Yet Another Value Podcast - The Science of Hitting's Alex Morris dissects "Letting Winners Run" philosophy and strategy

Episode Date: February 7, 2024

Alex Morris, Founder of TSOH Investment Research, returns to Yet Another Value Podcast for the fourth time to discuss his recent article, "Letting Winners Run." For more information about Alex Morris and subscribe to his research service, TSOH Investment Research Service, please visit: https://thescienceofhitting.com/ You can Follow Alex Morris on Twitter @TSOH_Investing: https://twitter.com/TSOH_Investing "Letting Winners Run" article: https://thescienceofhitting.com/p/letting-winners-run Chapters: [0:00] Introduction + Episode sponsor: Alphasense [1:47] Letting winners run thesis [6:23] Hindsight bias [8:26] Cash flow considerations [12:07] Selection bias [14:36] Examples of the "Letting Winners Run" strategy (forever business vs. 5-year/20-year outlooks) [18:55] How "Forever Business" in media has changed over the years [21:46] Management [26:07] Is there something unique about big tech [29:08] Thesis drift + examples [38:03] Knowing when to sell "forever business" [41:56] "Beautiful Sunset" principle [45:27] Dismissing banks an example of dismissing "letting winners run" [51:06] Why "Best Ideas Funds" fall short [53:40] Final thoughts and closing Today's episode is sponsored by: Alphasense This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the #1 rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities, like Smart Synonyms and Sentiment Analysis, provide even deeper industry and company analysis. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As a Yet Another Value Podcast listener, visit alpha-sense.com/fs today to beat FOMO and move faster than the market.

This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the number one rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities like smart synonyms and sentiment analysis provide even deeper industry and company analysis. Alphasense gives you the tools you need, to provide better analysis for you and your clients. As a yet another value podcast listener,

visit alpha-sense.com slash fs today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS. All right, hello and welcome to the yet another value podcast. I'm your host, Andrew Walker, also the founder of yet another value blog.com. If you like this podcast, it would really mean a lot if you could rate, subscribe, review wherever you're watching or listening to it.

With me today, I'm happy to have on either. for the third or fourth time. I'm not quite sure which one it is. My friend and the founder of the Science of Fitting and Dad to be Alex, how's it going? Do you well. Thanks for having me. Enjoyed your podcast with Bill Brewster, our usual friend. Anybody who hasn't listened, should go listen. It's a good pod. I appreciate that. That's on a completely different feed. It's on the business brief feed, but please go check it out if you have it. Before we get started, I'll just do a quick reminder to remind everyone. As with every podcast, nothing on this podcast is investing advice. Always true, but particularly true today. Alex and I don't have a particular

stock we're going to talk about. So who knows? Maybe we'll talk about 500 different companies. Maybe we're long all of them. Maybe we're sure at all of them. Who knows? But just remember, nothing on this podcast and investing advice. Please do your own work, consult a financial advisor, all of that type of stuff. So Alex, the reason I wanted to have you on, aside from third or fourth time guess, I like having you on. It's fun. People seem to enjoy it based on our Twitter feed is you published this great post almost a month ago now on letting winners run. And when you did,

I instantly emailed you and said, hey, I've been thinking of something similar. I'd love to have you on to just discuss the concept. So people who haven't read it, I'll include a link to the letting winners run post that Alex posted in the show notes.

But I just wanted to turn it over to you, maybe to start, just describe the concept of letting winners run, why you did the post and everything, and then I'll follow up with questions and everything. Yeah, well, first of all, obviously, thanks for having me. Always enjoyed being on.

You know, I think the post is, In some ways, it was kind of a combination of thoughts about having for a while now, which kind of aligns still what we're seeing in the market generally in terms of, you know, a handful of very high profile names that have had strong runs for, you know, a very long period of time now. And people thinking about this question of when to sell, do you ever sell, you know, that type of thought process or questioning. And, you know, it aligns with some other posts that I've written recently.

You know, probably the most notable one, which ties into letting winners run, is this idea of a coffee can portfolio, which goes back to an investment advisor, I believe was in the 50s. Long story short, they would give out stock recommendations. And he had a client who would take those recommendations and put a fixed amount of money into all of them. I think it said $5,000. But the one thing that this client did not do was ever selling the stocks when the investment advisor said, hey, now it's time to take the profits and to invest in something else. And when they looked at this client's portfolio after a period of, you know, 20 years or so, let's say, what they found was a decent number of the positions were, you know, basically

immaterial worth $1,000, $2,000. They had lost a lot of money. There were a handful that were worth worth $50,000 or $100,000. So it made $5,10,000 or more. And then I believe there was one or two positions that were worth, you know, north of half a million dollars. So, you know, the advisor who wrote this post basically talks about the idea of this client who had... And it seems to be a much more simplistic approach to investing how his outcomes were much better than what they achieved by spending all their time working very hard to decide when to buy and sell things. And it aligns with conversations I've seen over and over again, notably in the art of execution, which is a good book written by a gentleman who ran the Best Ideas Fund. He becomes a similar conclusions in terms of all the managers that that performed the best had a handful of positions that had grown to be very large in size. There's a great quote from Gavin Baker along the same line.

So it's just something I've seen over and over again from investors that I that I respect who are clearly intelligent and who have been playing the game for a long time. So I just find it very interesting to think about. That's great. So you did mention Best Idea Funds. And I think that's actually one of the things I had in my mind when I was emailing you. So I want to come back to that. But let me ask you my first question.

In 2021, one of the most frequent things. And I think I know the person who started the same, but I won't call them out. And not pull them out. I won't identify them because I don't know if they didn't want to be identified. But I heard from multiple investors, a story that would go like this. What's the biggest mistake Stanford ever did? The biggest mistake Stanford ever did was in 2004, 2005, they had a big position in Google, and they sold all of their Google stock.

And if they had just held that Google stock, the Google stock would be worth a trillion dollars. Or if they, you know, another that comes to mind recently is Bill Act when he's been criticized in Harvard nonstop, not trying to turn this into political podcast. But one of the things he criticized them, was he gave them equity in a smallish Asian startup. And he said, hey, I think this is a killer. I'm giving you this equity. You cannot sell this, right?

