing is bring his mic up. Of all the things that are hard to do, and I'm not saying I can do it, but I think interest rates is really, really high up the list. Hard to decide where the rate.

Hard to forecast the 10-year yield six months out. Hard to forecast the front end. There's a function on Bloomberg that most of us have access to WIRP, right? It's like what people think rates are going to be probabilities of rates. And it's really funny that we're talking about this right out of the gate because I'm moving my office to six floors higher tomorrow.

In fact, I'm running out of here to get the first time moved out of a little later today. And I was digging through the file cabinet. And I saw something I published as a strategist in 2010. I'd done a detailed survey of institutional investors asking when they thought the Fed would cut rates. And by far and away, the highest probability was raised rates. The highest probability was six months later, people thought, and it turned out to be Expo six years later. Yeah. They never raised rates again.

People have a very poor algal for forecasting what the Fed's going to do. They're consistently wrong. I worked at Morgan Stanley for seven years. The industry strategy was wrong all seven years in a row about what was going to happen. Again, I'm not saying I can do it. I'm just saying these people are paid for living. They're really smart. They have access to the Treasury, the Fed, really smart people, and they get it wrong.

So the idea that like any of us have any clue, I don't know. What I thought I learned through the years is they pay pension to full employment and stable pricing. And if you look at that, I'm not sure they need. to cut rates, right? Obviously, you mentioned the key point, which is the president has been clear that he would like lower rates. And so that, you know, the economy is too strong to have rates this high. It feels to me, wait, what? It feels incongruous. Right. It feels incongruous. I'm with you. And, you know, also, like, I'm not 100% sure that if you're bullish on equities, you want them to cut a lot. Like, think about the sequence of how we get data, right? We, uh,

We get the price action, and you and I talk about the four prices lead everything, right? Certainly the economy. Then all of us are getting better and better at sweeping new data points, whether it's on X or LinkedIn or we look at National Energy Processing. Every earnings is called transcript, whatever. Then the companies report earnings. Then economists do whatever they do. And then the Fed acts.

Like by the time the Fed tells you something, it's already way after so many things have happened. By design. Yeah. That's the data dependent part. Totally. So like people are like, it's lagged. I'm like, yeah, no kidding. It's lagged.

So I look at it and I think to myself, well, what was the, what was the, what was the, the best call you could have made, December 22, cover your massive invidia and meta shorts, get along those same stocks, why the Fed was really close to the end of the hiking cycle. They were only going to hike a couple more times. We're bullish. What I'm a little worried about is we're kind of close to the end of the accommodation cycle and, like, how much more are they going to really cut until you're like, whoa, they're cutting because things actually got worse, not, you know.

So I'm a little bit worried that eventually people won't be like the cuts awesome. It'll be like, oh, man, things actually did erode at a rate that's, surprisingly bad. He made it really clear that unemployment's the only number that matters now. Full employment, yeah. So we're at 4.1%.

My friend Nicola has pointed out in his note this morning, that is a lower unemployment rate than 84% of all the time that we've been keeping this data. Right. So it's a historically low, it's not at the low, low, low,

but it's a historically low unemployment rate. Right. And the Fed is only looking at unemployment at this point. And that is not changing. then they're not going to cut, right? Thanks to immigration, we have a smaller labor pool, and that's political.

That's by design on the political side. And everyone's got those fresh memories in their mind of when they had to hoard employees three years ago. So unless there's some massive AI breakthrough where the Fortune 500 can let go of 10% of their staff and not lose anything at all in the process, which maybe is coming in three years, I don't know. Like what?

I don't really see what changes the, equilibrium. Yeah, we do a lot, a lot of work on that topic and productivity because, you know, it really impacts stocks and how people perceive stocks and margins. And then actually at Trivariate, we do a ton of work, you know, on that same front. And I think more companies are apt to grow the revenue without net hiring than they are to do a ton of wholesale firing. I think it'll really depend. And it depends on the business. Sometimes you have to run things in parallel before you can fire people. So I don't think it'll be a 2026 or 2027 issue. We see massive. firing as things are good.

Yeah. I think there'll be businesses that can say, you know what? Less hiring. Yeah, we can go 3% a year and maybe do no net hiring. So let's do the stock market was rallying. Was the stock market rally in anticipation of the Fed cutting? Like, it seems to not be bothered by it. I didn't, this is a, you're asking a feel question, and you know, I'm kind of more like

a quant nerd about it. But I'd say my feel to your question would be, I felt like the market was reacting more toward, you know, this concern that the Fed wasn't going to be independent or Trump could fire Powell. And then when he wasn't like that reaction, then it was maybe about the actual cuts or not. But that's like, you know what I mean?

Yeah, there was like big moves around like, oh my God. He's not really going to fire him. He's going to jail him. It's just occurred to me. We didn't give you your intro. You're a three or four-time guest here.

It's my fourth time. Almost 2% of your shows. I know. I'm pretty proud of that. Adam is the founder and CEO of Trivariate research. For those who are not aware, Trivariate research is a U.S. Equity Focus boutique research platform.

Adam was the chief U.S. Equity Strategist at Morgan Stan. Stanley from 2010 to 2017. Of course, you see him on all the shows that I'm on. Closing Bell, CNBC, halftime report. You've done squawk. You've been everywhere. You missed that job?

So I apologize for missing. No, I love that. And if I could just do one plug, you know, about three months ago since we were last on, we started a business selling to financial advisors and individuals. All right. Insights. It's called Trivector. We got some nice new stickers on the phone here.

And so that's like $100 a month service. It's been awesome. We do ETF analysis. We give a lot of advice to advisors and people like why they should stay fully invested and how do they dollar cost, average, new business, and, you know, how do they think about leverage and things that they ask me. And then we do, you know, sector and industry ideas and recommendations and how should they react to news.

And this ETF analyzer we're doing is pretty cool. We give it like letter grades, like Portnoy's sort of pizza reviews. So people seem to like that. Because as you guys know, a lot of ETFs aren't exactly what the title is. You know, that's great business because there are like 20,000 RAA. and the vast majority of them just do not have it in their budget to have in-house research. The CIO is the founder, the portfolio manager is the founder's young adult son. They don't, like, there's a lot of firms that need help.

And I'll tell you, you said there's 20,000. There's actually 400,000 individual advisors. Come on. I mean, like actual firms. Well, actual compared to your standard, there's like 20, what I'm saying, compared to like, you know, so that's what you're saying, exactly right. because TriVirate, the institutional business has every day for the biggest 3,000 equities, we download or compute hundreds of pieces of information. So we can kind of give them dashboards for data they don't access to.

And I do a monthly webcast where, I mean, you guys have these massively successful road shows where people want to see you. And so for us, like, people can dial in and ask me questions. And I'd say they like they like they, it's almost like they don't even want me to say anything. They just want to ask me like, what do you think of this? Don't give away too much, though. For 100 bucks, don't give them. 100 bucks a month, yeah.

Don't give away too much. You'll never be able to raise the, never be able to raise the price. Yeah, you know, it's, thanks. You know, but it's been, it's been great, and we're at, you know, in our fifth year now at Trey Baird, and so it's, it's good. Like, we're investing in new opportunities and bolt in on some stuff and, and I'm working a ton of loving it. So it's good. But thanks, thanks for this plug. I forgot about that because I just sat down and talked to guys.

I haven't seen it while. I'm happy to see you. We usually don't go to 22 minutes into the show before we used to guys. I actually, it's funny. I forgot too. I was just enjoying being with you guys. So, Adam, how do you think about like? We'll play some golf now that you're doing that.