If this equity, like, I think the story is if it goes up more than five times, I get to choose the proceeds of whatever above five X it did. And equity went up 20 times and it turns out Harvard had sold out, right? So I would hear these stories of people saying the biggest mistake Stanford ever did was selling Google in 2004, 20075. And that is true, you know, but I, do you think there's a lot of hindsight bias there. And I can tell you a lot of the people who were saying that in 2021, they were holding these

huge winners, you know, that with, again, with the benefit of hindsight, we're really benefiting from the Zert bubble, you know, were way, way overvalued. It just, you know, in 2022, it really went against that. And that's not to say these people weren't smart. The ideas weren't great. Maybe they come back. But, you know, I think, again, with the benefit of hindsight, they'd probably look back and said, ooh, maybe I should have turned a little bit of that.

So I guess my first thing with. say like a lot of we can talk selection bias we thought but what would you say to people say hey Alex you're coming and telling me this and like we can we'll talk Microsoft we'll talk all these but you're you're really using hindsight bias here right if I had said the same thing about holding Enron in 2000 and I was like the biggest mistake would have been selling Enron in 1998 well the biggest mistake would have been holding Enron in 2000 because it was going to zero real quick and we can point to dozens of other examples you know Sears was the best before we stock of all time what would you say to that kind of selection hindsight bias pushback

Yeah, in the article I should mention that the client from the copy can portfolio, the position that was largest of all was Xerox. And, you know, obviously, over time, that eventually got to a place where you would not have wanted to have had 80% of your portfolio in Xerox. So it's, you know, very specific. It aligns with that example perfectly, right? And I think I wrote about this as well as it relates to Coca-Cola and Berkshire's investment, which I find fascinating that. I believe Buffett started buying in 88 or 89. He bought his last share in 94. At the peak, it was worth, I believe, 35% of the equity book,

and he has not bought or sold his share once in the past 30 years since 1994. And I think my takeaway from it is less so about, as Coca-Cola have been a great investment or not, and there are obviously lessons to be learned there. It's more so just getting into understanding the mindset of someone who's able to do that. Because that's very far away from how I think people probably approach investing, generally, especially smart people, right? People who spend a ton of time working at investing and are thinking of a portfolio as a collection of securities with complied IRAs over, you know,

some time period, five years, ten years, whatever it may be. And they kind of back into sizing and selection based on that criteria. And it's interesting to think how different approaches may approach that question very differently and how it kind of works out. So it's less of a, this is the best way to invest, more of a, it's very interesting to see this very different style of investing from what you normally see and how it can work when obviously it works well, right? Just on the Buffett piece. So one of the things, and you mentioned this in the article.

So I'm very much stealing what you were saying, but you mentioned, hey, you know, it's interesting. Buffett did this and he never bought her shoulder to share, but he did have, I don't want to say other sources of income because it wasn't Buffett who had the other sources income, but Berkshire had the insurance flow. Right. Every year, you know, they're great, they've got great advantage insurance businesses and they started buying more businesses. So every year they had more cash coming in. And you mentioned the advisor who kind of just coffee can portfolio it. I think one of the things you said for both them is they could maybe they could coffee can a little easier because they had more income coming in on the side. So they knew. And that's great. But I think, you know, my pushback there would be if you're a professional investor, you're aspiring professional investor, like you have to look at your portfolio every day. Like it is the only thing. that you're going to make. And, you know, the coffee can portfolio sounds great, but my second pushback would be,

hey, if you need this other source of income to do it, like you're kind of saying you need a put option on yourself almost or you know, you're kind of under, you're taking under optimization in your portfolio because you've got other income, you know, and even if you've got other income, like if you were someone who was fortunate enough to save, let's say $10 million and you have $100,000 per year income. Like $100,000 per year is a decent chunk of change. But it pales in comparison to the $10 million. So if like one stack had run up to 80% of your portfolio, it would be kind of tough to be like, well, I've got $100,000 of income, but I've got this one,

$8 million position. So I guess that would be my second pushback. You know, like is this really optimized investing when we're looking and saying, hey, it only works when you've got other income sources to go on. Yeah. I mean, I think that the put my question back would be, what is optimized me and what are you trying to optimize for? And I think that's where, that's where that's where it gets grayer, right? And that's where we get outside of black and white thought process of what it means to be an investor. And I think that's where it gets, the conversation gets messier.

And you get into these questions of, you know, what part of this is quantified IRRs and what part of this is faith in a management team or a manager of faith in a business, faith in a TAM. You know, these are things that you can have thoughts on, but obviously can't know with any certainty. I think the cash flow consideration, you know, warmed up in 2000 or whatever, you or want to pick during the time period when the position got to a very, very large size, but you could have very reasonably assumed that if you looked at over the next 10 or 20 years,

that you had the position underperformed by, you know, some some amount of margin relative to the index or another opportunity on pre-tax phases, let's say. You know, he had reason to believe that the position was going to become much smaller over time. Now, does that justify the decision? I don't think so, but it does make the decision different that if you were sitting there with the portfolio and you were thinking, I need to take cash out of this every year for the next 20 years. I think that would impact your thought process and what was the appropriate thing to do. And obviously, there were other considerations there, like being on the board of directors, etc.

But yeah, my main takeaway, most of this stuff is it's ultimately a personal decision based on kind of your desired way to approach the game, which obviously should hopefully align with something that can work well over time, but then structuring your process and decision-making to align with that. And now a quick break to remind you that this episode is brought to you exclusively by AlphaSense, the AI platform behind the world's biggest investment decisions. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As yet another value podcast listener, visit Alpha-dashcense.com slash FS today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS.

Let me ask one more question. So you have. Actually, I'm going to ask a lot more questions, but just one more. The best fund managers, and again, I want to return to the concept of best funds. But what he said is, hey, I know of no great investors who haven't, you know, had one or two big winners that grew up a huge percentage of portfolio. And I guess I would just ask how much of that is resulting or selection bias, right? Okay, cool. If we start with 2,000 managers and 40 of them have these, you know, mega home run winners, yes, your 40 best investors had 40 mega home run winners. But there are 1960 others and maybe they weren't as smart.

Maybe they were just as smart. Maybe they were smarter. But they didn't have the mega winner so you don't point to them. Like how much of that is just, yeah, it's, you know, you had 2,000 monkeys and 40 of them through the stock and hit Apple or Tesla or Netflix and their returns were incredible. But 1960 of them through the stock and hit Cisco or Oracle. And I'm just naming names, but stacks that didn't have quite as good of returns, you know. Wells Fargo in 2014 is one that I really like to mention because,

I can go back. I put a post up. We can probably include a link to it as well. Warren Buffett as recently as like 2011, 2012 was saying Wells Fargo was his opportunity cost. Every time he thought about buying more of a stock, he would just say, why don't I just buy more Wells Fargo? And two years later, the Wells Fargo scandal comes out. The stock's gone nowhere for a decade. And Buffett's now sold all of his Wells Fargo. So I do, you know, I just wonder how much of this is selection bias. So I guess I'll turn that over to you. No, I think it's a fair question. I mean, I think there's other valid, you know, for example, art of executions based on he managed his bond. I think it's over a seven, eight, nine year period, right? So we're not talking about, like some multi-decade

study covering. I wouldn't say it's not the most, you can ask questions about, first of all, to the study, let's say. Again, I think the bigger point is, one, obviously avoiding extremes and just thinking about what is, what is kind of the lesson here? And again, how does it, people can look at their own portfolios? How does it compare to your own portfolio construction? Is you look at the value of your portfolio, let's say, you know, what percentage of it is from companies that have been in there for more than three years, more than five years, whatever it may be? And again, are you even, is that even a desired outcome or condition that you want your portfolio to have? I mean, that's a, that's a question for people to answer. For me,

it is. But it's because I'm trying to invest in a certain way. So again, it's always up to the people for them to decide what they think is the most appropriate way to invest their money based on their own considerations, right? Just on, if you're looking for the letting winners run strategy, right? Right now, if you had invested in the past three years, the best answer would have been either by, you know, Apple, Microsoft, or an AI winner and video would have been a great one. But it does strike me the example you gave for Buffett was Coke, and the example you gave for kind of a retail person who was copying it was Xerox.

And the reason that strikes me is Coke and the other, the other, the other stock, guy named for Buffett Wells Fargo. Those are timeless businesses, right? Coke has been around since the late 1800s. I think it's pretty safe to say people are going to want to drink something that they enjoy. You know, we can talk about sugar issues and all this sort of stuff. But I think it's probably pretty safe to say 200 years from now people are probably going to be drinking Coke. Maybe it'll be a Diet Coke with a better, you know, zero sugar. But that brand is pretty timeless to me at this point. Wells Fargo banking, it's what's the joke? It's the second oldest business in the world like you can feel pretty comfortable 200 years from now there's going to be

banking maybe the nuts about changes but maybe it doesn't right like i think crypto has taught a lot of people hey the banking system is pretty nice reason so buffett like his forever businesses the business is he's let run if you think about geico insurance american express credit card slash banking the businesses he's really let run have been forever businesses the most recent example is apple which that's interesting because it may not be forever business but it's probably more forever than some of the magnificent seven, I would probably say. But anyway, he's got these forever businesses that are timeless. The example you cited of the coffee can't portfolio, the big winner there was Xerox.

And a lot of the big winners, when I think back to the Google examples, the studies I said earlier or the people earlier with Google, they were not timeless businesses. And I just want to ask you, do you think there's something to that, like Buffett was choosing forever businesses for these letting winner runs example versus, you know, maybe an analyst or someone else is choosing a business that probably's got a great five-year outlook, but maybe if you looked out like 20 years, you could say, hey, there might be some terminal value risk. I guess it's really static because it always fascinated me from when I did work on fever tree,

which is basically a cocktail mixer's business, they make tonic water and things like that. Fever trees, sales volumes, last year was 700 million units, and Coca-Cola's daily unit volume is 2 billion units around the world, which gives you a sense for the scale of that that is fascinating. But yeah, I think the point you're making is spot on. I think I mean, Buffett's talked about this explicitly at some of the annual meeting in terms of how he thinks about security selection and position sizing. It's very much framed around certainty of outcomes as opposed to, you know, again, like an IRR-driven framework.

Or you could obviously make some adjustments for risk reward, but he very much leads with what's my level of confidence in terms of where this is going to be five and ten years down the road. So I think it's a very fair point. You know, the other part of it is there's this article from a couple of years ago. I'm talking about hindsight bias and resulting, but about this, I believe it's a dentist or an optometrist in West Palm, who has this portfolio that's worth a ton of money. And, you know, he had companies like Cisco, companies like General Electric, but they just sprung to an immaterial size over time. This is just not performed particularly well. But he also had a $5 million investment in ICO dating back to, and believe it was the mid-80s.

And he knew the people there personally, the Mendelsohn's, where their name is, and he had done scubble, but they gave him a lot of confidence in the business. And that $5 million investment is now, or at the time when I wrote about it, was worth more than a billion dollars. And, you know, I think your question is a fair one. I think he also probably recognized that the company is well positioned in that part of the value chain and that they had opportunities to grow over time through M&A. And, you know, it's only been 30 or so years, but so far he's looking pretty good on that

all. So again, I don't think any of it's black and white. And maybe it comes down to a question of as physicians run and as they become larger percentages of your portfolio, how do you think about sizing? Maybe the answer isn't to just let them run forever and never touch them. Maybe it's to brim, but with less aggressiveness than maybe you would if you were purely looking at things on a, you know, next 12-month B.E. or something. That's great. Let me ask, let me ask one more here. So right now I think when people think of a letting winners run forever, and this is very related to the terminal value question. People think a lot about Netflix, right? And that's interesting. I mean, Netflix is a great company. I don't think there's any doubt about that. But if I just went in

media, 10 years ago, if I was like, hey, what's your forever business in media? People said, oh, that's easy. The cable networks, right? Paramount. I mean, they were literally the greatest business models anyone's ever imagined. Whether people watched them or not, they got paid, you know, $2 per month. Think no capbacks, incredibly high returns. They were fantastic, great economies of scale. So, you know, if you were a cable network and you and cable network one and you bought cable network two and you, uh, you could say, go to your cable distributors and say, hey, now more people watch us. We used to charge you a dollar per month for each of these. You got to pay us $1.25 per month for each of these because now we've got even more thing. So it's just

curious, like 10 years ago, you would have said cable networks, 20 years ago, you would have said blockbuster. You said, hey, these guys have this great brand. They've got this great mode in terms of returning. They have scale purchasing power when it comes to buying VHS. 30 years ago, you would have said newspapers. And it does just strike me like media is a forever business. But just when I was thinking about Netflix, I was kind of struck by how much the forever business and media has changed over the 10 years. I don't know if there's a question in there, but I just did think that was interesting. So I just kind of want to toss that over to you as you think about these letting winners run business.