This might be too short term for you, but I'm just curious. So we have Microsoft up 4% today. Yeah. Meta is up 11%. And the market is flat. RSP maybe look like a double top. Who knows? Like, do you get caught up in like the short-term nature of these moves? Or you're like, dude, it's just a day.

What are you talking about? I try not to, but it's unavoidable. I'd like to answer your question this way, which is, you know, I try to think about what new news changes my mind. And if you said me, like, look at him, you've got this optimist of you on equities, but what are you worried about it? I can give me a couple of data points I'm worried about it.

And you just hit on one. One is, ASML said when they reported that there were some tariff issues, okay? And I'll call ASML a very real company. They basically have a monopoly and a key portion of producing semiconductors, okay? So they missed a couple quarters ago. Everyone thought it's China, it's Samsung. It was kind of idiosyncratic. But time when semi reported the same day, SML did, beaten, raised, made a tariff

competent, but nobody noticed. The correlation between semis and the market are so high that I'm really focused on other semi-companies talking about tariff stuff because I just think that the market, you mentioned when we were chatting, maybe the market acted great when UNH did it, but the market won't act great if semis don't. Okay. So I got to sort of understand a contagion on tariffs. The second point is your question you asked me, which is I thought the banks had great earnings, provisioned less, good trading, like multiple business areas. And the stock didn't go up very much. And you always hate it when there's like a beat that doesn't go up very much. They had gone up a lot.

They had up prior. Totally. But you know, you know the best thing is when they miss and it doesn't go down. And you're like, all, it's a sickle goal with it all clear signal. So on that opposite Lodge. So I'm a little bit worried about your question of like, I would have thought the market be up a little bit more today with, you know, when I was sitting there last night going like, whoa, look at Microsoft and meta's numbers and look at eBay's numbers and like, you know, this is like on like Donkey Kong. And like the market didn't, I thought we're up one percent on the SEP one and a half. That's what I'm saying. If you asked me at 530 p.m. last night, I thought we're going to be up big today. So I'm a little bit, you know, consensitive to the fact

that we're like going to digest the good news or what's great for Microsoft and Meta doesn't necessarily translate to the next 98 companies in the NASDAQ 100. On the other hand, we've gone straight up since the April lows. You get back 5%, 7, whatever, I mean, kind of who cares? You know, I just think that what's been really hard for most institutional investors who are benchmarked against the S&P is that since the president said, it's time to buy stocks, which was probably the best quant signal of the year. Just president said, when was that?

April night at 10 a.m. or whatever, I mean, he said, it's a pretty, it's a good time. he was right. You know, what's worked has really been low-quality, what we call like hyper-growth junk stock. So, you know, most institutional investors, they raise money from serious people. And so they have to kind of say, I buy top-half quality businesses. They've lagged. And so I've been sort of thinking at some point, maybe good fundamentals would result in a bit of rotation out of, I don't know what you call your junk proxy. A lot of people would say ARC. We call it the DJ. No, it's a non-profitable. Goldman's losing list. Arc, which is like a hyper-growth junk kind of asset. We made a Dow Jones out of the most degenerate stocks, just not ETFs and not crypto.

And it was ripping. And I think it's, Sean knows the number, but it absolutely has crushed. In Q2, it dominated. So that's hard because you want to, like, participate when things are on. Usually the junk stocks work when you're close to the bottom of recession and you expect recovery and margins and earnings where you think there's going to be a lot of fiscal stimulus or monetary policy that juices that. What's unusual, we had it, and we saw that on the election, great, red sweep, regulatory release,

M&A. So you saw it last November and December, it kind of made sense. Okay, there's a bit of a risk on rally. Small caps work for a couple weeks around the election too. But then for it to work in April when people generally think the economy is decent but slowly eroding and we don't think there's going to be a massive fiscal stimulus because that's kind of anti-doji or whatever. We're already running at a wartime deficit anyway. It's just a little bit unusual to bet on a four-month period like we've had of the junk running. So I think that's been harder. This is a good segue into the conversation we're about to have with earnings last night. What we have on screen is the Mag 7 names since the low, chartkin Matt knew that Adam was going to be on and he had to step up his game and he did.

So the best performing. Elite. Yeah, absolutely. The best performing stocks since the bottom is Broadcom, which I know is not in the Mag 7. But it's Broadcom and Viti. And then there's a gigantic gap. Gigantic app. Apple's at the bottom.

Meta Microsoft are 2 and 3. and then Tesla, Amazon, Google are sort of in the middle. Yeah. But look at those returns. 91% for Broadcom, 88. The point being, there was no need to gorge yourself on junk because look at the returns you got with the AI trade. Microsoft, you know what I mean?

It's a $4 trillion market cap. No, totally. And I mean, anecdotally, I sort of think Broadcom is even more crowd than Nvidia, just because I feel like everyone, you know, everyone's there. And Hock10 has done a great job, and he's on met his board. He's kind of, like, moved himself into the inner circle. What is the quant stuff that you look at, say, in terms of crowded trades? So, I...

What was the chart on the right of that? It was just a bar chart. Oh, okay. Yeah. Yeah, I feel like the word crowding is kind of a weird word. Like, we used to think of it 10 years ago as like, we don't want crowding. Now you want crowding. I think, I think, yeah.

Depending on the market cap. I think I did a dinner with eight chief risk officers of big funds this past week. And a legitimate huge fund said that they now have a strategy where they get, along the meme stocks. So they see open door, they see coals. It's got a lot more options activity, a lot of short interest, a lot more than equity activity. It's got a lot of short interest.

And they see it squeeze from $50 to $1. They buy it from $1 to $2. So you're seeing like you're seeing behavior that's totally different because they can, they can measure that and make money. So the earlier point that you are making that it's weird to see the low quality junk stocks rallying. Yeah, they just reacted to it. So what if I tell you those stocks are not economically sensitive?

they're not borrowers. In a prior era, junk stocks were had a lot of debt. Yeah. These days, they could sell equity. All they have to do is make some shit up about we're inventing a flying carpet. So that's one. Two, I don't, so I don't think they're access to the capital markets isn't the other.

Yeah. So I don't think they're economically sensitive. I think they're demographically sensitive. And the demographics, meaning the young investors, that's on their side. It's a flood tide of 27-year-olds with lots of money who, want to have fun. Yeah. I think it's not economically sensitive

about the way those facts trade. These guys are just, it used to be a couple years ago when the first meme stuff came out, you know, with GameStop or whatever, that people said, all right,

what are like, do we sweep X? Do we look for words? Like, what are the household name stores that the 27-year-olds will try to squeeze up higher? But when you look at Coles, I think people have been shorted for years.

It's basically going to be pickleball ports, courts at some point. The whole thing makes no sense. And it's gone from 60 to 7 or 8. And so people were just happy to be shorted. this melting ice cube forever, and then it gets squeezed to 14 in one minute. I'm surprised that they didn't learn anything, though, from three years ago. Yeah, your clients, like, still doing this?

Why would you be short, calls down 95% from its high with 35% short interest in the stock? When we ran our hedge fund, we, you know, really didn't short any stock to trade a bill of $10 a share. It's just, it's dangerous. Yeah, you know, you're shorting to five. So the open door thing to me is crazy. It was 50 cents, and you were shorted. Like, I mean, I mean, why are we shorting 50 cents? It goes up five cents.

It's 10%. I mean, whatever. Like, you know, that's just insane. But I think, I think the point is just that, you know, the retail investors a little less sensitive evaluation. A little. No, it's irrelevant. It's not even in the conversation.