Yeah, I wrote another article about this recently where I kind of let off with this quote from Ken Langone, who's had big investments in companies like Eli Lilly and Home Depot for a very long time. Obviously, I've been, you know, fantastic investments. And when he was asked on CNBC, it's kind of his selection process, investing, he basically said it's all about people. And I think, I think that's hugely an important part of all this. And again, it's messy because this is not investing people, smart investment people. I think they do not like these things that that are a little bit harder to get your arms around, but what's your hugely important over time. And I wrote about this in the context of Microsoft and Cloud Computing and Sotchanadella.

And it's very clear from looking back on the story that if he had not been put in charge of server and tools and eventually became CEO of the company, you'd probably be looking at a very different story today than what actually played out. And I think part of being a minority investor and particularly a long-term investor is doing the best job that you can, to try to piece these things together as they happen. You know, you may not get there until three years after major developments or something, right? It might take a lot of time. In some cases, it may not even be something that you can ever truly get your arms around

even with doing a good amount of skeletal. But to the extent that you do find these things, I think you have to put a lot of weight on them as opposed to, you know, again, just going to more quantitative-driven approaches to how I'm going to think about position sizing and security selection. So that's another interesting one. So just on the management piece, like most of these, you know, the Magnificent Seven, I think most people today would say had generally top tier management, right? I guess the two things that are interesting there.

If you're letting Winters run forever, like eventually you do have to think about a management change. But just if I even took the Magnificent Seven, right? Two years ago, if you and I had been having this conversation 18 months ago, Facebook stock would have been at 150 on the way to 100. And, you know, Facebook was burning money like crazy on, Meta Labs and everything. I don't know if people would have said Zuck was this visionary CEO at the time.

I know a lot of people were like, hey, I wrote articles. I mean, I wish I'd done this. I read articles. I was like, hey, this is the guy who took Facebook from mobile to desktop. He was from desktop to mobile. He bought Instagram. Like, you've got to give him a little word. But I know a lot of people were like, this isn't insane.

This is, he's burning all this money. I don't know a lot of people would have put him in that category. You know, Microsoft is one. I think even when you bought it at the time, Balmer was running it, right? And Balmer, I think the best thing that ever happened to Microsoft is they made the switch to Soutia when they did. But if they had made it a few years later, like, we could have really been talking about terminal value there, right? So I guess my two questions on management.

And we'll go back to Microsoft in a second. Like, how important is management when you're letting these winners run? Because management does change over time. And it does strike me that the same management team can get viewed very differently, you know, even with Zuck, inside of 18 months, he can get viewed very differently. Yeah, I'd say for one, you know, you certainly need to have your own perspective on the answers to these questions. And if market price action is going to greatly impact your views on something like this, and that's that's probably going to be an issue. So it has to be addressed, you know, at the investor level, you know, in the case of Microsoft is a very fair point.

And for me personally, it started out as a very traditional value investment. And, you know, I think it stayed that way for more a long time until the, you know, call it 2015, 2016. period where a stock that I've been trading at, let's say 10 times for for many years, now found itself trading at at 20 times and, you know, started to look expensive on how people had viewed that business for for some time. You know, in hindsight, that was at $55 a share or something like that. And, you know, today it's at $400 or ever may be. And that some of that has been due to multiple expansion, but a very significant part of it has been the earnings have gone from $250 to, you know, something in the $15 range or whatever it is. So,

or getting that. So, I mean, I think that that's a good example of, again, you know, continuing to follow the story and learning over time. I can explicitly remember when, when Sachinadella was named CEO, there was a common response, particularly in the financial press that they hired an insider and this was not going to work and they made a mistake. They shouldn't work with an outsider like Alan Malawi. And, you know, that this was probably the end of, or things were going to continue to get worse for Microsoft. And I remember explicitly reading a blog from someone who had a smaller software business that was acquired by Microsoft and he worked under Satya Nadal after that deal and his perception was that what was being

said about Satya, to the extent things were being said about him, was exactly wrong and that he was the perfect position, perfect person for this position and that he was going to be able to implement pretty significant change in terms of where the company is focused. And I think if you align, if you align that period of time with what he writes it out and get refreshed and he piece it all together again with the benefit of hindsight, you start to really understand how important it was that he was there. So, you know, there's no question that management is hugely important. As I kind of wrote here recently, I think the arc of the, the arc of the quality of

business bends over time to the quality of the management team. And you're something like AWS, obviously is a very prominent example at Amazon. And I think as an investor, you have to do all you can to see where the crumbs are at and what they're suggesting in terms of, is this a very good team or is it a team that, you know, is lacking in some ways. So a notable example recently, at least in my mind, is, you know, is a very good team is a very is when I see someone like Gavin Baker in an interview say that Google has been horribly mismanaged over the past couple years, I think he understands these things. He understands

that company in particular much better than I do. So if I hear someone like him saying that, it would strike a core with me. And I would think seriously about what that means and to the extent I could get the answer myself, whether or not that was right. You know, I just, one thing you said in there, you said the arc of the business spends over time towards the arc of the management team. I think you said the quality of the management team, which is interesting. because I would have a conflicting view and a similar view. Like, you know, the conflicting view is, that is the direct opposite of Warren Buffett's when the quality, when a management team with a good management team meets a bad business,

it's the business that wins, right? That's the exact opposite. But at the same time, I would say, hey, you invested Microsoft in 2012, right? If you bought Microsoft in 2012, Azure and all the online tools, Microsoft 365 subscription and service, no one, you could not underwrite that. you didn't even know about that. A lot of people have ridden Amazon, you know, for the past 15 to 20 years. If you did that, AWS launched in what, 2006, 2007, it was not a needle mover, right?

You bought it because you said Amazon, dominant retailer, best and breed management with Jeff Bezos. And it is just interesting, these guys pulled, I mean, that's literally pulling a rabbit out of your hat, right? If you bought Facebook 10 years ago, you bought because you're like, Zucks a killer, and you didn't have a, hey, we buy Instagram for a billion and what's that for 3,000? and these are like two of the best acquisitions of all time. But it is just interesting, these are management teams that as you're saying, are bending the business towards their arc in direct conflict. I guess my off-the-spot question would be, is that something unique about big tech where they can quickly pivot and the management team because the scale is so infinite?

Because I would say like steel, which is known as not a great business, right? Even if you've got the absolute best manager and seal, and maybe this is disproved by like the new, for example, and everything. But even if you got the best management team in seal, You can't really pull a rabbit out of your hat, right? Cool. We've got a specialty steel company. Your multiple is going from five to five and a half.

It's not like you're going to grow like crazy. Is it something unique to tech or am I kind of missing something? Yeah, I would say the keyword is Ben's, right? And you don't want to test the theory by picking a very crummy business and then say, okay, this guy's the best manager. Let's see if this works out. Preferably, you're going to pair a very good business with a very good manager. And I certainly would argue that, you know,

And again, part of the reason why I invested in Microsoft in first place is because there were components of that business that I thought at the time were very, very strong and were, you know, they had challenges ahead for sure. But the positions that they held that they held that in Windows, the position that they held with the office, the position they held in server and tools, while they were certainly challenges ahead and as always required effective strategic decision making and management to get them to where they needed to be five to 10 years down the road, I still thought the starting position was very, very strong. And obviously, you can look at the P&L or the cash flow statement at that period of time, the balance sheet, et cetera. They had a lot going for them even during a period of clear stress. You know, obviously, we could say something very similar to with Zuck and Meta, you know, in late 2020. A lot of things were going against them.

They were businesses not doing particularly well in some ways, huge uproral losses. But when you put it all together at the end of the day, it wasn't like they were fighting for solvency or something. So I think that's a huge part to add in here to the discussion. Let me just so on the pulling rabbits out of your hat, right? One of the things I have had the most trouble with in my career is and picking losers, but also thesis drift. Like most of my big losers come from thesis draft and the thesis drift generally looks something like this.

Let's use a very simple example. Hey, the stocks at 20. I'm buying it because they're undergoing a strategic review. I think this strategic review is going to be fierce and I think it's going to go for 30, right? And then six months later, hey, the strategic review failed because I think the company won and 30 and nobody would bid higher than 27. I think they were wrong. The stock's at 15. And now it's starting to look cheap. And I think we'll have a strategic review again in six months. And let's go forward six months. The stocks at 10. Yeah, the industry's not doing well, but now it's cheap. And I think they're going to be buying

back shares. And then let's forward six months later. The stock's at five, but this is option. Option value at this by, right? So I have thesis drift the whole way down. I guess with Microsoft. And I wonder this. And I think several people wonder this. And you could wonder this with somebody who bought Amazon a few years ago. Like, pick your, Apple at 10 times PE, six years ago versus Apple today are very different stories, right? The thesis dropped where, hey, Alex, 12 years ago, you bought Microsoft because it was at 10 XPE and you saw these great businesses. And now you have very successfully held at the past 12 years or so. But at some point, this became thesis trip, right?

You had a, I am buying this as a value metric. I am buying this as a value play. And now it's become it's a Gart play. And now it's become it's a takeover the world play, right? And in my thesis, your case, like, it's negative, right? You should have just, and in your case, it was positive, but I could also paint the, hey, we, we did the Stanford, don't sell the Google thing. And we went from 10 to 30 and then we didn't sell. And then, you know, how many people have shown you a stock of Oracle or even Microsoft, you know, it hits a share price in 2002.

And if you held it from 2002 today, you did, actually, you've done decently given the recent. But from 2002 to 2016, the stock is flat, right? It takes a while to really backfill that. Like, when does that come into play? I don't know if any of that made sense. Yeah, I think that's when it all matters, right? This is a big question to be answered. And I think, again, it comes down to your assessment of the position of the business,

obviously some thoughts on Pam or something like that. How big can this be over time? What's the opportunity? It comes down to the quality of the management team, competitive position, et cetera. You know, to put a very specific example on this, if Saatchanadella announced he was retiring tomorrow, that would be an announcement that would be problematic for me than I would need to seriously think through in terms of my level of confidence in the business as we looked out 10 years and what that meant for position

sizing, even up on the market, right? So that would impact my decision making. My hope is that he's still relatively young and that he decides he'd rather do nothing else in his life. I'd stay here for a very long time. But yeah, those are all, those are all relative considerations. And again, I think some of the trouble with some of these things is when it gets so black or white and and you have to live in one all-in-camp versus the other all-in-camp. You can always make positions smaller. You can do things on the margin that maybe you're not perfectly aligned with one worldview, but that, again, like, bend that direction.

And I think that's really where my head goes. It's how do you get yourself in a place where you can make a little bit longer term and really not be in the position where when you find the best management teams and the best business that you're capable of finding, you push yourself out of them purely based on traditional evaluation efforts. There is a limit to that, but I think it's, if the past 10 years or so are any indication, it can also be the cause of very significant stress when you look back. And again, some of the quotes that I mentioned at the outset, right?

Let me give you another, just a counter example. You know, three years ago, so 2021, if you and I had this conversation, like Disney, one of the best businesses ever. Iger, I believe Iger had, he retired in 2020, but, you know, the after effects of it hadn't really started seeping in. And I'm like, this is a great business, right? Disney Plus is a killer. Look at Marvel is the most successful franchise in history. Star Wars.

Okay, the last Star Wars film wasn't great, but they got Mandalorian. I'm pretty excited about the future there. Like, we would have been really bullish parks are great. ESPN struggling, but they found the bottom probably and they still got all these great assets. Disney Plus is thriving. Iger was one of the best media CEOs of all time, right? A lot of people would be running them in the coffee can portfolio. as they had for the past 50 years pretty successfully.

But, you know, if you've studied Disney, also over 50 years, if you closed your eyes, it did really well. But there were a lot of down feats there, right? There's the early 90s. There's the mid-2000. Like, there are a lot of bad place for Disney. And I guess today, if we came forward,

the whole story has changed, right? Everyone points it and be like, oh, those guys are aft. Like, yeah, you know, theme parks are going to be good. I'm not calling for them to go bankrupt, but they're caught up in these crazy culture wars that we certainly wouldn't have been talking about in 2021. Like the state of the state of Florida. against Disney?