It's not in the conversation. I did this several years ago. I had this guy, Igor Tolshinsky, who runs World Quant at a conference. And he did this whole thing, you know, talents everywhere. We have two million. We're creating millions of signals a year. And it was like 250 people in a room when I was in strategy, Maurice Stanley. So I said, hey.

Just give us one of the two million signals, man. Like, help a brother out. Give us one signal. And he goes, low price. And everyone laughed. Right. And I went back to the office. I met with a team and I said, this was like hiding at a point.

This guy's not freaking kidding. Okay, you go to a certain country. At that time, I said it's Vietnam and other areas. People just buy $3 stocks. They think they're cheaper than eight. Then we studied splits in America and they generate subsequent return. You can divide a numerator and denominator by three. Why does it generate subsequent return?

Because people think it's a better deal when it's lower. They don't even know about the denominator. even here in the U.S. Even so stupid, it's genius. Right. Okay, so this guy was in our face in front of 250 of the smartest quants. And he's like low price.

And so I think that's an important issue. The other thing is a lot of money now is being run valuation neutron purpose. So I don't know if you guys talk to like folks who run quant money, but it's kind of important for people to hear this. So take any of the big multistrats. You know, they're just 15 or 20 of them. People know the names, okay? And I don't want to, you know, single anyone out because they're all clients of Trivari.

But a lot of them have like 35 quant teams. Quant team can be one to five guys. Like separate pods doing different quantitative things. And they run 50 to 150 million dollars each. You may be like 50, 150 million. That's nothing. Okay. Calm down.

There's 35 teams. They run 6 to 1,200 gross. Now it's a $20 billion quant businesses. That's something bigger to you. And here's the part that's crazy. Each one of these teams has hundreds of longs and hundreds of shorts. And they run market sector and valuation momentum neutral. And they have a three hour to two day holding period.

Their long-dated strategy is 10 days. They turn over 10% for the day. So you want to know why you bought a stock, like Microsoft. It was up a lot in the aftermarket, and then it faded afterward because the only thing these quant guys don't do is play during earnings. It ruins the alpha of their algal. As soon as his earnings is over and there's a lot of liquidity there, they're going to grab that with something else.

So you see a lot of guys short stocks, it miss and they're happy and then it goes up the next five days. Their longest stock competes and it goes down. A lot of that's just, there's 15 firms that are doing what I just described to you. So everyone thinks, like, nobody cares about valuation. It's like they don't care about valuation because they're long, crazy expensive stocks and short, crazy expensive stocks on purpose. And they watch.

Yeah. They're valuation neutral. So some of that stuff, the impact that that has in the market, when there's 10 firms with $20 billion on balance sheet with three hour to two-day holding period is massive. And you're like a long, only guy, you're doing real work and you're holding stocks for three years. Why is my stock going down? Why is it going down?

Because everybody who's trading it take does not care about what you care about. Yeah. That's opportunity. Yeah. Over a, and so durations are your side. They're focused on two days. Yeah. So if you're focused on five days and you can like make it through the next two days.

But if I told you your job and any of all these multistrots have fundamental guys who do, who they have to call the quarters. If I told you, look, you're going to cover a consumer book right now, 30 longs, 30 shorts. You're a smart guy. And I told you you're going to get paid if you get the quarters right. All you're going to care about is what's in the price. Who's going to be, who's not? And you have to be long short. You're going to be neutralized.

And then these guys make $20 million in one year. You know what's so hard about that game. No, Michael makes this point all the time. If you were to do a sports betting strategy like that, at least you know the odds. So, like, if the Giants beat the Green Bay Packers, they were supposed to lose, right? They were getting 10 points, and not only did they not lose, but they win. Everyone knew what the expectations were going in. They're published, they're literally published on the internet.

So these guys get paid. We don't know. These guys get paid $20 million to figure out the odds before they were. Right. I would argue that real long-term. investors are really doing some kind of Monte Carlo, like, they're saying, well, what's in the prices thing is a 10% chance of being successful? I think it's 40% and there'll be asymmetric upside. Like, that's really what they're doing. It's guessing the expectations of everyone else.

They're playing the distribution game. But the guys call in the quarters, like they're, they have to bet on upward provisions. They're Vegas. They're basically handicapping the stock. But they have the ability to do things in detail, talk to experts that go to court case. Like, they're diving in at a level that somebody who's running $50 billion with 20 names or 40 names trying to be at this, they're not, right? So it's, they're playing a different game. But how do they know what's, like, expected? Is it just like the whisper?

Remember the whisper number back in the day? Talk to every cell site. I was talked to your peers at the by side. Go to idea dinners, hear what people are saying. Go to sector specialist dinners. That's what they're saying. Look at every natural language process. Sounds exhausting for a two-day trade.

Yeah. It is, but if you're running 100 million at 8 to 1,200 gross and you get it right. Yeah. No, totally get it. Stuff adds up. The reaction to Microsoft. So just let's just go here Because I think this is put the table up

So we're looking at What do we think the reaction is by the close? Well, it's a pretty big fade. It's on the lows of the day. It's up three, but it's up, it's up four percent. It's still, you know, all-time highs. It gapped up to 55 and it's now at 5.352. But this is not a stop that's 35 times.

Yeah, 35 times forward P.E. And based on this chart, what you can see is in Q1 of 2023, which is really not that long ago, it went into their earnings at 23.8 times. So it's a lot of turns higher on forward multiple, and it's still rallying after the results. The revenue was massive. We'll talk about it in a second.

This is from Consensus Media. They do great work here. I was just about to look up the revenue. What stands out to me here is that they've beat on EPS, the last X number, what is this, 10 quarters in a row? Whatever it is, whatever it shows, it's beat every time. But the single-day reaction, a lot of pretty deep red, right?

Like, a lot of pretty deep red. It can be, you know, it can be. That's the part that's hard. You don't know where the number, where the whisper number is. And it's also, like you said, how much is rallied first and, you know. How much is it up before the print? And it's not just what they reported, but what's the implied guides? Did they change the full year guides enough that people, we saw that a little bit

yesterday where a company beat, like carrier beat but didn't raise the full year number. It's people thought the implied number was law. Whatever. There's a lot of that. Then there's, what about the gross margin? Was there a mix issue? Some people focus just on the Azure growth or the AWS growth. You know, so it's really hard sometimes to isolate.

You know, one of my friends said this to me years ago. It's a 19 variable problem and like we have to isolate it to one so we can understand. Like this is too many variables to get right. Last night, Gene Monster said, tonight is a breakout moment for AI. Oh, finally. Meta and Microsoft just sent a message to... Who said that? Gene Monster.

Okay. Meta and Microsoft just sent a message to every company. there's gold in those hills. I believe he meant Herman Munster. I don't know who Gene Munster is. I apologize. No, Gene is like one of the top technology analysts. They call Gene when Dan Ives is busy.

Gene's good. I just don't know who it is. What is Gene? I'm shocked that you don't know this guy. He's been on forever. Okay. I just don't know him. Well, we'll connect you.

Finally, somebody said something positive about AI. Seriously. Is important. So throw this Azure chart up, John. So the guy's, the guy's on AI, and he's kind of saying, we got, what we got on? Well, breakout moment just in terms of, like, it's another KAPX guide hire from Microsoft.

That's rewarded by the media. Yeah, and meta reaffirmed and actually raised the lower bound. The midpoint of the thing came up, yeah. Yeah, so this looks fake. This is from Alex Morris. It's Microsoft's Azure revenue runway. Yeah, look at, yeah, look at Nvidia's revenue runway. It looks, the chart looks the same.

Yeah, it's unbelievable. It's unbelievable. I put one in my note on, you saw, you, You email me, Josh, I put one on the video. It looks exactly the same. No one of the stocks up. Look at the consistency of this growth every single quarter for seven years. You almost, like, you couldn't have a better business.

And it's insanely profitable, by the way. So listen to that. Speaking of profitability, this made me laugh. This was in the deck. Microsoft Cloud gross margin percentage decreased year over year to 68% given, driven by the impact of scaling AI. structure. They're spending all this money and the margins are still 68%. Yeah. How about a 120 billion annualized CapEx run rate, which is almost 40% of revenue. I'm not surprised. We used Azure out of the

gate at Trivaria to do, you know, storage and compute because they charge a little less for storage than AWS. And we don't use as much compute. So, you know, given what we do. But we ended up getting rid of it. I'll tell you why they it's you know how like in the casino you can't find like the exit door on purpose like they don't want you to so we were i forget what our bill was no clocks no windows yeah exactly so maybe our bill at traver it was six seven grand a month to do what we did and then one month i get a bill 10 grand so i just email like hey that seems on a percentage basis like a fairly chunky you know increased is there anything did we do we use more compute did we you know do we use more storage like and like it took three months to get an answer back from these guys

And I'm like, look, I'm not going from 84 to like a 120k annual run rate without an email. And so I found these two dudes who do my IT, these two guys. And I was telling this to a client, they're like, what's the ticker? I'm like, no, no, no, it's two guys from New Jersey. Yeah, Mo and Lenny. Yeah, exactly. It's two guys. Anyway, so, and they kind of like kind of got me my own service for way less money.

So I got rid of, I think that George just has pricing power. If people aren't paying attention, they just keep raising on you, you don't notice. I think within, so one of the things. That's why the marks are so high. One of the things about Azure early on, like 10 years ago, 2015, at the dawn of the cloud computing era, there was a debate, is Microsoft better positioned than Amazon or any other competitor, Google? Right.

And the smart answer, which I didn't know, but somebody explained this to me, the smart answer is Microsoft because the world is filled with people who have earned IT credentials as Microsoft experts for the companies they work for. So if you already are... There's not there. There's GitHub, there's LinkedIn. There's a lot in the currency there that people use. I mean, we use it.

We use a lot. You know, I don't think the price... But the IT professionals working at the Fortune 500... They pull the revenue with it. They're Microsoft credentials. So that's what they do it. At the beginning of this year, Gartner, which is a big kind of IT services company,

came out with the 10 technology trends for the next few years. So we thought, let's search every earnings call transcript, 400 tech companies, and let's look at any evidence of what... with these, you know, and I'll give ambient intelligence, so your computer's off, it's monitor you, disinformation security, so people send you bullshit and it has to flag it for your, for your IT, polyfunctional robots, post-quantum photography, agentic AI, so agents, all these things. So we tagged the stocks and we kind of created baskets and we followed their returns and multiples,

whatever. And one of my big summary reports, we wrote this in January of this year was, holy crap, like Microsoft's in a lot of these areas. Like Microsoft, it was in like five or six of the nine areas. And so one of our main conclusion points, was people might be slightly underestimating, like, the number of balls they have in the hopper in a number of these areas.

So it's kind of funny you say that because I kind of feel like they've invested in a lot of different areas. I sort of feel that way about Google, too, but we'll see. 100 million monthly active users on co-pilot, 800 million monthly active users using different products within Microsoft

that include AI. I don't think the product is that awesome, but I think I'm a user too. It tries to predict what words I'm going to say. Teams is the worst thing ever, which is completely irrelevant. So the big question now is the CAPEX. Like that's the whole market is hanging on that.

And Josh mentioned that they got it to over $100 billion. They're talking about $30 billion for fiscal Q1. And I mentioned that chart earlier. It looked fake. This sounds fake. I don't know what this number means, but here's a quote from the call. When you think about the full year comments I've been on CAPEX,

as well as a Q1 guidance of over $30 billion. Here's the part. You first have to ground yourself in the fact that we have $368 billion of contracted backlog we need to deliver. Not just across Azure, but across the breadth of the Microsoft Cloud. I don't even know what that means. $368 billion in backlog. I mean, even if it's half of that.

Well, these businesses were high single digits, CAPEX of sales, and now they're going to be like 15%. So that math kind of checks out. That doesn't seem crazy to me. Michael has a CAPX, Michael has CAPEX to a revenue chart or a CAPX to headcount chart of all those. the gigantic, and they're all spending this way. The only one that's not is Apple.

Apple's CapEx for this year is $11 billion. So I guess the question, kind of back to your, what world are they living in? Well, back to your crowded question, too, right? So there's a lot to talk about, I'll unpack here, right? Because a cynical person could say, look, like, they're not going to get the return on this investment.

The depreciation burden their cogs goes up because... I've never seen anybody talk over the bike. You got to talk into it. I just, I feel like it's in my way. He was telling you a secret. I feel like it's in my way. You know, sorry. Thanks for you. I'm not as comfortable with this number one shit as you guys are. No, so the

CapEx sales, the CapEx has like a three to four year useful life, right? So the problem is you depreciate that really quickly over your P&L. And so there could be a burden on your cogs. Your gross margins go down and then your multiple goes down because that price of forward earnings you show it is really correlated to gross margins for most businesses. So the risk would be they don't get return on it and depreciation is up, margins are down. And so that's definitely one of the biggest couple of big investment controversies. But I think it's a little bit like the crowded question, Like, I think you may ultimately be proven to be right if you're bearers. The return isn't there.

But you might not know the breadth of proofcases to the end of 2027 or 2028. And so you're saying it's 8.30. The main course is about to be served. And there's a massive party afterward with the most beautiful people in the world and like the hottest singers. But you want to leave now because like you're worried about your parking, like the exit, like how fat you're going to get onto the highway. Check this out. Last thing I have a mic saw. Right.

Like your parking spot at the stadiums is, you know. Also from Alex Morris. All right. So R&G expense of Microsoft nearly tripled over the past decade from $12 billion to $32 billion over the same period. But it declined by 150 basis points as a percentage of revenue. This is unbelievable. That's the sounds like productivity. It's unbelievable.

They came out saying they saved $500 million on something a couple of weeks ago, right? And I don't know how to think about that because, you know, you can do some monkey business with the accounting. I don't want to, you know, tape people deep in the depths of the accounting. counting. But like, you know, I remember years ago when I was a semiconductor analyst, I used to cover Intel and others. Intel will do this thing where they'd have a new technology, like a new wafer. And so they would first kind of have that in the depreciation. And then they'd say, well, we're really close to doing it, we'll count it as R&D. Or they'd move dollars from R&D back to COGS. And so what happens is the gross margins go up, even though the operating margins doesn't change, but the stock market reacted to changes in gross margins. So there's some fluid stuff around like, you know, what you're investing in AI, whether you call it cap, where they call it R&D. I wouldn't spazz about it. I think it's just that the net margins and the revenue have been good

and the stocks up because of that chart you showed earlier. Let's do meta quickly. And then we have other stuff to get to. Yeah, yeah. Let's talk about cooler stuff than this. So, Meta said there are 8 billion people on Earth

and Meta said 3.4 billion of those people actively use either WhatsApp, Instagram, or Facebook on a daily basis. There's never been a company in the history of the world that has had this percentage of humanity

as a daily active user, the stock is now 27 times earnings. Is that high enough? Given, like, how powerful this company's ability is to reach into everyone's minds and decide what we buy, where we go, how we shop, who we talk to. It's pretty scary.