Like, who would have imagined that in 2020? That's crazy. Disney's the biggest employer there. Nobody would have imagined that. Iger's come back, but now people think Iger's crazy. The whole strategy, like, I think a large part of his success for failing was, you know, part of it's on a successor, but a lot of it is he was executing the Iger strategy. And in hindsight, it wasn't a great strategy.

Iger looks way worse. So we've got this business that was forever with the best CEO out there. And now just three years later, you're like, hey, this business sucks. And Iger is a fool. I don't know. It's crazy how time shifts, I guess just on that, do you have any takeaways from that? Would you take, like, would you say the view three years ago with Disney and Iger was actually more close to reality than the view today? Do you think like ZERP and just post-COVID effects were actually masking some real weakness at Disney and Iger?

Any takeaways from that example? I think my biggest takeaway, and it mirrors something that I saw at Walmart through the 20 times. That was another example I had on my list, absolutely, yep. Particularly after Donald Bill and became CEO, and I think in hindsight, I mean, at the time as well, but in hindsight, I think there's the strategic decision making under his leadership in my mind has been very, very good, and he's got the business in a much stronger place than where it was when he got there. The problem is it required many, many years of significant P&L investment, particularly in

terms of getting some of the Ami Channel stuff in place that the company had effectively missed in prior years. And playing catch up was, it took a lot of time and it cost a lot of money. And I think Disney is a very similar story at the end of the day. It was it was never realistic to think that they get to where they need to be in 24 months in terms of D to C. And, you know, the levers that need to be pulled in terms of making this a sustainable business long term are still being pulled today. And it's far from assured that they're actually going to work. You know, on the other side of the ledger, you had a business with very significant exposure to linear TV in terms of in terms of the P&L.

And, you know, if you go back three, four years ago, I think the peak pace of pay TV subloss, if they looked at some of my Comcast, I think it was only two or three percent at that time. If you look now, last year, Comcast, pay TV subs in the U.S. defined, I believe it was 13%. So we've seen a significant acceleration there, you know, and that is obviously further pressure, further pressure to P&L. So I think, you know, the takeaway in my mind, it would go to this idea of when you're seeing disruption and you're seeing a business that is going to have a lot of pressure in terms of its evolution, the thing to do is to be careful in terms of buying just because the stocks going down. It's optically getting cheap to the extent that it even is. In this case,

the DNL obviously got hurt in a pretty significant way. But yeah, I think that's one of the bigger lessons. And Buffett talked about this as it related to precision cast parts when someone asked if the deal was basically a bad deal. And he said, you know, the history of Berkshire is we buy things and the portfolio has a way of kind of naturally solving for itself with a guy though that was worth a handful of billions of dollars being worth many multiples of that over time as the business continues to grow and improve. And the things that don't work kind of just fade away and become a smaller piece of the portfolio, which, you know, I think that that's part of the lesson that I take away from this and which, by the way, kind of mirrors

what you see from the tough competitor in terms of the index. You know, it's interesting, just like there's a famous loser, average loser saying, right? The funny thing about Buffett, now, he's the greatest, right? Every time I run the series every now and then called Trite Buffett quotes because he says these things that sound so trite. And then as you think about them, you realize just how much wisdom there is. But one of the interesting things is when you buy the whole business, there's no losers average losering because you've already bought the whole business.

And like, it actually works really well with a letting renter's one mindset, right? Because if you were like, hey, I'm really good at this. If I buy 10 businesses, four of them flame out, four of them are average and two of them are grand slams, that's actually. an incredible slugging percentage. And if you're buying the whole businesses, there's no chance to average down. So you just get that grand slam.

So it's kind of interesting. You mentioned Buffett. I just, I also think it's interesting. And this relates to what you were saying, right? It's a little bit losers average losing. But when things get optically cheaper, I know my first instinct is to buy more.

I loved it at 400. I should love it at, I should, I liked it at 400. I should love it at 300. I think one of the interesting things is Buffett has been very able to kill his best idea. is, right? Coke stock is flat for 15 years and he's never bought more Coke. Well, Spargo, he's talking

about it as his opportunity cost in 2011. He never buys more as far as I know after the scandal comes out and eventually he sells it all. Maybe he was too late to sell it all this sort of stuff. Airlines in 2018, he's buying all the airlines on the oligopoly story, basically. And in 2020, COVID hits and he just rips the mandate off and sells them all rightly wrongly, who knows. but he's been able to pull the plug and I just wanted to ask, like, what do you know to pull the plug, right? Because again, there are business

management teams, even if the management team doesn't change, like as you said, if Saad you left Microsoft, that would be a, hey, maybe it's time to trim this thing moment. But management teams, our view of them can come and go. Three years ago, Iger's a hero, today he's a villain. Two years ago, Zucks a villain, now he's a hero. When is it?

Like, how do you know it's not just a bump in the road? It's time to get out fully or, trim or how do you know it's not time to add because you know we we've seen these great businesses Netflix in 2022 reports a week quarter and Ackman flips it from he buys it at 300 and he flips it on 200 two months later and you know six two and a half years later two years later is at 600 anybody like a triple so how do you know it's not a bump in the road to be taken advantage of versus time to pull the plug yeah I think the answer is it just simply comes down to your own assessment situation which is not a very helpful answer I mean hard and vast rules here

I need hard and best rules. I'm trying to prove. I mean, as I'd have to go back and read the post that I wrote at that time, but I did buy more Netflix around that time. And I think part of my assessment was the long-term opportunity as I saw it was still in fact. The pricing power of the offering was still intact. The idea that their position in the industry was seriously under threat to me did not particularly pass the smell test. Maybe I'd benefited from, although I have not benefited from owning the stock,

maybe I benefited from owning Disney in terms of, I think I had some appreciation for how difficult it truly was going to be to try to scale globally and how the ability and willingness to go after an opportunity was going to be something that very few people may be able to go for. I thought Disney would be on that list. I'm less sure of that today than I was that. I never believed that a few of the other smaller players would really have what it took to go after that opportunity.