Here's a chart from chart kid, Matt. 43% of the world uses meta every day. And that numbered, for context, was 26% of the world in 2018. 18. So, and that was, I don't know, they had a billion users and people said, how do you get bigger than a billion? Well, this is how. Time. Yeah. I think that I think that it's hard to know like what the right multiple is. I'm taking your question. Sorry, I keep leaning over the thing. No, it's wrong in my face. I think it's hard to know what the right multiple is because if I said

to you, like, let's rank order these big companies about which ones we're sure are going to be around in 2040 or aren't going to be majorly eroding in 2040. I don't. I might put meta higher up the list than some of the other companies on the list. Yeah. You know what I'm saying? Because you're not sure, like, you know, do the kids, are they going to use the next generation going to use it? You know, they do. They're on Snap and TikTok, but they're on Instagram.

They do. But you don't know about 2040, right? Like, I didn't know that, you know, when I was a kid, sorry, I'm the one. No, it's us. It's false. It's false. You made me insecure about my face and the thing and over it. I'm not used to have a large cylindrical objects in my face.

I'm just trying to get it right. So, you know, I think that there may be some longer-term logic to why it doesn't trade it quite as a high multiple as the other businesses. And I would argue, like some of the other ones have, like, we talked about Microsoft, they have like eight or different, nine or different things that could work out, right? Like, I know LinkedIn when people first saw the side of the deal, we're like, whoa, they overpaid for LinkedIn. Well, now it's like, I see a data point.

Like LinkedIn says there's 38,000 more job openings this week than last week. And I'm like, oh, that's much more interesting than the jobs report that comes out the first Friday every month. LinkedIn is crushing it for them. Actually, LinkedIn revenue for back to Microsoft is up 9%. But they said... Every quarter. They said there's been a slowdown in hiring activity.

Is that not more interesting to you than whatever the B-Loss tells us in the front? Right. That's what I'm saying. Exactly. All right. Last thing from the meta thing. Adam, we can move out this, is, again, the CAPX. I think 30 times seems right.

That's a... I'll give a number. John, Charon, please. So they have a chart showing their quarterly and year-to-day CAPX in the most recent quarter versus the prior year. and it's just unbelievable. I mean, and they were getting killed in 23 and 24 for losing all the money in reality labs and investing so much money.

Last year is $15 billion to date, and now they're 30. To be fair, half of that is hiring people. What do you mean? Paying billion dollars salaries to... I don't know if that's in here. But either way, it's wild. They are all the way in. I think if you read Zuckerberg's letter, which he put out the day of earnings, he put out yesterday,

It's basically like all these other companies that are doing AI, they envision it as a way to replace people, and we see it as a way to empower people, and that's why we're different. I think their vision is like they're going to standardize the whole world. They have $3.4 billion in their audience. We're going to get everyone standardized on our AI tools. Do you have the rebands? Do you have the med rebands? I feel like you would. I feel like you're the kind of guy who would have the meta.

No. I'm the opposite of that. You're not an early technology adopter? it's not that I'm not an early adopter. It's that that particular kind of thing walking into a room and having people feel like I'm filming them. That's like what I'm trying to. I'm trying to avoid attention

when I move these days. I'm not, I would not be that person. Interesting. You know, I think the more, if you were at a house. I don't have my, I don't want,

if you were in a backyard barbecue with a whole bunch of people, your friends with some of them, some of them you'd never met before, and somebody walks into the backyard with fucking cameras on their sunglasses, how anxious are you to be in that person's line of sight throughout the course of that day?

Because I am going in the house to watch TV. Yeah, I don't really go to parties or have friends, so I... Fair. That's a... Fair point. I did know that. It's a weird application. Like, the worst part of this show for me, and I thought about this for the first time ever,

is at the end of the show, you ask about, like, what TV shows I've watched? And then I feel like a biggest loser of all time. If you want to talk about, like, the books, I'm in. But, like, I just... Everyone's like, did you see this one? And I'm always like, I hate TV. Now, what is a book?

All right. You wrote, you wrote, you wrote. I actually prepared this time to think, now you won't ask me, of course. I will ask you. Shouldn't have mentioned it. You wrote this week, what, you wrote a piece about why valuation doesn't work. Yeah.

Was it last week? No, Sunday. Fantastic. It was so good. Nice. And it's not, look, value investors don't need to be piled on, and that's not what you were doing. I think you're trying to catalog the various reasons why it's been so difficult.

I could, I could answer it. with one term, just say cloud computing. And if I just say that, and I show you a chart from 2015, it pretty much answers everything. But you, I thought, did this more thoughtfully than I would. What's the message about why valuation doesn't work for picking stocks anymore? And after we go through that, we'll diagnose whether or not some of those things will ever reverse. Yeah.

I mean, part of me thinks it's like I could teach a semester at school about that. Like, to answer it in 30 seconds isn't easy. But I'll just say. We will spot you 60 seconds. 60 seconds. I'll say it's because the market makes stocks cheaper. Stocks that get cheaper, on average, get cheaper for a reason that the fundamentals are more likely to be impaired. And stocks that get more expensive, get more expensive on average.

Has that always been the case? Less than it used to be. It used to be, listen, I'll answer this way. I used to think like value investing made sense and growth investing was crazy in like the late 90s when I was forming my investor districts. I'm like, all right, well, I know how much of discount should. happened in recession. I know where demand and supplies and when they'll run out of ability borrow money and I'll just get kind of dimension the value. And growth was like, I'm looking my finger and there's something called a Tam. It's a total available market. And that guy doesn't

know, you know, whatever. And so it just made more sense to me. And now I'd say it's like the exact opposite. Like if I show you every stock that trades about 10 times forward earnings in the mega large cap universe, there's in a single one in there. You'd be like, whoa, that's kind of surprising that American Airlines is cheap. Like, of course it's cheap. It's going to file for bankruptcy in the next 10 years or whatever. Like, you know, the auto, the traditional auto is. Did you know that General Motors traded a low price of oil? Like, there's nothing. Like, there's nothing. on that list, it's all cheap for a reason, a reason we understand. And so the value guys is just gambling on some future improvement that they can't see

and have no visibility on because if they could, we would see it too. That sounds more speculative than betting that people will still want iPhones next year. Yeah, then betting on AI working. Yeah. You know, so I was at this pitch for a public AI high fee fund from this billionaire investor was raising money on JP Morgan's private network. And I was like, I don't want, I'm going to hate this. I want to, like, hear this pitch and I'm going to like be.

cynical. And I'm like, mumble about it when I walked out. And even with my negative pre-aditude, the guy crushed it. How should he give him? So, so it's funny. It's funny. He said, the answer is zero because, you know, I'm a cynical guy. But I was with somebody, I'll answer. So what happened is it's like a high fee public year buying Nvidia and broad common infrastructure. And by the way, it's all 50% since the guy reads him. So the person, dog and pony show said, hey, isn't this all obvious? And then he gave an answer to it. I was like, this guy's money. He goes, yeah, you know, this guy's got several billion dollars personally. And he goes, um...

Is it Chimoth? He goes, I have made a hundred, 20% of my net worth on things that everyone else told me was obvious and then lost 20% on everything else everyone's ever told me about. And I was like, huh, okay. So you bought some cloud computing 10 years ago. You're buying some AI stuff now and you're trying to get me to sell it when there's seven years left in the cycle. Come back to me and, you know, like I said, you at the party, it's 8.30.

We're at, there's a dinner and a band and a party until 2 a.m. And it's 8.30 p.m. you want me to leave. Yeah. Because it's a 27 times earnings on meta. Great. Show us these charts. That's how I feel about it. Here's a price to forward earnings over time. So how does this figure in?

This is part of the AI answer. So I just think Costco is a poster child for a company where you get margin expansion that gets a higher multiple. This thing is a low margin business. And the multiple got to over 50 times late last year on forward earnings. And the reason is because their net margins were going up. And people thought they do a better job of monetizing at the door and, you know, all that kind of stuff.

And I pointed it out because there are a lot of really low margin businesses in the market. I am recommending McKesson and Cardinals and Cora, they're drug distributors. For people listening, if they knew what the revenue of McKesson was, if you guys knew, I'd be shocked. Okay, McKesson is 360 billion revenue company one year at 1% margin. They're a drug distributor, pass through. If they can somehow predict employee and customer behavior better and margins go to 1.5%, that's 50% earnings growth.

It's going to trade a 25, 30 times earning. So there's a lot of these like tens of thousands of employees, tons of revenue, billions of dollars, low margin. And if AI enables them to predict behaviors better and margins go up a little, you'll see Synthes and Costco and Walmart and all these businesses. So there you want to, not one, but a valuation mean reverting guy is going to say, oh, well, this thing looks expensive. And all they're really doing is shorting companies that have potential for margin expansion and productivity. And so that's, that's like a key to why I don't want to use valuation in like a three-year window to pick winners from those. Another thing would be, and I don't know if you're about to show another chart. You have Nvidia as the poster child of AI revenue beneficiaries.

So this looks like your Microsoft chart. You showed it looks fake. The right half of it looks fake. They guided up in May of 23. It looks like a projection. Right. It just looks like some idiot first graded across an Excel. Yeah, like in Silicon Valley.

It's exactly what you criticize and who is for. Like, dude, did you just drag that across Excel? Like put some cyclicality in. Like, what are you doing? You're fired. Right. Right. Right.

So that's an obvious, you know, everyone knows the revenue beneficiaries. We talked about that. I think the part that's tricky for people. And I don't know if you have another one, it's just the impregnable businesses. So whatever it's, you know, aggregates or toilet paper or, you know, water or waste management or whatever, like those stocks can trend higher. Not because things change at all, the growth cycle change, but because in 2030, I know I'm still that waste.

I'm still going to need water and toilet paper. And so the relative 2030 estimate achievability got better. And all you're doing if you short them on valuation or sell them is saying, you don't, you don't want to sell, but you're selling businesses that have a higher probability being around than others, right? I showed another one. I think I picked Getty images or something of like, that looks really cheap versus history.

Do you think that makes any sense to get longer because it's cheap? No, like you don't want a long company that have a whole, like a tax accounting. Or there's a bunch of software companies where like they're not going to exist. So they got cheaper for a reason. The reason is they're more likely to be disrupted. Number two, the way quantitative money is managed. We're going to go, we'll go through all six reasons. Yeah.

So that's what I was talking about the whole valuation neutral stuff with the $1,000, you know, 100. Yeah. So that they don't care. They're longer short of the valuation. All right. Three, we did this too. We tell investors are less valuation. We know that, okay.

Wait, hold on, I have a question. So cheap stocks, shitty companies. Let's call them shitty companies get cheap. They stay cheap. They get cheaper until they just die. Does that mean that the market is more efficient now than it used to be? Because there used to be an overreaction to the downside. I think it just means that the market has gotten more anticipatory.

It used to be years ago, people would say, well, I want to buy the stock because it's already discounting the most of a recession. So if we have a recession, it's already discounting it. Now, stocks that get cheap into recession are still the worst during a recession. The market was right to take them down in an anticipatory fashion because the market knows they're most impaired. The market gets increasingly anticipatory. I think that's the answer to your question.

So maybe it makes sense that the biggest pods of money are talking about three-day windows because over the long term, everything's already in the price. I think that valuation will work. And I want to avoid incredibly expensive stocks and incredibly cheap, like the top and bottom decile. Stay in the middle, 80%. Then I don't have to worry about valuation.

I just find margins. But it's all about margins. Yeah, margins are extremely expensive. accelerating revenue or other fundamentals. So, yeah, I think that makes sense. You point out that valuation has not worked for a long time. Like, this is not new. No.

It's just getting more. It seems to get more extreme. Right. Okay. Behavior into a recession. Did we just talk about that? Exactly. All right.

And then valuation being related to margins. I think that's like a really key point. Yeah. It feeds into my cloud computing schick. It's like these are companies that used to have a computer room. Like, if they wanted to expand, they would have. have to buy more servers from Dell and HP. They would have a cost that just isn't there anymore. It's a different type of cost. Part of who we talked to are like these cross-asset guys or

usually like if I go out of the U.S. or I'll say people over a certain age, and I'm 56, so I'll say my age or older, they tend to sort of use like Grantham or Schiller P.E. or Cape or like a valuation mean-reverning framework. And they'll say, well, I want to be underweight U.S. equities. This is a TMT bubble like 2000. And I don't agree with that. But I push back on them. As I say, all you're saying is, do you think margins are going to kill for U.S. equities? Because if I show you how much market cap has above 60% gross margin today versus history, I've shown me how many companies have high margins, all you're saying is that, you know, that you think margin is going to kill. So like, you know, I like the example of like, do you think there's anything that's worth more money than

anything else? Like, do you think the four seasons is worth more money than Motel 6? If they were both $40, which one would you choose? Yeah. Right? Like, they're not going to trade at the same multiple because one is growing faster and has higher margin superior to the other. So this is what they got wrong, the bears. This is from duality research.

And in 2017, 2018, when we were hitting, quote, peak profit margins, it was really difficult to foresee that the mega caps would continue to take market share to expand their margins. It was impossible. But that's exactly what happened. We're still at all-time highs in the market because we have all-time highs, all-time highs, all time highs and profit margins. Yeah, the median stock's margins and the top 500 aren't all the way back at highs, but they're certainly up a lot, you know, from where we were,

you know, six, nine months ago. And the mega caps are high. So yeah, S&P, you know, maybe in a dollar basis, that's true. But I look at even like the median stock. And I think the median stock probably has, I know CAPX is up for the big hyperscalers, but the median stock has lower CAPEX year over year, wage pressures down year over year. I haven't. seen a lot of companies. Maybe we'll see it, like you said, in the illegal immigrant stuff with healthcare services or restaurants or, you know, roofers or home builders. But generally, we haven't seen companies talk about labor shortages at all yet. So I don't think wage pressure is there. Commodities, Bloomberg Commodity Index, they're kind of down. Currency is going to

help a little bit. So, you know, some companies have trouble with pricing, but a lot happened so far. So, like, I think the median company could probably have gross margin expansion in the next six months. This is the funny thing about tariffs. Like, even if, even if that becomes a problem for companies, it's happening at, profit margins that are starting at 14%. Like, they'll figure it out. Yeah, and also, like, I'm underweight staples and we're underweight discretionary. We have kind of a cautious few on staples because I think they're the most vulnerable.

But 58% of the S&P is tech comp services and financials. And on the margin, like, they're not really going to be that impacted by tariffs, you know, in terms of the bulk of the earnings. And we've seen that so far during this earnings season with who's reported generally in tech and financials, comp services. So sure, like, you know, if you're a staple company and you kind of have. no game and Walmart comes to you and says, yo, eat it. You can decide. Like, either you eat it or they put you on like shelf 912 on the back and they hurt your sales, right? So it's always a trade. That's a volume or price. But Walmart and Amazon are a one and a half trillion in revenue.