You know, on the flip side, you go look at something like cable, which I own Comcast for a very long time. my own charter for a shorter period of time. But, you know, I think it, for me, that that situation has got to the place where the thesis that I was relying on, which may be valid at the price that I trades at today, was just so different from the reason I had bought the stock to begin with. And I think in those situations, for me at least, I got to a place where I think I need, I need to let them go and then maybe take a step back, take a breather, and then kind of just

reassess going forward. forward. And that might mean buying again in three months, if you can buy again at three mirrors, and I think you can never buying again. But I, for me, that situation felt different. And, but all I can say is that, you know, it's a one off. I just don't know if there's any, like me, the one blanket rule I walk away with from 10 plus years of doing this now and doing the opposite when I was younger is not just reflexively buying more when he goes to. That's what I used to do. And it can work out when you're right about the business. And I've had a number of situations where that did not well.

You mentioned Netflix. Your confidence was the long-term story, you know, the moat, all that. The one, we've generally been talking about this, I think, with a great business mindset, right? We've mentioned the tech companies. We've mentioned Walmart, media companies, which might not be great businesses anymore, but, you know, for a long time we're great businesses. There's another big winner category. Now, the wins might not be quite as big on the shorter term basis, but you know, what's

the best performing stock over the past 50 years. I believe it's still Ultria, right? Tobacco company. And you could probably know, maybe not 50, even 50 years ago, you probably knew that less people would be smoking 50 years from then. And today, you know, so I guess my question, coal companies over the past three years have been, I would put the chart of coal companies against any chart, right? These things have been home runs. Now, there's tons of things going on with coal companies, right? They were all highly leveraged. They had a cyclical boom. But these things have been great, and they might be really good long-term holds on a similar, you know, I love the phrase, it's a sunset industry, but what a beautiful sunset it could be, right? So I guess I just

want to just run by you. We've been talking about this through a great business lens. I don't think it's what you do. Everybody needs to know what they do, but I mean, can you apply the same principles to kind of the declining industry with the beautiful sunset principle? Is that just someone else's game? Is there no, are there no lessons to learn there? No, I think you can. I think, And I think it somewhat applies to the cable discussion as well. Where my head goes on those stories, and to be said, this is applicable, I think would probably be more applicable to the Bafin story, is how much of the TSR, how much of the return that I expect over time,

is kind of the organic growth of the business for which is a capital returns-driven part of the outcome, which there's nothing wrong with that. But I think for me, it does impact how I think about, about what's a reasonable position size. And this is another part of the discussion that actually probably brought up before. I think another thing to be said for a portfolio that has capital coming in versus one that's more static is it makes it more difficult in my mind in terms of in terms of position sizing and letting things run. Let's say for example, you have something at 5% of your portfolio,

you know, you think it gets unfairly hit. You still think it's a great business. You take it to 7, 8, 9%. It does it really well from there. A few years later, it might be 15 or 20% in your portfolio, which is a, I would think most people would agree is a fairly sizable position. And, you know, that just feels different than if that position was 8% of your portfolio after a strong run. So I just think that's also part of this discussion is if thinking about position sizing, you know, if this works, where is that going to get me to? And then what kind of outcome will that lead to? So for me, I bucket them in terms of, of what is driving the TSR, and as I think about how much, you know,

the portion of that that's dependent upon capital returns or, you know, effective timing to some degree, you know, how do I, how do I think about that when I'm sizing the position? And now a quick break to remind you that this episode is brought to you exclusively by AlphaSense, the AI platform behind the world's biggest investment decisions. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As yet another value podcast listener, visit alpha-sense.com slash FS today to beat FOMO and move faster than the market.

That's alpha-dash-sense.com slash FS. The one other area I've been looking at and thinking a lot about recently, and I think this is in part because, you know, for a long time, Buffett's opportunity cost was Wells Fargo. And today, it's not quite as bad as it was before, like, October when the Fed, when people started thinking the Fed would take rates down. I don't know. But there are a lot of good banks out there that trade around tangible book. And the reason I mentioned this is because if you think a good bank, pick your number, right? Let's say a good bank can do 12% return on equity, right? That's nothing crazy. That is on any measure that's above

their cost of capital, but that's nothing crazy. And let's say they pay out six percent, half of that is dividends and they retain the rest of that to grow, right? Like you can pretty 12% return on equity if you buy and hold it, you're going to get basically a 12% return. But you know, if you think over time the multiple glows to like 1.2 times book value with capital returns like it's not hard to paint a mid-teens or higher long-term return for buying that at tangible book now we've made all sorts of assumptions there right but most of the investors i talk to when i mention financials say i don't do financials right and one of the reason i ask you this because i know you've been an ally for a while and you and i have traded thoughts on ally uh previously ally for those who don't know it's

the old GM, our financing unit. I think it's, it's one of the few banks that Buffett still owns, or Berkshire still owns. And I think it's very interesting when you say that, because he owns, they own ally and Capital One, which are both pursuing either branchless or branch light models, which is kind of where the, they're unrelated, unrelated. I'm off track. I guess just, do you think investors, when they dismiss banks are dismissing a source of these letting winners run? Now, they're not going to be like huge grand slams, but you know, if I said, hey, I could paint you a pretty easy picture to mid-teens return over a long hold period that smashes the indices. A lot of investors are dismissive of that. And I wanted to ask you both

on banks, but just on the general like the financials, mid-teens model, that is another one that generates a lot of wealth over time. That is basically what Buffett pursued in his late-stage career. And I don't see a lot of investors talking about that. So I just wanted to ask that because I know you've looked at Ally and you've looked at these things before. Well, I probably should just got to the, I don't know, financials answer sooner. That would have made my life a little easier. Cut me off earlier, Alex. No, I think the point's there.