So they got the wood, you know, so you got to kind of, you know, so I think it makes sense to be cautious on most of the staples and select the consumer stuff. But I don't know why I'm negative on on JP Morgan or negative on, you know, the tech companies that are exposing. It's funny you were talking before about, like, the long-term growth raid. I was thinking about Palo Alto networks and they announced a deal this week. And I remember thinking, like, man, these cybersecurity things, this is like, five years ago, like this is so obvious. Like, of course you need security.

And this talk to the most obvious trade on Earth. And by the way, like this, talk to any IT gets, like the last thing they'll cut. Like, I told you moved my off. You can cut it. I move my off tomorrow. And the guy came today to make sure the firewall and the thing that I'm starting tomorrow is like 100% good. I think this was, I think this is one of the layup trades, even before A.

still picture a board of directors at a publicly traded company taking a vote right let's reduce cyber spend next year by 10% we have time for one more and I really wanted to get to this because I think it's low key one of the most fascinating things to be following going forward right um the wall street journal did a really good very data heavy piece about AI already disrupting new college graduates and my daughter's 19, so her friend's older siblings have all just graduated college in the last year or two and every one of them wants to have a conversation with me for some reason as if I know anything about how to get a job,

how to do an interview, how to present myself on Zoom. I literally can't help anyone. That's not true. But I also will never say no to a young person who, especially if we know. We have more interns and employees, but keep going on. especially we know the family. So anyway, I'm doing meetings like that and I'm trying my best. Right.

But anecdotally, and I now have the data to back this up, anecdotally, it really feels hard, harder than ever, other than in a recession, to be coming out of a great school, B.U, Tulane, Michigan. Oh, whoa, whoa. Schools where people should get hired. Whoa. What? I went to Michigan. I know you did. Let's not lump that into some of the other places you mentioned.

People should, Tulane and comparable schools like Michigan. Let's calm down with the Michigan Tulane compromise. It feels anecdotally talking to parents that kids coming out of school are having a tougher time than ever. Yeah, totally. And now we have the data to back this up. So I'll just show a couple charts. So here's one. Share of graduates in the labor force with a bachelor's degree one year after graduation.

So this is just really showing like the big picture, the backdrop. And then here's some stuff from the piece. the unemployment rate over the last 12 months ending in May for recent U.S. college graduates, these are people between the ages of 21 and 24, is 6.6%. That's compared to 4% for the overall labor force. I'm just Googling what is Burning Glass Institute

just because... I made it up for the purpose of this conversation. Okay, I just want to know. 50% drop in entry level hires at major tech companies. That's down by half since 2019. Look, like, chat GPT. It's really tough. ChatGPT, Deep Research 03 is like 10,000 interns.

Okay, we, I'm like you on this front. We have a ton of interns because everyone's kid, niece, nephew, friends, kid. I just say yes. The truth is none of them are useful to me because all that we do is code and Python against our database. And it takes us time to train people. Are they faster than Uber eats, though? Oh, right, right, right, right. No, but I don't want to do that stuff.

So I try to, I try to give them a real project and have their name going a piece of research and have them help. And so what we've been using them more for is spot checking some of the work we're doing with natural language processing or or that kind of stuff where, for example, I mean, we have, I'll give you four or five projects I'm working on with different interns, friends of mine's kids, whatever. One, we did a piece looking at activist investing. We published it this week. And I think you're on my distribution list. Yeah. We kind of looked at, you know, you know, the history, the distribution of returns on activists. So we had the person help us kind of really define who the correct

attributes were, remove some individual names that didn't make sense, that kind of stuff. We're doing a piece on variable compensation of management teams. That's really hard to do

with natural energy processing because it's not like, it's on page 151 of the Bank America, 10K of what the guy made, and it's really complicated. So we're trying to do some kind of spot checking, reading, like trying to use them to do something that I can't do with NLP.

Litigation, we're doing a big piece on lawsuits because there are a lot of stocks that look optically cheap. you know, may they had a fire at PCG or Hawaii Electric or maybe they did a PFS at 3M or maybe they did an opioid or whatever. So you have the interns helping you with an AI. Yeah, with natural energy processing kind of output to sort of make sure it makes sense. So are you guaranteeing them all full-time jobs when they finish school? No, we, we don't.

You can't. We just try to help my friends and relatives kids have on their resume that they worked at my firm and that kind of stuff. Here's the question. Last chart. But your point's well taken. Like, you've got to have differentiated skills. And for us, it's like coding or other stuff. Pay attention to the slant higher under bachelor's degree in the fourth column.

This is unemployment rates by educational attainment and age. People with a bachelor's degree in 2018, 2019, 3.8% unemployment. Now it's 4.9. That is a really big jump in a four year, six year span of time. Look at graduate degree. Same thing. And graduate degree is as steep a slope from then to now. And these numbers are not all of a sudden going to reverse.

I think that what I struck my eye immediately was where your mind was, which was the graduate degree at 4.2, 23 to 25, is the same as some college no degree in 1819, 4.2. That's a little bit messed up. How is that sustainable? If you stayed in college from 1819 to get your master's degree in 25, you got nowhere. You know, that would be a rough six years, you know.

So, yeah, I think, I think. What do you think is the trajectory of this? I think it's because you have to get a degree in something that's useful. I mean, you know, and look, I have friends that are very senior at big law firms, investment bankers. Everyone's having the same conversation. Like, how are we going to train people to be like our generation? Because if I can already get a 30-page brief written, that's 70% accurate and one second for free, why they pay a first year, you know, a bunch of money, bill a client 500 grand, and they write something that's 70% accurate. And it takes them a month and I have to yell at them.

Like, there's every profession, investment banking? Like, come on. What do they do? They take the pro forma PNL combined for two entities. Well, I can use chat, TB, deep research, real free and do that. The Gen Zs are going to, are going to hate, they love AI now for their homework. They're going to hate it. I'm really worried about this for the second half of the decade.

I think there'll be a new body of stuff that forms and whether it'll be, I'll give me a great example in health care where, you know, we may have talked about this last time. But like, if healthcare, if you get better at like image recognition with AI models, let's say, right now, 6% of women are told they have breast cancer when they don't, because you've got to have zero type 1 error. You can't have anybody have cancer and tell them they don't, right? So somebody comes in, you tell them they have it. There's more false positive. There's always false positive.

Type 2 out, right? So what if it's 6% right now for the best radiologist in the world, and it goes to 0.01% with AI, but when it's 0.1% somebody finds out, you screwed me type 2 with a machine, and there's a lawsuit. Like there's going to be, there's no lawsuits at 6%, but there will be a 0.01 if it's not a human. So there'll be a whole body of new things that happen on checking. and quality control and I'm legal and a company. I think there'll be new jobs that form.

They'll be, you know. Like, become an expert in the things that AI usually gets wrong. Right, gets wrong. Or there's going to be new stuff that happens. I'm not, what do you think about this? I think it's a lot of possibility of a, for, you know, and I think it's just hire less people to do the high paying jobs and, you know, that they have one last point is the S&P 500 is way different than the economy.

And I think people like economists always like, oh, you know, we don't want to see, we want CAPX to pick up and, you know, whatever. So I just think the top 100 companies can be superior for sure. I think that entry-level jobs are now superfluous, and it is a huge, huge issue. You agree with me. This is not going to be great. No, it's awful because I think I saw something that only 10% of respondents, business respondents, are using chat GBT or any sort of AI system now. When it is more pervasive, when it's 20 and 50 and 70, and eventually everybody.

I think it's higher than that. Whatever it is. You just don't need kids to be doing entry-level roles, which is catastrophic. Now, I also know that there will, there are always, there's always this fear with new technology and there's always new jobs created. So I don't want to. I'm a little bit in that camp. So I don't want to be hyperbolic.

Yeah, you're, you're, you're, eventually. I would say like, look, you used to use, you know, shut, you know, it's the Milton Freeman thing, right? Like there used to be, you know, used to use, you know, shovels to dig ditches. And then you got, like, big, big machinery. and, you know, if it's a jobs program, you tell people to use spoons. Like, people will just,

they'll navigate towards some other skilled things, and there's a lot of stuff that's going to happen there. I mean, you know, I think there's going to be AI software. There's going to be AI semiconductor. It's going to be powered infrastructure. It's going to be energy transition. There'll be all sorts of new jobs. Of course.

There's going to be, you know, life sciences. There's going to be tons of old people demanding, you know, tools and diagnostics and services and other stuff. So, look, I also get that there's a lot of really high-paying professions that don't require an education where I can get the non-repancy the knowledge for free. I mean, anytime I have some HVAC guy at my house, we got a new air conditioner in my kids' room today, I'm thinking the Ph.D. in 30s or experience got me shit on my HVAC guy who can just drill me with pricing and I have zero elasticity of demand, right? So, I mean, there's a lot of

professions like that where, you know, plumbing that I think are going to be, so those impregnable to add. The moms in my town are all getting this content fed to them by the algorithm now on Instagram about like push your son and daughter toward like these types of professions. My son goes to culinary school. I'm, I'm kind of happy about that. People get to eat. Until the robots come. All right, we could we could cap it there because this kid Max is going to throw himself out the window. Everything's going to be fine. You'll be fine, I promise you. This is the longest season. You have fun on the show today, Adam? You know, honestly, you said it goes fast. To me, it goes crazy fast. I'm sitting there thinking,

like, I wish I had in my life something like this I could do all the time. Like, I'd come on once a month to be like. Well, listen. I love being with you guys. Great to see you. We'll take you up on that. Anytime. Honestly, it's easy for me and I love being here.

All right. So we want to hear about all the books you're reading. Big brain. Let me hear. No, I just not like, I was kind of kidding. It's just that the... Are you reading books still? Because Michael gave up and so did I.

No, I... I'm going to read one book by the time this summer's over. book, and this guy will be psyched that I'm plugging this. And I didn't, it just literally was on my stack. It's called On Board. This guy, Jonathan Foster, runs a fund called Current Capital. It's been a bunch of boards of companies. And he gave me his book.

And obviously, because I'm a sucker, he references some of my work in the book. So, and, and, but he's good. Actually, I'm looking at your shelf there, Barton Biggs on finance. I'm also in that book. So this is a good, it's a good little moment for me. Adam's in 13% of the books. Yeah, but 2% of your shows and about 9% of your books. So this is a great one of I love it here.

I started listening to books. And I think I could do it. I think it's going to stick. It's funny you say that. I just, I've learned, I didn't know this about myself until two years ago.

But I, and maybe, maybe this is like bad, bad thing to say, but like I just don't remember stuff when I hear it. Like, maybe my wife. My mind drifts.

Yeah. And so I'll listen to a podcast. And then afterwards, I'm like, my wife's like, we listened to that in the car when you were driving together. I wasn't there.

I drift sometimes. She's like, no, no, no, you literally, we were talking about. I'm like, I don't remember. Yeah, I'll just, And if I read it and I see the chart, I remember it forever. If we play golf, I will remember all 18 holes, the right, the left.

I'm like a visual guy. And if you tell me, like, the name of the guy we played with, I will not remember. But that happens to me when I read a book, too. I'll read a 400-page book. And a week later, I'm like, wait, I don't remember anything. See, I'm just more visual that way. So I just prefer to read it. And I think it's also, you know, I'm still like, you know, I guess I'm like in the generational gap of like I physically hold the book.

It feels weird to say that I'm an audio book guy now, but no shame. No, you're in the majority. I'm wrong. You're right. I just don't, I don't enjoy. I just also, for some reason, don't have a lot of time in my life. My wife's got me on this guy, Jay Bernstein's podcast, and I will listen to who it's a, he has a thing where people talk for six minutes. And I walk to work and it's like, it's like a 15 minute walk. So I can actually tolerate the six minutes. He's pretty, he's got some very interesting guests on. But I just not, other than compounded friends. I'm just not a regular, you know. I think I've got my AirPods on three hours a day. Honestly. Oh, really?

Just all the time. I read a physical book. I finished it yesterday. Very proud of myself. So I don't read... What is the word physical meaning? I don't read nonfiction anymore. I only read novels because I'm a writer. I'm the exact opposite. I only read nonfiction.

I want to get back. I want to become... I want to improve my writing. And I don't think you can do that unless you read good writing. So I read our friend Gary Steingard is out with a new book. Gary's one of my favorite authors ever.

Probably my favorite novelist right now. Give them a right. So Gary wrote a super sad true love story, which was a smash hit in the 2000. decade. And he's had some huge hit books. And the new one is really short. I read the large print edition. And it's only like 200 pages. It's a perfect summer novel. And when you get to the last two chapters, like your heart breaks in half. It's like, this is the thing that only novels

can do. And you don't get from reading a nonfiction. I love this side of you. This is a very nice side of you. Like success did that for me. Yeah. This book will, this book will completely break you when you get to the last but it ends in a it ends in a decent place but it's uh this is this is the only books that I am going to give time to is like things that are

evocative and bring emotions out it's an experience I love it I love where your head is right now oh it's called uh Vira or Faith for people that are like what's the book uh really really great summer book so I have a stack

on my on my bedside I just try to like you know, kind of put them in, you know, and read them as people recommend them. So, but I'm 98% nonfiction, but I should, I should be better. I like where your head is. What about you? What are you, Mike? I'm listening to The Godfather. Oh, the original. It's incredible.

It's okay, yeah. Breaking news, it's good. Yeah, yeah, yeah. I like it. Hey, you know, many years ago, might have been 2000. You and the mafia? No, there was, there was like a, you know, top, top books of the last century or whatever, and I, like, got them all. And I was, like, committed to, you know, 20, and I plowed through, like, 12 or 13 of them.

But I couldn't make it out through because some of them were, like, you know, 1,000 pages or whatever. But, you know, it was, like, forced me to read, like, the old, these big goodies. It's smart. It's good. I like, don't you feel like this has been a good ending as opposed to, like, I watched the, what's the TV show? Yeah, it's amazing. Neighbors and Friends. And I liked this.

So we got that going for us. And you, you read some. And I read a large print edition of a 200-page book. And I'm reading about this guy who was, like, on the board of a bunch of companies. He's actually very interesting. He's talking about a bunch of things. But I, you know, I'm like, if it's not, you know, stocks or sports, I'm kind of out. I got it.

I'm trying to broaden my horizons. Yeah. Yeah. You know, well, pleasure. Thanks for having me. Yeah, thanks. And if anyone, if I can do the 30 second plug, just go to Trivector Research.com. Oh, I was sending people there.

Let's give them the URL, though. Yeah, we'll give them the URL. Okay. www. www. And if you say you're, you know, compounded friends, a fan, we'll give you a month for you just to check it out. Look at that. All right, ladies and gentlemen, this has been Adam Parker.

Great to see everyone. Follow Adam on LinkedIn, where he's active. And please check out TriVector and Trivariate, his research products. Great job on the show this week, guys. Great job on all the shows. Thank you so much. The entire compound crew. Continue to crush it.

All right, guys, thanks for listening. We'll see soon. Thank you, man. Appreciate it. We got to get it. Thank you.