I mean, it's basically, it's largely aligned with what I see in something like Alley. I think if this works over time in terms of what I think they can do on the deposit base and in terms of how I feel about, you know, the asset class of that they play in and, you know, a reasonable assumption in terms of capital return to shareholders and, you know, kind of the financial framework you laid out, I think, I think that's correct. And I think it'll work well. You know, it's also a business where, as we've seen over the last year or two, at every turn,

there's just a new thing to worry about, right? I mean, we've dealt with, in their case, we've dealt with crazy runs and used car pricing. We've dealt with significant moves and interest rates. We've dealt with, you know, the regional banking issues and what impact I would have on the deposit base, etc. So, you know, we've gone through a number of tests and for the most part, they've shaken out reasonably well. but I think it's probably fair to say that that will not be the last test. So, you know, getting in a position where you're truly comfortable owning something like this and what that means in terms of position sizing, I think that's probably the more

the important question to answer. Yeah, no, they're just hard because, look, banks are black boxes, right? And I think everyone worries you're going to invest in Lehman in 2007 where, you know, Lehman, they never, I don't believe they ever reported a year of negative ROE. They reported 20% years ROE every year until 2008 they're bankrupt. And people worry about that. And I hear you on that, but, you know, a lot of the newer examples, right? The First Republic, the Silicon Valley Bank, you could look at Silicon Valley's bank,

and it was right there on the balance sheet, right? Held some of security securities. It held at 100, fair value 40. We have $30 billion of equity. I'm making rough numbers. So we're negative $30 billion in equity if you mark the things to market. Like you can look at the banks and I'm not seeing like a city group or a JP Morgan. They have so many assets.

They really are black box from outside. But some of these smaller banks, you know, they're just like, hey, $50. 50% of our loans are to commercial real estate. Yeah, you don't know the 500 loans that they did, but they'll give you high level stats on them. And I just wonder if investors are because of fear of that, if they're cutting it off. On the other hand, when I talk to financial experts, investors, they'll throw out like four stats at me and stuff or things I hadn't looked at where like, oh, shit. But you know, being a journalist, sometimes that does happen. So I just wonder, investors are so hesitant to invest in a lot of these things if they're cutting themselves off.

And I know in late 2022, a lot of investors would say, hey, you know, we just, you saw the deposit run. This is why you can't invest in banks. In my account, it would be, hey, if the bank survived the deposit run, like with COVID, a lot of COVID business, I like say, hey, COVID's the worst thing they're ever going to see. If they survive the run, like to me, they might deserve a higher multiple now, not a lower multiple because they've proven they can survive six months of zero revenue. Anyway, I threw a lot out there. Anything else there? Yeah. I mean, I think the famous quote is there's more banks than bankers, right? I think it's a business where you really need to feel good about the culture and the management team and what

that all means over time. And, you know, we had we had a very, very notable example in the industry. Well, as far real in terms of culture, management team and incentives, you know, a handful years ago, you know, allied in the last year or so, we've seen very, you know, I would say concerning issues in terms of C-suite turnover and the like. So it's, you know, I think it's an ever-present part of the business. I think that's true everywhere, but it certainly feels more acute in in financials. Because, again, as you well laid out, a mistake can, mistake can kill you, whereas another

business is a mistake maybe means that you need to, you know, adjust to do something to try it back on track. So it's a business where you really need to deal competent to people that you can trust with the capital. Last question I want to ask you. So we started this all with the idea best ideas funds. And you know, best idea funds as I've understood them are, you know, a guy says, hey, I've got 20 smart hedge fund managers. And all of them will come to me and be like, here's my number one idea. Here's my number two. Here's my number three. And what they'll say is, hey, I'm just going to go to my 20 smart hedge fund managers. And I'm going to take all of their number one idea. I'm going to put it into a fund and put a 5% waiting, and now I've got a best ideas fund, right? And isn't this

better? Instead of investing in everybody's second best idea, you just invest in their number one idea. And I've heard this idea pitched a ton of time, and I think it fails every time. And because we're running a little long, I'll lead the witness. But my, I think they fail because the person who's putting them together doesn't have the conviction, right? Like, if I was putting the best ideas fund of Alex, and you were one of the people, and Microsoft was your idea in 2014, I would have been down in 2017 because I would have said, oh, thesis drift, right? He bought it at 10X. It's at 25X.

Thesis drift, I'm gone. You had the conviction to hold. On the other side, if you had bought Microsoft for 10X and then it went to 6X and you sold and I had invested in your best idea on the cheap stock, I think I actually would have been doubling down, right, being like, oh, this guy, he can't, he doesn't have the stomach. He can't handle the losses. So I would lead the witness and suggest best ideas funds. don't work because the person running them doesn't have the conviction and doesn't understand the idea

like the person who's actually putting the best idea on. But I would ask you, like, what do you think about that thesis? Where do you think it falls short? Do you think it falls short? I think the way you described it makes perfect sense. I have no idea how these things are typically managed. My thought would be that the best idea is fun is just simply the collection of best ideas from the managers that are selected. Why, you would that overlay your own decision making on top of that seems a little bit odd to me. I would, I would think that it would be something close to equal weighted. But to the extent of manager was making decisions on top of that, yeah, I think that's kind of odd. And I would, I would be a bit questionable that that's going to work well, particularly on

a after fees basis. So, yeah, I would have the same doubts that you have in terms of that being a particularly fruitful approach. We're almost at an hour. We've covered pretty much everything I wanted to cover. Again, it all include a link to the letting winners run post and I think there was one other purpose of mine that I put in there so we'll include links to both those I don't know we didn't really talk what's in your portfolio today we can we'll just have to schedule the fifth one you know five-time guests I get a yet another value podcast uh t-shirt so you'll have that stuff but anything else you want to mention on this or anything else going through your

these days no that there's a great conversation again I tell people to go listen to your to your conversation with uh with bill bill brewster over at the business brew Well, conversation number, what number? Is it three or four? For you? No, you on, you on Bill. I think it was number three with Bill. And Bill, I can ask him, is that a record or not?

And he hasn't responded to me. So I don't know if I'm the t-shirt winner there or not. Say he's got to get the t-shirts going. But yeah, it's like people should go listen to that conversation. And, you know, I think there's two conversations. They're probably opposite sides of the investing spectrum, but they're both very relevant in terms of, you know, making thoughtful decisions and kind of figuring out who you want to be as an investor. And I think that's a huge part of this game. Well, Alex, I really enjoyed this.

This was different, but I had a bunch of fun. It was, as you hopefully could tell, I really enjoyed your post. And I found it very thoughtful. And I was trying to really did a lot. And this helped connect some of the more some of the other dots for me. So really enjoyed it. Enjoyed having you on. Congratulations almost. I think we'll probably have to take a two or three month hiatus before we can get me back. Looking forward to having you back on a little more sleep deprived. And we'll go from there. Thanks for having me, Andrew. Have a good one. A quick disclaimer. Nothing on this podcast should be considered an investment advice.

Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.